USG CEO Foote calls loss 'unacceptable'

USG Corp. Chief Executive Officer William Foote called the company's most recent quarterly net loss "unacceptable" as the longest recession in a half century reduced demand for gypsum wallboard.

"That's just unacceptable, even in a recession," Foote said today at the company's annual meeting in Chicago. "We remain committed to returning the company to profitability."

USG, North America's largest maker of wallboard, climbed 25 percent on April 21 after reduced costs helped it post a narrower first-quarter loss than analysts estimated. The operating loss narrowed to $42 million, the first improvement in results in eight quarters.

USG exited bankruptcy protection in mid-2006 as the housing market began a decline that's continued for three years and led to net losses in the company's past six quarters. Foote has responded by shutting plants, reducing capacity and cutting 1,400 salaried positions. More jobs will be slashed this year.

Foote said the housing market will remain poor because the inventory of unsold U.S. homes may supply demand well into next year. He also cited March housing starts of about 500,000, a 75 percent decrease from 2005, as a sign of continued trouble.

"That's a recession, if not a depression," said Foote, 58.

USG fell $1.29, or 9.5 percent, to $12.23 at 1:49 p.m. in New York Stock Exchange composite trading. The shares rose 68 percent this year through yesterday.

Capacity Shutdowns

USG has shut more than 3 billion square feet of wallboard capacity by closing or idling 11 production lines. The company also has shut 60 distribution centers, three paper mills and a cement board line. The company has trimmed about $350 million in costs since the housing recession began.

USG has invested in a new wallboard plant in Pennsylvania to serve the New York metropolitan area, opened a paper mill in Michigan and purchased a new ship to carry rock from Canada. When the economy picks up, USG will be prepared to take advantage, Chief Operating Officer James Metcalf said.

"We are in tough times, but we've rebuilt our enterprise," Metcalf, 51.

While consumer spending is up and mortgage rates are low, there's still not enough data to suggest trends will improve, Foote said.

"There won't be much to look forward to in 2009 and perhaps not in 2010," Foote said. "We anticipate a slow housing recovery."