Weyerhaeuser 4Q loss balloons to $1.2B

[February 07, 2009]  NEW YORK (AP) -- Weyerhaeuser Co. said Friday its fourth-quarter loss ballooned to more than $1 billion as the rapidly deteriorating U.S. housing market forced the timber and wood products company to book a massive charge and write down other assets.

The Federal Way, Wash.-based company, which builds houses and makes pulp and wood panels from trees it grows on more than 6 million acres, is facing its most challenging environment in a generation.

New home sales plummeted 14.7 percent in December to the slowest pace since 1963, the Commerce Department said late last month.

The moribund U.S. housing market has pushed down lumber prices to their worst levels in more than 20 years, with homebuilding at its weakest since 1959. On top of that, construction slows during the cold months of the fourth quarter.

Weyerhaeuser in December announced it would slash its quarterly dividend to 25 cents to hold on to cash and planned to cut this year's capital spending.

The company's loss amounted to $5.73 per share in the three months ended Dec. 31. It reported a loss of $63 million, or 30 cents per share, in the year-earlier period.

"These results reflect the speed and severity of the deterioration of market conditions," Weyerhaeuser Chief Executive Dan Fulton said.

Before goodwill impairment of $827 million and $343 million in other charges, Weyerhaeuser still posted a quarterly loss of $209 million, or 99 cents per share. Sales from continuing operations dropped 44 percent to $1.76 billion.

The results widely missed Wall Street's downbeat expectations. Analysts, on average, anticipated a loss of 57 cents per share on sales of $1.85 billion, according to Thomson Reuters.

The company's wood products business, which makes boards to frame houses and wood panels for floors and roofs, booked a loss of $960 million. Its real estate business, which builds homes, fell to a loss of $630 million after a profit of $22 million in the year-earlier quarter.

Earnings from the timberlands segment decreased 57 percent, something Fulton attributed to potential home buyers worrying about their falling incomes, or getting laid off, more than picking up bargain-priced houses.

The company's pulp, used to make toilet paper and absorbent towels, was "hit by stronger dollar and global recession," he said, making it harder to sell overseas. "We're dealing with a market that is weakening faster than anyone envisioned."

That business reported a loss of $29 million, versus a profit of $80 million in the fourth-quarter of 2007.

For all of last year, the company lost $1.18 billion, or $5.57 per share, compared with a 2007 profit of $790 million, or $3.60 per share. Sales fell in 2008 to $8.02 billion from $10.82 billion.

Weyerhaeuser expects home closings in the January to March quarter to decline from fourth-quarter levels. As a result, losses from homebuilding are expected to rise. The company also expects weaker results in pulp, with lower prices and higher maintenance costs.

Results in timberlands and wood products are expected to be similar to the fourth-quarter.

Shares rose 67 cents to close at $28.03 Friday after falling to a 52-week low of $25.30 earlier in the session.

[Associated Press; By MIKE OBEL]

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