Compass 2010Global forest, paper, and packaging sector outlook |
Positive indicators suggest that demand in the global forest, paper, and packaging (FP&P) sector will strengthen during 2010 according to a new report by the Deloitte Touche Tohmatsu Limited (DTTL) Global Manufacturing Industry group, Compass 2010: Global forest, paper, and packaging sector outlook. As the global economy shows signs of improvement, a moderate rise in sales from key end markets including construction and pulp, will help the sector to fare better in 2010.
According to the report, consolidation activity is expected to continue this year in certain product lines such as containerboard. Restructuring through bankruptcy is expected to continue in North America and Europe while companies with the financial health to do deals will still face distressed credit markets and the need to look for alternative financing options. In this depressed market, assets are undervalued and private equity will look to take advantage of the potential upside once the restructuring of the industry is completed. Private equity will increasingly be involved in the industry over the next few years with likely deals emerging in forestry markets such as Uruguay and Argentina. A strong appetite among investors for paper-type assets that can provide shorter-term attractive valuations is also an emerging trend.
Out of the tough economic conditions, industry players will likely refocus efforts towards innovation as a source of growth. Biofuels is just such an opportunity. Several European and North American companies are placing bets in biofuels for future revenue growth.
Broad growth may be difficult to come by this year in North America and Europe but the global FP&P sector in 2010 will likely see recovery in key subsectors with stronger growth in markets like South America and China.
Compass 2010: Global forest, paper, and packaging sector outlook
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