Financial performance
Why is this indicator important?
Canada’s forest industry contributes significantly to the nation’s economy. It is particularly important in many rural communities, where other industries and types of employment can be scarce.
Key measures of the forest industry’s financial performance include operating profits and return on capital employed. High operating profits indicate that an industry’s core business activity is in good health. High return on capital employed indicates that the industry is using its capital efficiently.
What has changed?
Canadian forest industry operating profits stood at $1.4 billion in 2011, down by 40% compared with that of 2010. However, that is still a considerable rebound compared with the negative operating profits recorded in 2008 and 2009. The return on capital employed continued to improve, reaching 6.2% in 2011, which is above the long-term average (4.8%) of the past 15 years.
The relatively weak operating profits in 2011 were primarily due to ongoing weakness in North American lumber markets as a result of the U.S. housing crisis, and to a decline in global pulp market prices because of emerging global overcapacity and slowing paper production. However, the improvements in return on capital employed highlight the success of industry-wide efforts to improve efficiency.
| 2001 | 2010 | 2011 | |
|---|---|---|---|
| Return on capital employed | 5.5% | 5.8% | 6.2% |
Source: Statistics Canada, quarterly survey of financial statistics for enterprises, CANSIM Table 187-0002 (special extraction)
Financial performance by Canada's forest sector, 2001-2011
Source: Statistics Canada, quarterly survey of financial statistics for enterprises, CANSIM Table 187-0002 (special extraction)
Long description (includes data table)