SPOKANE, Wash.--April 19, 2005-- Potlatch Corporation today reported that improved operating results for its pulp-based businesses led to higher earnings from continuing operations for the first quarter of 2005 compared to the first quarter of 2004.
The company reported earnings of $3.8 million, or $.13 per diluted common share, for the first quarter of 2005, compared to a loss from continuing operations of $6.3 million, or $.22 per diluted common share, for the first quarter of 2004. Including discontinued operations, the company reported net earnings of $21.8 million, or $.74 per diluted common share, for 2004's first quarter. Discontinued operations in 2004 consisted of three oriented strand board mills in Minnesota, which the company sold in September 2004. Net sales for the first quarter of 2005 were $336.2 million, compared to net sales from continuing operations of $316.5 million recorded in the first quarter of 2004.
The Resource segment reported operating income of $10.7 million for the first quarter of 2005, compared to the $12.1 million earned in the first quarter of 2004. Income from land sales in Idaho was $1.7 million lower during the first quarter of 2005 compared to the first quarter of 2004 and was largely responsible for the unfavorable comparison.
Operating income for the Wood Products segment totaled $8.8 million for the first quarter of 2005, compared to income of $11.7 million recorded in the first quarter of 2004. "Net sales for the segment grew slightly in the first quarter, compared to last year's first quarter, due in large part to higher selling prices for lumber products. However, those benefits were more than offset by higher log costs," said L. Pendleton Siegel, Potlatch chairman and chief executive officer. "Homebuilding activity continues to be strong despite a climate of slowly rising interest rates. Although housing starts may not reach the record levels of the past two years, 2005 should be a good year for the housing industry."
For the first quarter of 2005, the Pulp and Paperboard segment reported operating income of $2.9 million, versus an operating loss of $7.8 million for 2004's first quarter. "Higher paperboard selling prices were the primary driver behind the positive results for the segment," Siegel said. "The continuing gradual trend in pricing improvements more than offset lower paperboard shipments, which were largely the result of a change in product mix at the Cypress Bend, Arkansas, facility," he added. Although pulp production increased at the Lewiston, Idaho, facility compared to the first quarter of 2004, more of the pulp was used internally and shipments to third parties were lower.
The Consumer Products segment incurred an operating loss of $0.6 million for the first quarter of 2005, compared to an operating loss of $3.8 million for 2004's first quarter. "It is very encouraging that in such a competitive marketplace the segment was able to significantly increase product shipments, as well as realize higher selling prices," Siegel noted. "Higher packaging, transportation and employee training costs in the first quarter of 2005 partially offset the positive sales results." The operating loss incurred in the first quarter of 2004 included a pre-tax charge of approximately $1.3 million for a reduction in force.
Interest expense for the first quarter of 2005 totaled $7.3 million, a substantial decline compared to the $11.9 million charged against results for the first quarter of 2004. The reduction in interest expense was the result of the repayment of approximately $282 million in debt during the fourth quarter of 2004, using a portion of the proceeds from the sale of our oriented strand board mills.
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