Impact of Capital Spending on Paper Industry Profitability, 1996 Engineering Conference Proceedings
It has been noted long and often that the paper industry is the most capital-intensive of all U.S. industries (Figure I)...This, in itself, is not as significant as the fact that the industry has returned only 6.0% on the shareholders equity during the past five years. This record is the worst among all 20 of the industry groups tracked by Forbes Magazine in their annual comparisons of industrial performance (Figure 2). In short, massive infusions of capital into the industry have led to shareholder returns on the same order as no-risk returns on Treasury bills (6.9%). Perhaps even more disturbing is the downward trend in earnings of 14 of the industry’s largest competitors. Figure 3 contrasts the 1985-1990 with the 1991-1995 period, marking a clear falloff in Return on Equity.
Impact of Capital Spending on Paper Industry Profitability, 1996 Engineering Conference Proceedings