Weyerhaeuser Co.'s first-quarter loss deepened as a near-dormant housing market knocked down sales of its lumber and wood panels.
The company, like other lumber, pulp and wood producers, is struggling with a 3-year slump in housing that sparked the current recession. With relatively few homes being built, there is little demand for two-by-fours, plywood decking and other wood products that generate revenue for companies such as Weyerhaeuser.
But some good news emerged in Tuesday's results. Weyerhaeuser's loss of $264 million was not as bad as Wall Street expected. And the company forecast "slightly" higher closings of home sales in the second quarter.
"No one expected the housing market to plummet to levels we haven't seen for decades and become mired in a downturn that continues today," Dan Fulton, Weyerhaeuser's CEO, told analysts in a conference call that followed the company's results.
New home sales have plunged 74 percent from their peak in July 2005, hitting a record low in January. Since then they have crept up slightly but no where near enough to yield a profit for the Federal Way, Wash., company.
Weyerhaeuser reported a first-quarter loss of $264 million, or $1.25 cents per share, steeper than the $148 million, or 68 cents per share, lost a year earlier.
The company has now lost money in 5 of the 6 quarters since the U.S. recession began in Dec. 2007. Its one profitable quarter benefited from the sale of its huge packaging business to rival International Paper Co.
Still, before the cost of mill shutdowns and lower real estate values, the company's loss of 68 cents per share was smaller than Wall Street's forecast of 80 cents.
Revenue fell 37 percent to $1.28 billion, as the recession hurt volumes and prices across all of Weyerhaeuser's products.
Revenue at its wood products business _ which sells lumber and plywood _ fell 44 percent to $542 million. The division's loss, however, narrowed to $266 million from $277 million, as the company lowered expenses, partly through scaled back mill operations.
Ten wood product mills permanently closed or had production curtailed during the quarter. That was just over 15 percent of the facilities Weyerhaeuser was running last year, according to its 2008 annual report, which lists 65 wood products facilities. Those actions bring to more than 30 the number of mills the company has closed or sold in its wood products business since the beginning of 2005.
Besides those closures, Weyerhaeuser also shut five distribution centers. And the company is running nearly all of its wood mills at sharply reduced rates. Wood products is the company's largest division by sales.
In May 2008, the company set a two-year goal of cutting selling, general and administrative costs by $375 million, and Fulton said that goal was reached in the recently completed quarter.
Meanwhile, the loss at Weyerhaeuser's real estate business, which builds and sells homes, deepened to $96 million from $74 million, due to fewer home closings from a year earlier.
The company's other big divisions posted profits, though sharply lower ones.
Timber earnings dropped 64 percent to $40 million on lower log volumes and prices, while earnings from pulp, used to maker paper and absorbent tissue, slid 45 percent, as selling prices declined.
Barclays analyst Peter Ruschmeier reiterated his "Overweight" rating on the shares, saying the results were "very weak" but "better than we expected."
Shares rose 70 cents, or nearly 2 percent, to $36.72 in afternoon trading.