Weyerhaeuser said first-quarter profit almost doubled as U.S. demand for new homes boosted sales of timber and real estate. The world's biggest lumber...

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Weyerhaeuser said first-quarter profit almost doubled as U.S. demand for new homes boosted sales of timber and real estate. The world’s biggest lumber producer yesterday also increased its dividend for the first time in a decade.

But the Federal Way company’s results fell short of analysts’ estimates, and Weyerhaeuser stock sank $1.42, or 2.2 percent, to $64 despite a broad stock rally on Wall Street.

Profit rose to $239 million, or 98 cents a share, from $121 million, or 54 cents, in the year-earlier period, Weyerhaeuser said. Sales rose 10 percent to $5.55 billion.

Pretax earnings from timber jumped 26 percent to $200 million, as U.S. builders broke ground on homes at the fastest pace since 1972. Weyerhaeuser got its biggest boost from its real-estate unit, where pretax profit rose 53 percent to $183 million because of higher prices and demand for homes in California, Nevada and Washington, D.C., the company said.

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“Real estate saved the quarter,” Credit Suisse First Boston analyst Mark Connelly said in a report to clients. Earnings from real estate included $57 million in land sales.

However, excluding some items, Weyerhaeuser earned $1.03 a share, below the $1.14 expected by analysts, based on the average of 15 estimates in a Thomson Financial survey.

“The big pricing rally for panel and lumber in February didn’t give the quarter the earnings boost many had expected,” Connelly said.

Pretax profit in the wood-products unit, which sells lumber, plywood and oriented strand board, fell 24 percent to $131 million though sales rose 4.3 percent to $2.24 billion.

Lumber and panel shipments were hurt by bad weather, Weyerhaeuser Chief Financial Officer Richard Taggart said in a conference call with analysts and investors yesterday.

“We expected a more rapid recovery in the wood-products sector” in the current quarter, as seasonal demand for wood for home building boosts shipments and prices, Taggart said.

The company boosted its quarterly dividend by 25 percent to 50 cents a share. It was the first increase since January 1995 and will be payable May 31 to shareholders on record as of May 6.

“This action reflects the board’s confidence in the company’s financial strength,” said Chief Executive Steven Rogel in a statement.

Earnings in the paper-products business will be better than in the first quarter on lower maintenance costs and more shipments, the company said. Log-business earnings will be about the same, while earnings in real estate will fall on lower proceeds from land sales, the company said.

Rogel boosted the company’s lumber, paper and box businesses with the $7.73 billion hostile takeover of Willamette Industries in 2002. He has since closed plants to boost profit and reduced debt by selling assets, including the $970 million sale of timberland and sawmills in Western Canada to Brascan announced in February.

The company’s total debt fell $408 million to $9.36 billion.

The expected sale in the current quarter of the Canadian business means Weyerhaeuser will reach its goal for reducing its ratio of debt to capital to between 30 percent and 40 percent from 40.8 percent at the end of last year, Taggart said.

Reducing debt will allow the company to consider using cash for other purposes, such as stock buybacks and small acquisitions, he said.