25 June 2012
Paper sales continue to be weak: report
OTTAWA—The Conference Board of Canada has released its latest outlook for Canada's paper products industry, and it's not very pretty.

While it's nothing players in the paper industry haven't heard before, the report notes e-readers and tablets are reaching a "critical mass of saturation among consumers," meaning a decline in printed book sales. Print ad spending in the U.S. hasn't recovered from the recession, "where demand for newsprint and communication papers continues to wane." (Newsprint sales were down almost 30% in Canada last year says the report.)

Pulp prices dropped "considerably" in the second half of 2011, driving down production and revenues. "Prices have begun to recover, but the benefits will be slow to materialize for domestic producers," reads the outlook.

It was a decent year for paper makers, who collectively pulled in $240 million in profit last year, according to the Conference Board. "Although margins remain razor thin, this marks a significant improvement over the years of losses throughout much of the 2000s," it reads.

Regarding print ad spending, a graph in the report sourced from the Television Bureau of Canada shows a very small decline in U.S. magazine ad spending and a much more significant (almost 10%) drop in newspaper ad spending in 2011 from 2010.

"The story for print ad spending in the key U.S. market continues to go from bad to worse," states the report. "Although the story is less stark in Canada, the underlying trend is the same."

As a result of weak prices and production, the board expects revenues to fall by almost five per cent this year. "In response, the industry will continue to find ways to make more with fewer people – it is forecast to shed 5,000 jobs this year and overall employment is expected to decline from 2013 through 2016."

The more positive news is the industry has recorded its second consecutive year of (minimal) profitability, "and that trend is expected to continue in 2012." Margins are forecasted at around two percent up until 2016.

To check out the full outlook, visit this page.
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