Yahoo Finance PotlatchDeltic to Halt Idaho Plant Output Amid Coronavirus Woes
PotlatchDeltic Corporation PCH announced plans to temporarily halt production at the St. Maries, ID industrial plywood plant, in view of the impact of the COVID-19 pandemic on plywood markets.
This timberland owner and wood products company will halt production in the facility starting Apr 20, 2020 for two weeks. This may be extended further, depending on the market conditions. Meanwhile, the company will continue to operate other businesses, including lumber mills in Idaho, Michigan, Minnesota and Arkansas.
"Our balance sheet remains strong and PotlatchDeltic will outlast the pandemic and be ready to return to 100% capacity when conditions return to normal," said Chairman and CEO Mike Covey.
Wood Product Makers Continue to Cut Production
Wood product manufacturers have been curtailing output in order to offset losses in demand, as the coronavirus pandemic has hit the construction market. Recently, Weyerhaeuser Company WY announced that it is adjusting operating capacity at certain manufacturing facilities, per customers’ sentiment and order flow. For April, Weyerhaeuser expects to reduce operating capacity by 20% for lumber, 15% for oriented strand board or OSB, and 15-25% for engineered wood products or EWP through temporary mill curtailments and reduced shift postures (read more: Weyerhaeuser Updates on Business Activities Amid Coronavirus).
Louisiana-Pacific Corporation or LP LPX updated its guidance for 2020 due to uncertainties surrounding the impact of coronavirus, governmental responses and subsequent economic recovery. Due to lower short-term demand for oriented strand board (OSB), LP reduced production by at least 100 million square feet in April. This reduction of almost one third of the total OSB capacity was done through a combination of curtailments and reduced schedules (read more: Louisiana-Pacific Amends Guidance in Response to Coronavirus).
The most recent data from the U.S. Commerce Department revealed that housing starts dropped 1.5% to a seasonally adjusted annual rate of 1.599 million units in February from 1.62 million in January. Notably, the February data does not conclusively reflect the mounting economic effects of the pandemic. March data for housing starts will be released on Apr 16.
Share Price Performance
Share price of PotlatchDeltic — a Zacks Rank #3 (Hold) company — has declined 33% compared with the industry’s 29.7% decline in the past three months. The downside reflects the rapidly evolving market conditions due to the pandemic outbreak. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
That said, long-term housing prospects remain strong. Also, market pundits are in favor of improvement in the second half of the year. Strong balance sheet and operational agility will help wood product manufacturers like PotlatchDeltic, Weyerhaeuser, UFP Industries, Inc. UFPI and Trex Company, Inc. to address the rapidly changing market conditions.
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