Second-quarter earnings at Potlatch Corp. fell 29% from he same period a year ago to $8.4 million due to decreases in both sawlog and pulpwood volume, the company announced today. Sales at the timber-harvesting company declined 13% to $112.4 million.

The Spokane, Wash.-based Real Estate Investment Trust, which owns approximately 1.5 million acres of timberland in Arkansas, Idaho, and Minnesota, announced a 53% decrease, to $2.8 million, in operating income for its wood products division. Sales fall almost 14% to $66.6 million.

Potlatch cited an 11% decrease in lumber sales prices over the past year as the reason for the segment's poor performance. Shipments decreased 4%. The segment did record a $2.4 million benefit from a lumber hedge it entered into in October 2010.

The company's resource segment, which covers harvesting operations, recorded a 50% drop in operating income to $7.5 million. Sales fell 32% to $34.3 million.

In a statement, company chairman, president, and CEO Michael Covey said harvest levels at Potlatch's Southern and Northern operations were low due to poor spring weather at its Northern operations and a decision to defer harvesting operations in Arkansas because of declining sawlog prices.

"Out regional diversity will allow us to shift harvest volumes in the second half of the year from the Southern to the Northern region to capture market opportunities," said Covey. "In our wood products business, the stronger prices for wood products we experienced during the first quarter did not continue into the second quarter, modestly impacting results."

Covey said the weak housing market has continued to hurt log and lumber demand, but that demand from China has helped to keep the industry afloat, especially parts of the industry with operations in the North.

The company's real estate segment performed much better than the other segments, however, more than doubling its operating income to $11 million on an 81% increase in revenues to $19 million.