In an earnings summary released by PricewaterhouseCoopers on the global forest and paper industry, Canada’s figures…
In an earnings summary released by PricewaterhouseCoopers on the global forest and paper industry, Canada’s figures were up a drastic 825%.
Canada’s forest and paper sector posted earnings of $453 million, compared to the corresponding quarter’s $62 million loss. The strengthening Canadian dollar resulted in a pre-tax foreign exchange gain of $398 million in the quarter on the translation of U.S. dollar denominated debt.
In Western Canada, seven of the nine largest public forest and paper companies saw positive results during the second quarter. In aggregate, the Western Canadian industry achieved earnings totaling $262 million up from $40 million in the second quarter of 2005. The major component of the 2005 earnings were gains on foreign currency denominated debt, as companies in the west reported $172 million in pre-tax foreign exchange gains.
Similar to the reductions seen in the second quarter of 2005, countervailing and anti-dumping duties expensed by the companies decreased by 51% to $66 million from $135 million in 2005 due to lower duty rates.
In Eastern Canada, the six largest public forest and paper companies reported aggregate earnings of $191 million in 2006, up 287% from a loss of $103 million in 2005. With a larger amount of U.S. dollar denominated debt than their western counterparts, eastern companies are more sensitive to movements in Canada/U.S. exchange rates. As a result, the strengthening of the Canadian dollar had a large impact. The eastern industry experienced pre-tax foreign exchange gains of $226 million on U.S. dollar denominated debt, compared to a loss of $87 million in 2005.
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