Potlatch Earnings Will Trail Expectations

Potlatch Corp. this week blamed disrupted shipping and excess supply of wood and paper products for fourth-quarter earnings that will be “significantly below” forecasts.

The Spokane-based wood products firm had been expected to earn 42 cents per share, based on the average estimates of three analysts surveyed by IBES International Inc.

Company spokesman Mike Sullivan said Potlatch is unsure how far below those estimates earnings will fall.

Potlatch said excess supplies of oriented strand board and other products caused lower prices.

Third-quarter earnings were negatively affected when sales of oriented strand board dropped 29 percent compared with 1996. Net earnings for the third quarter were $14.1 million, or 49 cents per share, down $5.4 million from a year ago.

“The company’s distribution system has been badly disrupted by the shortage of both railcars and trucks, which has increased our costs and hampered our ability to ship our products,” John Richards, the company’s chairman and chief executive, said in a statement.

Despite a continued soft market for oriented strand board, Potlatch is expanding its Minnesota production plant, banking on long-term profitability.

Potlatch recently invested $50 million in its St. Maries and Pierce operations, converting them to industrial-grade sheathing plants.

“We’re still struggling to get them up to speed,” Pendleton Siegel, president and chief operating officer, told a meeting of the Inland Northwest Partners last week.

Siegel added that Potlatch has “phased back” production at those sites by 25 percent and trimmed about 40 jobs until the company can make inroads into the industrial market.

Elsewhere in the region, Potlatch operates a tissue and bleached paperboard facility in Lewiston, and a particle board plant in Post Falls.

Potlatch shares fell $2 Wednesday and $0.19 today to close at $44.25.

, DataTimes