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17 Jul 2014 Norske Skog: Lower costs and improved margins
Norske Skog strengthened operations due to lower costs and improved efficiency in the second quarter. High production at the mills in a difficult market shows the relative competitive position of the group. - The good trend with lower variable and fixed costs. Overall, we are in a better cost position this year compared to prior years, due to continued cost reduction programmes and better economies of scale at our remaining units, says Sven Ombudstvedt, President and CEO of Norske Skog. Norske Skog's gross operating earnings (EBITDA) in the second quarter of 2014 were NOK 251 million, up from NOK 153 million in the first quarter. The increase was due to lower energy and fibre costs, and lapse of one-off effects at Boyer (start-up LWC), Walsum and Saugbrugs (start-up new pulp plant). Loss after tax for the period amounted to NOK -114 million in the second quarter, compared to a profit of NOK 11 million in the first quarter of 2014. The result was impacted by unrealized foreign exchange losses of NOK 121 million. Net interest-bearing debt increased by NOK 152 million to NOK 6 952 million, of which NOK 136 million related to a negative currency effect due to a weaker Norwegian krone. A weaker Norwegian krone will be positive for the company's future results. Norske Skog repaid the remaining bonds of NOK 496 million with maturity in June. Cash flow from operating activities before net financial items was NOK 206 million in the second quarter, compared to NOK 54 in the first quarter. - Cost reductions and lower interest expense after repayment of June-maturities will improve profitability. This coupled with the completion of the major investment program over the last two years will increase cash flow significantly ahead. At the same time, we will continuously monitor the market situation, and if necessary implement active capacity management to counteract the effects of market imbalances, says Sven Ombudstvedt, President and CEO of Norske Skog. Market and segments Europe Cost of materials declined from the first quarter on a per ton basis, reflecting lower energy and fibre costs. Fixed costs were flat. Capacity utilization was 87% in the second quarter compared to 90% in the first quarter. Australasia Cost of materials was flat on a per ton basis compared to the first quarter, with lower energy costs offsetting more chemical and pulp usage for magazine paper production. Capacity utilization was unchanged on 91% in the quarter. Key figures, second quarter of 2014 (NOK million)
Outlook 2014 Sales volumes will be seasonally higher in the second half of 2014. The new Boyer machine in Australia has ramped up and will contribute fully from the third quarter. Variable costs for the group are expected to remain relatively stable. Fixed costs initiatives will continue. Presentation and telephone conference An international telephone conference, open to questions from the financial markets, will be held at 13:00 CET. Callers are asked to register before 12:50 CET. Conference call details: +44 1296 480 100, confirmation code: 806 083# A recording of the presentation and conference will later be available on www.norskeskog.com. Oslo, 17 July 2014 Norske Skog
Q2 2014 Norske Skog press release |
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