Norske Skog will continue to look for opportunities to sell non-core assets and to evaluate output capacity, its CEO Sven Ombudstvedt said.
Against the background of weak demand for newsprint in Australasia Norske Skog announced that it would review its newsprint output capacity in that region. Presenting the company's first quarter results, Norske Skog's CEO Sven Ombudstvedt said that the company would check if it needed to operate all of its newsprint machines in that market. Norske Skog did a lot of restructuring, divestments and closures, and there were not many non-core assets left, he said. However Norske Skog will continue to evaluate the situation, he said. The PMs in Australasia are flexible and there is "little penalty in terms of fixed costs and productivity if you run four rather than five machines".
Alternatives include the conversion of capacity or the reconversion of a site for other industrial purposes. A decision could be taken by the end of the year, the CEO said.
Lower costs strengthened Norske Skog’s gross operating earnings in the first quarter this year compared with the same quarter last year, while debt was significantly reduced. Gross operating earnings in the first quarter were NOK380m, up from NOK296m in the same period last year, mainly as a result of lower costs. However, due to a substantially reduced value of energy contracts in the balance sheet as a result of lower electricity prices in the Nordic region, Norske Skog's operating result dropped to a loss of NOK587m from a profit of NOK225m in Q1 2011.