Weyerhaeuser Reports Sevenfold Increase in Third-Quarter Haul vs. Last Year
Oct. 23—Weyerhaeuser Co. made seven times more money last quarter than it did a year ago.
The $594 million third-quarter profit is the biggest ever for the company when a $179 million sale of timberlands is included.
When that and other one-time gains are taken out, the forest products company recorded the second-highest profit in its history.
Whatever the math, executives at the Federal Way-based company were eager to point out significant improvements in many of their business segments during a conference call Friday with analysts and investors.
"All businesses contributed to our third-quarter results," CEO Steve Rogel said during the call. "We have created meaningful, permanent changes that have made us more efficient."
For the same quarter last year, the company reported earnings of $82 million. (In the second quarter this year, Weyerhaeuser reported a profit of $369 million.)
Much of the jump can be attributed to price increases for many of Weyerhaeuser's core products, Rogel said.
Prices for key segments such as paper and wood have been depressed for several years. But demand for lumber, copy paper and boxes is increasing — and taking prices along.
The company's sales increased 13 percent in the third quarter from $5.18 billion a year ago to $5.85 billion this year.
Executives at Weyerhaeuser were excited to talk about improving sales in containerboard — paper that is turned into boxes.
"Corrugated demand in the United States has now experienced four quarters of year-over-year improvements after four years of falling demand," said Jim Keller, senior vice president for container board, packaging and recycling. "We are finally in a growth environment."
During the last six years, Weyerhaeuser closed five containerboard machines and optimized production at 14 packaging facilities in an effort to increase the efficiency of the company and drive down costs. "It's an area that the company will need to be focused on," said Paul Latta, an analyst with McAdams Wright Ragen in Seattle.
Containerboard is a leading indicator of both the paper market and the economy as a whole. Much of the world's goods are shipped in boxes made with containerboard, and an increase in demand for boxes shows that consumers are likely spending more money.
Though demand is strong, Weyerhaeuser isn't looking to buy or build more containerboard facilities, executives said. Instead, the company will continues to squeeze more production out of its existing plants.
Latta said the company needs to pay close attention to this market and take advantage of growing demand while it can.
Results for Weyerhaeuser's other businesses:
—Housing: The pace of single-family home sales during the third quarter declined seasonally. However, the backlog of homes sold but not closed is about seven months.
—Timberlands: Excluding the sale of the timberlands in Georgia, earnings in this segment declined $22 million because of a seasonal reduction in the log harvest and the wet weather and hurricanes in the South.
—Wood products: Strong housing starts meant strong demand for oriented strand board — a structural building product.
—Pulp and paper: Paper prices increased for all products.
Weyerhaeuser shares were down 84 cents Friday to close at $60.30. For the year, shares are down nearly 6 percent.
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