Weyerhaeuser Co. reported today its net loss in the first quarter nearly doubled from the year-earlier period to $264 million on a one-third fall in net sales to $1.3 billion. Meanwhile, Louisiana-Pacific Corp. (LP) announced its loss from continuing operations shrank by a third tof $30.2 million as sales shrank 41% to $204.6 million.
Roughly $45 million of Weyerhaeuser's losses involved closure, restructuring and asset impairment costs, primarly for its wood products division, where the group charge hit $266 million, only slightly better than the $277 million loss in the first quarter of 2008. Weyerhaeuser recorded another $45 million in losses for impairment and reserves for real estate assets, $17 million for corporate restructuring costs, and $12 million for litigation involving alder. Excluding those items, the company's net loss would have totaled $144 million, or nearly three times more than Weyerhaeuser's net loss excluding unusual items in the January-March 2008 period.
"The recession hit us hard and affected the results we announced this morning," Dan Fulton, Weyerhaeuser's president and CEO, said in a statement. "Declining revenues during the quarter reflect reduced volume and depressed prices across all of our product lines. In response, we've curtailed production capacity and reduced timber harvest levels. While we achieved our $375 million in previously announced cost reductions ahead of schedule, our current performance is unacceptable. Our priority is to put into place a competitive cost structure that will allow our business portfolio to achieve top quartile results regardless of economic conditions."
Cost-control measures and facility closures in the wood product division combined with lower log costs to more than offset reduced sales volumes for all product lines and lower lumber and oriented strand board prices, the Federal Way, Wash.-based company said. It forecast a smaller operating loss in the current quarter. " The company anticipates lower raw material costs and slightly higher sales volumes," Weyerhaeuser's financial report said.
In Nashville, Tenn., LP CEO Rick Frost called the start of 2009 "very challenging." While the operating loss of $42.5 million was only half as deep as the $85.7 million operating loss in the first quarter of 2008, the loss from continuing operations was only a third better at $30.2 million this first quarter vs. $45.9 million a year earlier.
"While the level of activity for the remainder of the year is expected to increase, the rate is unclear," Frost said. "Our goal this year is to conserve cash and improve liquidity so that when this economic downturn subsides, we will be well positioned to compete." The company noted it has completed its refinancings and realized $140.2 million in net cash in addition to $70.7 million in net tax refunds.
LP's OSB segment posted an operating loss of $24.2 million, 61% better than the year earlier, despite a 55% fall in net sales to $72.3 million. "Operating results reflected the favorable effects of continued actions taken to reduce raw material costs," the company said. "Also, in the first quarter of 2009, LP realized reductions in the cost of petroleum-based products used in production and benefited from the weakening of the Canadian dollar compared to the first quarter of 2008."
The siding segment did much better, with operating income hitting $2.1 million coimpared with a year-earlier total of just $300,000. This came event as net sales shrank 31% to $73.8 million. LP credited "continued strength in the repair and remodel markets as well as increased market penetration" for its good numbers.
In the engineered wood products segment, operating losses deepened by 14% to $9.2 million as sales plummeted 50% to $30 million. "The lower operating results in the first quarter were driven by lower volumes, softening prices and costs associated with the mill that produces [laminated strand lumber]," the company said.