What is Fastmarkets RISI's cost benchmarking?

Fastmarkets RISI's cost benchmarking is a cost efficiency comparison on a weighted average cost at pulp, paper, paperboard, as well as selected lumber/timber and wood products mills globally. Fastmarkets cost benchmarking is available in the Analytical Cornerstone database and modelling program, an essential tool for assessing cash manufacturing costs. 

The database includes all of the inputs needed to estimate cash manufacturing costs including technical details drawn from exhaustive research of many data sources and regional unit cost measurements. The program also provides graphing tools, allows users to tailor views and reports and permits easy export of data to other business applications and platforms, like Excel. 

The Scenario Manager provides the ability to interact with the database and perform what-if scenarios, such as determining the impact of a shift in the currency values or change an individual mill’s costs. Analytical Cornerstone is kept current with quarterly updates for all geographical unit costs and exchange rates. 

The cost data is partially made available in the Mill Asset Database (cost benchmarking basic) as well as in the Index Builder (as percentage values and averages per regional mill groups). 

Cash cost is used for assessing the operational efficiency and short-term competitiveness.

Cash cost (production cost, based on variable cost*) is the operating cost that directly supports the production process. It includes fiber, energy, chemical, labor and maintenance/miscellaneous cost. This cost balance is what Fastmarkets RISI refers to as mass & energy balance. 

Direct cost is used for assessing the asset level cost structure analysis. 

Direct cost consists of cash cost and capital cost. Capital cost = capital charge + depreciation. Capital Cost is calculated based on the mill’s investment (capital expenditure) history, such as upgrading machinery, adding new machinery, adding new product line capabilities, etc. Capitalized maintenance expenses not captured in cash manufacturing costs are included here as well.

EBITDA curve is used for assessing the operational profitability (cash flow)

Financial profitability: financials have been estimated – they are updated automatically by the Analytical Cornerstone application. Revenue – operational costs – overheads. EBITDA numbers in Analytical Cornerstone should always be compared with the actual company report's financial results.

Total Cost is used for long term investment and viability analysis 

Total Cost is the total of Cash Cost, Capital Cost and Selling, General & Administrative (SG&A) Cost. SG&A Cost includes all indirect expenses incurred to run a mill, except for capital and cash costs. These indirect expenses include company salaries (employees that work for more than one mill, such as sales and marketing staff or senior executives), local property taxes not paid on the company level but rather on the mill level, and building overhead cost not directly related to production, such as heating office space in a production facility. Fastmarkets RISI also includes delivery cost and charge of inventory in its SG&A calculation.