The financial performance of Canada’s forest industry improved in 2016. This was largely the result of demand growth in wood markets that pushed up prices, together with a weaker Canada–U.S. exchange rate that helped all forest product exporters.
- Operating profits in 2016 rose by 31.3% from 2015 levels.
- Return on capital employed increased to 8.6% in 2016 (up from 7.1% in 2015), its highest level since 2009.
Both operating profits and the return on capital employed indicate the economic competitiveness of the forest sector. Operating profit measures the difference between operating revenues and operating expenses. Return on capital employed measures the efficiency of capital use in the industry.
(million Canadian dollars)
|Return on capital employed
Why is this indicator important?
- Strong financial performance is essential for the continued economic competitiveness of Canada’s forest industry.
- Both operating profits and return on capital employed help show whether Canada’s forest sector can attract investment and continue to generate economic activity.
What is the outlook?
- Continued weakness in the Canadian dollar is expected to benefit the competitiveness of Canada’s forest sector through increased exports.
- High operating profits will allow firms to make investments such as improving the efficiency of operations.
- Decline in demand is expected to dampen revenue prospects in the printing and writing paper subsector, while an improving U.S. housing market looks positive for solid wood and panel producers.
- Statistics Canada. Quarterly financial statistics for enterprises (61-008-X) (special extraction).
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