Weyerhaeuser Corp. today declared third-quarter net earnings of $1.12 billion, of which $1.035 billion was deferred taxes that were reversed as a result of Weyerhaueser's conversion to a real estate investment trust (REIT). Excluding that special item, the company swung to net earnings of $81 million in the quarter, swinging from a $56 million loss before special items in last year's third quarter. Net sales rose 18.3% to $1.66 billion.
The company's wood products and timberlands segments trailed the performance of its other units. The wood products segment recorded an operating loss of $100 million, or $3 million worse than in 2009's third quarter, while the timberlands segment's operating profit shrank 65.7% to $75 million. In contrast, the cellulose fibers segment increased its operating proft 9% to $181 million and the real estate group rebounded to a $20 million third-quarter profit from a year-earlier loss of $64 million.
President and chief executive officer Dan Fulton called it "obvious" that the overall housing market "remains in an uncertain state as the expiration of the housing tax credit led to a precipitous drop in prices and volume for our wood roducts business. The housing market also affects our Timberlands business, where we continue to defer harvest due to lower log demand."
The wood products segment suffered from an 18% drop in average sales realizations for lumber between July and September compared with the April-to-June period, while oriented strand board (OSB) realizations slumped 30%. Sales volumes for engineered wood products fell by more than 20% from the second quarter. "Weyerhaeuser expects a comparable loss from the segment in the fourth quarter compared with the third quarter," the Federal Way, Wash.-based company said in its earnings report. "The company anticipates seasonally lower volumes across all product lines and modestly lower price realizations, offset by lower log costs."
The timberlands segment's earnings included $34 million from disposition of non-strategic timberlands. "Excluding the disposition of non-strategic timberlands, Weyerhaeuser expects fourth quarter operating earnings from the segment to be lower than third quarter," it said. "The company expects lower log price realizations, primarily in the West, and seasonally lower harvest volumes. The company also anticipates increased silviculture costs.
The company's breakdown by wood products type:
- Structural Lumber sales rose 17.6% to $254 million. Production rose 12% to 889 million board feet.
- Engineered solid section sales grew by just $1 million to total $68 million. Production was up 33% to 4 million cubic feet.
- Engineered I-joist sales fell 17% to $39 million. Production slumped 28% to 31 million lineal feet.
- OSB sales leaped 27% to $80 million. Production increased 18% to 428 million square feet (3/8-inch equivalent)
- Softwood plywood sales increased by $2 million to reach $19 million. Production was marginally higher at 68 million square feet (3/8-inch equivalent) vs. a year-earlier 66 million square feet.
- Hardwood lumber sales were unchanged at $54 million. Production slipped by 1 million board feet to total 65 million board feet.