Potlatch 2Q net income falls despite higher sales

SPOKANE, Wash. (AP) — Timberland management company Potlatch Corp. said Tuesday its second-quarter earnings fell 40 percent, as higher costs overshadowed rising revenue.

The company earned $5.1 million, or 13 cents per share, compared with $8.4 million, or 21 cents per share, in the year-ago quarter.

Revenue rose 5 percent to $117.5 million, driven by stronger demand for manufactured wood products at higher prices. The company's wood products segment reported its highest operating income in over five years.

Overall costs increased by 6 percent.

"Results for the first half of the year exceeded our expectations and we feel confident about continued strong operating results from all of our business segments moving into the second half of 2012," the company said in a statement. "Although there have been, and will continue to be, some slowdowns and setbacks along the way, there are many indications that the domestic housing market has bottomed and is finally beginning to slowly turn upward toward solid and continued recovery."

The second quarter is typically the seasonally weakest for timber companies. Potlatch said it prices in the wood products segment have moved down since April and May, but they're still far above the first quarter. It expects that segment to continue to drive results.

Potlatch shares rose 30 cents to $35.36 in late afternoon trading amid a broader market downturn.