Weyerhaeuser Reports Q2 Net Earnings of $420 Million, on Net Sales of $5.8 Billion
Press release from the issuing company
FEDERAL WAY, Wash., July 21 -- Weyerhaeuser Company today reported second quarter net earnings of $420 million, or $1.71 per diluted share, on net sales of $5.8 billion. This compares with $369 million, or $1.57 per diluted share, on net sales of $5.7 billion for the second quarter of 2004.
Second quarter 2005 earnings include the following after-tax items:
-- A gain of $110 million, or 45 cents per diluted share, related to the sale of the company's operations in coastal British Columbia.
-- A charge of $44 million, or 18 cents per diluted share, related to a planned repatriation of $1.1 billion of eligible Canadian earnings under the provisions of the American Jobs Creation Act of 2004.
-- A gain of $37 million, or 15 cents per diluted share, related to the recognition of a deferred gain from previous timberlands sales.
-- A charge of $12 million, or 5 cents per diluted share, related to litigation.
Second quarter 2004 earnings included the following after-tax items:
-- A charge of $14 million, or 6 cents per diluted share, for early extinguishment of debt.
-- A charge of $10 million, or 4 cents per diluted share, for an adverse judgment in a lawsuit.
"This year's overall results are good, despite conditions that were more difficult than second quarter of last year," said Steven R. Rogel, chairman, president and chief executive officer. "We're pleased with this short-term performance, but we also recognize that many of our businesses face significant long-term challenges. We remain focused on finding ways to enhance the earnings performance of our entire portfolio, regardless of market conditions."
Second quarter earnings increased slightly from the first quarter due primarily to higher domestic log prices. Export prices were flat quarter to quarter. Fee harvest was down slightly.
Third quarter earnings are expected to be slightly lower than the second quarter, due to reduced harvest and sales activity from normal seasonal shutdowns. Export prices are expected to be modestly higher, but not enough to offset anticipated declines in domestic log prices.
Earnings increased significantly from first quarter due primarily to higher shipment volumes for all core product lines. The overall effect of price on earnings quarter to quarter was minor, with higher prices for engineered wood products offset by lower prices in oriented strand board and plywood. Average lumber prices realized were flat. Second quarter earnings included $18 million in pre-tax charges related to litigation.
The segment incurred $27 million in countervailing and anti-dumping duties and related costs on Canadian softwood lumber the company sold into the United States in the second quarter, compared with $22 million in the first quarter.
Prices for commodity building products are expected to drop seasonally in the third quarter. Shipment volumes are expected to be flat. As a result, third quarter earnings are expected to decline to a level closer to the first quarter.
Segment earnings declined slightly from first quarter, due primarily to scheduled maintenance downtime and higher chip, chemical and freight costs.
Fluff pulp pricing improved during the quarter. Oversupply and weak demand in Europe resulted in lower papergrade pulp prices and shipment volumes. Fine paper prices improved in all major product lines and sales volume increased modestly.
Price declines are expected for papergrade pulp and fine paper product lines in the coming months. However, the company expects that minimal scheduled maintenance downtime will result in lower costs and higher third quarter earnings.
Earnings increased over first quarter levels primarily due to a seasonal increase in box shipments and lower manufacturing costs at the containerboard mills. Lower manufacturing costs were due primarily to increased production in the second quarter when compared to first quarter. The first quarter included a pre-tax charge of $12 million associated with the settlement of a linerboard antitrust lawsuit and $4 million for costs associated with the closure of a packaging facility in Bowling Green, Ky.
The company expects third quarter earnings to decrease as both containerboard and box prices are currently under pressure.
Earnings declined as expected from the prior quarter as contributions from land sales declined $36 million. Single-family home closings and average prices increased. The backlog of homes sold, but not closed, represents approximately six months' sales.
The company's key real estate markets continue to be strong and Weyerhaeuser expects single-family closings to remain steady in the third quarter.
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