Deloitte 2012 Global Forest, Paper, and Packaging Sector Outlook: Industry Will Continue to Operate at a Regional Level

NEW YORK, April 3, 2012 /PRNewswire/ -- According to the 2012 Global forest, paper, and packaging sector outlook launched today by Deloitte Touche Tohmatsu Limited's (DTTL) Global Manufacturing Industry group, the forecast for this sector is closely tied to economic and operational dynamics at the regional level, and how they impact the global supply chain of the industry.

According to the report, China is expected to lead the sector in growth for 2012 due to increasing demand in the Asia Pacific region. However, Chinese companies are confronted with profitability challenges because of raw material cost and producer fragmentation. Europe is facing a potential economic recession due to declining demand and overcapacity for paper products. Meanwhile, growth in South America is slowing, with only an incremental increase in pulp and paper demand expected for 2012. Modest growth is anticipated in North America overall, but several subsectors will still face difficulties ahead.

"A handful of well-managed paper and packaging producers will continue to focus on operational efficiencies and cost containment strategies while building strong cash reserves on their balance sheets," said John Dixon, Global Forest, Paper, and Packaging sector leader, DTTL. "These companies are in a good position to make bold moves into adjacent products, enter new emerging markets, or further their market share through acquisitions. They are also able to better address the growing challenge of securing limited natural resources and manage the uncertainties of government regulation. The widening gap between the haves and have-nots could have a material impact on the global dynamics of the industry."

For the pulp and paper subsector, forecasts are positive; as such, pulp plants are under construction in Brazil, Chile, Argentina, and Uruguay. Lower production costs, availability of raw material, and shorter growing time for trees are key drivers for the increase in pulp production in South America.

"Pulp producers are nearing the bottom of the roller coaster ride that they have been on for the past year and a half. Pulp prices have tumbled from their recent highs thanks to an 18 percent increase in inventories compared to last year when there was a scarcity of pulp throughout the world," said Dixon. "At the end of the first quarter in 2012, prices are beginning to recover, led by South American producers. The global forest, paper, and packaging companies that have made the necessary adjustments to strengthen their position through liquidity, operational efficiencies, and opportunistic growth will likely have a strong performance year in 2012 and will continue to influence the on-going evolution of the industry."

To access the 2012 Global forest, paper, and packaging sector outlook, please visit www.deloitte.com/manufacturing.

About Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte's approximately 182,000 professionals are committed to becoming the standard of excellence.

Deloitte Touche Tohmatsu Limited Global Manufacturing Industry group

The Deloitte Touche Tohmatsu Limited Global Manufacturing Industry group is comprised of around 2,000 member firm partners and over 13,000 industry professionals in over 45 countries. The group's deep industry knowledge, service line experience, and thought leadership allows them to solve complex business issues with member firm clients in every corner of the globe. Deloitte member firms attract, develop, and retain the very best professionals and instill a set of shared values centered on integrity, value to clients, and commitment to each other and strength from diversity. Deloitte member firms provide professional services to 80 percent of the manufacturing industry companies on the Fortune Global 500®.  For more information about the Global Manufacturing Industry group, please visit www.deloitte.com/manufacturing.

SOURCE Deloitte Touche Tohmatsu Limited

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