RESOLUTION
DNS cache directive in the /etc/webalizer.conf file needs to be disabled.
DNSCache dns_cache.db
This is written in webalizer DNS.README file:
DNS lookups are made against DNSCache file containing IP addresses and resolved names. If the IP address is not found in the cache file, it will be left as an IP address. To make it happen, a cache file MUST be specified when the Webalizer is run, either using the -D command line switch, or a DNSCache configuration file keyword. If no cache file is specified, no attempts to perform DNS lookups will be made.
So, to switch off dns lookups the customer should comment out of the DNSCache directive from the webalizer.conf file."