MRO Magazine

Wood products industry to record second consecutive year of profitability in 2011

Ottawa, ON -- Despite slower production growth in 2011, Canada's wood product industry will record a second consecutive year of profitability, according to The Conference Board of Canada's Spring 2011 outlook for the industry.


Ottawa, ON — Despite slower production growth in 2011, Canada’s wood product industry will record a second consecutive year of profitability, according to The Conference Board of Canada’s Spring 2011 outlook for the industry.

“Following a solid rebound last year, the wood products industry is expected to lose momentum in 2011. Ongoing weakness in the U.S. housing market and a slowdown in residential construction activity in Canada are limiting growth in demand for wood products,” said Michael Burt, associate director, Industrial Economic Trends.

“However, the industry is expected remain in the black in 2011, thanks to cost-cutting measures implemented in previous years and industry efforts to diversify away the U.S. market.”

Production growth will to slow to 3.9% this year, down from an increase of 10.7% in 2010. Starting in 2012, an improvement in residential construction activity in Canada, rising exports to China and the long-awaited recovery in the U.S. housing market should support stronger production growth. However, industry production is not expected to return to its 2005 peak during the forecast period through 2015.

Advertisment

After recording losses totaling $1.6 billion between 2007 and 2009, the industry returned to profitability last year. In 2011, pre-tax profits will increase by 13.8% to $694 million. Profit margins will hover around 3.6% in 2011 and continue to rise over the next four years.