The Canadian forest, paper and packaging industry has not been immune to the economic downturn, according to figures compiled by Pricewaterhouse Coopers.

Indeed, aggregate fourth quarter 2008 net earnings of 13 of the largest Canadian companies in the sector plummeted to a loss of $1.3 billion from a loss of $226 million in Q3 2008 and a loss $438 million in Q4 2007.

According to PwC’s quarterly net earnings review, Western Canadian companies’ net losses increased across the board to $641 million in the fourth quarter from a loss of $368 in year ago period, excluding TimberWest who actually saw improved results in Q4 2008 due to a $340 million net gain from its fair value adjustment on modification of debt.

Eastern Canadian companies saw losses deepen dramatically from $106 million in Q4 2007 to a loss of $954 million in Q4 2008. However, it was Domtar who skewed numbers by suffering the most significant drop due to a $700 million impairment charge.

“It would seem that many companies in the industry are cleaning up their balance sheets — some to the positive and some to the negative, perhaps writing down investments and assets to their net realizable value,” says Craig Campbell, leader, performance improvement, global forest, paper and packaging practice for PwC. “Companies have been bleeding and we expect the pain to continue as long as the economy is spiraling downwards.”

IE