Global Forest and Paper Industry: Net earnings summary
August 26, 2003 By Pulp & Paper Canada
A regional analysis of the financial performance of the global forest and paper industry was released by Pricewater…
A regional analysis of the financial performance of the global forest and paper industry was released by PricewaterhouseCoopers from financial statements issued by pulp and paper companies.
Nine of the largest public forest and paper companies with operations in Western Canada — Canfor, Doman, Interfor, NorskeCanada, Pope & Talbot, Riverside, Slocan, TimberWest and West Fraser — reported losses of $20 million in the second quarter, down from net income of $242 million for the second quarter of 2002. This year’s results include charges of $73 million after-tax for countervailing and anti-dumping duties. In the comparable quarter of 2002, these companies reversed $104 million of countervailing and anti-dumping duties accruals booked in 2001 relative to the ruling by the US ITC in May 2002.
Integrated companies reported a loss of $20 million, down from net earnings of $153 million in the second quarter of 2002. The Q2 2003 results include after-tax foreign exchange gains of $107 million on the translation of USD-denominated debt compared to $59 million in the same quarter of 2002.
Net income for solid wood companies was nil, down from earnings of $89 million for the same quarter in 2002, and includes after-tax payments of $20 million for countervailing and anti-dumping duties.
The five large public forest and paper companies based in Eastern Canada — Abitibi-Consolidated, Cascades, Domtar, Nexfor and Tembec — reported net earnings of $266 million in Q2 of 2003, down from earnings of $384 million posted for the same period in 2002. The Q2 2003 results include after-tax foreign exchange gains of $330 million on the translation of USD-denominated debt, up from $205 million in the same quarter of last year.
Eastern Canadian companies paid $34 million after-tax in countervailing and anti-dumping duties during the second quarter, compared with a $54 million after-tax reversal during the second quarter of 2002.
Reporting net earnings of $862 million US, ten of the largest public US-based forest and paper companies — Boise Cascade, Bowater, Georgia-Pacific, International Paper, Kimberly-Clark, MeadWestvaco, Smurfit-Stone, Sonoco, Temple-Inland and Weyerhaeuser — saw an increase of 33% from net earnings of $646 million US during the same quarter in 2002.
Seven of the largest European-based forest and paper companies — Ahlstrom, Jefferson Smurfit, Metsaliitto, Norkse Skog, Stora Enso, Svenska Cellulosa and UPM-Kymmene — reported net earnings of EUR 251 million in the second quarter of 2003, down 59% from net earnings of EUR 612 million in the corresponding quarter of 2002.
US dollar depreciation against the Euro and the Canadian dollar in the second quarter contributed to falling earnings for European and Canadian companies. The Canadian dollar rose 9% against the US dollar for the quarter and 15% for the year. The Euro continued to strengthen, up 5% for the quarter and up 9% for the year. Since both Canadian and European producers incur costs in domestic currency and sell some production in US dollars, profit margin continues to be reduced.
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