Weyerhaeuser Company (WY) reported a net loss of $109 million or 52 cents per share for the fourth quarter of 2009, compared to a net loss of $209 million or 99 cents in the same quarter of 2008. However, the reported loss per share was more than the Zacks Consensus Estimate of a loss of 39 cents. Net sales were $1.5 billion, down from $1.8 billion in the fourth quarter of 2008.
 
For the full year of 2009, Weyerhaeuser reported a net loss of $545 million, or $2.58 per share, down from $1.2 billion or $5.57 per share in 2008. For the fiscal year 2009, the Zacks Consensus Estimate was a loss of $1.92, much below the reported loss per share. Net sales were $5.5 billion, down from $8.1 billion in the previous year.
 
Quarterly earnings from operations were lower primarily due to the company’s decision to defer additional harvest, lower sales of non-strategic timberlands and higher logging, trucking and road costs. These reductions were partially offset by an increase in log sales realizations. Losses related to international operations, excluding the pre-tax items noted above, were $6 million compared to $4 million in the third quarter.
 
Weyerhaeuser has almost halved its operating cost from $8,008 million in 2008 to $4,740 million in the current year. New opportunities together with strict cost control will add to the company’s profitability in future. Weyerhaeuser is eliminating several underperforming facilities and reducing costs. In addition to several closures undertaken in the recent past, the company announced that it is reviewing a range of alternatives for its fine paper business, which includes continuing or holding the business for a possible sale in the future.
 
However, Weyerhaeuser has witnessed many downtrends as it is highly related to the housing industry. The current global economic crisis has caused downturns in several markets, including the construction and the residential markets. Moreover, the industry in which the company operates is highly cyclical in nature.
 
Nevertheless, Weyerhaeuser is well positioned to increase its operating efficiencies and decrease manufacturing costs by reducing its use of energy. Thus, we reiterate our Neutral recommendation on the stock.
Read the full analyst report on “WY”
Zacks Investment Research