Canadian forest product company earnings plummeted by 118% to an average loss of C$61m during the second quarter, a new report by PricewaterhouseCoopers reveals.

The poor performance has been blamed on a weakening Canadian dollar and increased costs for energy, labour and raw materials.

Five of the nine largest forestry companies in western Canada recorded positive results. The overall average profit from the region was C$40m, compared to C$281m in 2004.

Eastern Canadian producers fared worse because of their larger amount of US denominated debt. The six largest operators in the region had an average second quarter loss of C$101m, down from a C$67m profit a year ago.

America remained more profitable, with the 15 public US-based forestry companies posting net earnings of US$1.34bn, down 23% on 2004.

Europe’s seven largest timber and paper producers reported average net profits of €77m, an 85% decrease on a year ago, reflecting continuing difficult market conditions in Europe.