Plum Creek benefits from early stages of housing recovery
Sales and earnings increased for Plum Creek Timber Co. in the second quarter ended June 30.
Revenues increased 3.1% to $303 million. Earnings increased to $46 million, up from $36 million in the second quarter of 2012.
“Each of our business segments performed well during the second quarter,” said Rick Holley, CEO. “We are experiencing fundamental demand improvement and better pricing; although, we remain in the very early stages of the housing recovery. As the industry adjusts to this change in the demand environment, regional markets we serve are recovering at different rates.”
He added that the company’s geographic diversity allows it to act and capitalize on strong local markets.
Improving production trends for lumber and structural panels are expected to result in greater demand and higher pricing for sawlogs as the housing recovery continues to advance. Sawlog prices during the second half of 2013 are expected to be higher than the prices for the second half of 2012 in all regions.
The company continues to expect to harvest 17.5 million to 18 million tons of timber this year.
Operating profit in the Southern Resources segment was $23 million, up $1 million from the $22 million reported for second quarter of 2012. Higher prices for both sawlogs and pulpwood offset lower harvest volumes. Sawlog prices increased $1 per ton, or 5%, and pulpwood prices increased $1 per ton, or 10%, compared with the second quarter of 2012. Overall the Southern harvest declined about 500,000 tons, or 14%, compared with the second quarter of 2012. While the company's full-year 2013 Southern harvest is planned to be similar to 2012’s harvest level, the 2013 harvest is weighted to the second half of the year to capture the expected improvement in log prices.
The Real Estate segment reported revenue of $53 million and operating income of $30 million in the second quarter of 2013. Second-quarter 2012 revenue was $47 million and operating income was $29 million. The Manufacturing segment reported operating income of $14 million, a $5 million improvement over the second quarter of 2012. Strong demand and pricing continued to benefit each of the company’s manufactured product lines.
Plywood prices increased 13% compared with the second quarter of 2012 on strong industrial demand. Plywood sales volume declined 6% compared with the same period of 2012 due to reduced log availability.
In April of this year, the company re-opened its Evergreen lumber mill, boosting lumber sales volume by 21% compared with the second quarter of 2012. Average lumber prices declined approximately 1% as the product mix shifted to include lower-priced stud lumber from the re-opened mill.