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New report says sawmill losses worst in history |
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In case you
didn't already know it - based on your own experience, industry news,
gut feeling and bank account - it's official: sawmills around the world
experienced some of the worst losses in recent history during 2008 and
early 2009.
According to the Global Lumber/Sawn Wood Cost
Benchmarking Report—2008 & Q1/2009, a biannual study jointly
prepared by International WOOD Markets Group, PricewaterhouseCoopers
and The Beck Group, global average losses (on an EBITDA basis) were
US$-12/m3 (net lumber basis) in 2008 and they fell even further in Q1
2009 to US$-14/m3. By comparison in 2006, the global industry showed a
profit of US$8/m3.
The biggest losses were seen in Canada,
especially Eastern Canada. The report benchmarks timber and sawmilling
costs in all major producing regions in the world and shows that the
region with lowest EBITDA global earnings in 2008 for “average”
sawmills was Canada. This poor performance was the result of the
collapsing US market, the strength of the Canada dollar against the US
dollar and the impact of Canadian export taxes on U.S. shipments.
Average sawmills in Eastern Canada had horrific annual losses of
US$-37/m3 (US$-58/Mbf – nominal count) in 2008 which dropped even
further in the first quarter of 2009.
The regions with the
highest EBITDA earnings for average mills in 2008 were in niche markets
such as South Africa, China and Northwest Russia. While these regions
were the most profitable, they were only marginally so at US$3-$4/m3.
There
were several regional trends that emerged from the timber and
sawmilling cost data that was compiled and analyzed on an
apples-to-apples basis.
· During 2009-Q1, the returns
on timber stumpage (or receipts to timber owners) were highest in
Europe and the Southern Hemisphere and lowest in Russia and Canada.
· During 2009 Q1, delivered log costs were lowest in Western Canada and Russia and highest in Europe.
·
For the full year 2008, average mills in the Baltics, Central Europe,
Chile and Brazil had the lowest sawmilling costs when compared to the
other regions. During the same time period, the highest sawmill costs
were incurred in Australia, South Africa, New Zealand, Russia, and
Eastern Canada.
· From a profitability perspective
(EBITDA basis), the region with the best earnings during 2008 were the
countries in the Southern Hemisphere. During 2009 Q1, Russia joined the
Southern Hemisphere as a top performing region – both regions benefited
from weak currency exchange rates.
· From a
profitability perspective (EBITDA basis), the regions with the worst
earnings during 2008 and 2009 Q1 were Europe and Canada.
With
respect to log costs in 2008, the global average annual delivered log
cost to sawmills was US$69/m3. According to the study results, the
average delivered log cost to sawmills was approximately US$10/m3 lower
in Q1 2009 as market prices for logs and lumber dropped in parallel to
the weakening market conditions. The current level is modestly lower
than that reported in the 2006 report.
The lowest delivered log
costs in 2008 occurred in Russia (for companies with their own forest
licences, where logs are “at cost”) with some regions below US$40/m3.
The next lowest-cost region in 2008 was the Canadian Prairies followed
by Chile, where logs were in the US$42 - 50/m3 range.
The
highest delivered log costs in 2008 were seen in China for mills that
used a combination of imported and domestic logs. The next highest-cost
regions were in Europe, led by Germany, Finland and Austria with log
costs ranging from US$105 to $120/m3, or almost three times the cost of
logs available in Russia and the Canadian Prairies.
The full report is available through www.woodmarkets.com
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