Plum Creek Beats Zacks Estimate

Plum Creek Timber Co. Inc. (PCL - Snapshot Report), a real estate investment trust (REIT) owning and managing timberlands in the U.S., reported third quarter earnings of $19 million or 12 cents per share, compared to $69 million or 40 cents per share in the year-earlier quarter. Earnings results beat the Zacks Consensus Estimate by 4 cents.
 
During the quarter, Plum Creek reported revenues of $294 million vis-à-vis $414 million in the year-ago quarter. Although revenues and earnings declined year over year, the company has witnessed stabilization in most timber markets with modest log price improvements. In addition, Plum Creek is gradually benefiting from its manufacturing downsizing and cost management efforts.
 
By segment, the Northern Resources division reported a $3 million operating profit during the quarter compared to $12 million in the previous year, with continued low residential construction activities and adverse effects of recession on softwood sawlog markets. In the Southern Resources segment, operating profit declined to $21 million from $29 million in the year-ago quarter, primarily due to lower sawlog and pulpwood prices.
 
Operating Income in the Real Estate segment decreased to $20 million during the quarter from $73 million in the year-earlier quarter. The Manufacturing segment relatively improved with an operating loss of $1 million during the quarter versus $4 million operating loss in the previous year. Plum Creek continued to sell large tracts of rural lands including non-strategic timberlands to raise cash. During the quarter, the company sold 60,000 acres of rural lands at a varied price ranging from $970 per acre to $9200 per acre.
 
Cash flow from operations totaled $492 million for the first nine months of 2009. At quarter end, the company had $351 million of cash and cash equivalents. In response to the continued weak pricing for sawlogs, Plum Creek has deferred its harvesting, and consequently fourth quarter harvest levels of both sawlogs and pulpwood are expected to fall well below that of 2008. The company now expects its fourth quarter earnings to vary within 12 cents to 17 cents per share.