SEATTLE, WASHINGTON -- January 26, 1999 -- Plum Creek Timber Company, L.P. (NYSE:PCL) today announced earnings for the fourth quarter and year ended December 31, 1998. Fourth quarter earnings totaled $22.0 million, or $0.29 per Unit on revenues of $188.8 million, compared to $24.3 million, or $0.35 per Unit on revenues of $183.7 million for the fourth quarter of 1997. Earnings for the year were $75.4 million, or $0.90 per Unit on revenues of $699.4 million, compared to prior year earnings of $111.7 million, or $1.72 per Unit on revenues of $725.6 million
The Company stated that its quarterly cash distribution to Unitholders would be $0.57 per Unit. The quarterly distribution will be paid on February 25, 1999 to Unitholders of record as of February 12, 1999.
"While 1998 presented challenges for Plum Creek in terms of product pricing and earnings, we generated strong cash flow and enhanced our underlying asset value and operations," said Rick R. Holley, President and Chief Executive Officer. "Specifically, we successfully acquired 905,000 acres of prime timberland in central Maine; reconfigured our Joyce, Louisiana manufacturing facility; intensified our cost control program; and continued our sales of certain higher and better use lands. All of these actions contributed to strengthening our position in the marketplace and improved the long-term value of the Company."
"Despite a strong U.S. economy and housing market, weak demand in Asia caused log and lumber supplies that are normally sold into the Asian market to be re-directed into the U.S. market, putting tremendous downward pressure on prices. In particular, prices for lumber and Northwest logs were impacted by these factors. The pricing impact was offset in part by favorable results in our plywood, medium density fiberboard (MDF), and Southern resource businesses as well as ongoing sales of higher and better use lands.
For the year, Northwest lumber prices were 12% lower as compared to the prior year period, and prices for Southern lumber declined 13%. While Cascades Region domestic log prices declined 13% from the prior year, fourth quarter 1998 prices increased 9% over third quarter levels due to lower West Coast inventories. Prices for logs in the Rocky Mountain Region declined 4% in 1998 compared to the prior year. Cascades Region export log prices declined 16% for the year compared to 1997 levels; however, prices for the fourth quarter 1998 increased 6% from third quarter levels, due primarily to low West Coast and Japanese log inventories.
"The strategic focus and geographic diversity of our operations helped to partially offset the lumber and log price declines experienced in 1998. Our Southern resource operations and our plywood and MDF product lines performed well," Holley continued. For the year, prices for Southern sawlogs equaled pricing for 1997, while pulp log prices increased 5% compared to 1997 levels. Plywood prices for the year were 2% above prices achieved for the full year 1997. Although MDF prices were flat year-to-year, our focus on improving production efficiencies has substantially decreased costs and improved margins.
"During the fourth quarter we completed our acquisition of 905,000 acres of timberland in central Maine. These timberlands are some of the best managed and most productive in the Northeast – a geographic region characterized by stable pricing and demand for wood products. This purchase meets our objective of expanding and enhancing our timberland asset base and making acquisitions that are accretive to our cash flow.
"Earnings also benefited from our active higher and better use land sales program, which generated revenues of approximately $21.5 million in the fourth quarter and $32.8 million for the year. These lands are classified as having higher value for recreational, residential and conservation uses than for long-term timber management. A recent example is the sale we completed in the fourth quarter of 4,720 acres of environmentally sensitive land in our Southern Region to The Nature Conservancy of Louisiana," Holley stated.
"We anticipate a slight improvement in pricing and overall market conditions in 1999 as domestic wood products demand, interest rates and consumer confidence remain favorable. We also expect to see some improvement in the export markets in the second half of the year as demand for housing improves and the Japanese economic stimulus package is implemented," Holley continued. "We believe our focus on key strategic objectives including capital projects to improve our competitive advantage, ongoing efficiency and productivity enhancements throughout our operations, our cost control initiatives, and acquisitions to enhance our asset base will keep us well-positioned in the marketplace."
Plum Creek is an integrated forest products company with timberlands and mills located in the Pacific Northwest and Southern and Northeastern United States.
Income Statements for Plum Creek are attached.
Income Statements (In Excel)