Lower production costs have protected Norske Skog from the worst effects of lower Australian and European sales in its third quarter of 2012.
The newsprint maker says good capacity utilisation, with high export levels and lower costs, were the main cntributors to its better result.
A "significant reduction" in debt was a result of strong cash flow.
Gross operating earnings in the third quarter were NOK 365 million, compared to NOK 393 million in the previous quarter. The weak markets in Europe and Australasia were offset by lower variable and fixed costs and "effective production adjustments".
"Despite very challenging markets, we have been able to implement effective production adjustments, considerable cost reductions and a significant debt reduction this year," says president and chief executive Sven Ombudstvedt.
Cash flow from operating activities (before financial items) was NOK 550 million, an improvement of NOK 162 million from the same quarter last year. The cash flow improvement was a result of effective realisation of trade receivables and reduction of inventories..
"We have had a significant decrease in debt of NOK 1.6 billion so far this year. This helps to strengthen our financial position going forward," says Ombudstvedt.
During the quarter, Norske Skog announced it would close a newsprint machine at the Tasman mill in New Zealand, and convert a newsprint machine to magazine paper production at the Boyer mill in Australia. The company says this will result in a total closure of around 250 000 tonnes of newsprint capacity in Australasia.
Norske Skog expects "relatively stable" volumes and margins for the rest of the year.