TOLEDO, Ohio—Owens Corning Inc. shares fell on Monday after it said demand for roofing shingles would fall about 10 percent this year, compared with 2009, and it would not hit the high end of its earlier announced earnings target for the year.
Owens Corning shares were down $1.19,or 4.8 percent, to $23.57 in afternoon trading.
As recently as last month the maker of construction and manufacturing materials predicted demand for shingles in the U.S. would be flat for the year. On Monday, it said it expects demand to fall 10 percent for the year from the previous fiscal year -- and 35 percent for the third quarter, compared with a year earlier.
Much of the falloff in roofing shingle demand happened in the third quarter as retailers reduced inventories, the company said.
Homebuilding continues to be weak. The National Association of Home Builders said Monday that its monthly index of builders' sentiment was unchanged in September at its lowest level since March 2009. Lenders took back more homes in August than in any month since the start of the mortgage crisis, according to foreclosure listing service RealtyTrac Inc.
Those foreclosed homes can sell for less than what it costs to build a new home. That's bad news for the builders who buy Owens Corning shingles.
Owens Corning had previously forecast full-year earnings before interest and taxes as high as $450 million. On Monday it said "the higher end of the guidance is no longer achievable." It said it would provide more details when it reports quarterly results on Oct. 27.
It said the roofing business is still performing well, with pretax margins above 20 percent for the third quarter as well as full-year 2010.
Owens Corning said its two other major businesses, insulation and composites, are performing in line with prior guidance.
Morgan Keegan analyst J. Keith Johnson left his rating on the shares at "Outperform."
"While roofing demand has slowed in the near term, we believe that the valuation is attractive" and the company is well-positioned in all of its segments to benefit from an improving economy and a better U.S. housing market next year.