Weyerhaeuser earnings fall 89.3 percent in Q2
Weyerhaeuser reported second-quarter net earnings of $32 million, down 89.3 percent compared with $298 million in the same period last year.
The company had sales of $4.3 billion for the second quarter, down 12.2 percent from $4.9 billion last year.
The forest products giant took several charges in the quarter, including $30 million for impairments in the company’s wood products and real estate segments, closures of wood products facilities and the sale of Canadian distribution facilities. The company also took a $27 million charge related to extinguishment of debt and a $25 million charge for legal settlements and a contract termination.
Second-quarter 2006 results have been recast to reflect the discontinued operations, the company noted. Those discontinued operations include Weyerhaeuser’s fine paper business and related assets.
Other reasons for lower sales and earnings include lower prices on lumber, plywood and oriented strand board; increased prices for cellulose fibers; and declining margins in the company’s real estate assets.
“In response to continued challenging market conditions, we managed production and costs throughout the second quarter,” said Steven Rogel, chairman, president and CEO of Weyerhaeuser. “In the coming quarter, we will look for ways to further reduce costs and improve performance as we face challenges produced by the continuing sluggish housing market.”
Weyerhaeuser is one of the world’s largest forest products companies with 2006 sales of $21.9 billion.
The grass is sometimes greener
An increasing number of consumers are shunning high-powered gas lawn mowers in favor of manual or “reel” mowers — which are both reasonably priced and kind to the environment, according to some manufacturers and distributors.
While the human-powered reel mowers have their drawbacks — gas-powered mowers get the job done faster, for instance — reel mowers are gaining traction in the market among consumers with small lawns and an environmental conscience. According to Teri McClain, inside sales administrator for American Lawn Mower, based in Shelbyville, Ind., sales of reel mowers nationwide have been increasing steadily over the last 15 years, and in the last five years have jumped from 250,000 units to 300,000 units sold annually.
Many new homes in the last decade have been built on one-third-acre lots with smaller lawns, allowing homeowners to mow their yards in less time, which for some makes reel mowers a practical choice, she said. In addition, Americans are encouraged to engage in cardiovascular activities, and pushing a reel mower can burn about 500 calories an hour, according to McClain, who added, “It’s a lot cheaper than a gym membership.”
Do it Best currently has six reel mower skus in its warehouses — representing 18 percent of its total mower skus and ranging in price from $69 to $200. According to Jeff Ridgeway, the company’s merchandise manager for outdoor power equipment, member purchases of reel mowers were up more than 30 percent for fiscal year 2007, which ended in June.
Several factors contribute to the increase, Ridgeway said. “People are building bigger homes on smaller lots which means less lawn; they’re concerned about the environment and the high cost of gas; and we’ve heard some parents find reel mowers to be a good source of exercise for their children — it gets them away from their favorite video game for awhile.”
In addition, Ridgeway explained that reel mowers can be easier to use in contemporary outdoor living spaces, which tend to involve more elements. “They’re light and maneuverable and don’t throw grass everywhere,” he said.
True Value stocks nine reel mowers, compared to 15 gas mowers and three electric models. The units have suggested retails of $69.99 to $219.99, but seasonal global product merchant Steve Clymer doesn’t believe price is a determining factor in whether or not a consumer buys a reel mower as opposed to a gas or electric powered unit. “Features of the unit and the size of the yard are the key elements,” he said.
Although Clymer has not seen an increase in unit sales of reel mowers over the last couple of years, he does say that environmentally friendly products — often classified as “green” products — are steadily gaining in popularity.
“Push reel mowers have an impact in this category, but the overall impact is minimal when compared to other environmentally friendly products,” he said. “Most consumers, when it comes to mowers, are concerned more about getting the job done quickly, and whatever mower has the most attractive features for the price ends up being what they purchase most of the time.”
Lars Hundley founded clearairgardening.com, a Web site featuring “environmentally friendly lawn and garden supplies,” almost a decade ago and has seen double digit growth in reel mower sales each year — with the biggest increases coming in the last couple of years.
“The organic trend is really taking off, but we’re also seeing interest from mainstream consumers,” said Hundley, whose site offers eight reel mower models ranging in price from $119 to $200. He cited the trend toward bigger houses on smaller lots, adding, “If you have a 20 by 20 lawn area, you don’t need a big power mower to take care of that.”
Hundley also said that reel mowers appeal to women, who don’t like the “noise or hassle of starting up a power mower.” They are lighter in weight — 20 to 30 pounds, as opposed to 90 pounds or more for a power mower — and “there’s basically nothing that can go wrong with them because they’re so basic,” he said.
Kingfisher agrees to sale, leaseback of DC
Kingfisher, British parent of B&Q and Castorama retail home improvement stores, has agreed to a 73 million pound (US$148 million) property sale and leaseback of its 875,000-square-foot national distribution center in Worksop, Nottinghamshire.
The deal, with Mutual Finance, will allow the DC to be leased back at an open market rent, the company said. The company will receive a pre-tax gain of 40 million pounds (US$81.2 million).
Kingfisher will use the proceeds to repay existing debt and invest in its worldwide store opening plans.
“This is consistent with our policy of recycling property when economically attractive, with the aim of creating value for shareholders,” said Duncan Tatton-Brown, group finance director for Kingfisher.