Moody's Investors Service has announced that it has revised its outlook for the global paper, packaging and forest products industry from 'positive' to 'stable', following lower-than-expected earnings from major firms operating in the sector.
In its Paper, Packaging & Forest Products – Global report, Moody's noted that the consolidated operating income of the 44 rated paper and forest product companies will be lower than originally expected in the coming 12 to 18 months, while global GDP growth will also slow.
“The stable outlook for the global paper, packaging and forest products industry reflects operating income in the 2%-4% range over the next one to two years and is driven by lower prices and weaker demand, as well as higher input costs across most subsectors in most regions,” commented Ed Sustar, a Moody’s senior vice-president.
Regional Performance
According to Moody's, operating income for rated North American firms accounts for about 55% of the global rated industry's operating earnings, and it is expected to grow between 1% and 3% over the next 12 to 18 months.
European companies' operating earnings, which account for 25% of the global total, are expected to see operating income grow by 2% to 4% over the same period.
Latin American producers represent around 20% of the global rated industry's operating income, Moody's noted, and their earnings are expected to grow by 2% to 4% over the same period.
In terms of specific firms, Moody's said that Smurfit Kappa Group plc (Ba1 stable), Metsa Board Corporation (Ba1 positive) and Mondi plc (Baa1 stable) 'will also benefit from productivity improvements and the ramp-up of new capacity', while Smurfit Kappa and Mondi will also 'benefit from the integration of recent acquisitions'.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
