Norske Skog net result down by 60% in Q1-Q3 period

Norske Skog Tasman mill
Source: Norske Skog
28 Oct 2013 − 

Norske Skog concluded the first three quarters of 2013 with negative earnings. Capacity reduction measures during the reporting period have impacted results, the company says.

Norwegian newsprint and magazine paper manufacturer Norske Skog posted a net loss of NOK1.39bn for the first nine months of 2013. The figure represents a 60% decline compared with last year. While the operating result for the reporting period was 8.8% higher than for the same period last year, it was still negative at -NOK829m. The company's sales for the first the January-September period stood at NOK9.81bn, NOK3.1bn lower than for the same period last year.

Norske Skog attributes the drop in sales mainly to the fact that the company has less available capacity than last year due to which output and deliveries declined. In this context, Norske Skog cites the closure of a paper machine at its Tasman newsprint mill in New Zealand, the sale of the 51% majority stake in the Pisa newsprint mill in Brazil as well as the divestment of the Parenco magazine paper mill in the Netherlands.

The year-on-year development of financial items is conspicuous in the company's balance sheet: expenses for the first nine months have increased from NOK63m last year to NOK935m this year, mainly due to currency effects. Norske Skog reports currency losses of NOK448m. In 2012, the same effects contributed a gain of NOK262m to the company's earnings. The paper manufacturer, however, adds that the Norwegian krone lost some of its strength in the third quarter 2013 compared to the second one. At NOK87m, currency losses for the third quarter 2013 were less than half the corresponding figure for the previous quarter.

With one exception, the various business divisions of the company also report poorer results for the first three quarters of the current year. Sales of the Norske Skog's Newsprint Europe division stood at NOK3.12bn, 8% lower than last year to yield an operating profit of just NOK21m compared to NOK147m for the first nine months of 2012. Norske Skog pointed to the fact that deliveries in the first three quarters of the year at 862,000 t were 15,000 t below the figure for the same period in 2012.

The company's Newsprint Outside Europe division posted a higher operating result for the reporting period. Following a loss of NOK176m in 2012, the division generated a profit of NOK6m for the January-September period. Among other reasons, Norske Skog attributed the improvement to the reduction of fixed costs resulting from the divestment in Brazil. This divestment in addition to the closure of the PM in New Zealand also meant that the company's output dropped. The division's deliveries at 634,000 t were almost 200,000 t lower than the figure for the January-September period 2012. The division's sales for the first nine months of 2013 at NOK2.97bn dipped 27% below last year's figure.

Unlike in the newsprint segment, the company's Magazine Paper division slipped into the red. The division posted an operating loss of NOK103m for Q1-Q3 2013 after generating a profit of NOK48m last year. Sales dropped by 26% to NOK3.64bn which Norske Skog attributed to the sale of the Parenco mill. Deliveries in the reporting period fell by around 250,000 t to 777,000 t year-on-year.

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