Plum Creek Timber Co.'s manufacturing operations rocketed out of the red in the first quarter, swinging to a $4 million operating profit from a year-earlier $22 million loss, the company reported today. Increased volumes helped overcome a modest drop in average sales prices to push revenues up $2 million to reach $60 million.
"Manufacturing results are expected to improve further as higher prices and higher seasonal demand results in improved profitability," the Seattle-based company said.
Plywood sales volumes rose 27% from the January-March 2009 period and medium-density fiberboard sales volumes climbed 4%, Plum Creek said, while average sales prices for both slipped 3%. Lumber results "improved significantly," it added, "as the company's right-sizing efforts returned the business to profitability." It noted that last year's first-quarter operating loss included a $12 million pretax impairment and $2 million in severance costs.
Plum Creek also has timber and real estate interests. Company wide, it posted first-quarter earnings of $87 million, 45% below its performance in the year-earlier quarter, on a 33% drop in revenues to $317 million.
"We are encouraged by improving prices for lumber, structural panels, and pulp and paper products," said Rick Holley, president and chief executive officer. "This should lead to improving demand and prices for our timber as the economic recovery takes hold. Interest and activity in rural land markets have improved from the low levels we experienced in 2009; and the right-sizing of our manufacturing businesses has returned the segment to profitability. In addition, our debt reduction and cost management efforts have reduced interest costs and overhead expenses. We remain conservatively positioned as the pace and timing of the recovery remains uncertain; however, we expect each of our businesses to benefit as markets improve."