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Negative Outlook For Global Paper And Forest Products Industry: Moody's

By Steve Wynne-Jones
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Negative Outlook For Global Paper And Forest Products Industry: Moody's

Moody's has changed its outlook for the global paper, packaging and forest products industry to negative from stable, saying that global operating income in the sector will likely decline over the next 12 to 18 months, as wood product and pulp prices ease from recent peaks.

"The negative outlook for the global paper and forest products industry reflects a 2%-4% decline in industry operating income over the next year or so," commented Ed Sustar, a Moody's senior vice president.

"Increasing paper packaging prices and demand for paper packaging and pulp will only partially offset rising input costs, declining demand for paper and lower wood product and market pulp prices," Sustar added.

European Outlook

In Europe, Moody's anticipates that the consolidated operating income of the 16 European producers in the market, which represent about 24% of the global rated industry’s operating income, will decline 0%-2% over the outlook period.

Modest operating income growth from European paper packaging and tissue producers will be offset by lower operating earnings from commodity paper and pulp companies,' it said. 'Paper producers will continue to face secular declines in demand (with some grades facing an accelerated rate of decline), which could be partially offset by stronger average pricing in 2019 compared to 2018.'


At the same time, firms such as Smurfit Kappa, Meets Board Corporation and Mondi plc will benefit from ongoing productivity improvements and rising demand, Moody's said.

© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.

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