world news - 02.04.2009
Russia’s role in the global forestry sector and its prospects for the future
The three leading regions in terms of return on
capital employed (ROCE), the main performance
index, were Latin America (7.8%), developing
Asian countries (7.3%) and the US (5.5%).
Canadian producers had the lowest average ROCE
(negative 0.1%), which reflects the financial
crisis that the Canadian forestry industry is
suffering. The total average ROCE for the companies
surveyed was relatively stable compared
to the previous year’s figure (4.8%) and was
considerably far from the industry target indices
of 10-12%. Fast growing markets, primarily
China and India, appeared to be more stable
and continued their rapid development.
In 2007, high GDP growth rates were sustained
in China (11.4%), India (9.2%), Russia (8.1%)
and Latin America (5.6%). The leaders in the
FPP industry are the fast growing economies of
Asia – notably China – as well as Latin America
and Russia.
Alexei Ivanov, Partner in the Forestry, Pulp-and-Paper
group at PricewaterhouseCoopers, comments: "The global forestry, pulp-and-paper industry is largely
affected by both commercial and environmental factors,
creating new opportunities for some regions and setting
challenges for others. Entities with the lowest production
costs find themselves in an advantageous position in
terms of fluctuations in exchange rates and a rise in
costs, which allows them to seize new opportunities
and enter new markets".
The best performing companies in 2007 include
Setra Group of Sweden, with a ROCE of 25.2%;
Kimberly-Clark in Mexico, with a ROCE of 20.3%; and
Kimberly-Clark in the US, with a ROCE of 15.2%.
The capital reinvestment ratio (i.e., investments
in proportion to depreciation, or an index
reflecting to what extent depreciating assets
are replaced by capital investments), was 1.2
for the PwC Top 100. In previous years, this
index was less than 1.0. This positive trend is
largely attributable to the growth of Chinese
and Latin American manufacturers, with indices
of 3.08 and 2.84, respectively. Canada is at the
opposite end of the scale with a reinvestment
index of 0.4 in 2007. It is expected that
mergers and closures will increase in regions
like North America which have smaller, older
companies that are unable to compete with
high-tech, low-cost manufacturers in Latin
America.
Indeed, the industry’s growth is propelled
by forestry companies operating in emerging
economies, notably China, India, Latin America
and Russia. In terms of deliveries, it is
increasingly evident that South America has
the competitive advantage, while China has
the largest impact on demand. Additionally, the
number of companies from emerging economies
in the PwC Top 100 is increasing. In 2007, China’s
Sino Forest, Shangdong Huatai Paper and Lee
& Mann Paper and India’s Ballarpur Industries
entered the list.
In terms of revenue, in 2007 the US company
International Paper was ranked first in the PwC
Top 100, with sales of 21.9 billion US Dollars,
just under this entity’s 22 billion US Dollars in
sales in 2006. The Finnish Stora Enso is listed
second with sales of 18.32 billion US Dollars,
or 12% higher than in 2006 (16.27 billion US
Dollars). The US company Kimberly-Clark is
ranked third with 18.27 billion US Dollars in
sales, or 9% higher than last year’s 16.75 billion
US Dollars. In 2007, the 20 biggest companies
from the PwC Top 100 accounted for 60% of
total sales.
See also:
- — Electronic export permit system for China timber importers and exporters
- — Lack of industrial residues creates new markets for wood chips
- — Belarus: Private businesses, sole traders to export timber
- — Forests can have a major role in the fight against climate change
- — Reduced domestic purchase and import of timber in Norway
