SEATTLE – Weyerhaeuser Co. posted a steep fourth-quarter loss Friday on hefty charges as company executives conceded that the forest products giant is grappling with difficult business conditions and big industry changes.
Chief executive Steve Rogel sought to reassure investors that the company was determined to respond aggressively, and warned that it wouldn’t hesitate to close or sell operations that don’t make the cut.
“We know what we must do to make Weyerhaeuser a stronger company,” Rogel said in a conference call with analysts. “We understand the need to improve shareholder returns and the urgency on which we must act.”
Weyerhaeuser shares gained 25 cents to close at $67.50 Friday on the New York Stock Exchange as investors took heart that the company’s earnings, minus one-time items, beat Wall Street expectations.
The Federal Way-based company lost $211 million, or 86 cents a share, during the October-December quarter, compared with a profit of $199 million, or 82 cents a share, in the same period in 2004. Revenue, however, grew 4 percent to $5.9 billion from $5.7 billion.
Weyerhaeuser’s total charges of $505 million, or $2.05 a share, in the latest quarter were related to the closure of some facilities, asset impairment, a litigation settlement and early debt retirement.
Those charges were partially offset by one-time gains of $62 million, or 25 cents a share, on an asset sale and an accounting change.
Without the one-time items, Weyerhaeuser would have earned 94 cents a share for the most recent quarter, beating Wall Street estimates.
Analysts polled by Thomson Financial were expecting earnings of 74 cents a share on revenue of $5.7 billion.
Analyst Steve Chercover with D.A. Davidson said the company is dealing with less demand for its products. One issue is that more documents are available electronically instead of on paper. Another problem is that more products are being manufactured overseas, reducing the need for the packaging Weyerhaeuser creates in the United States.
Chercover said the company appeared to be moving aggressively in the right direction, and he lauded the company for not hesitating to close money-losing operations.
Last quarter, Weyerhaeuser announced plans to close a 50-year-old pulp mill in Cosmopolis and an 81-year-old sawmill in Aberdeen.
“Weyerhaeuser, maybe more than some of the companies in the industry, is really focused on generating value for the shareholders, and you can’t generate value for shareholders if you’re losing money,” Chercover said.
Weyerhaeuser said it expected operational improvements to pay off this year, but executives said the company would continue its overhaul.
Rogel said he couldn’t give a time frame for when it will be complete.
“This is a continuous process,” he said.
For the full year, Weyerhaeuser’s earnings fell 44 percent to $733 million, or $2.98 a share, from 2004’s profit of $1.3 billion, or $5.43 a share. Annual revenue edged up 3 percent to $22.6 billion from $21.9 billion.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
