Rayonier Inc., a U.S. forestry company, cut its dividend and restated quarterly earnings after an internal review found some timberlands incorrectly included in inventory. The stock plunged the most in almost six years.
The company restated first- and second-quarter earnings after finding “material weakness” in internal controls, Jacksonville, Florida-based Rayonier said Monday in a third-quarter earnings statement. Some timber listed as salable was in “restricted, environmentally sensitive or economically inaccessible areas,” Rayonier said in the statement.
David Nunes, who became chief executive officer in June, initiated an operational and strategic review following the spinoff this year of the company’s performance-fibers business. Rayonier said it plans to reduce its reliance on the sale of “non-strategic” timberlands and instead focus on cash flow from its operations, which will be harvested at a slower, more sustainable pace.
“While we view Rayonier’s disclosures this morning as troubling, we note that these irregularities have been identified as quickly as one could reasonably expect,” Paul Quinn, a Vancouver-based analyst at RBC Capital Markets, said Monday in a note to clients.
Rayonier said it doesn’t expect the internal review and restatement to have an “adverse impact” on the availability of borrowings under current credit facilities. The stock slid 15 percent to close at $28.82 in New York, the biggest decline since December 2008.
In a separate statement, Rayonier said it appointed Douglas Long to oversee U.S. forest operations. It said Lynn Wilson, executive vice president of forest resources, left the company “to pursue other opportunities.”
Former Rayonier CEO Paul Boynton, now chief executive officer of Rayonier Advanced Materials, wasn’t available to comment, Rayonier Advanced Materials spokesman Russell Schweiss said Monday by phone. No one answered the phone at Wilson’s office.
The fourth-quarter dividend will be 25 cents a share, down from 30 cents for the prior quarter.
“Reducing our dividend will provide the necessary balance between our near-term financial goals and long-term shareholder interests,” Nunes said in the earnings statement.
The company said its revised merchantable timber inventory at the end of 2013 is 10 percent lower than previously reported. Rayonier sees its output in the U.S. Pacific Northwest at about 1.3 million tons of timber a year, down from an average of about 1.8 million tons from 2004 through 2013.
In June, the company spun off its business that makes specialty wood pulp used in cigarette filters, creating Rayonier Advanced Materials.
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