Norske Skog: Improved cash flow and operating conditions
(Thomson Reuters ONE) -
Norske Skog's gross operating earnings (EBITDA) in the fourth quarter of 2015
were NOK 260 million, up from NOK 163 million in the third quarter. The EBITDA
improved from the third quarter due to higher sales volume and lower costs.
Higher sales and release of working capital in the quarter resulted in a cash
flow of NOK 363 million from operating activities before financial items. The
exchange offer launched on 5 January has been extended to 26 February 2016.
The net loss of NOK 304 million in the fourth quarter of 2015 was significantly
impacted by negative non-cash, unrealised foreign exchange losses amounting to
NOK 119 million on foreign denominated debt due to a depreciation of NOK. A
total cash interest in excess of NOK 250 million were paid in the quarter. In
addition, the last NOK 200 million of the USD 2015 bond was repaid. Net
interest-bearing debt increased by NOK 0.1 billion in the quarter to NOK 8.5
billion due to unfavourable foreign exchange effects. Cash flow from operating
activities before net financial items was NOK 363 million (NOK 2 million in Q3
2015). The working capital was seasonally reduced by NOK 170 million in the
fourth quarter.
- We are satisfied with higher sales, the improved cost- and cash flow
developments in the quarter, especially for the Norwegian units. The weakening
of the Norwegian krone has improved the operations for the Norwegian units but
has a negative effect on the net interest bearing debt, says Sven Ombudstvedt,
President and CEO of Norske Skog.
Exchange and consent solicitation offer have been extended to February 26
Norske Skog has extended the exchange offer launched on 5 January 2016 to 26
February 2016. The exchange offer is to holders of the notes due in 2016 and
2017 into a mix of new unsecured notes, perpetual notes, qualified
securitization financing notes (QSF) and equity rights.
The content of the exchange offer will remain unchanged. The reason for the
extension is a court order of 2 February 2016 in New York State (USA) for a
temporary restraining order (TRO) on the closing of the exchange offer until
conclusive court hearings are made on 24 February 2016. The TRO was requested by
Citibank on behalf of certain 2019 bond holders. A detailed stock exchange
notice regarding the extended exchange offer was published yesterday.
- Norske Skog will defend its position vigorously, and we see no merit in the
allegations made by the plaintiff in the court proceedings. Our exchange offer
to bondholders will benefit all the company's stakeholders, said Mr. Sven
Ombudstvedt, President and CEO of Norske Skog.
Market and segments
Europe
Operating revenue increased from the previous quarter with higher sales volumes.
Publication paper prices were relatively flat in the two periods. Gross
operating earnings improved quarter-over-quarter reflecting the higher volumes
and an enhanced competitive position for the Norwegian mills as NOK depreciated.
Variable costs increased with the higher volumes, while fixed costs were up
partly due to NOK depreciation. Demand for newsprint and magazine paper in
Europe decreased by 6% and 5% respectively through November last year, compared
to the same period the year before.
Australasia
Operating revenue increased from the previous quarter with a combination of
somewhat favourable pricing, sales volume and NOK depreciation. Variable costs
increased with higher volumes and NOK depreciation.
Fixed costs declined due to a reversal of environmental provisions, but were
negatively impacted by NOK depreciation. Gross operating earnings improved
quarter-over-quarter with favourable capacity utilization and the one-off cost
reduction.
Demand for newsprint in Australasia decreased by around 9% in the first eleven
months of the year compared to the same period last year, while demand for
magazine paper was relatively stable.
Active capacity management
Total annual production capacity for the group is 2.7 million tonnes. In Europe
the group capacity is 2.0 million tonnes, while in Australasia the capacity is
0.7 million tonnes. Capacity utilization for the group in the fourth quarter was
89%, compared to 85% in the third quarter.
The market balance for newsprint and magazine paper in Europe has improved,
reinforced by newly announced capacity closures in the industry. Capacity
utilisation in Europe improved seasonally to 86% in the period. Capacity
utilisation in Australasia was seasonally high at 96% in the period compared to
92% in third quarter of 2015.
- We have been successful in pursuing an active capacity management policy to
enhance cash generation and improved the market balance. After a temporary
market curtailment, we restarted the third machine at Skogn to take advantage of
a considerable cost advantage, derived from a weakened Norwegian krone, says
Sven Ombudstvedt, President and CEO of Norske Skog.
Key figures, fourth quarter of 2015 (NOK million)
+----------------------------------------+-------+-------+-------+------+------+
| |Q4 2015|Q3 2015|Q4 2014| 2015| 2014|
+----------------------------------------+-------+-------+-------+------+------+
|Operating revenue | 3 087| 2 779| 3 208|11 538|12 150|
+----------------------------------------+-------+-------+-------+------+------+
|Gross operating earnings (EBITDA) | 260| 163| 190| 753| 801|
+----------------------------------------+-------+-------+-------+------+------+
|Gross operating margin (%) | 8.4| 5.9| 5.9| 6.5| 6.6|
+----------------------------------------+-------+-------+-------+------+------+
|Gross operating earnings after | | | | | |
|depreciation | 67| -27| 2| -14| 66|
+----------------------------------------+-------+-------+-------+------+------+
|Restructuring expenses | -32| -2| -7| -53| -4|
+----------------------------------------+-------+-------+-------+------+------+
|Other gains and losses | 26| 43| 29| -86| 39|
+----------------------------------------+-------+-------+-------+------+------+
|Operating earnings | 61| 13| 24| -153| 102|
+----------------------------------------+-------+-------+-------+------+------+
|Share of profit in associated companies | -18| -7| -4| -41| 1|
+----------------------------------------+-------+-------+-------+------+------+
|Financial items | -376| -782| -858| -801|-1 357|
+----------------------------------------+-------+-------+-------+------+------+
|Income taxes | 29| 33| -178| 40| -223|
+----------------------------------------+-------+-------+-------+------+------+
|Loss for the period | -304| -742| -1 017| -955|-1 477|
+----------------------------------------+-------+-------+-------+------+------+
|Cash flow from operations before net | | | | | |
|financial items | 363| 2| 640| 66| 947|
+----------------------------------------+-------+-------+-------+------+------+
Update on new growth opportunities
Biogas at Saugbrugs
The NOK 150 million biogas project at Saugbrugs is on schedule for completion at
the year-end 2016. The biogas facility will be at full run-rate contribution to
gross operating earnings in 2017. Norske Skog is currently considering
replicating the project at Skogn and Golbey.
Wood pellets in New Zealand
Nature's Flames pellets production has reached an annual capacity of 40 000
tonnes. Norske Skog considers to expand the production of pellets, given the
considerable competitive export advantage. Pellets brings significant
environmental benefits replacing fossil fuels.
Outlook
The market balance for newsprint and magazine paper in Europe improved during
the autumn of last year with the effects from capacity closures in the industry.
This has led to high operating rates into 2016 and improved pricing across all
publication paper grades. The domestic prices in Australasia are stable, while
Asian newsprint prices have increased somewhat.
Favourable energy costs for our European mills and efficiency measures at all
mills are expected to reduce variable costs by 2-3% per ton in 2016. Fixed costs
initiatives continue at all mills towards a run-rate group level of NOK 600
million per quarter by year-end 2016.
The growth initiatives announced last year will start to contribute to gross
operating earnings this year, and is expected to reach full run-rate
contribution within a timeframe of 3-4 years.
Presentation and quarterly material
A recorded CEO presentation, the quarterly financial statements and the
presentation package are available on www.norskeskog.com.
Oslo, 5 February 2016
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
This information is subject to the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.
Q4 2015 Norske Skog presentation:
http://hugin.info/105/R/1983966/727221.pdf
Q4 2015 Norske Skog quarterly report:
http://hugin.info/105/R/1983966/727220.pdf
Q4 2015 Norske Skog press release:
http://hugin.info/105/R/1983966/727219.pdf
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(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 GlobeNewswire
[HUG#1983966]
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Datum: 05.02.2016 - 07:00 Uhr
Sprache: Deutsch
News-ID 448886
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