Weyerhaeuser Posts Quarterly Profit, May Sell Unit
Weyerhaeuser posted a first-quarter profit on Friday versus a year-ago loss, boosted by a gain from splitting off its fine paper business, and said it may sell its containerboard unit, sparking a 7% jump in its stock.
The No. 2 U.S. timber and forest products company by sales said it is contemplating a sale or link-up of its containerboard, packaging and recycling business.
The company said its board of directors has authorized a process to consider strategic options for the containerboard business, which could also include continuing to operate the unit.
The Federal Way, Wash.-based company said net income was $755 million, or $3.22 a share, compared with a net loss of $576 million, or $2.34 a share, in the year-ago quarter.
Excluding items, the company earned $48 million, or 20 cents a share, in the first quarter of 2007.
Analysts, on average, had looked for earnings of 33 cents a share, according to Reuters Estimates.
In August of last year, Weyerhaeuser agreed to merge its fine paper business with Domtar in a deal worth $3.3 billion.
Weyerhaeuser has been cutting jobs, selling businesses and closing mills as part of a restructuring effort to deal with high energy costs and sluggish demand.
It has also been reducing production amid a U.S. housing downturn and has shuttered and curtailed operations at several operations because of weak demand for wood.
Quarterly revenue fell to $3.89 billion from $4.45 billion.
"As we look to the second quarter, we see continued challenges in many of our markets, especially in wood products where we expect to see a weaker than normal increase in seasonal demand," said Chief Executive Steven Rogel in a statement.
According to its Web site, the company operates 43 million acres (16 million hectares) of forests in North America, Australia, New Zealand and Uruguay and makes various lumber and building products.
On a sequential basis, Weyerhaeuser said it expects slightly lower earnings from its timberlands segment in the second quarter as log supplies increase seasonally and housing starts remain weak.
Sales of nonstrategic timberlands also will be lower in the second quarter due to the timing of transaction closings, said the company in a statement.
Prior to Friday, shares of Weyerhaeuser had fallen more than 9% in the last three months, weighing down the Standard & Poor's Paper and Forest Products Index that has remained almost flat, over the same period.