AP Manufacturing Writer
New York — Weyerhaeuser Co.‘s first-quarter loss widened as a near-dormant housing market strangled sales of its lumber and panels.
However, excluding costs for mill shutdowns and lower real estate values, results beat Wall Street expectations and Weyerhaeuser expected closings on homes to rise “slightly” in the second quarter, but at lower average prices.
Lumber, pulp and wood products companies are struggling with a three-year slump in housing. With relatively few homes being built, there is little demand for two-by-fours, plywood decking and other wood products that generate revenue for companies like Weyerhaeuser.
New home sales have plunged 74 percent from their peak in July 2005, hitting a record low in January. Since then they have crept up slightly but nowhere near enough to yield a profit for the Federal Way, Wash., company.
Weyerhaeuser posted a net loss of $264 million compared with a loss of $148 million a year earlier. Sales fell to $1.28 billion from $2.04 billion. Analysts polled by Thomson Reuters were expecting a loss of 80 cents per share on revenue of $1.65 billion.
Timber earnings fell 64 percent to $40 million on lower volumes and prices, while earnings of pulp, which is used to make paper and absorbent tissue, dropped 45 percent as selling prices declined.
The loss from homebuilding deepened to $96 million from $74 million in the first quarter of 2008, due to fewer home closings.
Weyerhaeuser’s wood products segment posted pretax earnings of $266 million, stronger than the year-earlier level of $277 million as lower costs, reduced expenses and reduced capacity offset weaker volumes and reduced prices. Sales of wood products fell to $542 million from $966 million.
“The recession hit us hard,” said Dan Fulton, the company’s chief executive. “Declining revenues during the quarter reflect reduced volume and depressed prices across all of our product lines.”
During the first quarter, the company permanently closed or curtailed 10 wood products mills. That is just more than 15 percent of the facilities it was running last year, according to Weyerhaeuser’s 2008 annual report, which lists 65 wood products facilities.
Those first-quarter actions bring to more than 30 the total number of mills in its wood products business closed or sold since the beginning of 2005.
Besides the mill closures, Weyerhaeuser also shut five distribution centers in the first quarter. And the company is running nearly all of its wood mills at reduced rates.