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Weyerhaeuser Says Pace of U.S. Housing Recovery Uncertain After Tax Credit
Weyerhaeuser Co., a home builder and the second-largest owner of U.S. timberlands, said the timing of a recovery in demand for new single-family housing remains “uncertain.”
Sales of new homes are sagging following the expiration this year of a federal incentive, executives of the Federal Way, Washington-based company said today on a conference call after reporting second-quarter earnings.
“Last quarter, I noted that the pace of the housing recovery remained uncertain and this continues to be true three months later,” Chief Executive Officer Dan Fulton said on the call. “This has been especially evident in the market retreat following the expiration of the federal homebuyer tax credit at the end of April.”
The annual pace of U.S. new-home sales in May was the lowest in data going back to 1963, figures from the Commerce Department showed. The rate in June was the second-lowest.
“Our housing markets remain unsettled with low consumer confidence and high unemployment outweighing attractive mortgage and record affordability,” said Larry Burrows, the head of Weyerhaeuser’s real estate unit. “The second quarter is traditionally the height of the selling season when we build a backlog of homes to be closed later in the year. This momentum did not materialize in the quarter.”
Weyerhaeuser fell 21 cents, or 1.3 percent, to $16.28 at 12:21 p.m. in New York Stock Exchange composite trading. The shares declined 62 percent this year through yesterday.
REIT Conversion
Weyerhaeuser, the second-largest North American lumber producer, is preparing to become a timber real estate trust to reduce taxes on its investments in timberland. Earlier this month, the company declared a $5.6 billion special dividend, part of the process of becoming a REIT.
The company reported second-quarter net income was $14 million, or 7 cents a share, compared with a year-earlier loss of $106 million, or 50 cents. Profit excluding some one-time items was 20 cents a share, exceeding the 13-cent average estimate of 15 analysts surveyed by Bloomberg.
“I’m encouraged by our ability to profitably manage operations in an uncertain economic climate without a sustained housing recovery,” Fulton said on the call.
Weyerhaeuser is the second-largest owner of U.S. timberland after Seattle-based Plum Creek Timber Co. Weyerhaeuser trailed Vancouver-based West Fraser Timber Co. in North American softwood-lumber output in 2009, according to a Weyerhaeuser spokesman.
To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net.
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