Indicator: Financial performance
The forest industry’s financial performance improved for the seventh consecutive year with increased operating profits and improved return on capital employed.
- Operating profits rose by 25.7% over 2017 levels.
- In 2018, return on capital employed increased to 13.1%, up from 11.2% in 2017.
- The financial performance of the forest industry benefited in 2018 from both high commodity prices for the majority of the year and strong demand for Canada’s major 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, 2008–2018
Operating profits were negative and rising from 2008 to 2009, they continued rising to a positive value in 2010, fallen from 2010 to 2011, remained the same in 2012 slowly increased until 2015 and finally has steadily risen since. The return on capital employed was negative in 2008, steadily rose to positive values through to 2010, fell from 2010 to 2011, steeply rose from 2011 to 2012, slowly rose from 2012 to 2015 and has been steadily rising since 2015.
(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 indicate whether Canada’s forest industry can attract investment and continue to generate economic activity.
What is the outlook?
- Strong demand for wood products over the short term, along with a weaker Canadian dollar, supports a positive outlook for financial performance of the forest sector.
- However, fibre supply shortages (caused by wildfires and pest outbreaks), uncertainty about trade restrictions, and declining demand for some paper products could present challenges to the financial performance of Canada’s forest industry in 2019.
Sources and information
- Statistics Canada. Quarterly balance sheet and income statement, by North American Industry Classification System (NAICS) (special extraction, February 27, 2019).
- Note that financial performance improved for the seventh consecutive year instead of for six years as would be implied if comparing this year’s report to last year’s report. Data revisions by Statistics Canada caused this change.
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