11 Aug 2006

Restructuring and demanning in Norske Skog

Norske Skog is implementing a far-reaching programme designed to achieve a considerable improvement in its profitability. The main features are further operational efficiency gains, concentration on the most profitable products and a substantial demanning. Annual production capacity in Korea will also be cut.
With 9 400 employees today, the company is pursuing a major restructuring and simplification of its organisation.
"This turnaround could mean shedding around 1 000 jobs," says chief executive Christian Rynning-Tønnesen. "The biggest relative contraction will be in administrative functions, but staffing will also be cut substantially at the mills."
Rynning-Tønnesen is giving weight to achieving a good process with employee representatives involved in its planning and execution.
Big differences in productivity and earnings currently prevail between Norske Skog's 18 mills. Efficiency and profitability are to be enhanced across the group through continued development of global standards and by exploiting each mill's own experience and expertise.
The company is also carrying out a detailed review of its product and customer portfolios.
"We currently produce almost 100 different varieties of magazine paper and newsprint," explains Rynning-Tønnesen. "We can achieve more efficient operation and improve earnings by concentrating on a rather smaller number of grades."
Demand for newsprint in Korea has declined by about 20 per cent over the past four years, creating a need to reduce production capacity in that country. Norske Skog accordingly plans to shut down the PM1 and PM4 paper machines at the Norske Skog Jeonju mill at 31 December, cutting its annual Korean capacity by 180 000 tonnes.
A provision in the order of NOK 1 Billion will be made in the interim accounts for the third quarter of 2006 to cover the write-down of the Korean machines as well as demanning costs.

Oxenøen, 11 August 2006
Norske Skog
Corporate communications
Further information from
Hanne Aaberg, senior vice president corporate communications, Norske Skog tel: +47 67 59 90 29 or +47 91 35 16 81
Tom Bratlie, director, corporate communications, tel: +47 67 59 93 34 or +47 90 52 19 04
Financial market:
Jarle Langfjæran, tel: +47 67 59 93 38 or +47 90 97 84 34
Thomas Tronsgaard, tel: +47 67 59 90 62 or +47 90 02 99 18
Rune Gjessing, tel: +47 67 59 90 73 or +47 90 15 26 14