Norske Skog

Still lower costs - Seite 2

The Walsum paper machine (PM4), which ceased production of 225 000 ton in December 2013, has been liquidated and sold to Eurasteel. The sales agreement has a clause of not producing publication paper grades again.

Australasia
Operating revenue increased compared to the second quarter, due to higher production after the start-up of the LWC-machine at Boyer. Demand for newsprint and magazine paper in Oceania fell by 6% and 1% in the first eight months of this year compared with the same period last year. 

Variable costs per ton increased in the quarter compared to the previous quarter due to higher costs associated with LWC-production at Boyer. Fixed costs were slightly higher compared with the second quarter in part due to a stronger Australian dollar. Capacity utilization was 94% in the quarter compared with 91% in the previous quarter.

Key figures, second quarter of 2014 (NOK million)

	Q3 2014	Q2 2014	Q3 2013	2013
Operating revenue	3 057	3 018	3 353	13 339
Gross operating earnings (EBITDA)	208	251	176	862
Gross operating margin (%)	6,8	8,3	5,2	6,5
Gross operating earnings after depreciation	22	71	40	134
Restructuring expenses	5	0	3	-145
Other gains and losses	70	51	-47	-1 100
Impairments	0	0	0	0
Operating earnings	97	122	-4	-1 111
Share of profit in associated companies	0	-3	9	26
Financial items	-138	-284	-245	-1 258
Income taxes	-152	51	94	500
Profit/loss for the period	-192	-114	-147	-1 844
Cash flow from operations before net financial items	46	206	17	690

Outlook

Publication paper prices in Europe are expected to remain relatively stable into 2015. The market balance for newsprint is acceptable, while the operating rate for magazine paper currently is not satisfactory.

Newsprint prices in Australasia are to a large degree fixed through long-term contracts, while export volumes track international prices. Magazine paper prices are more short-term and among other exposed to the relative strength of AUD.

Variable costs for the group are expected to remain relatively stable. Fixed costs initiatives continue.

Presentation and telephone conference

The interim financial statements will be presented in Karenslyst allé 2 in Oslo today at 08.30 CET, and transmitted live on Norske Skog's website www.norskeskog.com.

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: [phone], confirmation code: 483 289#.