Moody's has said that the outlook for the global paper and forest products industry is stable over the next 12 to 18 months, as higher prices and stronger wood product, paper packaging and market pulp demand offsets rising input costs and lower paper demand.
The ratings agency said that it expects consolidated operating income to increase by between 2% and 4% across the 46 globally-rated forest product companies it tracks over the next 12 to 18 months.
In North America, the consolidated operating income of the 29 companies it rates will remain essentially flat, with 2% to 4% growth expected over the outlook period.
"Notably, despite flat operating incomes overall for the North American subset, US timberland and wood products companies including Weyerhaeuser Company, Rayonier Inc., and Potlatch Corporation stand to benefit as the demand for new US housing increases about 8% in 2017 and as lumber prices escalate with the implementation of duties on Canadian lumber exported to the US," said Moody's Senior Vice President Ed Sustar.
In Europe, the 11 producers it rates will see consolidated operating income to increase 1-3% over the outlook period.
'Packaging volume is similarly expected to grow as the European economy improves, and continuing weakness in the Euro should strengthen European exports in 2017,' Moody's said in a statement. 'Moody's forecasts modest economic growth of about 1.4% for the Euro area in 2017 and 2018.'
The ratings agency said that it expects the outlook for the global forest and paper products sector to reflect the 'expectations for the fundamental business conditions in the industry over the next 12 to 18 months'.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.