Norske Skog

Higher capital utilisation and lower costs strengthen Norske Skog's gross operating earnings in the second quarter compared with the same quarter last year.

Gross operating earnings in the second quarter were NOK 393 million, up from NOK 248 million in the same period last year, mainly due to lower costs and better capacity utilisation. The result is on the same level as the first quarter of 2012, despite the closure of production at Follum and the sale of Bio Bio in Chile.

- Despite challenging markets, we have had better capacity utilisation, significant cost reductions and a significant reduction in debt so far this year, says President and CEO in Norske Skog, Sven Ombudstvedt.

Cash flow from operating activities (before financial items) was NOK 423 million, a significant improvement from the same quarter last year, where cash flow was NOK 295 million. Net interest-bearing debt decreased during the quarter from NOK 7.1 billion to
NOK 6.9 billion, and has decreased by NOK 1.0 billion so far this year, mainly as a result of cash flow from operating activities and asset sales.

- Our financial room for manoeuvre is clearly improved over the last two years, as debt has been cut by over 30% or around NOK 3 billion, says Ombudstvedt.

	Q2 2011	Q1 2012	Q2 2012
Operating revenue	4 542	4 411	4 377
Gross operating earnings (EBITDA)	248	380	393
Gross operating margin (%)	5.5	8.6	9.0
Gross operating earnings after depreciation	-184	129	164
Restructuring expenses	-23	-11	0
Other gains and losses	5	-670	-46
Impairments	0	-35	0
Operating earnings	-202	-587	118
Share of profit in associated companies	-3	8	0
Financial items	-67	109	-242
Income taxes	-9	128	34
Profit/loss for the period	-280	-343	-91
Net cash flow from operating activities (before financial items)	295	357	423

The loss after tax was NOK 91 million, compared with a loss of NOK 280 million in the same quarter last year. Operating revenue was NOK 4 377 million, compared with NOK 4 542 in the same quarter last year.

Sales of the Follum industrial area in Hønefoss and Norske Skog's mill at Bio Bio in Chile were completed during the quarter. After quarter end, an agreement has been entered into with H2 Equity Partners (Netherlands) for the sale of the mill at Parenco in Renkum, Netherlands. The transaction will have little operational impact on the rest of Norske Skog. The sale will be finalized and recognised in Norske Skog's financial statements in the third quarter of 2012.

Despite the economic downturn in Europe, margins in the second half of the year are expected to be in line with the first half. Norske Skog expects somewhat higher sales volumes in the second half as a result of seasonal variations, but the group will actively adjust production capacity to match market demand. Efforts to reduce fixed costs and net interest-bearing debt will continue.

Presentation and telephone conference
Norske Skog will hold a presentation in SEB'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 (Free phone Norway)
0800 279 4841 (Free phone UK)
1877 249 9037 (Free phone USA)
+44 (0)20 7138 0813 (International)
Code: 3084228

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