03 Aug 2004

Norske Skog Q204: Demand up but results still weak

Operating earnings for Norske Skog in the second quarter of 2004 came to NOK 201 million before a provision of NOK 230 million for restructuring in Australasia.

Corrected for gains from energy trading, this result was down by NOK 82 million from the same period of 2003. Revenues increased by seven per cent to NOK 6.2 billion during the quarter. The net loss came to NOK 31 million after a gain of NOK 142 million was recorded from the sale of forest land and other property mid-Norway.
The Improvement 2003 programme delivered gains of NOK 462 million during the second quarter, representing a strengthening in competitiveness of NOK 1.85 billion on an annual basis.
"Our results for the second quarter are unsatisfactory," says Norske Skog CEO Jan Oksum. "Demand is rising, but prices declined in most regions compared with last year at the same time as the cost of input factors such as energy, market pulp and recovered paper increased."
Norske Skog's financial position is good, with a gearing - net interest-bearing debt divided by equity - of 94 per cent at 30 June 2003.
Cash flow from operations totalled NOK 1.015 billion for the second quarter and just over NOK 2.0 billion in the first half-year.
"Price increases have been implemented for publication paper in North and South America as well as most Asian countries, and more rises have been announced," says Mr Oksum. "Looking at the strong demand and the general market picture, prices are expected to increase in Europe when contracts are to be renewed.
"We nevertheless expect results to remain weak in the second half of 2004, prospects are better for 2005."
Norske Skog is making substantial investments to meet market requirements through a new paper machine in China and an extensive restructuring in Australasia.
The board has also resolved to expand the thermomechanical pulp (TMP) facility at Norske Skog Walsum, with this project due to be executed in the second half of 2004.
Oxenøen, 3 August 2004
Norske Skog
Corporate communications
Further information from:
Jarle Langfjæran, vice president investor relations,
tel: +47 67 59 93 36, mobile: +47 90 97 84 34
Hanne Aaberg, senior vice president corporate communications,
tel: +47 67 59 90 29, mobile: +47 91 35 16 81
Read more about the quarterly report on the Norske Skog web site www.norske-skog.com

Q204 BOD Report