Moody’s downgrades the world’s paper and forest products industry
Moody’s Investors Service Inc. said yesterday that the next year or two for the world’s paper and forest products industry is going to be rough.
Moody’s expects weaker demand and prices due to the sluggish economies of Europe and North America, and the increased supply from China.
Moody’s is also expecting a period of “continued consolidation”, as we are already seeing with Resolute Forest Products (formerly AbitibiBowater)’s move to acquire Fibrek.
An interesting aspect of this potential acquisition – Fairfax Financial Holdings Ltd. is a significant shareholder of both Resolute and Fibrek.
“Fibrek, and its stock, has not performed well for a long time,” Prem Watsa, the chief executive of Fairfax, said in an emailed statement explaining his firm’s position. “New management has worked very hard to try to reverse problems from the past, but the orphaned assets and the market have worked against them.”
Moody’s downgrades paper and forest products industry (FinancialPost)