Weyerhaeuser reports 3Q net earnings rose by $512 million

Москва. 25 октября. /Lesprom Network/. Weyerhaeuser Company today reported third quarter net earnings of $594 million, or $2.45 per diluted share, on net sales of $5.8 billion. This compares with $82 million, or 37 cents per diluted share, on net sales of $5.2 billion for the third quarter of 2003.

Third quarter 2004 earnings include the following after-tax items:

A gain of $179 million, or 74 cents per diluted share, from a sale of timberlands in Georgia.

A gain of $16 million, or 7 cents per diluted share, from a tenure reallocation agreement with the British Columbia government.

A gain of $13 million, or 5 cents per diluted share, due to the reduction of the reserve for hardboard siding claims.

A charge of $7 million, or 3 cents per diluted share, related to the sale or closure of facilities.

Third quarter 2003 earnings included the following after-tax items:

A charge of $32 million, or 14 cents per diluted share, for closure of facilities;

A charge of $15 million, or 7 cents per diluted share, associated with the settlement of a class action linerboard antitrust lawsuit;

A charge of $15 million, or 7 cents per diluted share, for integration and restructuring activities.

Other significant third quarter financial matters include:

The company, including Real Estate and Related Assets, reduced outstanding debt by approximately $270 million to approximately $11.4 billion at the end of the quarter. In addition, cash and short-term investments increased by approximately $500 million in the third quarter due primarily to strong cash flows from operations and proceeds from the sale of timberlands in Georgia. The $1.2 billion balance of cash and short-term investments as of the end of the third quarter is largely expected to be applied to future debt repayment.

Capital spending, excluding Real Estate and Related Assets, for the first three quarters of 2004 was approximately $275 million.

“Our strong quarterly earnings reflect favorable market conditions and contributions from all our businesses,” said Steven R. Rogel, chairman, president and chief executive officer. “Our employees continue to do an outstanding job containing costs, increasing productivity and improving efficiency. While we expect to see normal seasonal downturns in the fourth quarter, we are well positioned in our markets.”

DISCUSSION AND OUTLOOK BY BUSINESS SEGMENT

TIMBERLANDS

Third quarter earnings include a $271 million pre-tax gain on the previously announced sale of timberlands in Georgia. Excluding this gain, earnings declined $22 million from the second quarter, reflecting a normal seasonal reduction in harvest activity in the West and abnormally wet weather in the South. Aside from disruption due to wet weather, hurricanes caused minimal damage to our timberlands. Prices for logs in both domestic and export markets increased slightly from the prior quarter.

Fourth quarter earnings are expected to be similar to third quarter, excluding the third quarter sale of timberlands in Georgia. 

WOOD PRODUCTS

Third quarter earnings of $362 million include a $20 million pre-tax gain from the tenure reallocation agreement with the British Columbia government, and a $20 million reduction in the reserve for hardboard siding claims. This compares to second quarter earnings of $448 million, which included a $16 million pre-tax charge from an adverse judgment in a lawsuit.

Housing starts remained high throughout the quarter, resulting in healthy demand for oriented strand board, plywood and lumber. Structural panel prices were volatile with average prices declining from the second quarter. In contrast, average prices for most lumber indicators were flat to slightly up from second quarter to third. The segment also benefited from earlier price increases in engineered lumber.

The segment incurred $31 million in countervailing and anti-dumping duties and related costs on Canadian softwood lumber the company sold into the United States in the third quarter. This compares to $34 million in the second quarter.

Fourth quarter earnings are expected to be lower than the third quarter, as lumber and structural panel prices decline from recent, very high levels.

PULP AND PAPER

Earnings increased during the quarter as uncoated free sheet paper prices improved across all product lines. Papergrade pulp prices increased during the quarter but have begun to decline. Fluff pulp prices improved early in the quarter and remained stable. Fine Paper prices strengthened throughout the quarter and are expected to continue to improve in the fourth quarter as a result of recent price increases.

Fourth quarter earnings are expected to be slightly lower than the third quarter – despite stable fluff pulp markets and increases in paper prices – due to weakening papergrade pulp markets and costs associated with scheduled maintenance downtime.

CONTAINERBOARD, PACKAGING AND RECYCLING

Earnings improved over second quarter levels due primarily to price increases for both containerboard and boxes, as well as slightly lower costs for old corrugated containers. Third quarter results include pre-tax charges of $12 million related to facility closures.

Customer demand for boxes is expected to remain healthy, but decline seasonally. The company expects higher fourth quarter earnings due primarily to increasing prices.

REAL ESTATE AND RELATED ASSETS

Third quarter earnings benefited from increased single-family home closings and higher margins, and from the sale of a multi-family site that generated a pre-tax gain of $18 million. The pace of single-family home sales during the third quarter declined seasonally compared to the prior quarter. However, the backlog of homes sold, but not closed, is approximately seven months.

Fourth quarter earnings are expected to modestly exceed the third quarter because of increased closing volume and strong margins.

Weyerhaeuser Company (NYSE: WY), one of the world's largest integrated forest products companies, was incorporated in 1900. In 2003, sales were $19.9 billion. It has offices or operations in 18 countries, with customers worldwide. Weyerhaeuser is principally engaged in the growing and harvesting of timber; the manufacture, distribution and sale of forest products; and real estate construction, development and related activities.