03 Feb 2005

Norske Skog in 2004: Weak annual result despite production records

Norske Skog's total deliveries in 2004 were up by 4.7 per cent from 2003. The company produced and sold just under 5.5 million tonnes of newsprint and magazine paper - the highest volumes ever. Demand was good in most markets, and productivity high at many of the mills.

Operating revenues for 2004 came to NOK 25.3 billion, an increase of NOK 1.2 billion from 2003, while operating earnings were NOK 930 million as against NOK 1.4 billion the year before.
Net earnings after tax amounted to NOK 655 million, up from NOK 402 million in 2003. This result includes several special items totalling NOK 650 million.
"As expected, operating earnings were weak in 2004," comments chief executive Jan Oksum. "That reflects not only low price levels - particularly in Europe, where one-year price agreements prevail - but also cost increases for important input factors such as energy and fibre.
"However, we take an optimistic view of 2005. All signs are that European growth will continue, and substantial price increases are in the process of being implemented. These are driven by higher demand and moderate capacity expansion.
"We also expect demand to continue growing outside Europe. Prospects are particularly good in China, where the new mill in Hebei province is due to begin production in the second half."
Cash flow in 2004 was on a par with the year before, at just over NOK 2.9 billion. Capitalised investment came to NOK 2 billion, including just under NOK 600 million for the company's share of the Hebei project.
Norske Skog's financial position is good, with a gearing -ratio of net debt to equity - of 0.9.
The board of directors has proposed an unchanged dividend of NOK 6 per share for 2004.
The Improvement 2003 programme was completed as planned. During 2003-04, Norske Skog achieved improvements totalling NOK 2 billion compared with the 2002 base year. That corresponds to the original target.
Norske Skog has prioritized work on health and safety for several years, and can in 2004 report the best-ever results regarding sick absence and number of accidents. Sick absence declined by 20 per cent from 2003.
"Despite a tragic fatal accident in Chile last summer, the results show that we have good routines and people who think safety," says Oksum.
"But such statistics mustn't give us a false sense of security. Health and safety must and will always have our highest attention."
Additional information can be found on Norske Skog's web site at www.norskeskog.com.

Oxenøen, 3 February 2005
Norske Skog
Corporate communications
For further information:
Vice President Investor Relations
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

BOD report 2004