Weyerhaeuser's fourth-quarter earnings more than doubled from a year ago, but the forest-products giant fell short of analysts' expectations.
Weyerhaeuser’s fourth-quarter earnings more than doubled from a year ago, but the forest-products giant fell short of analysts’ expectations and cautioned that bad weather could hurt the current quarter’s results. It paid the price with a 3.1 percent drop in its stock yesterday.
The company saw higher-than-expected costs in some of its businesses because of unusually wet weather in Canada and the southern U.S. that hampered harvesting, as well as higher energy costs. Its mills and factories also experienced unexpected downtime and scheduled maintenance that had been delayed because of the strong market.
Among other things, an ice storm collapsed the roof of a box plant in Kentucky, taking it out of production. And many logging crews were involved in salvage activities following the Florida hurricanes.
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The Federal Way-based company reported quarterly profit increased 116 percent to $199 million, or 82 cents per diluted share, from $92 million a year earlier. Net sales in the fourth quarter rose 14.4 percent to $5.89 billion, from $5.15 billion a year ago.
However, operating earnings came in at $1.07 a share, 8 cents short of a consensus of expectations compiled by Thomson First Call.
Weyerhaeuser shares slid $2.01, or 3.1 percent, to close at $63.19 yesterday.
Steven Rogel, Weyerhaeuser chairman, president and CEO, said the company sees “smoother sailing in the first quarter.”
“We’ve completed the delayed maintenance, and pricing for most products should remain stable,” he said. “Weather, however, is a concern, especially in the West.”
Officials said heavy rains in Southern California could affect crops there and hurt Weyerhaeuser’s box business in the West. The weather also could slow housing starts in the region, which would affect the company’s wood-products and real-estate businesses.
Analysts said that missing earnings expectations by 7 percent in the forest-products sector is not as big a deal as it would be in some fields.
“In this industry, it’s almost a bull’s-eye,” said Steven Chercover, forest-products analyst at D.A. Davidson & Co. in Portland.
Ignoring various one-time sales and write-offs, most of the company’s segments showed improvement in operating earnings. Weyerhaeuser’s timberlands business posted pre-tax earnings of $217 million, up from $185 million a year ago. Wood products declined to $72 million from $111 million in the fourth quarter 2003. Pulp and paper rebounded to a pre-tax profit of $35 million from a $67 million loss a year earlier. Containerboard, packaging and recycling grew to $81 million from $32 million in 2003, and real estate and related assets jumped to $217 million from $109 million.
Paul Latta, an analyst at McAdams Wright Ragen in Seattle, called the quarter “rock solid.”
“An 8-cent miss is a moderate miss,” Latta said. “It would be a huge miss if it were Microsoft, but in a cyclical industry with lots of moving parts, it’s not a huge miss.”
For the year, Weyerhaeuser posted profit of $1.28 billion, up from $277 million a year ago. Net sales grew by 14 percent to $22.67 billion, while operating costs were up just 7 percent to $20.01 billion.
Melissa Allison: 206-464-3312 or firstname.lastname@example.org