Weyerhauser Suffers Double Housing Whammy - Housing Tracker

Quote of the Day

“Hang in there, guys.” – Wall Street analyst Stephen East of Pali Research, signing off of a conference call with Masco Corp. (MAS) executives last week. (Crain’s Detroit Business, May 5th)

Housing-Related Industries

Lafarge First-Quarter Net Falls 59% on U.S. Slump, 2007 Gains. “Lafarge SA, the world's biggest cement maker, said first-quarter profit fell 59% on year-earlier disposal gains and a construction slowdown in the U.S. Net income declined to €150 million ($232M), or €0.79/share, from €362M, or €2.07/share, a year earlier, when the Paris-based company booked disposal gains. Analysts… predicted profit of €122M. Sales rose 8% to €4 billion, Lafarge said.” (Bloomberg, May 7th)

Akzo Q1 Profit Down, Says U.S. Deco Paints Soft. “Dutch chemical group Akzo Nobel reported a less-than-expected 2% drop in first-quarter core profit on Wednesday, but warned U.S. market conditions in decorative paints remained soft, hitting its shares 3%. Akzo: "In the U.S., the trading environment continued to be soft," the world's biggest paint company said. Petercam analyst Jan van den Bossche said: "Indeed, it should be clear by now that the U.S. market will continue to decline in 2008," adding he expected market conditions in continental Europe to worsen.” (Portfolio.com, May 7th)

Council Approves Plan For New Lowe's Near Maize. “Kansas: Wichita City Council members this morning cleared the way for a new Lowe's store near Maize Road and 29th North by dedicating 54 acres of land for the construction of wetland preserve and a storm water detention pond. The Lowe's is expected to open in the fall.” (Wichita Eagle, May 6th)

Chain Link--News from the Supply Side. “Much of Weyerhauser’s (WY) Q1 loss was related to impairments of its real estate holdings as well as the costs of shutting down some of its wood products capacity. Conspicuously, there was no specific mention of impairments [from] LandSource, the land development company Weyerhaeuser invested in with McFarlane Partners, [now] on the verge of bankruptcy… Weyerhaeuser gained $721 million by selling off its fine paper business [and] is expected to sell its containerboard packaging and recycling assets in Q3… Could the company's home-building companies be next? Recently-named CEO of Weyerhaeuser Real Estate Company Larry Burrows: “The spring selling season has not materialized.” (Big Builder Online, May 6th)

Embattled Shermag Seeks Creditor Protection. “Beleaguered furniture maker Shermag Inc. says it faces a liquidity crisis and won't be able to survive without court-ordered protection from its creditors... The company's shares plunged more than 71% on the news... Shermag said in a court filing yesterday that the sharp rise in the value of the Canadian dollar, competition from lower-priced importers and a weak U.S. furniture market are the three key challenges it has been struggling with over the past few years.” (Globe and Mail, May 6th)

Less Remodeling And Fewer New Homes Buffet Masco's Earnings. “Masco Corp. (MAS), maker of home fixtures and furnishings posted dismal first-quarter earnings last week, with a net income of $2 million or $0.01/share on net sales of $2.44 billion, down from $143M— $0.37/share — for Q1’07.That's a drop of $141 million, noteworthy even in today's moribund economy. Masco's stock closed at $18.60 on Friday. Its 52-week high was $30.99 on May 8 and its 52-week low was $17.78 on March 17. Lower housing starts coupled with homeowner insecurity mean Masco products are taking a hit on two fronts, Chairman Richard Manoogian said.” (Crain’s Chicago Business, May 5th)

Weyerhauser Loses $148 Million. “Weyerhaeuser’s Real Estate Co., or WRECO subsidiary, which includes Pardee, Maracay, and Winchester Homes, qualifies as one of the largest homebuilders in the country. As such, Weyerhaeuser is suffering many of the same challenges as other major builders. Its first-quarter closings slipped 13.5% year-over-year, to 844. Cancellation rates fell 14 percentage points from Q4, to 26%, but that figure still stands 10 points above WRECO's cancellation rate in Q1’07. With new orders down 45%, to 926 sales, the company expects similar results in Q2.” (Builder Online, May 4th)

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