the visible hand

it is the theory which decides what can be observed – einstein

Weyerhauser real estate, wood products and timberlands businesses struggling…

Posted by ecoshift on February 9, 2008

For those of you paying attention to the nexus between timberland values, real estate values and lumber values this report on Weyerhauser’s current status may be interesting. The falling housing market is creating negative number in Weyerhauser’s timberlands, lumber and building units.

The containerboard, packaging and recycling unit is improving, but this is the unit they want to sell. I imagine it can be sold at reasonable values to keep cash flow together and absorb losses. Note: more Weyerhauser mills will be shut down this year. Not a good time to sell timber, building or lumber production assets.

San Jose Mercury News – Weyerhaeuser swings to loss on housing
By JESSICA MINTZ – AP Business Writer
Article Launched: 02/08/2008 04:22:25 AM PST

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 per share, after a profit of $507 million, or $2.12 per 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 per 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 per 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,” said Daniel Fulton, Weyerhaeuser’s president, 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 development and sells forest land 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.


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