UFPI Announces Measures to Align Costs with Current Business

Universal Forest Products UFPI today announced measures to align its costs with its current business, primarily due to significantly weaker-than-expected sales in the first five months of the year. Specifically, from the same period of 2010, year-to-date net sales through May 2011 were down 9.5 percent to $765 million, including a decline of 15.0 percent in net sales to retail customers. In addition, contrary to typical seasonal trends, the lumber market declined for 11 consecutive weeks from March 2011 through the end of May 2011. That decline, coupled with significantly higher fuel prices, contributed to a decline in gross margin to 10.5 percent, or a year-to-date decline of 2.2 percent in May 2011 from the same period of 2010. The decline in year-over-year net sales was due, in part, to lower lumber prices in 2011. “Retail sales during what is historically our busiest selling season didn't materialize as expected this year, and in order to preserve our opportunity for profitability and to ensure we're properly sized for our business opportunities moving forward, we have undertaken additional cost-cutting measures,” said CEO Michael B. Glenn. The Company has identified cost reductions that will result in annualized savings of $10 million, before one-time charges for severances related to the reductions.