The summary for the period ending 31 March 2004, showed that net earnings for Europe's top performers which included Norske Skog, Stora Enso, SCA, UPM and ArjoWiggins, increased to 389.2m (e586m).

However the picture painted is not a true reflection of current economic and market conditions, according to PwC.

Craig Campbell, a senior partner in PwC's global forest and paper practice, said that although the earnings showed significant increases, they were not a true reflection of market performance.

The results had mainly been affected by Stora Enso's year-on-year change. The firm's results last year were hit hard by shutdowns and production curtailment.

The same had also been reflected in the US, where both International Paper and Weyerhaeuser had suffered last year from the impact of shutdowns and closures.

"The second quarter figures should be more reflective of the true state of the market, and how well companies are performing," he said.

US companies this year had so far benefited both from price increases in wood products and pulp.

In the US, 10 of the largest firms, which included International Paper, Weyerhaeuser, and MeadWestvaco, saw an increase of over 400% in net earnings to 446.3m.

In eastern Canada, the five largest forest and paper companies reported a net loss of 27m, a shock contrast to net earnings of 105m for the same period in 2003.

A major factor on the reversal in results was due to adjustments in foreign exchange on the denominated debt.

PwC provides professional advice and services to 50% of the world's top 100 largest forest and paper companies.

Story by Andy Scott