Business News
WEYERHAEUSER REPORTS THIRD QUARTER RESULTS
Monday 01. November 2010 - NET EARNINGS OF $1.116 BILLION, OR $3.50 PER SHARE; INCLUDES EARNINGS OF $1.035 BILLION FROM INCOME TAX ADJUSTMENTS; INCREASE IN SHARES OUTSTANDING DUE TO SEPT. 2010 SPECIAL DIVIDEND
Weyerhaeuser Company (NYSE: WY) today reported net earnings of $1.116 billion for the third quarter, or $3.50 per diluted share, on net sales of $1.7 billion.
This compares with essentially break-even results on net sales of $1.4 billion for the same period last year.
Earnings for the third quarter of 2010 include $1.035 billion from income tax adjustments, primarily related to the reversal of deferred taxes as a result of Weyerhaeusers conversion to a real estate investment trust (REIT). Excluding the income tax adjustments, the company reported net earnings of $81 million, or 25 cents per diluted share, in the third quarter of 2010, a $137 million increase compared with the $56 million loss before special items reported in the third quarter of 2009.
Calculations of third quarter 2010 earnings per share are based upon approximately 318 million weighted average shares, on a diluted basis, compared with 212 million shares in second quarter 2010. Weyerhaeusers shares outstanding increased to approximately 536 million shares as of the end of the third quarter, or 537 million shares on a diluted basis, following the companys Sept. 1 payment of a previously announced special dividend. The dividend consisted of approximately 324 million shares of common stock and $560 million in cash in conjunction with the companys conversion to a REIT.
“Cellulose Fibers reported a record performance, as it benefited from stronger production levels, lower costs and higher prices,” said Dan Fulton, president and chief executive officer. “Meanwhile, the work done by our real estate business to restructure its operations and product offerings resulted in an operating profit despite challenging market conditions. Its obvious, however, 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 Products business. The housing market also affects our Timberlands business, where we continue to defer harvest due to lower log demand.”
Timberlands: a gain of $163 million on sale of 140,000 acres of non-strategic timberlands
Cellulose Fibers: a gain of $122 million related to alternative fuel mixture credits
Real Estate: charges of $55 million for asset impairments and restructuring
TIMBERLANDS
3Q 2010 Performance – The segments earnings increased in the third quarter compared with the second, as increased income from disposition of non-strategic timberlands was partially offset by lower earnings from operations.
Third quarter included pre-tax gains of $34 million from disposition of non-strategic timberlands, compared with $14 million in the second quarter. Earnings from operations declined due to lower log price realizations, primarily in the west, and seasonally higher road and silviculture expenses. Weyerhaeuser continues to defer timber harvest.
4Q 2010 Outlook – Excluding the disposition of non-strategic timberlands, Weyerhaeuser expects fourth quarter operating earnings from the segment to be lower than third quarter. The company expects lower log price realizations, primarily in the west, and seasonally lower harvest volumes. The company also anticipates increased silviculture costs.
WOOD PRODUCTS
3Q 2010 Performance – The dramatically weaker market conditions the company experienced in the latter half of the second quarter persisted throughout the third quarter. Quarterly average sales realizations for lumber declined 18 percent in the third quarter compared with the second, while oriented strand board realizations declined 30 percent. Sales volumes for engineered wood products fell by more than 20 percent. Operating rates for oriented strand board and engineered lumber mills declined.
Second quarter results included pre-tax gains of $8 million from the sale of assets.
Excluding this item, the segments results declined by $89 million compared with the second quarter.
4Q 2010 Outlook – Weyerhaeuser expects a comparable loss from the segment in the fourth quarter compared with the third quarter. The company anticipates seasonally lower volumes across all product lines and modestly lower price realizations, offset by lower log costs.
CELLULOSE FIBERS
3Q 2010
2Q 2010
Change
Contribution to pre-tax earnings (millions)
$181
$74
$107
3Q 2010 Performance – The segments earnings improved substantially in the third quarter compared with the second due to higher average price realizations, significantly lower maintenance costs and strong operating performance by all mills. There were no annual maintenance outages in the third quarter, compared with three in the second quarter.
4Q 2010 Outlook – Weyerhaeuser expects fourth quarter earnings from the segment to be lower than third quarter due to lower average pulp price realizations and increased scheduled maintenance.
REAL ESTATE
3Q 2010
2Q 2010
Change
Contribution to pre-tax earnings (millions)
$20
$27
($7)
3Q 2010 Performance – Earnings from the segment declined in the third quarter compared with the second, as lower earnings from land and lot sales were partially offset by increased income from single-family homebuilding operations.
Single-family homebuilding operations earned $16 million in the third quarter, compared with $14 million in the second quarter. These amounts include income from partnerships of $7 million in the third quarter and $3 million in the second quarter. Home sale closings declined 20 percent to 501 single-family homes. Margins on homes closed improved slightly due to mix.
Third quarter included gains of $4 million on the sale of land and lots, compared with $13 million in the second quarter.
4Q 2010 Outlook – Weyerhaeuser expects slightly lower earnings from single-family homebuilding operations in the fourth quarter, with additional single-family home closings offset by somewhat lower margins. Weyerhaeuser does not anticipate any significant land and lot sales in the fourth quarter.