The third quarter provided much of the same for Canadian forest and paper companies – weak demand and low prices for commodity products, PricewaterhouseCoopers has reported. Overall, the industry suffered a $632 million loss, $80 million more than the $552 lost in the third quarter of 2008.
The nine largest public forest and paper companies in the western part of the country posted losses of $230 million. Western Canadian companies benefited from pre-tax foreign exchange gains of $164 million on the translation of the U.S dollar denominated debt. Four of the nine biggest western forestry companies had positive earnings, while seven reported improved results. However, these ameliorations are primarily due to fluctuations in non-operating results.
In Eastern Canada, the picture is grimmer, with the six largest public forest and paper companies dealing with a loss of $422 million, representing an additional $100 million downward slide from the corresponding quarter in 2008.
PwC’s performance improvement practice leader for the global forest and paper industry Craig Campbell notes the quarterly results paint a dire picture, but points to the upward trend in pulp prices as a positive note for the sector.
“Tough times have sparked some innovation in the sector,” Campbell adds. We are seeing some forest products producers holding on by tweaking operations to run more efficiently at lower throughputs, taking advantage of government incentives and other programs to reduce energy consumption and others looking at potential new revenue streams from bio-energy products.”