Price Waterhouse Forest Industry Report Offers Little Optimism

Wednesday, December 09, 2009 03:58 AM

Prince George, B.C. – Price Waterhouse Coopers has wrapped up an assessment of third quarter results for the forest industry in Canada and although the news is grim, the picture is a little brighter for companies in the west.

The nine largest public forest and paper companies in Western Canada posted losses of $210 million for the third quarter of 2009, compared to $230 million losses reported for the prior year period. Four of the nine companies posted positive earnings and seven companies reported improved results, however the improvement was mainly due to fluctuations in non-operating results.

Western Canadian companies benefited from pre-tax foreign exchange gains of $164 million on the translation of US dollar denominated debt in the third quarter of 2009 compared to a loss of $87 million in the third quarter of 2008. Included in the results for West Fraser are asset impairment charges of $155 million.

The story is very grim in the eastern sector of the country where the six largest public forest and paper companies reported losses of $422 million for the third quarter of 2009, a further decline from the $322 million losses for the same period in 2008.

Craig Campbell, leader of PwC's Performance Improvement practice for the global forest and paper industry says there is a glimmer of optimism "Some hope is offered by the current positive price trend for pulp, which we believe will continue in 2010. And, while still relatively small in terms of volumes, there is some optimism in Western Canada about the growth of lumber exports to China."

Campbell adds "Tough times have sparked some innovation in the sector. We are seeing some forest products producers holding on by tweaking operations to run more efficiently at lower throughputs, taking advantage of government incentives and other programs to reduce energy consumption and others looking at potential new revenue streams from bio-energy products."

Meantime in the United States, 10 of the largest public US-based forest and paper companies posted earnings of US $1.2 billion in the third quarter of 2009, up almost US $500 million from earnings of US $733 million in the same period of 2008. All but two companies posted positive or improved earnings, resulting mainly from an estimated US $1.1 billion of tax credits for the use of black liquor as a biofuel to generate energy. The tax credit is due to expire at the end of the year.

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Posted on Wednesday, December 09, 2009 03:58 AM in News by 250 News

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Comments

Posted by: samiam on December 9 2009 9:13 AM

Huh??? These companies are showing less losses than the year before(so they say).

Bottom line, they are still losing money hand over fist. They must think I never took math in school!

The whole thing is propoganda, to ensure they don't get charged with ROBBING us. They are a bunch of thieves, that couldn't work for an honest dollar to save their lives.

I reckon things are going to change real soon! The people that pay the bills, have just about had enough!

And they want to take our GUNS away!! What a bunch of thieving losers!!

Posted by: faxman on December 9 2009 10:03 AM

Huh? I don't see anything about guns in the story.

Posted by: Loki on December 9 2009 10:31 AM

up 500 million due to a 1.1 billion tax credit.
Does that mean that without the tax credit, they would be down 600 million?

Posted by: samiam on December 9 2009 10:44 AM

Huh faxman??? Nor did I, but if you are able to "read between the lines"............Hello

Posted by: faxman on December 9 2009 10:55 AM

Hello to you too samiam! I still don't see the correlation between PWC's report and taking our guns away. Are they planning to attack us? Those Eastern bastards will stop at nothing... :)

Posted by: BATMAN on December 9 2009 4:58 PM

Faxman, that was funny!

Posted by: samiam on December 9 2009 6:46 PM

right on faxman!!! The correlation is, they don't want us to attack them when we are really done with their nonsense. Have a great day!!

Posted by: samiam on December 9 2009 6:49 PM

right on faxman!!! The correlation is, they don't want us to attack them when we are really done with their nonsense. Have a great day!!

Posted by: samiam on December 9 2009 6:50 PM

whoops!!

Posted by: Harbinger on December 9 2009 9:16 PM

hey1 look on the bright side. Oil and gas exploration and development will compensate for our crappy forest scenario. Better yet, if we can drill off the coast like the folks on the "Rock" and in the English Channel, and the Gulf of Mexico, we can still postpone becoming one of them so called "have not provinces. The glass isn't half empty or half full. But it is kinda oily.

Posted by: Harbinger on December 9 2009 9:16 PM

Hey! (faulty keyboard)

Posted by: interceptor on December 9 2009 9:25 PM

So what do you do for a living, samiam? When "the people that pay the bills" have had enough with the forest companies as you say then please tell me where your money will come from?

Posted by: samiam on December 10 2009 4:13 AM

What I do for a living interceptor has nothing to do with anything. Everybody in Prince George is affected by the forest industry, no matter what you do. WE ARE A MILL TOWN. However, when these big companies, like Canfor cry poor mouth, I cry BS.

When they say they lost $200,000,000.00 in the last year, that is based on their target profit. If they budgeted a profit of $400,000,000.00, and only made $200,000,000.00 in profit, they tell us they lost 200 million.

I wish I had such a loss. It's a numbers game, that we will never understand! At the end of the day, they walk away with a pocket full of money. The people that helped them make that money can blow gas!End of story.

Time we stood up and said enough is enough.

Posted by: socredible on December 10 2009 8:33 AM

Samiam, I don't know where you got that idea of 'projected profit' minus 'actual profit' equals 'loss' from, but it is utter nonsense in regards to Canfor, or what the PWC Report is talking about.

When a forest company like Canfor, or any other company for that matter, "loses money" in a fiscal year it simply means that on their Balance Sheet the net worth of that company in terms of its shareholder's equity, or "Capital", has declined by that amount. It's Liabilities have increased relative to its Assets, and a corresponding decline in Capital "balances" this. It's worth that much less to its owners over that period, in other words.

In business accounting operational profit (or loss) is NOT 'cash' Receipts minus Disbursements, but rather Sales minus Expense. What may have been 'budgeted' as a revenue target, and subsequently missed, does not enter into those calculations at all. Profit and Loss is always after the fact, it records what has actually happened in the Firms 'trading' account after the fiscal period has ended, and that result is closed to the Balance Sheet reflecting an increase or decrease in Equity.