Deltic Timber Corp. of El Dorado on Wednesday reported a net profit of just $38,000, down from $6 million in the same quarter last year, amid a “prolonged weak housing market recovery” and “excess inventory of wood products” in the U.S.
The real estate and timber company reported net sales of $50.1 million, down from $58.3 million in the same quarter last year.
“While some wood products manufacturers increased their production in anticipation of a stronger U.S. housing market for the second half of 2015, the actual recovery continued to be slower than expected, adding to the downward pressure on lumber prices in the third quarter,” Deltic President and CEO Ray Dillon said in a news release.
“In addition, exports of logs and lumber manufactured on the West Coast of the United States to the Far East have decreased. As a result, there was simply more wood-product inventory available in the Company’s primary market areas during the third quarter than required to meet current demand.”
Low prices for lumber and medium-density fiberboard hit the company’s manufacturing segment, which reported operating income of $2 million, down from $9.1 million in the same quarter last year.
The company said that in its sawmill operations, the average lumber sales price was $321 per thousand board feet, down 19 percent from $398 per thousand board feet in the third quarter last year.
The company’s woodlands division reported operating income of $4.5 million, down from $5 million in the same quarter last year, amid reduced timberland sales and decreased oil and gas related income. Its real estate segment reported an operating loss of $200,000, compared to an operating loss of $300,000 million for the same period last year.
The company said that during the third quarter, it entered into a new $100 million term note for 10 years allowing it to “finance future growth opportunities.” It also spent $9.6 million to repurchase Deltic stock under its authorized share repurchase program.
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