SEATTLE ( TheStreet ) -- Plum Creek Timber ( PCL) appeared to best Wall Street estimates for its second quarter as it cut costs by reducing manufacturing capacity in the face of declining log sales, but it also ratcheted back financial guidance for the third quarter.

The Seattle-based sawyer and lumber miller said it earned $32 million, or 19 cents a share, in the second quarter. That included gains of $23 million, or the equivalent of 14 cents a share, from the sale of 59,000 acres of Wisconsin timberland. Stripping out that windfall, Plum Creek's bottom line of 5 cents a share compares with analysts' estimates of a 2-cent profit.

Revenue, however, lagged, coming in at $272 million, down 28% from the year-ago period's $376 million.

Demand and pricing have of course slumped during the recession. Average sawlog prices were 26% lower and average pulpwood prices 11% lower than the year-ago period, according to the company's data.

Looking ahead, Plum Creek said it expects a third quarter per-share profit of between 5 cents and 10 cents, well below analysts targets of 14 cents.

For the year, Plum Creek said it's forecasting earnings of $1.25 to $1.40 a share, straddling analysts' estimates of $1.30.

Plum Creek said it will continue its policy of deferring harvests amid week demand for wood. The company added that it now expects full-year production to come in at the low end of its previously predicted range of 15.5 million to 16.5 million tons.

The company also said it intends to keep selling off "non-strategic" timber properties whenever it sees a good opportunity to do so. In the third quarter alone, it's looking to take in between $50 million and $70 million from the sale of real estate. For the year, the expectation is to unload between $460 million and $480 million worth of and.

Shares of the company ended trading Monday at $33.17, up 2.5%.

--Reported by Scott Eden in New York.
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