The world’s top 100 forest products companies saw total profits slashed in half last year.
An oversupply of wood and slowing demand has been blamed for the fall from US$6.2bn in 2001 to US$3.1bn last year, according to a report by consultants PricewaterhouseCoopers.
It said the worldwide industry needs to shave 10% capacity for all its products. The US and Canada, where costs are high and economic growth is at a standstill, will suffer the most cuts.
The consultants also said there will be a shift away from North America and focus will turn toward low-cost regions, particularly the southern hemisphere, China and Russia.
The third largest forest products company, Weyerhaeuser, announced 3,000 jobs losses in the past year and other big timber firms also made cuts. However, total employment at US companies rose 11,000 to 489,000, mainly because of growing operations overseas.
Overall profitability improved, with return on equity at US companies averaging 5.9% last year, up 0.7% on 2001.
The 11 Canadian companies among the top 100 saw sales rise, due partly to increased exports to the US. Profits at these companies more than doubled to US$238m, but they could be hit this year by the rising value of Canadian currency which increases the cost of export.
