01 Nov 2012

Norske Skog, Third quarter 2012: Good cash flow and lower debt

Good capacity utilisation, with high export levels and lower costs, counteracted the effects of the weak market development in Europe and Australia. The significant reduction in debt was a result of strong cash flow.

Gross operating earnings in the third quarter were NOK 365 million, compared to NOK 393 million in the previous quarter. The weak markets in Europe and Australasia were offset by lower variable- and fixed costs and effective production adjustments.

- Despite very challenging markets, we have been able to implement effective production adjustments, considerable cost reductions and a significant debt reduction this year, says President and CEO in Norske Skog, Sven Ombudstvedt.

Cash flow from operating activities (before financial items) was NOK 550 million, an improvement of NOK 162 million from the same quarter last year. The good cash flow for the period was a result of an effective realisation of trade receivables and reduction of inventories. Net interest-bearing debt during the quarter decreased from NOK 6.9 billion to NOK 6.3 billion, and has decreased by NOK 1.6 billion this year, primarily due to cash flow from operating activities and asset sales.

- We have had a significant decrease in debt of NOK 1.6 billion so far this year. This helps to strengthen our financial position going forward, says Ombudstvedt.

Key figures third quarter 2012 (NOK million)

Q3 2012 Q2 2012 Q3 2011
Operating revenue 4 115 4 377 4 799
Gross operating earnings (EBITDA) 365 393 469
Gross operating margin (%) 8.9 9.0 9.8
Gross operating earnings after depreciation 134 164 39
Restructuring expenses -122 0 -4
Other gains and losses -65 -46 -43
Impairments -403 0 -1 875
Operating earnings -455 118 -1 883
Share of profit in associated companies -83 0 -2
Financial items 86 -242 -251
Income taxes -20 34 294
Profit/loss for the period -433 -91 -1 841
Net cash flow from operating activities (before financial items)





The net loss for the period was NOK 433 million, compared with a loss of NOK 1 841 in the corresponding quarter last year. Operating revenue was NOK 4 115 million, compared with NOK 4 799 million in the same quarter last year. The decrease was due to reduced production capacity after the divestment of Bio Bio and the closure of Follum, combined with lower sales volumes in a weak market.

The sale of the Parenco mill to H2 Equity Partners in the Netherlands was completed on 2 October.  

During the quarter, Norske Skog announced the closure of a newsprint machine at the Tasman mill in New Zealand, and conversion of a newsprint machine to magazine paper production at the Boyer mill in Australia. This will result in a total closure of around 250 000 tonnes of newsprint capacity in Australasia.

Norske Skog expects relatively stable volumes and margins for the rest of the year, when the Parenco transaction is taken into account. The company will actively adapt production to match market demand and will continue its efforts to reduce fixed costs and net interest-bearing debt.

Presentation and telephone conference
Norske Skog will hold a presentation in DNB's premises at Aker Brygge today at 08:30 CET. The presentation will be transmitted directly via a link on Norske Skog's homepage www.norskeskog.com. A recording of the presentation will also be posted afterwards. An international telephone conference will be held at 13:00 CET, which will be open for questions from the financial market. The President and CEO, Sven Ombudstvedt, and other members of corporate management will participate in both these events.

Telephone numbers:
800 56054 (Freephone Norway)
0800 279 4977 (Freephone UK)
1877 280 1254 (Freephone USA)
+44 (0)20 7784 1036 (International)
Code: 2046807

Norske Skog
Corporate communication and corporate affairs

For further information:
Vice president communication                                                                                                
Carsten Dybevig
Mob: 917 63 117
Financial markets:                                                                                                
Vice president Investor Relations
Tom Rogn
Mob: 948 55 659

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

Q3 2012 Norske Skog press release
Q3 2012 Norske Skog quarterly report
Q3 2012 Norske Skog presentation