Here is a summary of a recent article by J.D. McNutt [1] which I think is timely and interesting.

We all know that the pulp and paper manufacturing is an industry in difficulty. A new integrated, virgin fibre-based mill has not been built in North America (NA) in more than 17 years. Value creation and stocks have gone nowhere over the past decade, making new investments unlikely. However, in the past, some really bad industries have turned around with strong asset management discipline and consolidation; an example is the steel industry. The possibility exists for the pulp and paper industry to turn around, judging by investments made by some private equity firms. Private equity is paying about 30-40% of invested capital costs for assets. With a new focus on capital asset management, older assets (capacity) are being permanently retired, resulting in both lower capacities and improved asset quality. This constrained new capacity investment and focused asset management climate should help paper companies to reach healthier returns on invested capital. Click to continue »