Major organisational changes and the launch of an extensive turnaround characterised 2006 for Norske Skog. The turnaround had already provided an improvement of NOK 400 million in the second half of the year. Gross operating earnings before special items came to NOK 4.7 billion for 2006 as a whole, an increase of NOK 700 million from 2005. Net operating earnings before special items amounted to NOK 1.48 billion, compared with NOK 934 million for the year before.

 

The company's operating revenues came to NOK 28.8 billion as against NOK 25.7 billion in 2005.

 

Gross operating earnings for the fourth quarter totalled NOK 1.3 billion, a reduction of roughly NOK 55 million from the previous three-month period. This partly reflects lower prices for coated magazine paper and slightly higher maintenance costs. Net operating earnings for the fourth quarter came to NOK 538 million compared with NOK 495 million in the previous three-month period.

 

"Major changes which will have long-term effects for Norske Skog characterised 2006," says chief executive Christian Rynning-Tønnesen.

 

"The company acquired a new corporate management and a changed organisational structure, an extensive turnaround was launched, we closed five paper machines and resolved to transfer one of these to Brazil.

 

"The turnaround is intended to improve profits by NOK 3 billion by the end of 2008. With the commitment now being made by the whole organisation, I am very optimistic about reaching our target."

 

The profit improvement plan involves a restructuring of operations, demanning, productivity improvement measures and cost reductions in procurement, energy, sales and logistics.

 

Market trends
Earnings made substantial progress for newsprint in Europe and South America, while results were weaker for magazine paper in Europe and newsprint in Australasia.

 

Price increases were implemented for newsprint in Europe, South America and Australasia during 2006. Overcapacity in China meant that prices there were very low.

 

Market prospects are good for newsprint in Europe during 2007. Newsprint prices will be increased in Europe and New Zealand, while some pressure on prices can be expected in most other markets. A price increase for magazine paper in Europe could be possible in the second half.

 

There is a risk of increased prices for raw materials, but a strong focus on the improvement programme should yield better results for 2007 than in 2006.

 

Presentation/webcast
A presentation of the 2006 results will be held at Norske Skog headquarters today at 13:30 CET.

 

Oxenøen, 7 February 2007

 

Norske Skog
Corporate communications

 

For further information:

 

Finance:
Vice president investor relations
Jarle Langfjæran
Mob: +47 909 78 434 

 

Media:
Vice president corporate communications Tom Bratlie
Phone: +47 67 59 93 34
Mob: +47 905 21 904