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Moody’s lowers outlook for global & European paper, packaging and forest products industries on lower-than-expected earnings

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Moody’s : Outlook for global paper, packaging and forest products industry revised to stable on lower-than-expected earnings

 Outlook for global paper, packaging and forest products industry changed to stable from positive
 Aggregate operating income forecast revised to 2%-4% from 4%-6%

The outlook for the global paper, packaging and forest products industry has been changed to stable from positive, Moody’s Investors Service said today. In the new report, Moody’s notes that the consolidated operating income of the 44 rated paper and forest product companies will be lower than originally expected in the coming 12 to 18 months, while global GDP growth will also slow.

“The stable outlook for the global paper, packaging and forest products industry reflects operating income in the 2%-4% range over the next one to two years and is driven by lower prices and weaker demand, as well as higher input costs across most subsectors in most regions,” said Ed Sustar, a Moody’s Senior Vice President.

The outlooks for the North American and European paper, packaging and forest products industries likewise have been revised to stable from positive. Operating income for rated North American firms is expected to grow 1%-3% over the next 12-18 months, and these firms represent about 55% of the global rated industry’s operating earnings. European companies’ operating income is expected to grow 2%-4% over the same period, with these firms accounting for around 25% of the global total.

Meanwhile, the outlook for the Latin American paper, packaging and forest products industry remains positive. Moody’s projects that the earnings of rated Latin American firms will grow 6%-8% in the next year or so on the back of increased production volumes from the ramp-up of capacity additions and productivity improvements. Latin American producers represent about 20% of the global rated industry’s operating income.

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