Global forest, paper, packaging CEOs less confident about revenue growth over next 12 months than CEOs in other sectors, yet are more confident about revenue in next three years, finds PwC survey; 92% have implemented cost-reductions in last year
VANCOUVER, British Columbia
March 11, 2013
– CEOs plan to invest in operational effectiveness, innovation and R&D
Forest, paper & packaging (FPP) CEOs are less confident about revenue growth over the next 12 months than their peers in other sectors, but are more optimistic about their company's revenue prospects in the next three years, according to PwC's 16th Annual Global CEO Survey released recently in Davos, Switzerland .
"The CEOs of forest, paper and packaging companies are a resilient bunch. Recently they've faced challenges such as shifting demand and markets, a bumpy economy, overcapacity, environmental issues and rising costs," said Bruce McIntyre, Leader of PwC's Forest, Paper and Packing practice in Canada . "CEOs have identified their top three priorities: enhancing operational effectiveness; investing in innovation and R&D; and developing new business models."
Improving operational effectiveness and investing in R&D
McIntyre says, "FPP CEOs are intensely focused on trimming any fat from operations." The survey found 92% of sector CEOs have implemented a cost-reduction initiative in the past 12 months, and 89% are planning to in the coming 12 months. This result is higher than the overall average of 70% of CEOs across all sectors in the PwC survey. Some of the cost reduction reported was through staff cuts, which are expected to continue, with 18% of FPP CEOs reporting plans to cut their workforce by more than 8% this year.
R&D and innovation is a top priority for 42% of FPP CEOs in the next 12 months—a full 10% higher than the overall average across the entire CEO Survey. Almost three-quarters of the FPP CEOs said they will make changes to increase capacity for innovation and R&D.
Targeting pockets of opportunity
Half of the FPP CEOs surveyed have entered into a new strategic alliance or joint venture in the past year, 34% completed a cross-border M&A and 32% completed a domestic M&A. "The high degree of transactions and partnerships reflects the broadening uses being found for fibre such as bioproducts, biofuels, and textiles."
CEOs reported plans to conduct even more deals in the coming 12 months, with 58% contemplating a strategic alliance or joint venture, 47% a cross-border M&A, and 34% a domestic M&A.
Other key findings from the FPP CEO Survey include:
For PwC's 16th Annual Global CEO Survey, 1,330 interviews were conducted in 68 countries during the last quarter of 2012, including 38 FPP CEOs in 15 countries. This year's survey looked at key items on CEO agendas around the world including confidence in growth, current threats like the availability of talent, approaches to leadership and the need to rebuild trust. By region, 449 interviews were conducted in Asia Pacific, 312 in Western Europe , 287 in North America , including 120 in Canada and 167 in the U.S., 165 in Latin America, 95 in Central & Eastern Europe , 50 in Africa and 32 in the Middle East .
The full survey can be downloaded at www.pwc.com/ceosurvey. Copies are also available from the media contacts noted in this release, including related charts and information graphics to help illustrate your stories.
To watch a video clip of PwC Canada CEO Bill McFarland's address to the Economic Club of Canada , please visit: http://www.pwc.com/ca/en/audit-assurance/bill-mcfarland-economic-club-canada-speech.jhtml.
Forest products CEOs and other industry leaders will discuss these topics at PwC's 26th Annual Global Forest and Paper Industry Conference on May 9, 2012 in Vancouver , Canada . Please visit: www.pwc.com/ca/forestconf
Follow PwC on Twitter at @PwC_Canada_LLP and on Facebook at http://www.facebook.com/pwccanada.
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