Spokane -- 1/24/01 - Potlatch Corporation (NYSE:PCH) today reported a net loss for the fourth quarter of 2000, due in large part to poor wood products markets and substantially higher energy costs at most company facilities.
Shutdowns at several facilities during the quarter also negatively affected earnings. Market-related issues resulted in extended holiday shutdowns at the company's two Minnesota coated paper mills, while completion of capital projects caused downtime at the Arkansas pulp mill and an oriented strand board mill in Minnesota.
The company incurred a net loss for the fourth quarter of 2000 of $15.7 million or $.55 per diluted common share, compared to fourth quarter 1999 net earnings of $8.4 million or $.29 per diluted common share. Net sales were $419.7 million, compared with $432.7 million in the fourth quarter of 1999.
The full year 2000 net loss totaled $4.9 million or $.17 per diluted common share, before restructuring and mill closure charges totaling $28.3 million after taxes. Including the charges, the company had a net loss of $33.2 million or $1.16 per diluted common share. Net earnings for 1999 were $40.9 million or $1.41 per diluted common share, after a nonrecurring charge of $4.6 million taken in the first quarter. Net sales were $1.81 billion, equal to net sales in 1999. The net sales figures for 2000 and 1999, as well as the fourth quarter of 1999, have been restated to reflect the reclassification of freight costs mandated by accounting rules effective for the fourth quarter of 2000.
Fourth quarter resource segment operating income was $13.1 million, down from 1999's fourth quarter income of $20.0 million, largely as a result of lower sales volumes and prices for timber in Idaho. Results for 1999 included a $3.0 million pre-tax gain on the sale of land in Arkansas.
The Wood Products segment incurred an operating loss of $18.9 million for the fourth quarter of 2000, compared to earnings of $11.3 million in 1999's fourth quarter. "Net sales realizations for virtually all of the company's solid wood products were down compared to the fourth quarter of 1999," noted L. Pendleton Siegel, Potlatch chairman and chief executive officer. "Oriented strand board realizations were the most adversely affected, declining approximately 30 percent from last year's fourth quarter." Costs associated with downtime taken to complete the modernization and expansion of the company's oriented strand board facility in Cook, Minnesota, also negatively affected results for the quarter. The shutdown at Cook extended into mid-January 2001, when operations were resumed.
The Printing Papers segment recorded fourth quarter operating income of $3.0 million, compared to a loss of $6.4 million reported a year ago. "Market pulp sales continue to have a significant, positive influence on earnings for the segment since sales began early in the year," Siegel said. Demand for printing papers was weak during the quarter and, combined with increased imports, necessitated shutdowns in November and December at the company's two printing paper mills in Minnesota.
The Pulp and Paper segment reported a fourth quarter operating loss of $3.9 million, versus income of $4.9 million for 1999's fourth quarter. "Substantially higher costs for electricity and natural gas significantly reduced earnings, and was the cause for a brief curtailment in December of operations at the company's Lewiston, Idaho, pulp, paperboard and consumer tissue complex," Siegel noted.
Results were also adversely affected by downtime resulting from the rebuild of the recovery boiler at the company's pulp and paperboard mill in Arkansas. The rebuilt boiler has operated very well since startup in October. Increased shipments for consumer tissue and higher net sales realizations for paperboard and consumer tissue partially offset the effects of higher energy costs and operational disruptions.
Potlatch is a diversified forest products company with timberlands in Arkansas, Idaho and Minnesota.
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