Nevada County Picayune and Gurdon Times Newspaper Archive

Low First Quarter Earnings Reported

Potlatch reported lower earnings for the first quarter of 1996 due to severe flooding, other weather-related problems and weaker markets in several product lines.

Net earnings for the first quarter of 1996 were $5 million, or $.17 per common share. First quarter 1995 earnings were $23.5 million, or $.81 per share.

Net sales for the first quarter of 1996 were $388.6 million, compared with $394.6 million a year ago.

John M. Richards, Potlatch chairman and chief executive officer, stated that the weather-related problems caused slightly less than break-even results for the first two months of the quarter.

The Wood Products Group reported operating income of $11 million for the first quarter of 1996, down from 1995's $31.9 million. Richards noted that lower net sales realizations for all wood products, especially panels, reduced earnings.

"Net sales realizations for oriented strand board have declined 20 percent from a year ago, largely due to increased capacity in the industry," Richards said. Flooding in Idaho also adversely affected first quarter earnings in the wood products segment.

The Northwest Paper Division reported first quarter 1996 operating income of $12 million, compared with $17.6 million earned in 1995. "Slightly higher shipments for the division were more than offset by lower net sales realizations," Richards said. Realizations were affected by discounting in mid-line grades and by a less favorable product mix.

The other pulp-based businesses, which include the Pulp and Paperboard Group and the Consumer Products Division, reported operating income for the first quarter of 1996 of $4.3 million, compared with $8.4 million in 1995's first quarter.

The company's pulp mill in Lewiston, Idaho, was shut down for six days in February because it could not obtain clean water as a result of flooding in the area. In addition, the paperboard and tissue mills at Lewiston were also forced to shut down during the same period because of a lack of water.

Production costs increased significantly during February because of these shutdowns. Product shipments were adversely affected by the floods as well. Lower net sales realizations for pulp also contirubed to the earnings decline.

"Despite weather-related problems in Idaho, the Consumer Products Division benefited from higher shipments and substantially higher net sales realizations to post improved results compared with 1995's first quarter," Richards said.

"The outlook for the second quarter continues to be mixed, with markets weak for some of the company's products and improving for others," said Richards.

Potlatch is a diversified forest products company with timberlands in Arkansas (including Prescott), Idaho and Minnesota.