Weyerhaeuser Co.'s wood products group incurred a $97 million pretax loss in the third quarter on a 41.5% drop in sales from the year-earlier period to $588 million, the company reported today. While still in the red, the wood products group improved its standing from the $162 million pretax loss incurred in the second quarter and the $146 million loss its reported for the July-September period of 2008.
During a conference call with analysts, Weyerhaeuser executives said they expect the wood products group's loss will deepen again in the fourth quarter due to seasonally lower volumes and recent price cuts. "Our operationg posture is to match production with demand," president and CEO Dan Fulton said. He said the recovery of the housing market appears to be under way, "but its pace is highly uncertain. We're taking steps today to manage through this time frame," including keeping a lid on employee and administrative costs as well as keeping an extremely close eye on operations.
The wood products group's performance during the third quarter improved "due to higher lumber and oriented strand board sales prices, continued cost control measures and lower log costs," Weyerhaeuser said in a statement. "Volumes were down in all product lines except engineered wood products."
Wood product sales and volumes by product:
- Softwood lumber: $226 million in third quarter (vs. $393 million in the year earlier quarter) on 803 million board feet of sales (down from 1,197 million board feet)
- Engineered solid sections: $67 million ($114 million) on 3 million cubit feet of sales (6 million cubit feet)
- Engineered I-joists: $47 million ($79 million) on 43 million lineal feet of sales (63 million lineal feet)
- Oriented strand board: $63 million ($113 million) on 363 million square feet of 3/8-inch product sales (595 million square feet)
- Plywood: $25 million ($48 million) on 84 million square feet of 3/8-inch product sales (135 million square feet)
- Hardwood lumber: $54 million ($72 million) on 66 million board feet of sales (83 million board feet)
- Other products produced: $37 million ($63 million); no sales volume figures provided
- Other products purchased for resale: $69 million ($124 million); no sales volume figures
The wood products segment incurred a $4 million charge in the third quarter for asset impairments and a $1 million charge for restructuring and closures. That's down from the $37 million incurred in the second quarter.
Weyerhauser reported these production volumes for the third quarter:
- Softwood lumber: 777 million board feet (vs. 1.11 billion board feet in third quarter of 2008)
- Engineered solid sections: 3 million board feet (6 million board feet)
- Engineered I-joists: 36 million lineal feet (60 million lineal feet)
- Oriented strand board: 390 million square feet of 3/8-inch product (585 million square feet)
- Plywood: 48 million square feet of 3/8-inch product (89 million square feet)
- Hardwood lumber: 54 million board feet (64 million board feet)
Company-wide, the Federal Way, Wash.-based company said it broke even in the third quarter from a $280 million net profit in the year-earlier period. The net loss stemmed primarily from from a $35 million income tax provision; on a pretax basis, Weyerhaeuser reported a $30 million operating profit this quarter vs. a $426 million loss last year. Net sales and revenues fell by a third from the year before to reach $1.41 billion.