Net earnings for Canadian forest and paper industry drops even further in Q4 08: PricewaterhouseCoopers

Losses and write-downs cause significant changes

VANCOUVER, March 18, 2009 — The Canadian forest, paper and packaging (FPP) industry has not been immune to the economic downturn. Indeed, aggregate fourth quarter 2008 net earnings of 13 of the largest Canadian FPP companies plummeted to -C$1.3 billion from -C$226 million in Q3 2008 and -C$438 million in Q4 2007.

According to PricewaterhouseCoopers' (PwC) quarterly net earnings review, Western Canadian companies' net losses increased across the board to -C$641 million in Q4 of 2008 from -C$368 in Q4 of 2007, excluding TimberWest who actually saw improved results in Q4 2008 due to a C$340 million net gain from its fair value adjustment on modification of debt.

Eastern Canadian companies saw losses deepen dramatically from -C$106 million in Q4 2007 to -C$954 million in Q4 2008. However, it was Domtar who skewed numbers by suffering the most significant drop due to a C$700 million impairment charge.

"It would seem that many companies in the industry are cleaning up their balance sheets-some to the positive and some to the negative, perhaps writing down investments and assets to their net realizable value," says Craig Campbell, leader, Performance Improvement, Global Forest, Paper and Packaging practice for PwC. "Companies have been bleeding and we expect the pain to continue as long as the economy is spiraling downwards."

Western Canadian Company Performance

Eastern Canadian Company Performance

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