Rayonier Inc. (RYN), a maker of specialty wood pulp used in cigarette filters, fell the most in almost five years after a company executive said prices for the commodity may decline amid plentiful global supplies.
Rayonier dropped 15 percent to $46.67 at 12:18 p.m. in New York. The Jacksonville, Florida-based company’s shares earlier fell 16 percent, the biggest intraday decline since Dec. 1, 2008.
Weaker prices in Europe for specialty-pulp products also used in the automotive and construction industries are adding to concern about potential excess supply, Jack Kriesel, a senior vice president of Rayonier’s performance-fibers business, said yesterday on a conference call.
“Although these are not currently large markets for Rayonier, we see indications that competitors who supply those markets are trying to place volumes in the higher value sales specialties markets,” Kriesel said.
Some producers of generic pulp are trying to sell their product into specialty markets, depressing prices, said Paul Quinn, a Vancouver-based analyst at RBC Capital Markets.
“With already significant declines in commodity pulp prices, those producers are looking to gain by selling into the lucrative specialty pulp market,” Quinn said today by telephone.
Rayonier, which also has investments in U.S. timberland and real-estate development, is now conducting annual price negotiations with its customers, he said.
“There is no question that downward price pressure exists,” Kriesel said.
Third-quarter net income fell to $57.4 million, or 44 cents a share, from $80.6 million, or 62 cents, a year earlier, Rayonier said yesterday in a statement. Per-share profit trailed the 46-cent average of six analysts’ estimates compiled by Bloomberg.
“We outlined our outlook on the performance-fibers market in great length yesterday on our earnings call,” Russell Schweiss, a Rayonier spokesman, said today by e-mail. “We stand by those statements and have nothing further to add at this point.”
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