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Weyerhaeuser Declines on Performance at Lumber Unit

Weyerhaeuser Co. (WY), a U.S. lumber producer and home builder, fell the most in nine months after profit from land sales in the fourth quarter overshadowed weaker-than-expected earnings from wood products.

Weyerhaeuser declined 2.3 percent to $30.77 at 12:58 p.m. in New York. The Federal Way, Washington-based company’s shares earlier dropped 4.9 percent, the most intraday since April 23.

Fourth-quarter net income more than doubled to $143 million, or 26 cents a share, helped by $65 million of earnings from so-called non-strategic land sales, the company said today in a statement. Weyerhaeuser’s per-share earnings topped the 20- cent average of eight estimates compiled by Bloomberg.

The shares are “down because the beat was generated by lot and land sales in the real estate segment that can be very volatile from quarter to quarter and this quarter were unusually high,” Joshua Zaret, a New York-based analyst at Longbow Research LLC, said today in an e-mail. “Higher raw material costs in wood products also constrained earnings.”

Earnings from lumber were disappointing, even as prices for building materials have risen as the U.S. housing market recovers, Mark Connelly, a New York-based analyst at Credit Agricole Securities USA, said today in an e-mail.

“All of the outperformance was in land sales,” Connelly said. “You have to take them out to see performance versus expectations. So today’s results were ‘just ok.’”

Fourth-quarter sales rose 24 percent to $2 billion from a year earlier.

Weyerhaeuser expects the housing recovery to continue this year, Chief Executive Officer Dan Fulton said today on a conference call.

“Market conditions are much improved from one year ago, though today’s level of housing starts is still low by historic standards, but we are at last on a clear path to recovery to long-term trend levels,” Fulton said.

Net income in the fourth quarter of 2011 was $65 million, or 12 cents a share.

To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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