Norske Skog: Stable quarter, brighter prospects
(Thomson Reuters ONE) -
Somewhat better margins in the quarter due to seasonal variations in demand and
lower costs per unit as a result of ongoing efficiency programmes. Price
increases and sustained depreciation of the Norwegian krone will improve the
revenue base going forward. The ongoing investments at Boyer and Saugbrugs are
progressing as planned and will improve margins at both mills from 2014.
- Despite falling demand, we are experiencing high capacity utilisation of our
machines and overall improved margins. This shows that our employees manoeuvre
the ship well. However, we will actively continue our efforts to cut costs and
improve productivity, and if necessary, close or convert paper machines, says
Sven Ombudstvedt, President and CEO of Norske Skog.
Norske Skog's gross operating earnings (EBITDA) in the second quarter of 2013
were NOK 214 million, down from NOK 398 million in the second quarter of 2012.
The decrease was primarily due to lower selling prices and volumes. Cash flow
from operating activities was NOK -48 million in the second quarter and was
lower than the second quarter of 2012. The decrease was primarily due to weaker
operating margins.
- Permanent capacity cuts of more than a million tonnes have been announced in
Europe this year as a result of the fall in demand. This, combined with expected
price increases in the second half, continued favourable exchange rate
development and stable raw material costs, contributes to a brighter margin
outlook, says Ombudstvedt.
Net interest-bearing debt increased by NOK 159 million in the quarter, mainly
due to the weaker Norwegian krone. The previously announced divestment of 51% of
Pisa in Brazil for USD 41 million was completed, and the proceeds were received
in the second quarter. The level of fixed costs was NOK 784 million in the first
quarter, down from NOK 964 million in the second quarter of 2012.
Key figures, second quarter of 2013 (NOK million)
+-------------------------------------------+-------+-------+-------+------+
| |Q2 2013|Q1 2013|Q2 2012| 2012|
+-------------------------------------------+-------+-------+-------+------+
|Operating revenue | 3 267| 3 186| 4 377|16 592|
+-------------------------------------------+-------+-------+-------+------+
|Gross operating earnings (EBITDA) | 214| 174| 398| 1 485|
+-------------------------------------------+-------+-------+-------+------+
|Gross operating margin (%) | 6.6| 5.4| 9.1| 9.0|
+-------------------------------------------+-------+-------+-------+------+
|Gross operating earnings after depreciation| 16| -24| 168| 550|
+-------------------------------------------+-------+-------+-------+------+
|Restructuring expenses | 0| 0| 0| -118|
+-------------------------------------------+-------+-------+-------+------+
|Other gains and losses | -662| -153| -46|-1 009|
+-------------------------------------------+-------+-------+-------+------+
|Impairments | 0| 0| 0|-2 086|
+-------------------------------------------+-------+-------+-------+------+
|Operating earnings | -647| -178| 123|-2 663|
+-------------------------------------------+-------+-------+-------+------+
|Share of profit in associated companies | 4| 5| 0| -70|
+-------------------------------------------+-------+-------+-------+------+
|Financial items | -358| -333| -248| -117|
+-------------------------------------------+-------+-------+-------+------+
|Income taxes | 142| 124| 34| 69|
+-------------------------------------------+-------+-------+-------+------+
|Profit/loss for the period | -859| -381| -91|-2 781|
+-------------------------------------------+-------+-------+-------+------+
|Profit/loss before special items | -197| -228| -45| 432|
+-------------------------------------------+-------+-------+-------+------+
|Net cash flow from operating activities | -48| -106| 6| 982|
+-------------------------------------------+-------+-------+-------+------+
Other gains and losses of NOK -662 million have no cash impact. The amount
consists mainly of NOK 487 million arising from reduced value of energy
contracts and the loss from divestment of Pisa of NOK 195 million, recognized on
a 100% basis.
Financial items consist primarily of NOK 191 million in unrealised currency
losses and NOK 150 million in interest expenses.
Active capacity management
The company's investment projects are progressing according to plan. AUD 84
million (NOK 480 million) is being invested in connection with the conversion of
a machine at Boyer in Australia from production of newsprint to catalogue paper,
and NOK 220 million is being invested at Saugbrugs in Norway to reduce energy
consumption and fixed costs.
As previously announced, Norske Skog has temporarily stopped production from the
end of June at one of three machines (PM2) at Skogn in Norway. Annual production
capacity for this machine is 160 000 tonnes. Due to the lack of profitability of
magazine paper, LWC production will be subject to a separate capacity assessment
in the third quarter.
Outlook for 2013
Price increases from the third quarter, the weaker Norwegian krone and
seasonally higher sales volumes will improve the revenue base in the second
half. Variable costs are expected to remain largely unchanged, whilst fixed
costs will decline somewhat as a result of ongoing cost reduction programmes.
The deconsolidation of Norske Skog Pisa following the divestment of 51% of the
mill will cause a decline in reported revenue and costs from the third quarter.
New member of corporate management in Norske Skog
Roar Ødelien (45) has been appointed Chief Operating Officer (COO) in Norske
Skog, with responsibility for the group's commercial and operational activities.
He will be employed from 1 October, and appointed to the position from 1
November 2013. Ødelien comes from the position Group Warehouse Director in
Carlsberg Supply Company AG in Switzerland. He has extensive experience in
logistics and supply from Ringnes AS as well as commercial experience from a
number of other companies.
- Roar Ødelien has an exciting background that will bring new knowledge and
energy to Norske Skog, says President and CEO Sven Ombudstvedt. Ødelien will
replace Trond Stangeby (63) who has been a member of corporate management since
August 2011. Stangeby has decided to resign from his position from 1 November.
- Trond Stangeby has been responsible for the implementation of major
organisational changes, and has brought Norske Skog's operative business to a
new level. We are many colleagues who thank him for his contribution, and will
miss his enthusiasm and dedication, says Ombudstvedt.
Presentation and telephone conference
The interim financial statements will be presented in DnB's offices in Bjørvika
in Oslo today at 08:30 CET. The presentation will be transmitted live on Norske
Skog's website www.norskeskog.com. A recording of the presentation will be
published shortly afterwards.
An international telephone conference, open to questions from the financial
markets, will be held at 13:00 CET. Conference call details:
+44(0)20 3427 1909 Confirmation code: 6586683
Interim financial statements
The interim financial statements are only prepared in English.
Oslo, 18 July 2013
Norske Skog
Communications and Public Affairs
For further information:
Norske Skog media: Norske Skog financial markets:
Vice President Corporate Communication Vice President Investor Relations
Carsten Dybevig Tom Rogn
Mob: +47 917 63 117 Mob: +47 948 55 659
Q2 2013 Norske Skog quarterly report:
http://hugin.info/105/R/1717208/570919.pdf
Q2 2013 Norske Skog presentation:
http://hugin.info/105/R/1717208/570920.pdf
Q2 2013 Norske Skog press release:
http://hugin.info/105/R/1717208/570938.pdf
This announcement is distributed by Thomson Reuters on behalf of
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(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Norske Skog via Thomson Reuters ONE
[HUG#1717208]
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Datum: 18.07.2013 - 07:01 Uhr
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