Higher prices and stronger wood product, paper packaging and market pulp demand offsetting rising input costs and lower paper demand will keep the outlook for the global paper and forest products industry stable, says Moody’s Investors Service in a newly published global outlook for the sector. Consistent with the stable outlook, the rating agency expects consolidated operating income increases of 2-4% for its 46 globally-rated forest product companies over the next 12-18 months.
Moody’s expects that the consolidated operating income of the 29 North American companies it rates will remain essentially flat, with 2-4% growth over the outlook period. Such growth is consistent with analysts’ expectations of modest operating income growth from North American paper packaging, wood products and timberland producers being partially offset by lower operating earnings from pulp and paper companies. Significantly, these same companies account for about 60% of the global rated industry’s operating income.
Brattleboro – Despite the importance of the forestry industry to Vermont’s economy, fundamental shifts in the market for low-grade wood threaten the survival of many small businesses and the viability of the state’s forests.
“We manage our forests for all kinds of things including durable wood products,” said Michael Snyder, Commissioner of Vermont Forests, Parks and Recreation. “We specialize in high-grade, high-value-added wood products. In fact, they are world renowned. But in order to grow that high-quality product, we need to manage the woods.”
And managing the woods entails – just like cultivating a garden – pulling the weeds, said Paul Frederick, Wood Utilization and Wood Energy Project Leader for the Vermont Department of Forests, Parks and Recreation. “We need to weed out the garden to let the healthier trees utilize the space. If we don’t have the markets for the soft wood, that work is very difficult.”