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Canada`s forest, paper and packaging sector was the world`s worst performer in 2008, accounting for half of the combined $8 billion US in record losses posted globally by the top 100 firms in the field, according to a report Wednesday.
Canadian companies account for only 11 of those 100 companies but still had losses of $4 billion, said the PricewaterhouseCoopers report. Not one of them made money in 2008 and only three turned a profit in 2007.
"All the stars were aligned in a negative sense here because the forestry industry is always cyclic, and we were already down when the economic tsunami began to take effect a year ago," said Craig Campbell, leader of PwC`s performance improvement practice for the global forest and paper industry, and author of the survey.
"Not only did the much anticipated recovery in the U.S. markets served by Canadian producers not materialize in 2008, a number of Canadian producers actually described the year as the most difficult and worst downturn in recent history."
The Canadian firms` losses represented a 355-per-cent increase over 2007, when they totalled $900 million.
Worse yet, Canada delivered the poorest performance in the industry`s key metric, which measures profitability as a percentage of the money invested in the business. It is used because the industry is one of the most capital-intensive in the world, with new plants costing in the neighbourhood of $1 billion.
In Canada, the industry`s return on capital employed, or ROCE, was a negative five per cent. Packaging firm Cascades was the only Canadian company in the PwC Top 100 to post positive ROCE, at 0.9 per cent, followed by fine-paper maker Domtar at zero per cent.
Read the full article here.
Canadian companies account for only 11 of those 100 companies but still had losses of $4 billion, said the PricewaterhouseCoopers report. Not one of them made money in 2008 and only three turned a profit in 2007.
"All the stars were aligned in a negative sense here because the forestry industry is always cyclic, and we were already down when the economic tsunami began to take effect a year ago," said Craig Campbell, leader of PwC`s performance improvement practice for the global forest and paper industry, and author of the survey.
"Not only did the much anticipated recovery in the U.S. markets served by Canadian producers not materialize in 2008, a number of Canadian producers actually described the year as the most difficult and worst downturn in recent history."
The Canadian firms` losses represented a 355-per-cent increase over 2007, when they totalled $900 million.
Worse yet, Canada delivered the poorest performance in the industry`s key metric, which measures profitability as a percentage of the money invested in the business. It is used because the industry is one of the most capital-intensive in the world, with new plants costing in the neighbourhood of $1 billion.
In Canada, the industry`s return on capital employed, or ROCE, was a negative five per cent. Packaging firm Cascades was the only Canadian company in the PwC Top 100 to post positive ROCE, at 0.9 per cent, followed by fine-paper maker Domtar at zero per cent.
Read the full article here.