Investigation of costs and net revenues in Mazandaran Wood and Paper Company, Iran

Transcription

1 Invesigaion of coss and ne revenues in Mazandaran Wood and Paper Company, Iran Majid Zadmirzaei 1*, Soleiman Mohammadi limaei 2 1- M.Sc. Suden, Faculy of Naural Resource, Universiy of Guilan, Iran 2- Assisan Professor, Deparmen of Foresry, Faculy of Naural Resources, Universiy of Guilan, Iran *Corresponding Auhor Absrac In his sudy he effecs of deflaion and is impacs on ne revenues and oal coss in differen producive lines of Mazandaran Wood and Paper Company was invesigaed. Coss and ne revenues daa from financial balance shee of 6 producive lines were colleced over he period Nominal daa was convered o real daa using consumer price index. -es wih significance level of 0.0 was used o deermine he significan differences beween nominal and real daa using SPSS sofware. The resuls showed ha in all of he producive lines here are significan differences beween nominal and real daa of coss and ne revenues daa. Regression analysis was used o predic he coss and ne revenues models. The resuls indicaed ha i is possible o predic coss and revenues wih linear models. Key words: Deflaion, ne sale, oal cos, Consumer Price Index (CPI), regression analysis JEL Code: E44, E27, C13 Inroducion The area of naural fores in Iran is approximaely 12.4 million hecares, equal o 7. percen of he oal area of Iran. Of his, approximaely 1.9 million hecares are commercial foress called Iranian Caspian, Hyrcanian or Norhern foress. Oher foress are non-commercial foress. The commercial foress locaed in he norhern par of Iran, norh of he Alaborz Range and souh of he Caspian Sea. These foress grow, like a hin srip. Indusrial harvesing occurs only in he Caspian fores. Because of he severe climaic condiions and fores degradaion, foress in oher regions are no exploied for indusrial wood producion. Fores indusries in Iran produce sawn wood, wood-based panels, as well as pulp and paper from hardwood species. Moderae volumes of fores producs, mainly paper, are impored. Modes quaniies of wood are burned as fuel (Mohammadi Limaei, 2006). Mazandaran Wood and Paper Company (MWPC) has been esablished in 1977 as a join sock company and approved by exraordinarily general assembly of sakeholders ac in 200. Is main office is locaed in Tehran and is facories are in Sari Ciy, norh of Iran. This company manages and supervises abou ha of Iranian Caspian foress. The fores producs are ranspored o he company own mill. The company produces differen producs such as pulp, paper and cellulose producion (Financial balance shee, MWPC, 2009). Due o he imporance of his company in supplying of differen papers, i is imporan o invesigae he ne revenues and coss of his company. Paper is considered a sraegically imporan commodiy ha plays an imporan role in economic, culural and social developmen. Per capia consumpion of paper and paperboard is one of he crieria o compare he counries in economic and culural developmen (Tajdini and RouhNiya, 2008). COPY RIGHT 2013 Insiue of Inerdisciplinary Business Research 1136

2 The coss and ne revenues of a company direcly affec he ne profi. However, inflaion is a key facor o reduce he ne profi. Inflaion which is he increase in permanen immehodical and he price of goods and services ha evenually will reduce he purchasing power and will cause economic chaos (Farhang, 1992). Economic expers measure inflaion by comparing price of goods baskes and services annually. Prices of some goods and services in he caegorizing of goods and services will increase, while prices of oher goods and services may be reduced and ulimaely his is he overall price level which influence inflaion (Mohammadkhani, 2004). Bernsein (1992) invesigaed he price margins and capial adjusmen in Canadian mill producs and pulp and paper indusries. He esimaed a model incorporaing non-compeiive behaviour in produc and facor markes. Dobbelaere (200) esimaed price-cos margins and union bargaining power for Belgian Manufacuring. Ornaghi (2008) sudied on price deflaors and he esimaion of he producion funcion. Hanninen II, and Toppinen (1999) sudied long-run price effecs of exchange rae changes in Finnish pulp and paper expors. Buongiorno and Gilless (1980) sudied he effecs of inpu coss, economies of scale, and echnological change on inernaional pulp and paper prices. Lohmander, P. (1987) invesigaed he ime series of sumpage prices in Sweden, Norway and Finland and has shown ha Auoregressive models give reasonable represenaions of he hree price series. Gong (1990) also used auoregressive models for Swedish saw imber prices and price predicions. Howard (199) esimaed price rends for sumpage and seleced agriculural producs in Cosa Rica. He also describes earlier sudies of sumpage prices in differen counries oher periods. Linden and Uusivuori (2000) invesigaed he sochasic properies of imber prices in Finland during he period 1900 o 199. They conclude: However, i is ineresing o noe, ha in our analysis he daa firs appear non-saionary, bu ha his efficiency resul is laer disillusioned by he saionariy and non-orhogonaliy of he forecas error series. Mohammadi Limaei and Lohmander (2007) invesigaed he sumpage price predicion in Iranian Caspian foress. The aim of his research is o invesigae nominal and real ne revenues and coss daa in differen producion line and predic he coss and ne revenues models in MWPC. Maerials and Mehods Daa collecion: The required daa for his sudy has been colleced from financial balance shee and income saemen of company. Daa from he following 6 producions lines were considered: 1 Newspaper, 2 -Wriing and prining paper, 3 - Whie Kraf liner, 4 - Brown Kraf liner, - Paper fluing line (1), 6 - Paper fluing line (2) COPY RIGHT 2013 Insiue of Inerdisciplinary Business Research 1137

3 Deflaion: Consumer Price Index (CPI) is used for deflaion (real cos and ne revenue). CPI is a saisical esimae consruced using he prices of a sample of represenaive iems whose prices are colleced periodically (Diewer, 1993.). This index measures he cos of purchasing a fixed baske of goods and services over ime. This index is called cos of living index for i reflecs changes in he cos of living. The CPI in Iran is calculaed by he Iranian Cenral Bank of based on 39 iems of goods and services (consumpion iems of households from 7 ciies wih 70 percen of urban populaion). The base year is 2004 (Cenral Bank of Iran, 2010). The equaions (1 and 2) were used respecively o calculae he acual or adjused ne revenues and oal cos (Table 1) (Mohammadi Limaei, 2011): R a R 100 Y (1) R is ne revenues in year Where R a is he adjused ne revenues, Y is CPI in year and 100 is he CPI in base year (2004). C 100 C a Y (2) Ca is adjused oal cos o he base year, C is oal cos in year and 100 is he CPI in base year (2004). COPY RIGHT 2013 Insiue of Inerdisciplinary Business Research 1138

4 Unis newspaper Prining& wriing Whie Kraf liner Brown Kraf liner Fluing line(1) Fluing line(2) inpu/oupu Fix Cos Variable cos Revenue Ne revenue Fix Cos Variable cos Revenue Ne revenue Fix Cos Variable cos Revenue Ne revenue Fix Cos Variable cos Revenue Ne revenue Fix Cos Variable cos Revenue Ne revenue Fix Cos Variable cos Revenue Ne revenue Table1. Adjused inpu and oupu daa from 200 o 2010 (Iranian Million Rial) es: -es wih significance level of 0.0 was used o deermine he significan differences beween nominal and real daa using SPSS sofware. Regression Analysis: I is well known ha ime series models fied wih he hisorical values can be used o predic fuure values of he series. Naurally, we can use ime series models o predic fuure ne revenue and cos in differen producion uni a MWPC. Various linear models were used in order o predic he ne revenue and cos for differen producion uni in MWPC and evenually he following model was significan based on 6 years daa. NS NS 1 (3) NS 1 is he ne revenue in nex year(year +1), NS is he ne revenue in curren year(year ), is esimaed parameer, is he error erm. disribuion and Gaussian, wih expeced value 0 and sandard deviaion C NC 1 (4) is assumed o be independen idenical. COPY RIGHT 2013 Insiue of Inerdisciplinary Business Research 1139

5 (Iranian Million Rial) ijcrb.webs.com C is he cos in nex year (year +1), C 1 is he cos in curren year(year ), is esimaed parameer, is he error erm. wih expeced value 0 and sandard deviaion. is assumed o be independen idenical disribuion and Gaussian, Resuls Trend of ime series daa: Nominal and real ime series daa (ne revenues and oal cos) of newspaper show downside rends over he period There was a significan change afer defilaion in he rae of nominal and real daa (Fig. 1) Year Nominal revenue Real revenue Nominal oal cos Real oal cos Fig 1. Comparison of nominal and real daa in he newspaper producion uni. Nominal and real ime series daa of prining and wriing paper producion line has an ascending rend. Furhermore, afer deflaion here was a significan change in he rae of nominal and real daa (Fig. 2). COPY RIGHT 2013 Insiue of Inerdisciplinary Business Research 1140

6 ( Iranian Milliom Rial) (Iranian Million Rail) ijcrb.webs.com Nominal revenue Real revenue Nominal oal cos Real oal cos Year Fig. 2. Comparison of nominal and real daa in he prining and wriing uni Nominal and real ime series daa of whie Kraf liner from 200 o 2007 has a uniform process. I has an increasing rend afer 2007 and reached o is maximum level in 2008, and i was declined. Bu, here was a significan change in he amoun of nominal and real daa from 2007 o 2010 (Fig. 3) Nominal revenue Real revenue Nominal oal cos Real oal cos Year Fig. 3 - Comparison of nominal and real daa in he whie Kraf liner Uni Nominal and real ime series daa of brown Kraf liner showed ha in his producion uni, nominal ne revenues and oal coss a he beginning increased slowly and laer on sharply COPY RIGHT 2013 Insiue of Inerdisciplinary Business Research 1141

7 ( Iranian Milliom Rial) ( Iranian Milliom Rial) ijcrb.webs.com increased from 200 o However, here is a significan difference in raes of nominal and real daa a his uni of afer deflaion (Fig. 4) Nominal revenue Real revenue Nominal oal cos Real oal cos Year Fig. 4- Comparison of nominal and real daa in he brown Kraf liner uni Nominal and real ime series daa of paper producion fluing line (1) showed ha hey have irregular rends. (Fig. ) Nominal revenue Real revenue Nominal oal cos Real oal cos Year Fig. - Comparison of nominal and real daa in he fluing line uni (1) Paper producion fluing line (2) uni ime series daa showed ha he nominal ne revenues and oal coss from 200 o 2010 have an upward rend, bu ne real ne revenues and he oal cos COPY RIGHT 2013 Insiue of Inerdisciplinary Business Research 1142

8 ( Iranian Milliom Rial) ijcrb.webs.com during he sudy period wih a sinus condiion. However, here is significan difference in he rae of nominal and real daa (Fig. 6) Nominal revenue Real revenue Nominal oal cos Real oal cos Year Fig. 6- Comparison of nominal and real daa, he Fluing line uni(2) -es: -es a significan level of 0.0 percen was used In order o show he differences beween nominal and real daa in differen producion line of MWPC. Resuls indicaed ha here are significan differences a he significan level of 0.0 percen in all daa beween nominal and real producion line of MWPC (Table 2). Table 2.Resuls of -es. newspaper Wriing & Prining Whie liner Kraf Brown liner Kraf Fluing (1) Fluing (2) *cos (Toal cos) *Sale (revenue) Real-nominal cos* Real-nominal sale* Real-nominal cos Real-nominal sale Real-nominal cos Real-nominal sale Real-nominal cos Real-nominal sale Real-nominal cos Real-nominal sale Real-nominal cos Real-nominal sale Mean SD df Sig.(2- ailed) COPY RIGHT 2013 Insiue of Inerdisciplinary Business Research 1143

9 Regression analysis: Regression analysis was used o deermine an esimaor for ne revenue process in differen producion uni a MWPC. A he firs sage, he regression used S as dependen variable, S 1 and ime (year) as independen variables. The resuls showed ha here is a significan relaion beween S and S, bu here is no a significan relaion beween ime (year) and S. 1 1 Hence a he nex sage he variable ime was deleed. The resuls showed ha here is a significan relaion beween S and S. 1 Furhermore, regression analysis was used o deermine an esimaor for cos process in differen producion uni a MWPC. A he firs sage, he regression usedc as dependen 1 variable, C and ime (year) as independen variables. The resuls showed ha here is a significan relaion beween c and C, bu here is no a significan relaion beween ime 1 (year) andc. Hence a he nex sage he variable ime was deleed. The resuls showed ha here is a significan relaion beween c and C (Tables 3, 4 and ). 1 COPY RIGHT 2013 Insiue of Inerdisciplinary Business Research 1144

10 Table 3. Parameers based on he ne revenue and oal cos of he Paper producion uni and Prining and Producion Uni Variable Parameer value (β) -saisic R R 2 P-Value NewsPaper producion uni Ne revenue Toal cos Prining and wriing producion uni Ne revenue Toal cos wriing producion uni (200 o 2010). Table 4. Parameers based on he ne revenue and oal cos of he Whie Kraf liner producion uni and Brown Kraf liner producion uni (200 o 2010). Producion Uni Variable Parameer value (β) -saisic R R 2 P-Value Whie Kraf liner producion uni Ne revenue Toal cos Brown Kraf liner producion uni Ne Revenue Toal cos Table. Parameers based on he ne revenue and oal cos of he Fluing line (1) producion uni and Fluing line (2) producion uni (200 o 2010). Producion Uni Variable Parameer value (β) -saisic R R 2 P-Value Fluing line (1) producion uni Ne revenue Toal cos Fluing line (2) producion uni Ne revenue Toal cos COPY RIGHT 2013 Insiue of Inerdisciplinary Business Research 114

11 Discussion and conclusion In his sudy, nominal and real ne revenues and expenses has been invesigaed in MWPC. The resuls indicaed ha here is a significan difference a significance level of 0.0 beween real and nominal daa. This difference could be due o inflaion and is relaed facors (demand and cos pressures). In his sudy, i has been showed ha ne revenues and expenses of he company flucuae over ime during he sudy period. I is imporan ha in economic analysis we use he adjused daa insead of nominal daa. When using any variables measured in erms of moneary value such as income, ne revenues, profi, GNP, i should be careful o inerpre changes of hese variables over ime. To avoid, or more accuraely, o correc for he disorion caused by rising prices denominaed variable, economiss consruc a new variable known as he real, consan, or inflaion-adjused variable. Inflaion adjusmen, or "deflaion", is accomplished by dividing a moneary ime series by a price index, such as he CPI. Inflaion adjusmen commonly used by economis o deflae he daa for heir comparison over a period. Many sudies of relaed o his issue exis. Bernsein (1992) invesigaed he price margins and capial adjusmen in Canadian mill producs and pulp and paper indusries. He esimaed a model incorporaing non-compeiive behavior in produc and facor markes. The model is applied o wo major Canadian manufacuring indusries; pulp and paper and mill producs. The resuls show for boh indusries in each of hree produc markes and he wood inpu marke ha here is compeiive behaviour. In addiion, he indusries are no in long-run equilibrium as marginal adjusmen coss cause marginal profi o exceed he renal rae on capial. Wih he indusries exhibiing shor-run compeiive behaviour in produc and facor markes, new esimaes are derived for scale economies and raes of echnological change. Hanninen II, and Toppinen (1999) sudied long-run price effecs of exchange rae changes in Finnish pulp and paper expors.they invesigaed long-run exchange rae elasiciies of Finnish newsprin and pulp expor prices in he Unied Kingdom (UK) and Germany over he period The elasiciies were esimaed for a markup pricing model using Johansen's coinegraion mehod. The magniudes of he elasiciy esimaes obained by imposing price homogeneiy indicae ha pass-hrough of exchange rae changes o expor prices has been incomplee in boh markes. Dobbelaere (200) esimaed price-cos margins and union bargaining power for Belgian Manufacuring. He analyzed imperfecions in boh he produc and he labour marke for firms in he Belgian manufacuring indusry over he period His resuls showed ha paper and prining producs and oher manufacuring producs can be classified as secors wih moderae price-cos mark-ups and moderae union bargaining power. Ornaghi (2008) sudied on price deflaors and he esimaion of he producion funcion. The use of indusry indices o deflae nominal ne revenues and expendiure in inermediary inpus has been found o lead o lower scale esimaes of he producion funcion. He proposed a new approach o solve he esimaion biases due o he use of indusry deflaors which relies on he use of he firms' labour cos. Buongiorno and Gilless (1980) sudied he effecs of inpu coss, economies of scale, and echnological change on inernaional pulp and paper prices. A heory of price formaion was developed which ress on he assumpion of a generalized Cobb-Douglas producion funcion, COPY RIGHT 2013 Insiue of Inerdisciplinary Business Research 1146

12 coupled wih monopolisic compeiion in inernaional markes, and cos-minimizing behavior on he par of producers. The resuling price equaions were esimaed for wood pulp, paper and paperboard, and heir major componens, using daa from eigheen OECD counries observed from 1961 o Iranian sumpage price deflaion and is ime series were sudied by Mohammadi Limaei and Lohmander (2007). They showed ha he sumpages price in Iran during he period flucuaes over ime. However, here are many sudies abou price, revenues and coss process for pulp, paper and imber producions and a few of hem are menioned a his paper. I is possible o conclude ha here are many hings ha affec he paper ne revenues and coss which are no perfecly predicable and depend on socio-economic condiions in he fuure. COPY RIGHT 2013 Insiue of Inerdisciplinary Business Research 1147

13 References -Bernsein, J. I Price margins and capial adjusmen: Canadian mill producs and pulp and paper indusries, Inernaional Journal of Indusrial Organizaion, 10(3): Buongiorno, J. and Gilless, J. K Effecs of Inpu Coss, Economies of Scale, and Technological Change on Inernaional Pulp and Paper Prices, Fores Science, 26(2): Cenral Bank of Iran, 2010, consumer price index of goods and services in urban areas of Iran ( - Diewer, W.E The early hisory of price index research. Chaper 2 of Essays in Index Number Theory, Volume I, W.E. Diewer and A.O. Nakamura, ediors. Elsevier Science Publishers, B.V. -Dobbelaere, S Join Esimaion of Price-Cos Margins and Union Bargaining Power for Belgian Manufacuring, Ghen Universiy, Discussion Paper No Farhang, M The grea culures of economic sciences, Tehran, Alborz Publicaion, pp. -Gong, P Timber price and price predicions (expecaions). Swedish Universiy of Agriculural Sciences, Deparmen of Fores Economics, Umeå, Sweden, Repor 126, 44pp. - Howard, A.F., 199. Price rends for sumpage and seleced agriculural producs in Cosa. Rica Fores Ecology and Managemen, 7: Linden, M. and J. Uusivuori, Modeling imber price forecass and sumpage marke expecaion in Finland J. Fores Economics, 6: Linehan, P.E., M.G. Jacobson and M.E. McDill, Hardwood sumpage price rends and regional marke differences in Pennsylvania. Norhern Journal of Applied Foresry, 20: Linden, M. & Uusivuori, J Modeling imber price forecass and sumpage marke expecaion in Finland Journal of Fores Economics, 6: Lohmander, P The economics of fores managemen under risk. Ph.D Thesis. Deparmen of Fores Economics, Swedish Universiy of Agriculural Sciences, Umeå, Sweden, Repor 79, 316 pp. - Mazandaran Wood and Paper Company (MWPC).2009.Financial balance shee. Annual documen. - Mohammadkhani, N Principle of economic analysis, Deparmen of Educaion, Research and Technology Cener, Research Insiue of Prining and Publicaions Managemen and Planning, Tehran, Iran. -Mohammadi Limaei, S Economically opimal values and decisions in Iranian fores managemen. Docoral hesis, Dep. of Fores Economics, SLU., Umea, Sweden,,Vol. 2006:91. -Mohammadi Limaei, S. and Lohmander, P., 2007, Sumpage Prices in he Iranian Caspian Foress, Asian Journal of Plan Sciences 6(7): COPY RIGHT 2013 Insiue of Inerdisciplinary Business Research 1148

14 -Mohammadi Limaei, S Economics opimizaion of fores managemen: economically opimal values and decisions in Iranian fores managemen, LAP LAMBERT Academic Publishing, Germany, 140 pp. -Ornaghi,C Price deflaors and he esimaion of he producion funcion, Economics Leers, 99 (2008) Peninen, M.J., Impac of sochasic price and growh processes on opimal roaion age. Eur. Journal of Fores Research, 12: Tajdini, A. and Rouhniya, M Evaluaion and forecasing supply and demand siuaion of Fluing paper in Iran, Iranian Wood and Paper Research Journal, 23(2): COPY RIGHT 2013 Insiue of Inerdisciplinary Business Research 1149