31 CEOs interviewed in 23 countries 32% 94% Forest, paper and packaging. 20th CEO Survey.

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1 20th CEO Survey Forest, paper and packaging 31 CEOs interviewed in 23 countries 32% of FPP CEOs said they were very confident about growth See page 1 94% of FPP CEOs expect the bulk of growth to develop organically See page 2

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3 20 th CEO Survey Forest, paper and packaging 1 Confident, but carefully so In these economically and politically challenging times, Forest, Paper and Packaging (FPP) CEOs lean conservative about their own company s growth during the next year. 32% of FPP CEOs versus a global average of 38% said they were very confident in PwC s 20th CEO Survey, carried out between 26 September and 5 December, Looking longer term over the upcoming three-year horizon, all CEOs, including FPP, are bullish on their companies with a global average of 51% being very confident. In historical context, this compares to only 33% in our first 1997 survey. Figure 1 Reserved optimism in FPP Q: How confident are you about your company s prospects for revenue growth over the next 12 months? 29% Energy 32% FPP 38% Global 41% Industrial Manufacturing 48% Mining

4 2 20 th CEO Survey Forest, paper and packaging Costs carry high clout FPP CEOs far exceed global averages in expecting the bulk of growth to develop organically in the next year (94% in FPP versus 79% global), reflecting a change from earlier surveys when collaborations and new strategic alliances played a larger role. Cost reductions (77% in FPP versus 62% globally) are seen as second strongest growth drivers, with M&A and alliances ranking third and fourth. The US and Germany stand tallest in the growth picture, with FPP CEOs weighting both nations over 20% more important than global. In terms of top threats, FPP zeroes in on prices with 94% versus 55% globally fearing volatile commodity costs as a top risk and 74% versus 49% wary of whipsawing energy costs. FPP CEOs see less threat than average in speed of technological change only 39% rate it as a top concern versus 70% globally. Figure 2 The key: Organic growth and cost cuts Q: Which of the following activities, if any, are you planning in the coming twelve months in order to drive corporate growth or profitability? 45% M&A 32% New strategic alliances 77% Cost reduction 94% Organic growth

5 20 th CEO Survey Forest, paper and packaging 3 Managing man and machine When rating areas of the business they most want to strengthen to capitalize on new opportunities, FPP CEOs count innovation nearly two times higher than the global average 42% versus 23%. They also focus on strengthening human capital and the customer experience among their top four paths to new opportunity, as do global CEOs. But digital and technological capability plays far less of a role with only 3% of FPP CEOs versus 15% globally rating it as the one area they would most want to strengthen. Clearly, FPP CEOs rely heavily on the human element in the balance of man and machine in driving the future. But the human factor presents a challenge: those same skills that drive innovation like adaptability, problem solving, creativity, leadership and collaboration also lead the list as hardest traits for which to recruit. Figure 3 Focusing on innovation, with a human touch Q: Given the business environment you re in, which one of the following do you most want to strengthen in order to capitalize on new opportunities? Innovation Human capital Digital & tech capabilities Customer experience 15% 16% 15% 3% 10% 13% 23% 42% Global FPP

6 4 20 th CEO Survey Forest, paper and packaging Gauging the trust challenge Trust has been climbing steadily up the CEO agenda. And as our interactions become ever more automated, data driven and virtual, safeguarding stakeholder trust is increasingly dependent on digital factors. The top 4 threats to trust levels for FPP breaches of data privacy and ethics; cyber security breaches affecting information or critical systems; IT outages; and risks from social media parallel global CEOs. The most notable divergence is FPP executives are less afraid of breaches of data privacy and ethics (39%) than the global average (55%). Despite that, though, FPP CEOs are vigilant, with roughly the same amount as global, 55%, saying they are addressing that risk today. Figure 4 Data and ethics: Less of a trust issue Q: To what extent do you think the following areas will impact negatively on stakeholder trust levels in your industry in the next five years? 39% less FPP CEOs rate data and ethics breaches as less of a trust threat 55% that compares to only 55% of the global average

7 20 th CEO Survey Forest, paper and packaging 5 On the global vs. national trade seesaw CEOs recognize the challenge as the world s political and social compass begins to point more toward national interests rather than collective, global ones. In FPP, 61% of CEOs agree or agree strongly that it is becoming harder to balance competing in an open, global marketplace with trends toward more closed national policies. As for the benefits of globalization, FPP follows the global pattern on the top 3 positives. But more in FPP than the global average 71% versus 62% say globalization helped enable universal connectivity and 52% in FPP versus 34% globally say it worked to uphold access to infrastructure and basic services. Both FPP and global agree that improved ease of moving capital, people, goods and information is the second greatest benefit. Figure 5 Walking the changing line on global trade Q: To what extent do you agree or disagree that it is becoming harder for CEOs to balance competing in an open global marketplace with trends toward more closed national policies? 10% 29% 42% 19% Disagree Neither Agree Agree strongly

8 Contacts Max Blocker, PwC US Global and US Leader Forest, Paper & Packaging Tel: +1(678) Kevin Bromley, PwC Canada Canadian Leader Forest, Paper & Packaging Tel: +1 (604) Ian Murdoch, PwC Austria European Leader Forest, Paper & Packaging Tel: PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see for further details. At PwC, our purpose is to build trust in society and solve important problems. We re a network of firms in 157 countries with more than 223,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at