On the same day mill workers in Northwest Montana received layoff notices, Plum Creek Timber Co. announced its first-quarter profit grew fourfold, driven by real estate revenue that made up for declines in timber and manufacturing.
For the first quarter, Plum Creek earned $157 million, or 95 cents per share, up from net income of $38 million, or 22 cents per share, the same quarter a year ago. Revenue rose 29 percent to $470 million from $363 million.
Analysts, on average, were expecting a profit of 94 cents per share on revenue of $506.4 million, according to a poll by Thomson Reuters.
The financial numbers came out the same day Plum Creek announced it was closing its Pablo sawmill permanently, and may do the same at mills in Evergreen and Columbia Falls. Combined, the mills employ almost 300 people.
Rick Holley, Plum Creek’s president and chief executive officer, said in a press release that the first-quarter results came in “much as we anticipated,” and allowed the company to pay off $125 million in debt.
“We are making operational decisions that protect shareholder value,” Holley said. “For example, we are deferring harvests of valuable sawlogs in weak markets and adjusting production to meet current demand in our manufacturing segment.”
That means cuts here in the Flathead as demand for wood products continues to slump because of the troubled housing market.
The company said lumber sales volumes were approximately 50 percent lower than the first quarter of last year, while prices were slightly higher. Plywood and MDF sales declined 48 and 42 percent, respectively, while plywood prices were approximately 10 percent lower and MDF prices were similar to the same period of 2008.
As a result, sawlog harvests in the company’s northern and southern resources segments were reduced 46 percent and 35 percent, respectively, over the last year and combined lost $29 million in profit off last year’s sum. The manufacturing segment fared poorly as well, reporting a $22 million operating loss for the quarter.
Meanwhile, Plum Creek has been buoyed by its real estate segment, which posted $268 million in revenue in the latest quarter, up from $52 million a year earlier.
The jump was largely the result of one major land deal, Plum Creek’s media contact Kathy Budinick said.
Dubbed, “The Montana Legacy Project,” The Nature Conservancy and The Trust for Public Land are buying 320,000 acres of Plum Creek-owned land for $510 million. The project is financed through private and public sources, with the federal government paying for about half the cost.
During the latest quarter, Plum Creek completed the $25- million second phase of the three-phase sale, which accounted for 112,000 of the 113,000 acres of conservation lands sold during the quarter.
The latest quarter’s results also included 5 cents per share in impairment and severance charges, as well as a tax gain of 5 cents per share.
Looking ahead, the company said it expects second-quarter results to be about break-even, and income from continuing operations to hang between $1.20 and $1.45 per share for the full year. Analysts are expecting 2009 earnings of $1.45 per share.
What that means for workers at the Columbia Falls and Evergreen sawmills who have received notice is uncertain. The company has said it will decide in 60 days whether to keep the facilities open based on economic conditions and demand.
“We’d have to see some sort of improvement in the market and market conditions,” Budnick said.