Challenging markets and restructuring take their toll: Norske Skog reports a net loss for the financial year of 2012, with results being significantly influenced by non-cash items such as impairments and change in value of energy contracts.
Norske Skog's net loss of NOK2.8bn for 2012 was heavily influenced by NOK3.2bn in impairments, change in value of energy contracts and restructuring expenses. The company said that impairments reflect increased uncertainty about sales price expectations. In addition, reassessment of its business in Australasia and reduction in the expected useful life of Norske Skog Walsum influenced impairments. Net profit before special items were NOK432m in 2012 compared to NOK12m in 2011.
Norske Skog had gross operating earnings (EBITDA) of NOK327m in the fourth quarter of 2012, down from NOK365m in the third quarter. This decline was due to weak seasonal effects and NOK appreciation, the company explained. Gross operating earnings for the full year 2012 were NOK1.46bn, a reduction of NOK51m from 2011, mainly due to lower production capacity after the closure of Norske Skog Follum, sale of Norske Skog Bio Bio and Norske Skog Parenco.
Sven Ombudstvedt, President and CEO of Norske Skog explained that although the group's mill portfolio was reduced by three mills in 2012, it had made profitability improvements through cost input efficiencies and reduced working capital and fixed costs. The company continued to reduce debt and fixed costs despite challenging markets, and operating earnings before special items improved in 2012. Norske Skog had actively managed capacity to counter market imbalances, Ombudstvedt said, however, the main task ahead was to create a better balance between supply and demand, improve productivity and cut expenses to improve margins.
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