Global Forest and Paper Industry: Net Earnings Summary — Three months ended March 31, 2017

 

This Net Earnings Summary has been prepared by PwC based on financial statements and other sources issued by the selected companies. Earnings are reported in regional currencies, as noted.

Canada

The largest Western and Eastern Canadian based forest products companies reported overall higher net earnings in the first quarter of 2017 compared to the first quarter of 2016.  The reported seasonally adjusted US housing starts for March 2017 were 1.203 million units1, down 2.7% from the 1.236 million annualized starts reported in January 2017 and up 6.7% from the 1.128 million units reported in March 2016. 

Average commodity prices for lumber and pulp in Q1 2017 increased over Q4 2016 and Q1 2016. The average price of Western SPF 2x4s in Q1 was US $351 per thousand board feet, up 11% from Q4 2016 and 29% from Q1 2016. The average price of Southern Pine 2x4s in Q1 was US $460 per thousand board feet, higher than Q4 2016 price of US $432 and Q1 2016 average price of US $387. The Q1 average price of Plywood (Southern 3/8”) was US $291 per thousand board feet, up from US $284 in Q4 2016, but down 8% from Q1 2016 average of US $317.

Average softwood pulp (NBSK, Europe) prices were US $828/tonne, up from US $810/tonne in Q4 2016. Hardwood pulp (BEK, Europe) average prices were US $709, an increase over Q4 2016 average of US $656, but 4% lower than Q1 2016 average of US $736.

The Canadian/US dollar exchange rate has continued to stabilize. The recent currency average in Q1 was $0.76, compared to $0.75 in Q4 of 2016 and $0.72 in Q1 of 2016. 

Western Canadian based companies posted net earnings of $245.1 million in the first quarter of 2017, compared to net earnings of $208.5 million in the fourth quarter of 2016 and net earnings of $129.9 million in the first quarter of 2016.  West Fraser reported quarterly earnings of $123.0 million, compared to $79.0 million in the fourth quarter of 2016 and $42.0 million in the first quarter of 2016 primarily due to improved product pricing across operating segments.

Interfor released earnings of $19.7 million, up significantly from $0.8 million in the first quarter of 2016. The Company attributed the earnings growth to strong cash-flow, production gains, and an optimization initiative started in 2016.

Eastern Canadian based companies posted net earnings of $187.6 million in the first quarter of 2017, compared to net earnings of $16.3 million in the fourth quarter of 2016 and earnings of $122.6 million in the first quarter of 2016.  Norbord reported net earnings of $64.8 million for the quarter, compared to net earnings of $81.4 million in the fourth quarter of 2016 and $31.6 million in the first quarter of 2016. Cascades reported net earnings of $161.0 million, compared to $4.0 million in the previous quarter. The change in earnings posted is primarily due to a $160 million fair-value revaluation and dilution gain related to the company’s Boralex investment.

[1] US Census Bureau

 

Net Earnings (Loss):  Western Canada

   

$ millions

 

 

 

Company

Q1 2017

Q4 2016

Q1 2016

West Fraser

$123.0

$79.0

$42.0

Canfor

77.5

44.2

42.3

Interfor

19.7

26.6

0.8

Western Forest Products

16.2

36.2

17.3

Mercer International

12.8

24.7

12.1

Conifex

(1.4)

5.1

28.5

Fortress Paper Ltd

(2.7)

(7.3)

(13.0)

Total CAD

$245.1

$208.5

$129.9

 

Net Earnings (Loss):  Eastern Canada

   

$ millions

 

 

 

Company

Q1 2017

Q4 2016

Q1 2016

Cascades

$161.0

4.0

75.0

Norbord

64.8

$81.4

$31.6

Tembec

24.0

(9.0)

27.0

Resolute Forest Products

(62.2)

(60.0)

(11.0)

Total CAD

$187.6

$16.3

$122.6

 

United States

Nine of the largest US-based forest and paper companies reported net earnings of US $1.28 billion in the first quarter of 2017, compared to earnings of US $1.67 billion in the fourth quarter of 2016 and earnings of US $1.27 billion in the first quarter of 2016.

Weyerhaeuser reported net earnings of US $157.0 million compared to net earnings of US $551.0 million in the fourth quarter of 2016 and US $ 81.0 in the first quarter of 2016.  Weyerhaeuser’s 2016 fourth quarter results include after-tax earnings of $489 million from discontinued operations, primarily consisting of gains from the divestiture of the Cellulose Fibers pulp mills and printing papers business, and net after-tax charges of $44 million for special items.

 

Net Earnings (Loss):  United States

   

US $ millions

 

 

 

Company

Q1 2017

Q4 2016

Q1 2016

Kimberly-Clark

$575.0

518.0

560.0

International Paper

209.0

219.0

334.0

Packaging Corp. of America

117.4

110.6

103.7

Weyerhaeuser

157.0

$551.0

$81.0

WestRock

98.2

78.5

59.8

Sonoco

54.3

105.0

60.2

Graphic Packaging

37.0

34.9

57.5

Domtar

20.0

47.0

4.0

Boise Cascade Co

10.0

4.1

5.0

Total USD

$1,277.9

$1,668.1

$1,265.1

 

Europe

Nine of the largest European based forest and paper companies reported net earnings of € 831.2 million for the first quarter of 2017, compared to earnings of € 732.1 million in the fourth quarter of 2016 and €826.5 million reported in the first quarter of 2016.

UPM-Kymmene reported net earnings of € 240.0 million in the first quarter of 2017, compared to earnings € 187.0 million in the fourth quarter of 2016 and € 227.0 million reported in the first quarter of 2016. Norske Skog reported a net loss of € 30.5 million, attributing the loss to the weakening NOK, and its effect on interest expense and currency losses.

 

Net Earnings (Loss):  Europe

     

€ millions

 

 

 

Company

Q1 2017

Q4 2016

Q1 2016

UPM-Kymmene

€ 240.0

€ 187.0

€ 227.0

Svenska Cellulosa (SCA)

212.4

162.3

218.2

Metsä Group

106.7

68.2

68.3

Stora Enso

107.0

56.0

114.0

Smurfit Kappa

73.0

106.0

90.0

Holmen

51.0

45.3

23.8

Mayr-Melnhof Group

36.8

37.9

39.4

The Navigator Company

34.8

83.2

44.6

Norske Skog

(30.5)

(13.7)

1.2

Total EUR

€ 831.2

€ 732.1

€ 826.5

 

Rest of the World:  Japan and Emerging Markets

Six of the largest forest and paper companies in Japan posted net earnings of US $578.8 million in the first quarter of 2017, compared to earnings of US $416.2 million in the fourth quarter of 2016 and a loss of US $16.5 million in the first quarter of 2016.  Oji Holdings Corporation reported earnings of US $116.4 million in the first quarter of 2017, compared to earnings of US $148.4 million in the fourth quarter of 2016 and a loss of US $158.2 million in the first quarter of 2016.  

In the Emerging Markets regions, five of the largest forest and paper companies reported net earnings of US $272.8 million, compared to a net loss of US $158.0 million in the fourth quarter of 2016 and earnings of US $751.5 million in the first quarter of 2016.  The Brazilian Real has appreciated 24% against the US dollar from Q1 2016 to Q1 2017.

 

Net Earnings (Loss): Japan

     

US $ millions

 

 

 

Company

Q1 2017

Q4 2016

Q1 2016

Sumitomo Forestry

$188.5

54.1

62.8

Nippon Paper Industries Co.

122.9

(21.3)

(103.8)

Oji Holdings Corp

116.4

$148.4

($158.2)

Unicharm Corporation

113.9

145.8

81.4

Rengo

(6.0)

57.2

26.6

Daio Paper

43.1

32.0

74.7

Total USD

$578.8

$416.2

($16.5)

 

Net Earnings (Loss): Emerging Markets

   

US $ millions

 

 

 

Company

Q1 2017

Q4 2016

Q1 2016

Suzano Pulp & Paper (Brazil)

$143.3

(133.7)

288.1

Fibria Celulose (Brazil)

104.7

(27.9)

250.5

Sappi (South Africa)

88.0

$90.0

$100.0

Arauco (Chile)

(45.3)

75.8

52.9

Empresas CMPC  (Chile)

(17.9)

(162.2)

60.0

Total USD

$272.8

($158.0)

$751.5

 


Previous quarter reports

Global Forest and Paper Industry: Net Earnings Summary — Three months ended December 31, 2016

Global Forest and Paper Industry: Net Earnings Summary — Three months ended September 30, 2016

Global Forest and Paper Industry: Net Earnings Summary — Three months ended June 30, 2016

Global Forest and Paper Industry: Net Earnings Summary — Three months ended March 31, 2016

Global Forest and Paper Industry: Net Earnings Summary — Three months ended December 31, 2015

Global Forest and Paper Industry: Net Earnings Summary — Three months ended September 30, 2015

Global Forest and Paper Industry: Net Earnings Summary — Three months ended June 30, 2015

Global Forest and Paper Industry: Net Earnings Summary — Three months ended March 31, 2015

Global Forest and Paper Industry: Net Earnings Summary — Three months ended December 31, 2014

Global Forest and Paper Industry: Net Earnings Summary — Three months ended September 30, 2014

Global Forest and Paper Industry: Net Earnings Summary — Three months ended June 30, 2014

Global Forest and Paper Industry: Net Earnings Summary — Three months ended March 31, 2014

Global Forest and Paper Industry: Net Earnings Summary — Three months ended December 31, 2013

Global Forest and Paper Industry: Net Earnings Summary — Three months ended September 30, 2013

Global Forest and Paper Industry: Net Earnings Summary — Three months ended June 30, 2013

Global Forest and Paper Industry: Net Earnings Summary — Three months ended December 31, 2012

Global Forest and Paper Industry: Net Earnings Summary — Three months ended September 30, 2012

Global Forest and Paper Industry: Net Earnings Summary — Three months ended June 30, 2012

Global Forest and Paper Industry: Net Earnings Summary — Three months ended March 31, 2012

Global Forest and Paper Industry: Net Earnings Summary — Three months ended September 30, 2011

Global Forest and Paper Industry: Net Earnings Summary — Three months ended June 30, 2011 

Global Forest and Paper Industry: Net Earnings Summary — Three months ended March 31, 2011

Global Forest and Paper Industry: Net Earnings Summary — Three months ended September 30, 2010

Global Forest and Paper Industry: Net Earnings Summary — Three months ended June 30, 2010

Global Forest and Paper Industry: Net Earnings Summary — Three months ended 31 March 2010

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