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Louisiana-Pacific Names New CEO

Zacks Equity Research

Louisiana-Pacific Corporation (LPX) has announced the promotion of Curt Stevens to the post of chief executive officer (CEO), effective from May 4, 2012. Stevens will succeed Rick Frost who is retiring on May 31, 2012. Until now, Stevens was serving as company’s executive vice president and chief operating officer.

Stevens, who is also a board of director in Quanex Building Products Corp. (NX), has been with Louisiana-Pacific since 1997 and has held senior management positions. Frost, who has served as the CEO for 7 years, will now assist Stevens for a few days to prepare him for his duties till he retires.

Louisiana-Pacific expects his leadership qualities and his experience in financial and operational matters to boost the future performance of the company.

However, Louisiana-Pacific has been posting losses since several quarters owing to the downturn in the housing industry combined with an overall weak economic condition, high unemployment rates, reduced credit availability, rising interest rates and lack of incentives like tax-credit for homebuyers. The fiscal year 2011 also showed losses, attributable to sluggish demand for building products due to seasonality and inventory reduction actions taken by the company’s customers at year's end.

Besides, the housing market has become extremely aggressive and new homes are facing tough competition from housing alternatives, including resale homes, foreclosed homes, short sale homes and rental housing.

Though Frost is hopeful about the recovery in the North American housing market in 2012 in the near term, we expect the process to be slow. We thus maintain a Zacks #3 Rank on Louisiana-Pacific, which translates into a short-term Hold rating.

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