Forestry, Paper, and Packaging off to a strong start in 2017 – driven by strong US housing starts

May 11, 2017

By: Newswire

The PwC Q1 2017 FPP Deals Insights saw an increase in deal volume and total deal value relative to the fourth quarter (Q4) of 2016. A total of 23 M&A deals were announced during Q1 2017 with a total value of US$4.2 billion. This activity is being driven by a relatively healthy and optimistic building product sector, characterized by steadily improving US housing starts, which were up 9.9% in the fourth quarter of 2016 compared to same period in 2015.

“At the end of 2016, we saw a resurgence of US housing despite lower average commodity prices for building materials than the previous quarter,” said Kevin Bromley, Partner and PwC Canadian Forest, Paper and Packaging Leader.

M&A activity finished on a strong note, with the fourth quarter bringing in 39 deals with a value of US$3.4 billion.  Overall, M&A deal activity was down in 2016 with 122 deals compared to 143 deals announced in 2015.  The overall value of M&A activity was also significantly lower, with a value of US$11.5 billion in 2015 down from US$31.9 billion in 2015. Despite economic uncertainty, this indicates that the market is stabilizing and key players are forging deals to gain a competitive advantage.

Western Canadian based companies posted net earnings of $203.3 million in the fourth quarter of 2016, compared to net earnings of $30.7 million in the fourth quarter of 2015. Eastern Canadian based companies posted net earnings of $16.3 million in the fourth quarter of 2016, compared to losses of $372.4 million in the fourth quarter of 2015.

“In terms of the industry’s prospects for the remainder of 2017, we are keeping a close watch on the new US Administration’s evolving trade policies, in particular, the current softwood lumber dispute and negotiations between US and Canada. The industry is also looking at other overseas markets to diversify trade and to seek new growth opportunities, such as China and is making inroads with new emerging markets including India.”

These and other current business issues will be discussed by senior forest and paper company executives, customers, suppliers, industry analysts and government policy makers at the 30th Annual PwC Global Forest, Paper & Packaging Industry Conference being held in Vancouver, British Columbia today.

By: Newswire

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