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European Industry Feeling Benefits of Business Transformation

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Moody’s, Boston, Mass., USA, has published a Special Comment stating that first-half 2014 results indicate European paper and forest products companies are starting to feel the benefits of business transformation. The report concludes that first-half results indicate that transformational investments are starting to pay off.

Players that have repositioned or broadened their business profiles should maintain or even improve profitability in 2015, including Metsä Board Corp., Mondi Plc, Sappi Ltd., Stora Enso Oyj, and UPM-Kymmene.

Less diversified players such as Lecta S.A., Norske Skogindustrier ASA and Portucel S.A continue to face shrinking demand for paper and price declines, factors that could erode their profitability more permanently. Furthermore, the analysts stated that signs of possible future consolidation appear. Lower pulp prices are a double-edged sword and maintaining robust liquidity will be key.
 

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