Norske Skog: improved market and operations

Norske Skog’s gross operating earnings (EBITDA) in the first quarter 2016 were NOK 242 million, a slight seasonal decrease from 260 million in the fourth quarter 2015 but a substantial improvement from NOK 192 million the first quarter of last year. The liquidity was greatly enhanced in the first quarter 2016 following a new securitization facility and an equity offering.

European sales prices increased in the quarter, whereas the cost of energy decreased. It was somewhat offset by more low-margin Asian newsprint export from Australasia.

The market looks brighter. We are currently running at full capacity at our mills, but will continue to perform active portfolio management of our machine capacity when necessary. The announcements of large permanent capacity cuts and machine conversions in Europe and North-America in the last years in our product segments have been supportive to the market balance, and thus future price levels, says Sven Ombudstvedt, President and CEO of Norske Skog.

About market

The net profit of NOK 11 million in the first quarter of 2016 compared to a loss of NOK 828 million in the previous quarter, which was heavily impacted by a write-off of tax-assets amounting to about NOK 500 million and unrealized, non-cash, currency loss of about NOK 100 million. Net interest-bearing debt decreased by NOK 0.5 billion from year-end 2015, from NOK 8.5 billion to NOK 8.0 billion, reflecting proceeds from the equity issue, a positive unrealized currency effect of about NOK 200 million and positive cash flow from operations.

Cash flow from operating activities before net financial items was NOK 285 million compared to NOK 363 million in Q4 2015. Norske Skog returned to the accounting principle of embedded derivatives in energy contracts in Norway used in 2014 and earlier with effect from 1 January 2015.