Things are brighter at Norske Skog than a year ago, with the Boyer LWC plant and higher mill production contributing.
President and chief executive Sven Ombudstvedt says the paper group strengthened operations as a result of lower costs and improved efficiency in the second quarter of the year. “High production at the mills in a difficult market shows the relative competitive position of the group,” he says.
“Overall, we are in a better cost position this year compared to prior years, due to continued cost reduction programmes and better economies of scale at our remaining units.”
Norske Skog's gross operating earnings (EBITDA) in the second quarter of 2014 were NOK 251 million – up from NOK 153 million in the first quarter – thanks to lower energy and fibre costs, and the Boyer LWC, Walsum and Saugbrugs pulp start-ups.
There was a loss after tax of NOK 114 million in the second quarter, compared to a profit of NOK 11 million in the first. Norske Skog attribute this to unrealised foreign exchange losses of NOK 121 million.
The group repaid the remaining bonds of NOK 496 million which matured in June, with cashflow from operating activities before net financial items at NOK 206 million in the second quarter, almost four times that in the first.
Cost reductions and lower interest expense after repayment of June-maturities will improve profitability, with completion of a major investment programme over the last two years increasing cashflow “significantly ahead”.
“At the same time, we will continuously monitor the market situation, and if necessary implement active capacity management to counteract the effects of market imbalances,” Ombudstvedt says.