According to PricewaterhouseCoopers (PwC) Quarterly Net Earnings Summary for the period ending 30 June 2003, the depreciation of the US dollar against the euro contributed to the fall in earnings. The European firms were Stora Enso, Norske Skog, SCA, UPM-Kymmene, Ahlstrom, Jefferson Smurfit and Metslitto.

PwC senior manager for global forest and paper products, Dave Thompson, said the situation would continue until there was change in the exchange rate.

In North America there were signs of an improvement in the general economy, which would hopefully filter through to the European market by early 2004.

Profit margins continued to fall as European producers incurred costs in domestic currency and sold some production in US dollars.

The recent forest fires across Europe and Canada (PrintWeek, 14 August) could also have an effect on wood chip supply for the pulp and paper industry.

Thompson said that in Canada some mills had been forced to take downtime and import chip supply.

In the US, 10 of the largest public forest and paper firms, including Georgia-Pacific, International Paper, MeadWestvaco and Weyerhaeuser, reported a combined 33% rise in net earnings to 548m against the same period last year.

Q2 results
Stora Ensos operating profits fell 44%
UPM-Kymmenes profit before extraordinary items fell 31%
M-reals operating profits halved
International Papers net earnings fell by almost 60%

Story by Andy Scott