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Escalating Costs To Dampen Benefit Of Higher Prices In Paper Industry: Analysis

Published on Mar 26 2018 1:29 PM in Packaging And Design tagged: Featured Post / Smurfit Kappa / Paper / Moody's / outlook / Stora Enso / Paywall

Escalating Costs To Dampen Benefit Of Higher Prices In Paper Industry: Analysis

Moody's Investors Service has noted that the outlook for the global paper and forest products industry remains 'stable', with operating earnings among the major players set to 'grow modestly' over the next 12 to 18 months. However, it said that escalating costs in the sector are likely to 'dampen the benefit of higher prices'.

In its report, Paper, Packaging & Forest Products – Global: Outlook remains stable as escalating costs offset higher prices, Moody's said that the paper packaging and tissue, timber and wood products, and market pulp segments all continue to carry 'stable' outlooks, while the outlook for the paper segment remains negative.

"We expect the consolidated operating income of the 39 paper and forest products companies we rate globally to grow 2% to 4% in the next year or so," commented Ed Sustar, Moody's senior vice-president.

"Higher prices, productivity improvements and acquisition-related synergies, as well as stronger demand for wood product, paper packaging and market pulp, will drive profit growth, but will be partially offset by lower demand for paper and rising freight, labour, energy and chemical costs," Sustar added.

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