Print Solutions
The outlook for the global paper and forest products industry has changed to positive from stable, Moody’s Investors Service says in its latest report. The outlook change reflects higher prices and lower recycled fibre costs across most subsectors of the industry in most regions, leading to consolidated operating income growth in the mid single digits over the coming 12 to 18 months.
In line with the global industry outlook change, the outlooks for the North American, European and Latin American paper and forest products industries have also changed to positive from stable, as have the outlooks for the North American and European paper packaging subsectors, the North American, European and Latin American pulp subsectors, and the North American printing and writing paper subsector. The outlook for the North American timber and wood products remains stable.
‘Our positive outlook for the global paper and forest products industry reflects higher than expected market pulp, paper packaging and printing and writing paper prices,’ said Ed Sustar, a Moody’s senior vice president. ‘As a result, the 42 paper and forest products companies we rate globally should see consolidated operating income growth of 4 to 6% over the next year or so, while G-20 GDP growth of just over 3% through 2019 will support demand and resulting higher prices.’
Operating income for the 26 Moody’s rated North American paper and forest product companies, which account for almost 60% of the global rated industry’s operating income, will likewise grow 4 to 6% over the next 12 to 18 months. Stronger earnings from paper packaging, market pulp and timberland will offset declining income for tissue and oriented strandboard producers.
Operating income for the 11 Moody’s rated European paper and forest product firms, which represent about 25% of the global rated industry’s operating income, will also grow 4 to 6% over the next year or so. The growth drivers include higher prices for specialty paper, paper packaging, pulp, tissue and wood products, as well as greater volume across all subsectors except graphic paper.
Meanwhile, Moody’s projects operating earnings growth of 6 to 8% for the five Latin American producers it rates. The Latin American segment, which accounts for about 17% of the global rated industry’s operating income, will benefit from strong BEK pulp prices and higher volumes from Fibria Celulose’s 1.95 million tonne pulp mill recent expansion, while Suzano Papel e Celulose’s earnings will increase as its two new tissue production lines continue to ramp up.
