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Strategic & Financial Arguments(TM)
for the pulp and paper industry worldwide
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Participating as industry experts in pulp and paper financing and M & A deals around the world for over two decades, we continue to see the same mistakes made over and over. This newsletter is designed to help you avoid costly mistakes we have seen others make. We will be giving you one or two points each month to help improve your performance.
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Should you be held responsible for maintenance?
Maintenance is directly involved in asset valuation
This is maintenance month here at Paperitalo Publications. For the week of 16 March 2015, I have written a column in Nip Impressions titled, "Maintenance Malfeasance starts at the Top." Then I got to thinking: who holds the CEOs and boards of directors to account? The answer is you, the analyst. Many companies, many facilities, have falsely plumped up current earnings statements by deferring maintenance. In the past, companies have even come out with statements about why it made sense to reduce maintenance.
To use an old fashioned word, poppycock!
Deferred maintenance is a degradation of assets. It is milking the assets. Now, this might make sense in some grades, such as newsprint, where the market is in steep decline. However, it does not make sense when the assets are in viable grades, such as packaging or tissue.
Do you buy what I am saying here? If so, do you think you can do anything about it? After all, you are very powerful....
If you have any private comments you want to share with me, send me an email in confidence at jthompson@taii.com.
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If you have a casual question or a major deal, call me on my personal cell phone - 404-822-3412 or email me at jthompson@taii.com. We are here to help.
Sincerely,
Jim Thompson, CEO
Talo Analytic International, Inc. |
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