Potlatch earns $139 million

Last year was an eventful one for Potlatch Corp. The century-old firm spun off its vast timber holdings into a real estate investment trust and announced plans to step up land sales to cash in on rising real estate values.

Potlatch also finished 2006 with net earnings of $139.1 million, or $3.79 per share. In 2005, the company’s net earnings were $33 million, or $1.13 per share.

Last year’s earnings included two one-time benefits. The company received a $56.5 million tax benefit from the REIT conversion, and $39.3 million from the negotiated settlement of the U.S.-Canadian softwood lumber dispute.

For the fourth quarter, Potlatch reported net earnings of $44.1 million, compared with net earnings of $24.2 million during the fourth quarter of 2005.

Lower lumber prices and higher wood chip costs could affect Potlatch’s earnings in 2007, Mike Covey, Potlatch’s chairman and chief executive officer, told analysts during a Monday conference call.

“We’re not optimistic about our recovery in the housing market in 2007,” Covey said. The strength of the housing market is directly tied to lumber prices.

Higher prices for wood chips, meanwhile, affect costs for tissue production at Potlatch’s Lewiston plant.

Potlatch also plans to sell 15,000 to 20,000 acres of land this year. The land was identified as “non-strategic” in an acre-by-acre review of Potlatch’s holdings in Idaho, the upper Midwest and Arkansas. The company plans to sell 18 percent to 20 percent of its 1.5 million acres in land holdings for residential development over the next decade. It also plans to acquire more timberland.