Spotlight on Canadian forestry sector

How has the forestry sector performed in the past six months?

During the global economic downturn, demand for Canadian forestry products declined, with the sectors GDP dropping from C$ 15.3 billion in 2008 to C$ 14.4 billion in 2009. By the end of Q3 of 2010, demand had returned and output/production had started to increase. The forestry sectors GDP at the end of September 2010 was showing a trend back to its pre-2009 level at an annualized level of C$ 14.9 billion.

What is the current trend in payment delays and insolvencies?

 There has been little evidence of an increase in payment defaults or insolvencies in this sector. The only meaningful data on default has been in the pulp and paper segment, as overcapacity and heavy debt loads from earlier periods of consolidation have led to reduced capacity and mill closures, and in some cases bankruptcy reorganizations.

What should companies selling into the forestry sector pay particular attention to?

Companies selling into this sector should pay special attention to contractual terms of sale and ensure that all agreed conditions reflect industry norms. The longer the term, the more likely the chance of non-payment or the occurrence of deduction or reconciliation issues.

What is Crédito y Caucións short term outlook for the forestry sector?

The short term outlook for the forestry sector is fair. Demand has started to return and, with overcapacity issues addressed, output should move upward. As long as the US economic recovery continues, so should the gains in Canadian forestry.