Norske Skog

Lower costs strengthened Norske Skog's gross operating earnings in the first quarter compared with the same quarter last year, while debt was significantly reduced.

Gross operating earnings in the first quarter were NOK 380 million, up from NOK 296 million in the same period last year, mainly as a result of lower costs. Earnings were somewhat weaker compared with the last quarter of 2011, due to seasonal effects.

- We have received little help from the market. We have partly compensated for this through strong cost control, says President and CEO in Norske Skog, Sven Ombudstvedt.

Cash flow from operating activities was NOK 267 million and improved significantly from the same quarter last year when it was negative NOK 239 million. Net interest-bearing debt was reduced from NOK 7.9 to 7.1 billion during the quarter, mainly as a result of cash flow from operations and asset sales.

- In two years, we have cut debt by NOK 2.4 billion or 25%. Risk has been reduced, and the financial room for manoeuvre has clearly been improved, says Ombudstvedt.

	Q1 2012	Q4 2011	Q1 2011
Operating revenue	4 411	4 970	4 594
Gross operating earnings (EBITDA)	380	503	296
Gross operating margin (%)	8,6	10,1	6,4
Gross operating earnings after depreciation	129	137	-136
Restructuring expenses	-11	-361	0
Other gains and losses	-670	-532	369
Impairments	-35	-86	-8
Operating earnings	-587	-841	225
Share of profit in associated companies	8	203	-1
Financial items	109	-358	46
Income taxes	128	404	-101
Profit/loss for the period	-343	-592	169
Net cash flow from operating activities	267	409	-239

The loss after tax was NOK 343 million, compared with a profit of NOK 169 million in the same quarter last year.

During the quarter, Norske Skog has sold the Follum industrial area at Høneføss, the mill Norske Skog Bio Bio in Chile, and excess energy which has arisen as a result of reduced production capacity. Other gains and losses show the reduced value of energy contracts in the balance sheet as a result of lower electricity prices in the Nordic region.

Operating revenue was NOK 4 411 million, compared to NOK 4 594 million in the same quarter last year.

A stable price environment is expected for the rest of the year. Volumes will be lower than last year with weak economic conditions and a fall in demand, especially in Australia. This will in part be offset through lower capacity in the group and in the general market. Prices for input factors are expected to be slightly lower than last year and the efforts to reduce fixed costs will continue.

Presentation and telephone conference
Norske Skog will hold a presentation at DNB's premises at Aker Brygge in Oslo today at 08.30 CET. The presentation will be transmitted directly via a link on Norske Skog's home page 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 56053 (Free phone Norway)
0800 279 4841 (Free phone UK)
1877 249 9037 (Free phone USA)
+44 (0)20 7784 1036 (International)
Code: 2644671

For further information:
Media: Vice President Communication Carsten Dybevig Mob: +47 917 63 117	Financial markets: Vice President Investor Relations Tom Rogn Mob: +47 948 55 659

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