SPOKANE, Wash.--July 19, 2004-- Potlatch Corporation today reported significantly higher earnings for the second quarter of 2004, compared to the second quarter of 2003, due primarily to continued strength in its wood products markets.
Improved financial performance from the company's Pulp and Paperboard and Consumer Products operating segments also contributed to the positive results, while the Resource segment posted lower earnings compared to the prior year second quarter. Second quarter 2003 earnings were positively affected by significant interest income of $12.5 million from a federal income tax settlement.
For the second quarter of 2004, the company reported net earnings of $49.6 million, or $1.68 per diluted common share, compared to earnings from continuing operations of $6.8 million, or $.24 per diluted common share for the same period in 2003. Including discontinued operations, the company earned $6.6 million or $.23 per diluted common share for the second quarter of 2003. Net sales for the second quarter of 2004 were $472.6 million, substantially higher than the $368.1 million recorded in the second quarter of 2003.
Net earnings for the first half of 2004 totaled $71.4 million or $2.42 per diluted common share. The loss from continuing operations for the first half of 2003 was $2.1 million or $.07 per diluted common share. Including discontinued operations, the net loss for the first half of 2003 totaled $2.9 million or $.10 per diluted common share. Net sales for the first half of 2004 were $893.1 million, compared with $702.9 million for 2003's first half.
The Resource segment reported operating income of $6.8 million for the second quarter of 2004, substantially lower than the $23.5 million earned in the second quarter of 2003. Land sales revenue totaled $1.1 million in the second quarter of 2004, versus $14.1 million in the second quarter of 2003. The June 2003 sale of approximately 15,300 acres of hardwood timberland in Arkansas was the primary reason for the unfavorable comparison. Lower fiber sales in Arkansas during the second quarter of 2004 also negatively affected earnings.
Operating income for the Wood Products segment was $94.4 million for the second quarter of 2004, a dramatic increase over the $2.3 million earned in the second quarter of 2003. "The conditions that started the rally in wood products markets during the third quarter of 2003 -- low interest rates, a strong housing market and a weaker U.S. dollar -- have continued through the second quarter of 2004," noted L. Pendleton Siegel, Potlatch chairman and chief executive officer. "Selling prices for all of the segment's products were higher when compared to the second quarter of 2003, especially oriented strand board, which was more than double last year's price early in the quarter," Siegel added. Prices began an expected decline mid-quarter, but still remained at favorable levels at the end of 2004's second quarter. The higher selling prices more than made up for lower shipments of oriented strand board, lumber and particleboard on a quarter-to-quarter comparison.
The Pulp and Paperboard segment reported operating income for the second quarter of $5.9 million, versus a loss of $1.2 million for 2003's second quarter. "The segment benefited from higher paperboard and pulp shipments compared to 2003's second quarter, as well as higher selling prices for pulp. Additionally, higher production at both of the segment's facilities, especially the mill in Lewiston, Idaho, resulted in lower per ton costs," Siegel noted. "Pulp prices have steadily improved during the first half of 2004, and paperboard prices have improved modestly in recent months," Siegel added.
The Consumer Products segment incurred an operating loss of $1.2 million during the quarter, smaller than the operating loss of $5.0 million posted in the second quarter of 2003. "Although markets for consumer tissue products continued to be very competitive, segment shipments increased 18% over the second quarter of 2003, and net selling prices also showed a slight improvement," Siegel remarked. Both shipment and selling price measures were positively affected by the rollout of the ultra towel product manufactured at the company's new Las Vegas tissue facility. Results for the second quarter of 2003 were adversely affected by downtime taken on numerous converting lines to reduce finished goods inventory levels.
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