Norbord tapped to benefit from post-Katrina rebuilding

Amid the carnage caused by Hurricane Katrina, Toronto-based Norbord Inc. could enjoy an unexpected windfall, as the massive effort to rebuild the U. S. Gulf Coast will spur demand for building materials.

“ As hard as it is to find any good news to come out of [Katrina], in one sense there is a positive for us,” Barrie Shineton, Norbord chief executive, said yesterday at a Toronto investment presentation.

Norbord is the world’s secondlargest manufacturer of a plywoodpanel material called oriented strand board. It is used in home construction.

“Before, different analysts were saying different things about our industry,” Mr. Shineton said. “But our view is that Katrina has pushed the outlook for 2006 from fair to good.”

Since hitting a 52-week high of $13.90 in March, Norbord’s stock has been on a steady slide downward. But it’s up more than 12% in Toronto since Katrina hit on Aug. 29. It closed down 7¢ to close at $11.28 yesterday, and at least one analyst agrees with Mr. Shineton’s assessment that Norbord has plenty of upside.

“Before Katrina, my scenario was that the overall [ OSB] market would look significantly weaker,” Salman Partners’ forestry analyst Paul Quinn said. “But now, Katrina’s huge impact will have a material impact on prices. OSB prices are going to go up and I think Norbord is going to do very well.”

The company sold a little over 4 billion square feet of OSB last year. But output in 2006 will likely eclipse 5 billion, Mr. Shineton says, because rebuilding the homes lost to Katrina alone could require as much as 2.4 billion square feet of OSB.

Compared to its competitors, Norbord might be better positioned to profit from Katrina due to a strategic geographical advantage, Mr. Shineton said. Seven of the firm’s 11 OSB mills are in southern U.S. states.