Some 92 percent of the sector’s CEOs indicated in the report that their

companies had implemented a cost-reduction initiative in the past 12

months. Almost as many – 89 percent – plan to put one into action within the next year. These figures are higher than any other sector examined by PwC.

As a consequence of these measures, workforce reductions will be made. In 2013, one in five CEOs is planning to cut back on personnel. While the period immediately ahead appears challenging, there are some glimpses of light in the longer perspective. At the same time as company heads are less optimistic about 2013 than their counterparts in other industries, they are actually more optimistic in the long-term. Indeed, 53 percent are confident that there will be growth within a timescale of three years. The report also indicated that three of four CEOs in the industry believe that energy and raw-material costs could threaten growth, which is a significantly higher figure than the sector average.

Half of the company executives say that they will increase investment in raw material supply in the next three years, and believe that Africa and Latin America will become ever more important in terms of access to raw materials. This confirmed by the growing number of industry players establishing operations in these regions.

When the CEOs are asked to state their three investment priorities, enhancing operational efficiency topped the list. R&D and innovation together with strategic alliances shared second place.

The report concluded by stating that innovation will play a decisive role in the new business models of the industry and that we will also see new forms of collaboration within and outside the sector.

Facts: PwC’s report was based on interviews with 49 CEO, from 23 countries in the forestry and paper industry.