Global paper and forest products industry outlook to remain stable on steady operating income growth

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The report covers European companies Mondi, Norske Skog, Smurfit Kappa, Metsa Board, WEPA, UPM-Kymmene, Stora Enso, The Navigator Company, Sappi, Lecta and ENCE.

Overview :

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. 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.

In Europe :

· Of the 11 rated European producers, analysts expect consolidated operating income to increase 1-3% over the outlook period

· Such an increase is consistent with expectations that stronger operating earnings regionally from rated packaging companies will outweigh those from paper producers, which continue to face secular declines

· Nevertheless, in the report, Moody’s analysts underscore expectations of an increase in operating income from European wood-based building producers, as larger investments in homebuilding and renovations bolster demand for lumber and panels

· Packaging volume is similarly expected to grow as the European economy improves, and continuing weakness in the Euro should strengthen European exports in 2017

· European producers account for approximately 25% of the Moody’s-rated operating income for the industry globally

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