Potlatch dropped into the red during the fourth quarter with a $1.5 million loss after posting income of $9.4 million during the same period a year ago, the company announced today. The loss comes paired with a 25% decrease in revenues to $109.9 million for the quarter ended Dec. 31.
Yearly net earnings at the Spokane, Wash.-based real estate investment trust remained almost identical with 2010’s results at $40.3 million, despite an 8% dip in sales to $497.4 million.
“Economic conditions remained challenging throughout 2011, which is reflected in our fourth quarter and full year results,” said Michael Covey, chairman, president, and CEO of Potlatch.
In its segment results, the company announced its wood products division cut fourth quarter operating losses by more than 50% from the same period a year ago to $1.3 million. Sales in the segment increased 5% to $67.2 million. Lumber prices rose 2% while shipment volumes increased by 1%. The segment also recorded a negative $400,000 mark to market adjustments related to lumber hedges during the quarter, compared with a $2.9 million adjustment during the year prior period.
For the year, the net earnings in the wood products segment increased by $200,000 to reach $7.3 million, while revenues fell by just over $2 million to $271.6 million.
“In our wood products segment, although there has been a small near-term improvement in some markets, we expect lumber prices in 2012 to be very similar to 2011,” Covey said.
Fourth quarter operating income in the resource segment fell by $200,000 to $12.6 million, despite a 2% increase in sales to $54.4 million. For the year, the segment posted a 4% decrease in operating income to $59.8 million even though revenues grew by just over $1 million to $227 million.
Total fee harvest volume increased 8% during the quarter, due to a harvest shift to the company’s Northern region operations, as well as a rise in demand for pulpwood.
Potlatch’s real estate division saw fourth quarter operating earnings plummet by 85%, compared with the same period a year ago, to $2.1 million, while sales fell over 90% to $3.2 million. The vast differences in operating income and revenue were due to a 46,600 acre non-strategic land sale in Wisconsin and Arkansas the company carried out during fourth quarter 2010.
For they year, the segment reported a $1 million increase in operating income to reach $31.4 million, while sales fell 41% to $50 million.
“Our outlook for 2012 remains cautious and conservative,” said Covey. “Although there was a slight increase in housing starts late in 2011, the housing market remains depressed and we expect only a modest improvement in housing starts in 2012.”
The company also announced that in December its revolving credit agreement was amended, reducing the minimum interest coverage ratio to 2.00 to 1.00 and adding a minimum liquidity requirement of $60 million.