04 May 2005

Weak quarter, price rises consumed by stronger NOK

Financial results for Norske Skog remained weak in the first quarter of 2004, with operating revenue down by NOK 314 million from the same period of last year to just under NOK 5.8 billion.

Operating earnings for the first quarter came to NOK 260 million, while the net loss after tax was NOK 42 million - an improvement of NOK 15 million from the same period of 2004.

"We have had a disappointing start to 2005," acknowledges chief executive Jan Oksum.            
"Although we achieved price rises for our products, cost increases for energy and other input factors mean that the effect on our operating result was very limited. The result was also reduced by about NOK 95 million compared with the same period of last year because of the stronger Norwegian krone."
Deliveries in the first quarter are seasonally low, and that effect was strengthened this year by unusually high sales volumes in the fourth quarter of last year.
"Market growth for newsprint remains good in most countries and regions, but developments are weak in North America and Korea," says Mr Oksum.
"As expected, however, growth is not as strong as it was last year. Prices have risen in Europe, and little new newsprint and magazine paper capacity will be introduced this year."
Norske Skog is in a good financial position, with a gearing - net interest-bearing debt divided by equity - of 0.88 at 31 March 2005.
From 2005, Norske Skog's accounts are being compiled in accordance with the International Financial Reporting Standards (IFRS). Comparative figures have been restated accordingly.
The main difference from the Norwegian generally-accepted accounting principles applied previously lies in the fact that goodwill is no longer amortised.
Norske Skog has several major projects under way or in preparation. PanAsia - owned 50 per cent by the company - is due to start production from Asia's largest paper machine in China's Hebei province during the third quarter. The restructuring project in Australasia is making good progress, and a main study is under way for a possible new paper machine at Norske Skog Pisa in Brazil. A board decision on the latter project could be taken this year.
Progress on health and safety remained good, and the lost-time injury frequency per million working hours was 1.2 for the 12-month period to 30 March.
"This is the best health and safety results ever for Norske Skog", says Oksum. Ten of the mills had no lost-time injuries at all during this period.
The full quarterly report with accounting figures is available at www.norskeskog.com.
Oxenøen, 4 May 2005
Norske Skog
Corporate communications
Further information from:
Financial market: Jarle Langfjæran, vice president, tel: +47 67 59 93 38, mobile: +47 90 97 84 34
Media: Hanne Aaberg, senior vice president, tel: +47 67 59 90 29, mobile +47 91 35 16 81

Norske Skog Q1-2005 eng