Housing market hurts Weyerhaeuser
SEATTLE – Weyerhaeuser Co., one of the world’s largest lumber and packaging producers, said Friday it swung to a fourth-quarter loss as the deteriorating U.S. housing market cut into demand for lumber.
Executives forecast another grim year ahead, prompting investors to send shares down $2.37, or 3.7 percent, to $62.34.
Federal Way, Wash.-based Weyerhaeuser reported a loss of $63 million, or 30 cents a share, after a profit of $507 million, or $2.12 a share, a year earlier.
Excluding write-downs from housing-related business, restructuring costs and other special items, Weyerhaeuser would have earned $90 million, or 42 cents a share, in the quarter. Revenue fell 18 percent to $3.94 billion from $4.8 billion a year ago.
Analysts surveyed by Thomson Financial forecast a profit of 35 cents a share excluding items, but predicted higher revenue of $4.13 billion.
“Until the housing market recovers, our real estate, wood products and timberlands businesses will struggle,” Daniel Fulton, Weyerhaeuser’s president, said in a conference call.
Weyerhaeuser owns homebuilder operations in the greater Seattle area; Houston; Scottsdale, Ariz.; Southern California; Las Vegas and suburban areas around Washington, D.C. It also invests in residential real estate and sells forestland as home sites.
Real estate segment earnings sank 93 percent to $22 million in the fourth quarter as the U.S. housing market crumbled. Executives said even cities such as Houston and Seattle, which initially fared better than Southern California, Las Vegas and the Phoenix area, have begun to show signs of fatigue. Weyerhaeuser said it expects the division to post a loss in the current first quarter.
The wood products business widened its loss to $313 million, weighed down by facility closure charges and a 16 percent drop in single-family housing starts. Weyerhaeuser expects another loss in the first quarter and warned of additional curtailments or mill closures.
Weyerhaeuser’s timberlands unit, faced with sinking demand and some of the lowest prices in 25 years, earned 9 percent less, or $152 million. The company forecast even lower profit in the first quarter.
Cellulose fibers earnings rose 38 percent to $80 million in the quarter, helped by a weak U.S. dollar, but maintenance costs are expected to push down first-quarter results.
The containerboard, packaging and recycling unit, which Weyerhaeuser is considering selling, improved 39 percent to $99 million in the fourth quarter as prices increased, offsetting higher energy and materials costs. First-quarter earnings are expected to fall.
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