From Business North / Business Wire
Third-quarter sales of paper and packaging goods drove financial growth in the U.S. forest products industry enabling continued improvement in companies' balance sheets, according to Fitch Ratings' quarterly industry review.
Earnings in paper products outperformed packaging and containerboard by almost a 2:1 margin as paper price increases kicked in, energy costs declined, and fiber costs remained flat. Wood product earnings were down from 25% to 30% as a result of hurricanes, weather in the South, and easing transportation gluts, which had forced prices up.
One key negative was a significant decline in overall shipment data. Shipments of uncoated free-sheet were down in September, and box shipments for the quarter showed no marked signs of improvement, leading to second-guessing about the strength of the sector's recovery. Both lines typically experience a slowdown in the fourth quarter. Fitch also anticipates overall profits to be down in the fourth quarter due to a seasonal slowdown in construction and a lull in the paper sector.
The entire report 'Paper and Forest Products 2004 Third Quarter-Ups and Downs' is available on the Fitch Ratings web site at www.fitchratings.com .
