04 May 2004

Weak first quarter, but some bright spots

Norske Skog, the Norway-based paper group, achieved operating earnings of NOK 267 million for the first quarter of 2004, a decline of NOK 113 million from the same period of last year. When this result is corrected for gains from energy trading, however, operating earnings were up by NOK 12 million from the first quarter of 2003.

Operating revenues for this year's first quarter came to NOK 6.1 billion, an increase of nine per cent compared with the year before. A net loss of NOK 140 million after tax was recorded for the period, as against earnings of NOK 290 million in 2003. The figure for last year included NOK 465 million in gain on the sale of power stations.
Norske Skog has a good financial position, with net debt equivalent to 91 per cent of equity at 31 March 2004. Cash flow from operations came to NOK 844 million, an increase of NOK 344 million from the same period of last year. This reflects a better development in working capital.
Successful upgrades were completed during the quarter to paper machines at the Norske Skog Bruck mill in Austria and at Norske Skog Saugbrugs and Norske Skog Skogn, both in Norway.
Good progress was maintained in health and safety work, and the number of injuries recorded during the quarter was the lowest in the group's history.
Norske Skog's improvement programme continues as planned, achieving an effect of NOK 415 million in the first three months compared with the 2002 base year. This corresponds to an annual improvement in competitiveness of almost NOK 1.7 billion.
"Developments are positive in a number of markets around the world," says CEO Jan Oksum in a comment. "European demand for magazine paper increased by six per cent in the first quarter and high volumes in Australasia look likely to continue. Volumes are also developing positively in South America and several Asian countries. "While macro-economic conditions also indicate a recovery in other regions, Norske Skog is not expected to materially benefit from this until next year. Therefore 2004 will be a weak year for the company."
More information is available at www.norske-skog.com

Oxenøen, 4 May 2004
Norske Skog
Corporate Communications department

For further information:
Vice President IR, Jarle Langfjæran. Phone: +47 67 59 93 38, Mob: +47 901 78 434
Senior Vice President Corporate Communications, Hanne Aaberg, Phone: +47 67 59 90 29,
Mob: +47 913 51 681