Forest products firm Weyerhaeuser Co. (WY, WYHSF.PK, WYL.TO) announced Friday morning that profit for the third quarter surged nearly three-fold from last year, helped sale of the packaging business and its Australian operations. Adjusted loss per share for the quarter came in narrower than analysts' expectations by five cents. However, the company's real estate and wood products segment were hit by the slump in the U.S. housing markets and low product prices. The company also warned further losses for both the segments in the fourth quarter.
Weyerhaeuser, which produces wood products for housing and builds single-family homes, has been impacted by the downturn in the U.S. housing market. The company's problems have been compounded by tighter credit markets as banks are reluctant offer new home loans to customers.
In a bid to offset the slump in the U.S. housing market, Weyerhaeuser has closed down or sold more than fifty sawmills and wood product manufacturing facilities. The company also employs about 50 percent fewer employees than it did two years ago.
Third Quarter Results
The Federal Way, Washington-based company posted net earnings of $280 million or $1.33 per share for the third quarter, a near three-fold jump from $101 million or $0.47 per share in the year-ago quarter.
Results for the latest quarter include after-tax charges of $144 million or $0.69 per share related to real estate, $24 million or $0.11 per share related to Wood Products asset impairments and $10 million or $0.05 per share related to restructuring activities. It also included after-tax gains of $158 million or $0.75 per share from the sale of Australian operations, and $303 million or $1.44 per share from the sale of the Containerboard, Packaging and Recycling business.
Similarly, the year-ago results included after-tax charges of $17 million or $0.08 per share each, related to Wood Products closures, restructuring and asset impairments as well as corporate restructuring activities and real estate related charge of $16 million or $0.07 per share. It also included after-tax gains of $26 million or $0.12 per share related to legal settlements and $7 million or $0.03 per share related to sale of operations and previously closed plant sites.
Excluding these items, net loss was $3 million or $0.01 per share, compared to net earnings of $118 million, or $0.55 per share in the prior-year quarter. On average, fifteen analysts polled by First Call/Thomson Financial expected the company to report a loss of $0.06 per share for the third quarter.
Loss from continuing operations widened to $200 million or $0.94 per share from $5 million or $0.02 per share in the comparable quarter a year ago.
Total net sales and revenues for the quarter declined to $2.62 billion from $4.15 billion in the same quarter last year. On continuing operations basis, net sales and revenues were $2.11 billion, down from $2.80 billion in the comparable quarter a year ago. Ten Wall Street analysts had a consensus revenue estimate of $2.56 billion for the quarter.
The company noted that it reclassified the Containerboard, Packaging and Recycling operations as discontinued due to the sale of the segment's assets to International Paper in early August.
Forest product companies in recent times have been affected by sluggish housing market and strengthened Canadian dollar against U.S. dollar. Weyerhaeuser and its peers have been badly hit by the slump in the domestic construction market and recent data from the National Association of Home Builders indicates that U.S. home builder sentiment lingered near all-time lows.
Among Weyerhaeuser's peer's, Memphis, Tennessee-based International Paper (IP) on Thursday a 31% drop in third-quarter profit from the year-ago quarter, despite a 23% rise in sales, as the latest period was hurt by write-downs and restructuring charges. However, excluding special items, earnings rose and beat analysts' consensus estimate.
Another peer, Nashville, Tennessee-based Louisiana-Pacific Corp. (LPX) is scheduled to report its third quarter results on November 4. Wall Street analysts expect the company to report a loss of $0.30 per share on revenues of $394.06 million for the third quarter of fiscal 2008.
Segmental Details
Weyerhaeuser's Timberland segment generated net sales and revenues of $254 million, marginally up from last year's revenues of $252 million. Pre-tax segment earnings were $107 million, sharply down from $163 million in the year-ago quarter. The company expects segment earnings to be lower in the fourth quarter of 2008, compared to the third quarter of 2008. Fee harvest volumes are expected to be lower due to the weak domestic market.
Third quarter net sales and revenues for the Wood Products segment dropped to $1.01 billion from $1.45 billion in the year-ago quarter. The company incurred a wider pre-tax loss of $146 million from $131 million in the same quarter of last year. Weyerhaeuser expects higher operating losses for the segment in the fourth quarter as prices and volumes decline in the seasonally slower fourth quarter.
Cellulose Fibers segment posted net sales and revenues of $447 million, up from $436 million reported in the previous year quarter. Segment pre-tax earnings edged down to $78 million from $79 million in the comparable quarter of the previous year. Weyerhaeuser expects slightly lower earnings from the third quarter of 2008 as lower pulp prices, would partially offset benefits from a weakening Canadian dollar relative to the U.S. dollar.
Net sales and revenues for the Containerboard, Packaging and Recycling segment dropped to $0.50 billion from $1.29 billion in the third quarter of 2007. Pre-tax earnings for this segment plunged to $10 million from $104 million in the prior-year quarter.
Weyerhaeuser's Real Estate and Related Assets segment realized quarterly net sales and revenues of $329 million, sharply lower than $598 million in the same quarter of last year. Pre-tax loss for the real estate segment was $316 million, compared to a profit of $60 million in the year-ago quarter. Weyerhaeuser expects the loss from this segment's homebuilding operations to increase in the fourth quarter due to continuing weakness in the housing market.
Net sales and revenues for the Corporate and Other segment fell to $88 million from $118 million in the corresponding quarter of the previous year. Segment pre-tax earnings for the quarter were $1.37 billion, compared to a loss of $14 million in the comparable quarter a year ago.
Other Metrics
Operating loss for the latest quarter was $355 million, compared to operating income of $53 million in the prior-year quarter, while total costs and expenses rose to $2.46 billion from $2.74 billion in the year-ago quarter.
Nine-Month Highlights
For the nine-month period, Weyerhaeuser posted net earnings of $36 million or $0.17 per share, sharply lower than $853 million or $3.84 per share in the prior-year period.
Loss from continuing operations widened to $642 million or $3.04 per share from $119 million or $0.54 per share in the year-ago period.
Total net sales and revenues for the year-to-date period fell to $9.62 billion from $12.93 billion recorded in the same period last year. On continuing operations basis, net sales dropped to $6.32 billion from $8.38 billion in the comparable period a year ago.
Looking ahead
In a statement, president and chief executive officer, Dan Fulton said, "We expect housing market conditions will remain difficult, and our businesses will continue to aggressively manage costs and inventory accordingly. As a result of actions we've already taken, we have a strong balance sheet and good liquidity. We're meeting the challenges of today's markets, while preparing for stronger markets in the future."
Stock Quote
In Friday's regular trading session, WY is trading at $38.14, down $0.54 or 1.40% on a volume of 0.69 million shares. During the day, the stock touched a high of $39.47 and a low of $35.32. In the past 52-week period, the stock has been trading in a range of $29.53 to $78.00.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.