Assessing the Landscape of Forest Products Leaders

How did the big guys in various facets of the forest products world fare in the 4th quarter of 2023? A weather report might sound like “mixed precipitation with bursts of sunshine”.

For instance, Weyerhaeuser, the country’s largest private forest landowner reported flat sales for the 4th quarter of 2023, and that for the whole year, they dropped by 25%. Moving forward, the company’s President Devin W. Stockfish said, “Entering 2024, we are encouraged by resiliency in the housing market and maintain a favorable longer-term outlook for the demand fundamentals that will drive growth for our businesses”.

Meanwhile, International Paper’s results reflected difficult pulp and paper trends. The company recorded a net loss of $284 million for 2023 with most of that loss being recorded in the 4th quarter. The company is adjusting its business to declining demand throughout much of the paper industry.

Another company that is encountering problems is Enviva, the largest biomass company with pellet manufacturing operations throughout the Southeast.

Enviva missed an interest payment on its $750 million senior notes in January due to a misplaced bet on a pellet pricing contract. The bond ratings agency Fitch downgraded Enviva’s credit rating three days later.

Another large American timber landowner, the Rayonier REIT, also showed slightly declining revenue in 2023. “We are pleased with our overall financial performance for the full year 2023, particularly in light of the challenging and uncertain market conditions that we faced throughout the year,” said David Nunes, CEO. “Full-year 2023 Adjusted EBITDA of $296.5 million declined 6% versus the prior year, as lower results in our Timber segments were largely offset by a significantly higher contribution from our Real Estate segment,” Nunes said the company benefited from increased real estate sales.

One large client of forest products companies showed strong results in the quarter.

Lennar Corporation, the second largest home builder presented strong results for the 4th quarter with new orders increasing 32% of 17,366 homes and the backlog of orders standing at $5.6 billion.

Stuart Miller, Executive Chairman, said ‘Higher interest rates tested homebuilder sentiment, although purchases remained responsive to incentives that enabled affordability.”