Net income at Plum Creek Timber Co. increased 26% in the second quarter from the year-earlier period to hit $44 million, the company announced on Monday. Revenues at the timber harvester and lumber manufacturer increased 10% to $284 million.
While the overall numbers improved, the Seattle-based company's timber segment, which is broken down into Northern and Southern regions, saw sales decline 5% to $126 million and operating profit decreased 33% to $18 million. Plum Creek's Northern resources segment reported a profit of $3 million, identical to the same period a year ago, despite a decline in volume. The company noted that demand from China has increased sawlog prices in places such as Oregon. The Southern resources segment's operating profit fell 37.5% to $15 million as log prices fell--a result of how dry weather allowed more access to traditionally wetter, low-lying timber strands, therefore increasing supply.
Sales at the company's real estate segment jumped 84% to $79 million, while operating profit at the segment leaped 92% to $50 million.
The manufacturing segment witnessed a 50% drop in operating profit, to $5 million, as sales decreased 5% to $74 million. Second-quarter 2010 operating profits in the manufacturing segment included a $2 million benefit from one-time gains on the sales of equipment.
Prices for lumber and medium density fiberboard (MDF) remained unchanged during the quarter, while prices for plywood were about 4% lower compared with the April-June 2010 period. Lumber and plywood volumes were about 5% lower, while MDF sales volumes were 14% lower.
"Good results from our real estate segment offset weaker than anticipated results from our timber operations," said president and CEO Rick Holley. "Sawlog markets in the West and Northeast remained attractive during the second quarter however, sawlog markets in the South continued to be challenging to extremely dry weather and weak domestic demand."