Canadian Paper Industry Margins Decline in 2005

The Canadian paper industry’s earnings declined sharply in 2005, a reflection of their unfavorable exchange rates, high energy, transportation and chemical costs, and limited pricing power. A Pulp and Paper Week survey revealed that nine publicly-traded Canadian companies combined generated a total loss of C$505.9 million, compared with earnings of C$160.8 million in 2004, despite a 2.9% increase in sales. Margins for full year 2005 worsened to negative 1.8% from 0.6% in 2004. The Canadian dollar was 7.4% stronger overall for 2005 compared with the previous year.