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Potlatch 1Q profit falls on lower saw log volumes

SPOKANE, Wash. (AP) -- Potlatch saw profits tumble 34 percent in the first quarter and the timberland investment company on Monday cited decreased log sales and stagnant prices.

The company said that during the quarter ended March 31, it earned net income of $5.1 million, or 13 cents per share, compared to $7.7 million, or 19 cents per share, during the same period a year before.

Revenue during the quarter was $112.4 million, down from $122.2 million in the prior year period.

That was higher than the 8 cents per share in net income on $109.4 million in revenue that analysts expected, according to FactSet.

Potlatch is a real estate investment trust that specializes in managing timberlands in Arkansas, Idaho, Minnesota and Wisconsin. The company harvests timber and sells wood products like lumber, plywood, and particleboard.

Saw log sales volume fell 18 percent in the quarter compared to last year, primarily because last year's quarter was boosted by favorable logging markets in Idaho and a planned harvest deferral.

Log prices were up just 2 percent from the year before, according to Potlatch.

The lower saw log volumes helped drag down pulpwood volume by 9 percent from the year before. Pulpwood prices rose by 11 percent thanks to steady demand driven by a shortage of residual wood chips in the Pacific Northwest.

The company's wood products division did better in the first quarter, with revenue rising to $73.9 million from $68.5 million in the prior year period.

Log prices appear to have bottomed out, and the company expects improvement in its Northern and Southern regions over the next two quarters, said CEO Michael Covey.

The company expects to harvest about 3.5 million tons this year. It is waiting for better demand and better prices before boosting its harvest levels.

Shares of Potlatch Corp. fell 89 cents, or 3 percent, to $30.20 in morning trading. That puts it toward the low end of its trading price over the last year, when the stock traded between $28.01 and $39.95.