Quarterly earnings drop for Potlatch

Potlatch Corp. reported lower third quarter earnings Tuesday, citing higher energy costs in the wake of petroleum and natural gas supply curtailments from the recent Gulf Coast hurricanes.

The company reported earnings of $10.5 million, or 36 cents per share for the third quarter, compared to $24.2 million, or 81 cents per share, from continuing operations in the third quarter of 2004. During September 2004, Potlatch sold three oriented strand board plants in Minnesota for nearly $270 million, which is not included in the comparative numbers.

Net sales for the third quarter were nearly $405 million, compared to net sales from continuing operations of $370 million during the third quarter of 2004.

A week ago Potlatch announced that its earnings would come in “significantly below” analysts’ estimates of 50 cents a share, mostly because the company’s fuel bill is about $10 million higher than it was a year ago. Those higher prices are affecting almost every aspect of Potlatch’s operation, from trucking logs to the mills to shipping finished products to consumers, the company said.

The higher energy and chemical costs also showed up in Potlatch’s pulp and paperboard unit, where operating income dropped to $200,000 during the third quarter, versus $12.2 million a year ago. Lower prices for pulp are also reflected in the lower earnings, said Penn Siegel, Potlatch’s chairman and chief executive officer.

Lower prices for lumber and plywood also cut into the company’s earnings, Siegel said. Operating income for the wood products unit dropped to $6.1 million during the third quarter, compared to $26.4 million a year ago.

Potlatch’s stock price dropped by 74 cents a share Tuesday, closing at $46.36 a share.