The forest industry’s financial performance improved in 2017 and marked five consecutive years of growth both in operating profits and in return on capital employed.
- Operating profits rose by 37.3% over 2016 levels.
- Return on capital employed increased to 10.5% in 2017, up from 8.6% in 2016.
- The forest industry’s financial performance benefited from improving commodity prices and strong demand for Canada’s key forest products.
Both operating profits and the return on capital employed indicate the economic competitiveness of the forest industry. “Operating profit” measures the difference between operating revenues and operating expenses. “Return on capital employed” measures the efficiency of capital use in the industry.
Financial performance by Canada's forest industry, 2007–2017
(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 industry can attract investment and continue to generate economic activity.
What is the outlook?
- The Canadian dollar is expected to remain weak against the US dollar, which is favourable for the Canadian forest industry.
- The forest industry will face several challenges in 2018, such as a shortage in fibre supply (most notably due to fire and pests), declining demand for some paper products and trade disputes, which could have a negative impact on the industry’s financial performance.
- Capital investments and acquisitions by Canadian publicly traded forest industry firms and an improving US housing market could counteract these challenges and instead bolster financial performance in 2018.
What reporting frameworks does this indicator support?
Sources and information
- Statistics Canada. Quarterly balance sheet and income statement, by North American Industry Classification System (NAICS) (special extraction).