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Plum Creek Timber Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: PCL

In the Northwest, sawlog prices peaked at $73 per ton in April, driven by strengthening domestic demand. As spring progress, logging conditions improved, and the log supply expanded, and log prices retreated to $68 per ton. Log customers in the region were able to end the quarter with healthy log decks.

As expected, export demand was lower than in the second quarter of last year and did not command a significant price premium to domestic markets. We directed the vast majority of our harvest volume to domestic customers, exporting 26,000 tons of sawlogs during the quarter. We expect good logging conditions to prevail during the third quarter, so despite modestly strengthening export demand, we expect Northern sawlog prices to return to first quarter levels of about $67 per ton.

In the Northeast and the Lake States, pulpwood enjoyed solid demand, and prices held at attractive levels. As a result, pulpwood prices averaged $42 per ton during the quarter. We expect stable pricing and seasonally higher pulpwood harvest during the third quarter.

Overall, we expect Northern harvest volume to seasonally recover, a level similar to the first quarter, about 700,000 tons of sawlogs and 450,000 tons of pulpwood.

In the Southern Resources, Southern Resources' $22 million operating profit was $1 million higher than the first quarter's $21 million profit. Prices for both pulpwood and sawlogs were marginally higher compared to the first quarter, while our harvest volumes for both sawlogs and pulpwood increased. Our sawlog harvest increased 213,000 tons, but was about 100,000 tons less than we initially planned because sawlog pricing remained unattractive in some markets.

Pulpwood markets continue to present an opportunity with attractive pricing in many Southern wood baskets. Our Southern quarter harvest was nearly 100,000 tons higher than in the first quarter. We had initially expected a pretty flat quarter-over-quarter pulpwood harvest. However, our pulpwood yields from first thinning harvest are running higher than our expectations, and that has pushed up our pulpwood harvest.

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