Distressed U.S. Housing Market Causes Slowdown in Lumber Production; Pulp Prices...

Distressed U.S. Housing Market Causes Slowdown in Lumber Production; Pulp Prices
Driven Close to Historical Peak, According to PricewaterhouseCoopers

NEW YORK, July 23, 2008 (PRIME NEWSWIRE) -- The distressed housing market
resulted in weaker demand for lumber in the United States, causing lumber prices
to drop by an average of six percent in 2007 compared to 2006, according to
PricewaterhouseCoopers 11th annual "Global Forest, Paper and Packaging Industry
Survey." In response, sawmill operators struggled to cut costs, resulting in a
number of mills reducing production or shutting down entirely. The reduced
lumber production also impacted the availability of wood fiber to the pulp
industry. As a result, by the end of 2007, pulp prices were close to their
historic peak, which dates back to 1995.

The survey summarizes the 2007 year-over-year financial information of the PwC
Top 100 -- the 100 largest forest, paper and packaging (FPP) companies in the
world with publicly available data, ranked by annual revenues. There were 24
U.S.-based companies in the PwC Top 100 in 2007, one less than in 2006. These 24
companies reported aggregate sales of $106.7 billion, which was flat compared to
2006. However, without the increase in merger and acquisition activity seen in
2007, sales would have been down from the previous year. Net income increased by
31 percent from $4.2 billion to $5.5 billion as did losses with eight companies
reporting a total of $500 million in losses in 2007 compared with five companies
reporting $205 million in 2006.

Globally, the world's 100 largest forest, paper and fiber-based packaging
products companies posted mixed financial results in 2007, reflecting the
significantly different business and economic situations across regions. Total
sales of the PwC Top 100 were $343.3 billion in 2007, up from $317.3 billion in
2006. The 20 largest companies, six of which were located in the United States,
accounted for nearly 60 percent of total sales.

"The U.S. forest, paper and packaging industry is experiencing competing
crosswinds. The decrease in housing starts and the downward trend in newspaper
readership are resulting in weaker domestic demand for lumber and wood fiber,"
said Todd Stroup, U.S. leader of the forest, paper and packaging sector for
PricewaterhouseCoopers. "On the international front, the decline in the U.S.
dollar has raised demand for U.S. exports, easing the impact of the economic
slowdown for some producers. Even if the domestic economy improves, however,
U.S. producers must come to grips with the tilting balance of power towards
Latin America and Asia."

The three top regions in terms of return on capital employed (ROCE), a key
measure of performance, were: Latin America (7.8 percent), Emerging Asia (7.3
percent) and the United States (5.5 percent). Canada's producers earned the
lowest average ROCE, a negative 0.1 percent, reflecting the financial crisis
experienced in the Canadian forest products sector. The overall average ROCE of
the companies surveyed was relatively flat compared to the previous year at 4.8
percent, and a long way from the industry's 10 to 12 percent target range.

For more information and to access the full report, "Global Forest, Paper &
Packaging Industry Survey: 2008 Edition - Survey of 2007 Results," visit:
www.pwc.com/fppsurvey08.

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CONTACT: PricewaterhouseCoopers
Clare Chachere
(512) 867-8737
clare.chachere@us.pwc.com