Weyerhaeuser said Friday that it swung to a loss in the first quarter, hurt by a sagging housing market and low product prices. The Federal Way company...
Weyerhaeuser said Friday that it swung to a loss in the first quarter, hurt by a sagging housing market and low product prices.
The Federal Way company, one of the world’s largest timberland owners and wood-products manufacturers, said it expects continued weakness in the housing market and higher fuel costs to hurt second-quarter earnings in its timberlands segment.
Weyerhaeuser lost $148 million, or 70 cents a share, in the first three months of the year compared with a profit of $720 million, or $3.09 a share, in the year-ago period.
Results included $40 million in charges for closures in Weyerhaeuser’s wood-products business and $35 million for real-estate impairments and reserves. Excluding these and other pretax items, the company lost $51 million, or 24 cents a share.
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Sales fell 24 percent to $3.39 billion from $4.5 billion a year ago.
Thomson Financial said analysts expected a loss of 17 cents a share on sales of $3.63 billion. Those estimates typically exclude one-time items.
The company’s stock closed down 96 cents, or 1.5 percent, at $63.68 Friday.
“The protracted recession in the housing market has had a devastating impact on our first-quarter performance,” said Chief Executive Officer Daniel Fulton in a conference call. “Today’s results are sobering.”
Weyerhaeuser owns homebuilding 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 development and sells forestland as home sites.
Its real-estate segment swung to a $74 million loss as excess housing inventories rose and prices declined.
Lawrence Burrows, president of the segment, said Seattle-area and Houston sales had finally declined in the quarter.
The company is cutting back land purchases, reducing staff and building smaller, cheaper homes in response, Burrows said, but Weyerhaeuser expects a similar loss in the current second quarter.
Weyerhaeuser’s timberlands business reported an operating profit of $116 million in the first quarter, 34 percent lower than last year, as slowing demand in California, one of the states hardest hit by the housing crisis, dragged down prices.
For the second quarter, the company expects timberlands earnings to be slightly less than in the first quarter.
The housing downturn translated into faltering demand in the wood-products segment, pushing it to a wider net loss of $277 million in the quarter. Lumber shipments dropped 12 percent and shipments of oriented strand board sank 15 percent.
Earnings in the cellulose and the containerboard, packaging and recycling segments improved in the quarter from a year ago. Weyerhaeuser said it still expects the sale of the containerboard, packaging and recycling division to International Paper to close in the third quarter.
Fulton, in his first post-earnings conference call as CEO, said the company will take “definitive steps to resize this company as the leader in markets where we operate” in coming months, including more curtailments, permanent shutdowns and sales of noncore assets.
“Trees define us, and our timberlands business is at our core,” he said.
AP business writer Sara Lepro in New York contributed to this report.