SPOKANE, Wash.--April 19, 2004-- Potlatch Corporation today reported improved earnings in the first quarter of 2004 versus the previous year's first quarter, largely due to continued strong markets for the company's wood products, especially oriented strand board.
The company reported net income of $21.8 million, or $.74 per diluted common share, for the first quarter of 2004, compared to a loss from continuing operations of $8.9 million, or $.31 per diluted common share, for the first quarter of 2003. Including discontinued operations, the company incurred a net loss of $9.6 million, or $.33 per diluted common share, for 2003's first quarter. Discontinued operations in 2003 consisted of the company's former printing papers mill in Brainerd, Minnesota. Net sales for the first quarter of 2004 were $420.4 million, approximately 26% higher than the $334.8 million recorded in the first quarter of 2003.
The Resource segment reported operating income of $12.1 million for the first quarter of 2004, slightly higher than the $11.1 million earned in the first quarter of 2003. Higher income from land sales was largely responsible for the favorable comparison.
Operating income for the Wood Products segment totaled $57.8 million for the first quarter of 2004, a significant improvement over 2003's first quarter loss of $3.6 million. L. Pendleton Siegel, Potlatch chairman and chief executive officer, credited the improvement to higher selling prices and increased shipments for all of the segment's lumber and panel products. "Low interest rates are supporting continued strong homebuilding activity and demand for wood products, while a weaker U.S. dollar has increased the cost of imported materials," Siegel stated. The market's strength is most apparent in oriented strand board sales prices, which were nearly double first quarter 2003 prices and reflect a continuation of the positive conditions that existed during the fourth quarter of 2003.
The Pulp and Paperboard segment reported an operating loss for 2004's first quarter of $7.8 million, versus a loss of $9.3 million for 2003's first quarter. "Increased paperboard shipments, as well as lower unit costs due to higher paperboard production at the Lewiston, Idaho, facility, were responsible for the smaller loss in the quarter," Siegel said. "Segment profitability is being constrained by weak selling prices for paperboard. However, markets have recently begun to show some signs of improvement," he added. Siegel explained that the segment's first quarter results were adversely affected by lower pulp production resulting from weather-related fiber supply problems in January and a planned maintenance shutdown in March at the Lewiston, Idaho, facility.
The Consumer Products segment incurred an operating loss of $3.8 million for the first quarter of 2004, compared to operating income of $6.8 million for 2003's first quarter. "Markets for consumer tissue products continue to be very competitive, resulting in net sales prices that were 3 percent below first quarter 2003 levels," Siegel noted. "Higher pulp costs in the first quarter of 2004, coupled with start-up costs for the new tissue machine in Las Vegas, Nevada, contributed to the unfavorable quarter-to-quarter comparison as well." The results for the current quarter also reflect a pre-tax charge of approximately $1.3 million for a reduction in force, which occurred in January. The segment's Las Vegas facility is currently producing ultra towel inventory to support the product's rollout by retailers in the second quarter.
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