The extent of losses in the Canadian forest product sector during the second quarter have been laid bare in an earnings report compiled by PricewaterhouseCoopers.
The bleak picture was further underlined by a study by the British Columbia provincial government stating that the mountain pine beetle infestation is projected to kill 78% of the province’s marketable pine forests by 2015 if it continues at its present rate.
PricewaterhouseCoopers’ report shows Canadian industry earnings dipped by C$509m during the second quarter, compared to a year ago, incurring an overall loss of C$45m. One company, Tembec, recorded a C$164m loss.
A slowdown in the US housing market and the strength of the Canadian dollar are blamed for the situation.
It is feared that bankruptcies could hit the sector if poor market conditions persist. Upcoming third quarter results will be watched with close interest.
Meanwhile the BC government report “Timber Supply and the Mountain Pine Beetle Infestation in British Columbia – 2007 update” says the epidemic will have killed 530 million m3 of pine by 2007, and some one billion m3 by 2015.
But the spread rate is expected to reduce within a couple of years.
The 20 harvesting areas analysed in the report account for 87% of the mature pine in the interior of the province.