Four companies closely linked to the housing corporation--Potlatch, Plum Creek, Rayonier, and Masco--posted weak third-quarter earnings early this week, in some cases swinging to a loss from the year-earlier period.
The wood product segment at Potlatch Corp. swung to a $1.5 million operating loss in the third quarter, the Spokane, Wash.-based company reported Monday. That's a swing from the $1.6 million operating profit recorded in the year-earlier period but an improvement from the operating losses of $3 million and $11.2 million in 2009's second and first quarters, respectively, and Potlatch said it operated at a positive cash flow during the third quarter.
Revenue from wood product sales shrank 20% from 2008's third quarter to $60.2 million. Within that category, lumber revenue fell 14.6% to $38.1 million, plywood dropped 7.7% to $10.5 million, particleboard revenue plummeted 53% to $2.1 million, and revenue from other products dropped 35.7% to $9.6 million. Potlatch said lumber sales volumes decreased 3% in the third quarter from the year earlier, while sales prices were down 13%.
Company-wide, earnings for the timber, real estate and wood products company nearly doubled to $46 million from $24.9 million. Earnings were helped by $48.7 million in net proceeds from a timber deed sales that closed in September.
"Softwood lumber prices remain relatively depressed due to the weak housing market, which is putting pressure on our wood products business," said Michael Covey, Potlatch's chairman, president and chief executive officer. "We expect that the business will not be a meaningful contributor until housing improves."
Plum Creek Timber Co.announced Monday third-quarter earnings shrank 72% to $19 million from the year earlier. Revenue fell 29% to $294 million. The earnings results include a $2 million after-tax ($4 million pre-tax) pension settlement charge that stems from personnel cuts.
"Our third-quarter results reflect some quarter-over-quarter pricing improvement in Pacific Northwest timber markets and stable prices in Southern markets," Rick Holley, Seattle-based Plum Creek's president and chief executive officer, said in a statement. "The quarter's results also reflect some benefit from our manufacturing downsizing, and our cost management efforts. Timber markets appear to have stabilized in most cases, and we have experienced some modest log price improvement in some regions."
Jacksonville, Fla.-based Rayonierrevealed its operating loss in the wood products segment shrank by $500,000 to $2 million, in part because wood products sales climbed 6.4% to $13.3 million. Sales also were up in the timber segment, rising 6.7% to $46.5 million, while timber profits climbed to $1 million in the third quarter from $400,000 in the July-September 2008 period.
Company-wide net income for the third quarter shrank 24.7% from a year earlier to hit $81.1 million despite a 7.9% rise in sales to $300.6 million.
Masco Corp., a diversified business whose brands include Delta Faucet, Griffin Window, KraftMaid Cabinetry, Merillat, and Milgard Windows, announced Monday that net income attributable to the company fell 15.2% in the third quarter to $28 million. Net sales from continuing operations dropped 17% from the year before to 2.1 billion. Sales fell 17% in North America and 13% outside the continent.
The cabinets group swung to an operating loss of $16 million from a $23 million profit in the year-earlier third quarter as sales dropped 20% to $434 million. Meanwhile, the decorative architectural products group saw its operating profit jump 29.8% to $122 million on a 6.3% gain in sales to $474 million. And the installation services group swung to a $34 million loss from a $10 million profit in July-September 2008, as sales dropped 33% to $332 million.
The company's third-quarter performance "exceeded our expectations," Masco chief executive officer Tim Wadhams said of the Taylor, Mich.-based company. "Our sales continue to benefit from new product introductions and market share gains. Our gross profit margins were the highest we have achieved in the last seven quarters, as we continue to see the positive impact on our cost structure of the business rationalization initiatives we have implemented and our focus on quality and driving lean principles across the company."