Plum Creek's first-quarter 2014 earnings per share came ahead of
the Zacks Consensus Estimate thanks to higher log prices and added
harvest volumes from its recent timberlands acquisition. However,
the results were significantly below the prior-year quarter
earnings per share. This unfavorable year-over-year comparison was
due to $0.21 per share benefit experienced in the prior-year
quarter from the sale of a large non-strategic timberland.
Moreover, for the first quarter, total revenue fell 6.8% year over
year and missed the Zacks Consensus Estimate. While we believe that
the company's Southern Timberland buyout holds good for long-term
growth but earnings is projected to be dilutive in 2014.
Furthermore, the cyclical nature of the business, stiff competition
and strict environment policies remain causes of concern.
Based in Seattle, WA, Plum Creek Timber Company Inc. is a
leading publicly-held timber real estate investment trust (REIT)
and the largest owners of private timberland in the U.S. The
company produces lumber, plywood and medium density fiberboard
(MDF) at wood product manufacturing facilities in the Northwest.
The company also has natural resource businesses that focus on
opportunities resulting from property ownership. It includes the
scope for mineral extraction and natural gas production as well as
communication and transportation.
Plum Creek reports its operational data under 5 business
segments. It includes timberland operations in 2 business segments:
the Northern Resources Segment and the Southern Resources
Northern Resources Segment comprises timberlands in Maine,
Michigan, Montana, New Hampshire, Oregon, Vermont, Washington, West
Virginia and Wisconsin. Timber harvested in the Northern Resources
segment is sold as logs to domestic mills and used in its own
manufacturing facilities as well. The Southern Resources Segment
consists of timberland in Alabama, Arkansas, Florida, Georgia,
Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina
and Texas. Logs are sold to third-party mills including
manufacturers of lumber, plywood, pulp and paper products.
Among the other segments, Real Estate segment comprises sales of
better-use timberland and sale of non-strategic timberland. It also
operates a real estate development business.
The Manufacturing segment includes lumber mills, plywood plants,
lumber remanufacturing facilities and medium density fiberboard
facilities. These facilities convert logs to lumber, plywood and
other products and convert chips, sawdust and wood shavings to
Moreover, Plum Creek has the Energy and Natural Resources
segment that consists of the natural resource businesses, which
focus on opportunities for oil and natural gas production, rock and
mineral extraction, wind power and communication and transportation
rights of way. This segment was previously known as Other segment
and effective fourth-quarter 2013 the company changed its name to
maintain the transparency and comparability of its existing
Plum Creek's total revenues contribution in first quarter 2014
by different product types is given below.
Plum Creek Timber Co. Inc. (PCL): Read the Full
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