Weyerhaeuser said Friday it swung to a fourth-quarter loss as the deteriorating U.S. housing market cut into demand for lumber. Executives at the Federal...

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Weyerhaeuser said Friday it swung to a fourth-quarter loss as the deteriorating U.S. housing market cut into demand for lumber.

Executives at the Federal Way company, one of the world’s largest lumber and packaging producers, forecast another grim year ahead, prompting investors to send shares down $2.37, or 3.7 percent, to $62.34.

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 Seattle area, Houston, Southern California, Las Vegas, Scottsdale, Ariz., and suburban areas around Washington, D.C. It also invests in residential real-estate development 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 due to a seasonal drop in demand and higher fiber and energy costs.

Chief Executive Steven Rogel did not say whether the company is any closer to a sale of the division, but said he was pleased with the options in front of the board.

“They are doing the very best that they can, given those types of market conditions,” said Soleil Securities analyst Anna Torma.

Torma said she expects Weyerhaeuser’s shift to a pure timber, wood products and real-estate company, and away from paper and containerboard production, will improve the business.

Weyerhaeuser closed the sale of its fine-paper business to Domtar last March, in a stock-exchange offer.

Torma said she expects the housing market to stabilize in the second half of the year.

For the full year, Weyerhaeuser’s profit rose to $790 million, or $3.59 a share, from $453 million, or $1.84 a share a year ago. Revenue fell 13 percent to $16.3 billion from $18.7 billion in 2006.

Information from Associated Press reporter Lauren Tara LaCapra in New York is included in this report.