Weyerhaeuser reports positive earnings in Q2
Thursday, August 05, 2010
Press release from the issuing company
Federal Way, Wash. - Weyerhaeuser Company today reported net earnings of $14 million for the second quarter, or 7 cents per diluted share, on net sales of $1.8 billion.
This compares with a net loss of $106 million, or 50 cents per share, on net sales from continuing operations of $1.4 billion for the same period last year.
SIGNIFICANT SECOND QUARTER 2010 AFTER-TAX ITEMS
SIGNIFICANT SECOND QUARTER 2009 AFTER-TAX ITEMS
Excluding these items, the company's net loss was $125 million, or 59 cents per share, in the second quarter of 2009.
"In the second quarter we returned to profitability and all businesses were cash positive from operations," said Dan Fulton, president and chief executive officer. "I'm encouraged by our ability to profitably manage operations in an uncertain climate and with the lack of a sustained housing recovery. On July 11, we announced the final major milestone in our plan to become a REIT by declaring our special dividend. We look forward to the benefits that the REIT structure will bring to our shareholders."
SUMMARY OF SECOND QUARTER FINANCIAL HIGHLIGHTS
SEGMENT RESULTS FOR SECOND QUARTER
2Q 2010 Performance - The segment's earnings declined in the second quarter compared to the first, as lower earnings from disposition of non-strategic timberlands were partially offset by increased earnings from operations.
Second quarter included pre-tax gains of $14 million from disposition of non-strategic timberlands, compared to $31 million in the first quarter. Earnings from operations increased due to improved log price realizations, primarily in the west. This increase was partially offset by additional silviculture spending and seasonally higher road expenses for US operations. Losses related to international operations were $4 million in the second quarter, unchanged from first quarter levels. Weyerhaeuser continues to defer timber harvest.
3Q 2010 Outlook - Excluding the disposition of non-strategic timberlands, Weyerhaeuser expects third quarter operating earnings from the segment to be lower than second quarter. The company expects lower log prices and seasonally higher silviculture costs.
2Q 2010 Performance - Excluding the pre-tax items noted below, the segment's results improved by $52 million, resulting in a significantly smaller loss in the second quarter.
Although second quarter market conditions were extremely volatile, quarterly average sales realizations improved across nearly all product lines in the second quarter compared to the first. Sales volumes for most products increased moderately compared to very low first quarter levels. These improvements were partially offset by higher log costs.
Market conditions deteriorated substantially beginning in mid-May. Sales realizations for lumber and oriented strand board declined sharply. The company also experienced a considerable drop in sales volumes for engineered wood products. The segment reduced operating rates significantly in the latter half of the quarter to match lower market demand.
3Q 2010 Outlook - Weyerhaeuser expects a significantly larger loss from the segment in the third quarter compared to the second quarter. The company expects average price realizations for lumber and oriented strand board to drop below first quarter levels.
2Q 2010 Performance - The segment's earnings improved substantially in the second quarter compared to the first due to significantly higher average price realizations. Energy costs also declined. As in the first quarter, the segment incurred significant costs associated with planned annual maintenance, with outages at three mills compared to two in the first quarter.
3Q 2010 Outlook - Weyerhaeuser expects third quarter earnings from the segment to improve substantially compared to the second quarter. As no annual maintenance outages are scheduled for the third quarter, the company anticipates lower maintenance costs and improved production. Average pulp price realizations are expected to increase from second quarter levels.
2Q 2010 Performance - Second quarter earnings were comparable to first quarter, as a decline in sales of partnership interests was offset by higher earnings from single-family home building operations and increased land and lot sales.
Second quarter included earnings from single-family homebuilding operations of $14 million, compared to a loss of $5 million in the first quarter. Second quarter also included gains of $13 million on the sale of land and lots, compared to gains of $3 million in the first quarter. First quarter included gains of $33 million on the sale of two partnership interests.
Homebuilding operations closed 625 single-family homes in the second quarter, a 59 percent increase from first quarter. Margins on single-family homes closed also improved.
3Q 2010 Outlook - Weyerhaeuser expects breakeven results from single-family homebuilding operations in the third quarter. The company expects fewer single-family home closings and slightly lower margins. Weyerhaeuser does not anticipate any significant land, lot or partnership sales in the third quarter.
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