24 Apr 2008

Currency factors etc. in the accounts for the first quarter of 2008

The announcement of Norske Skog's accounts for the first quarter of 2008 will take place on Thursday 8 May at 0800 hrs. There will be a webcast presentation at the company's premises at 1300 hrs. on the same date. More information about this event will be published at Norske Skog's website www.norskeskog.com.
The silent period in advance of the announcement will commence on Monday 28 April.
The underlying operating profit in the first quarter of 2008
As previously communicated, the result in the first quarter of 2008 will be significantly weaker than in the fourth quarter of 2007. The main reasons are lower newsprint prices in Europe, increased recovered paper prices in Asia, increased timber prices both in Europe and in South America and high energy costs in New Zealand and in Brazil. Price increases have been implemented for magazine paper in Europe and newsprint in China.
Halting the Pisa PM 2 project
The net cost less currency hedging in connection with halting the project has been estimated at USD 107 million against USD 82 million as previously communicated. The increase is mainly due to changed considerations for the tax effects. The table below shows the relation between the estimated cost as of the end of the first quarter 2008 and what has previously been communicated.
Previous estimates, Mill. USD
New calculation, Mill. USD
New calculation,  Mill. NOK
Termination costs
Total, included in operating profit IFRS
Tax cost
Gain currency hedging
Net cost
Termination costs of NOK 346 million have been included under "Other gains and losses" in the income statement and do not affect the underlying operating profit.
Other special items which have not been included in the underlying operating profit
In total, NOK 1 billion has been recognised as income in the form of increased value of energy contracts and embedded derivatives. Furthermore, NOK 60 million has been recognised as gain from the sale of a port property in New Zealand, and with a cash impact of around NOK 100 million.
NOK 200 million has been booked as a provision in connection with staff reductions at the main office and the shutting down of three paper machines. The previous estimate was NOK 220 million. The residual value of the three paper machines has been written down by about NOK 940 million. The previous estimate was NOK 1.1 billion.
Currency factors
Total currency gains, included under financial items in the income statement, amount to about NOK 170 million. About NOK 150 million of this has been included in the result term "underlying operating profit". This comes from realised gains from cash flow hedging.
Norske Skog's trade-weighted currency basket ("the Norske Skog index") had an average value of 80.7 in the first quarter of 2008, compared with 82.3 in the fourth quarter of 2007 and 88.5 in the first quarter of 2007. The index originated on 1 January 2002.
Segment reporting
As of 2008, a separate energy segment has been established, and the presentation of intra-group trade between segments has been changed. This has some bearing on the operating results in most segments, and segment figures for the individual quarters in 2007 will be prepared for the sake of comparison. These will be published on 8 May in connection with the first quarter accounts, but do not represent any material changes compared with what has previously been made public.
Oxen°en, 24 April 2008
Investor Relations