Weyerhaeuser cutting 1,500 corporate jobs, posts third consecutive quarterly loss

Struggling wood-products giant Weyerhaeuser said this morning it will cut 1,500 jobs at its Federal Way headquarters, as it moves toward being a smaller, more focused — and eventually, it hopes, more profitable — company.

The cuts will take place between now and the end of 2009, chief executive Dan Fulton said in a conference call with analysts.

His comments came as Weyerhaeuser reported a $96 million net loss for the second quarter, or 45 cents per share — wider than the Wall Street consensus of 23 cents per share.

About 2,500 people work at Weyerhaeuser's sleek, tree-ringed headquarters off I-5.

The U.S. housing slump has hit the company hard, both in its lumber and other building materials business and in its real-estate development segment. Weyerhaeuser took a $311 million pretax charge in the quarter to write down the value of its homebuilding and land-related charges, on top of a $56 million charge in the first quarter.

However, Fulton indicated that he plans to hold onto both those segments in anticipation of an eventual recovery, though he said one likely won't begin until late 2009 at the earliest.

Instead, Weyerhaeuser has spent the past two years unloading businesses deemed "noncore." Just Monday it closed the $6 billion sale of its containerboard and packaging business to International Paper; after taxes, that sale should generate proceeds of $4 billion to $4.5 billion, much of which will go to pay down Weyerhaeuser's $7 billion-plus in debt.

The company sold off its Australian operations last month, and has put its shipping and rail lines on the market. It also dissolved its Uruguayan joint venture, leading to a one-time after-tax gain of $101 million.

But Fulton characterized those sales, and other moves that might be down the road, as "fine-tuning the portfolio," and indicated that the company's plan now is to get as much out of its current businesses as possible.

He also hinted that the eventual conversion of Weyerhaeuser into a real estate investment trust, while not imminent, was still on the table. He told analysts on the conference call that, with the company smaller and more focused on its land-based businesses, it could choose "the right structure, for the right reasons, at the right time."

One bright spot in today's report was the pulp and liquid packaging board business, which saw higher market prices. Although those were more than offset by higher maintenance expenses and shipping and energy costs, the completion of most of the planned maintenance closures should mean "significantly higher" earnings from that segment going forward.

Weyerhaeuser also disclosed that it had earned $22 million in the first half of the year from leases and royalties on its mineral rights — largely due to oil and natural gas exploration on a tract of land it owns in Louisiana.

Weyerhaeuser shares closed down 60 cents, or 1.1 percent, at $53.96 today.

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com