Industry still trying to find footing

Pulp & Paper Canada
July 23, 2008
By Pulp & Paper Canada
As the pulp and paper industry strengthens in different parts of the globe and weakens in others, financial results are becoming even more polarized by region. According to the PricewaterhouseCoopers' 11th annual Global Forest, Paper and Packaging Industry Survey, the top three regions in terms of return on capital employed (ROCE) were Latin America at 7.8%, Emerging Asia at 7.3%, and the U.S., at 5.5%%. Canada's producers turned in at negative 0.1% in 2007, down from 4.8% a year earlier.

"The global forest, paper and packaging products sector continues to be shaped by a shifting business and environmental factors, creating opportunities for some regions and challenges for others," notes Craig Campbell, leader of PwC's performance improvement practice for the global forest and paper industry, and author of the survey. "Mills with the lowest production costs structures are the ones that are best able to manage currency fluctuations and rising costs, allowing them to take advantage of new opportunities and markets."

Top performers included in 2007 included Setra Group in Sweden, with an ROCE of 25.2%, Kimberly-Clark Mexico with an ROCE of 20.3%, and Kimberly-Clark in the US with an ROCE of 15.2%.

The survey reported that the capital reinvestment ratio for the PwC top 100 companies was 1.2, up from less than 1.0 in previous years. This positive trend is primarily due to the dominance of Chinese and Latin American producers, who have high reinvestment ratios.

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