FEDERAL WAY, Wash., July 24 (Reuters) - Timber company Weyerhaeuser Co. (NYSE:WY - news) on Tuesday reported a 43 percent decrease in second-quarter earnings due to a continuing slump in lumber and paper products prices. The company, which has launched a $5.5 billion hostile takeover bid for smaller rival Willamette Industries Inc. (NYSE:WLL - news), said it earned $162 million, or 74 cents per share, before nonrecurring items. That compares with the $285 million, or $1.25 per share, the company earned a year earlier. Net sales fell 8 percent to $3.85 billion. After one-time items, Weyerhaeuser earned $171 million, or 78 cents per share, compared to the $203 million, or 89 cents, it earned a year ago. The results beat the consensus analyst estimate of 72 cents per share compiled by research firm Thomson Financial/First Call. Analysts' estimates ranged from 71 cents to 74 cents per share, U.S. paper companies were hit hard during the second quarter by a combination of slumping product prices and spiraling energy costs and Weyerhaeuser was no exception. The company also said Tuesday it expects lumber harvest levels to be seasonally lower during the third quarter and hurt further by dry conditions in the Western United States. Still, the company's stock price has remained strong, in large part due to investor enthusiasm for a combination with Willamette, which has resisted Weyerhaeuser's overtures. Weyerhaeuser stock has outperformed the S&P 500 and paper indices in the quarter, rising 8.23 percent. The stock closed Monday at $58.05.