"Each of our business segments managed the effects of the harsh winter weather effectively and delivered solid results in the first quarter," said Michael Covey, chairman and CEO of Potlatch Corporation. "We continue to believe housing starts will exceed 1 million in the U.S. this year and are seeing signs that the pace is picking up as we move into spring. As a result, we expect demand and prices for Idaho sawlogs and lumber to remain strong. We believe that Southern pine sawlog prices in our wood basket will recover over the longer term. Our real estate business continues to perform well and closed the first of two large transactions planned for this year in the first quarter. We continue to generate cash well in excess of our dividend and our strong liquidity provides a high degree of financial flexibility," concluded Mr. Covey.
Resource division's operating income was $16.2 million on revenues of $51.9 million in the 1Q, compared to operating income of $18 million on revenues of $61 million in the 4Q 2013. Harvest volumes decreased seasonally in the Northern and Southern regions. Sawlog price realizations increased slightly in Idaho, consistent with higher lumber pricing in the fourth quarter. In the Southern region, sawlog price realizations declined primarily due to a lower mix of hardwood logs. Southern pine sawlog price realizations were flat.
Wood Products division's operating income was $12.7 million on revenues of $87.8 million in the 1Q, compared to operating income of $9 million on revenues of $87.4 million in the 4Q 2013. Average lumber prices realized in the 1Q were 7% higher than the 4Q 2013, while lumber shipments were 5% lower due primarily to the effect of weather conditions on transportation. The delayed shipments will benefit second quarter results.
Potlatch is a Real Estate Investment Trust (REIT) with approximately 1.4 million acres of timberland in Arkansas, Idaho and Minnesota. Potlatch, a verified forest practices leader, is committed to providing superior returns to stockholders through long-term stewardship of its forest resources. The company also conducts a land sales and development business and operates wood products manufacturing facilities through its taxable REIT subsidiary.
