By John Gillie – The News Tribune
Federal Way’s Weyerhaeuser Co., which reported declining earnings for the third quarter today, says the market for its timber and wood products is weak at home and softening overseas even in such relatively robust markets as China.
The company predicted lower earnings in the fourth quarter as the price of logs declines and the costs of operating escalates during the fall and early winter because of deteriorating weather.
The forest products company reported earning of $66 million or 12 cents a share excluding special items. That compares with $81 million in the third quarter of last year on the same basis.
If one-time items are included, the company made $157 million, or 29 cents a share, in the third quarter of 2012 compared with $1.6 billion in the same quarter in 2010.
The 2010 third quarter results were inflated by $1.035 billion in adjustments made to its income statement by the company’s conversion to a real estate investment trust last year.
“All of our businesses faced challenging markets in the third quarter as the U.S. housing market languished and we experienced a slowdown in demand from China,” said Weyerhaeuser Chief Executive Dan Fulton in a prepared statement.
“We remain focused on improving performance with today’s level of demand while being prepared to flex all of our operations as markets improve,” he said.
The company’s timber operations produced a $62 million pre-tax profit in the third quarter. That’s a $50 million decline from the second quarter as net sales dropped by $36 million as log prices fell.
In the wood products part of the company’s business, losses declined from $53 million in the second quarter to $43 million in the third quarter. Lower raw material costs were partially responsible for that improvement, said the company.
Weyerhaeuser’s cellulose fibers business saw a $55 million improvement in profitability during the quarter to $135 million. The company said maintenance outages were down and production was up compared with the second quarter.
And the company’s real estate division produced a $2 million profit improvement over the second quarter to $10 million. The Federal Way company closed sales on 508 homes in the third quarter, an 11 percent improvement over the second quarter.