The board of Norske Skogindustrier ASA has decided to use the 30-day interest payment grace periods on its existing senior notes due in 2026 and the Norwegian Securitization Facility due in 2020 (the "NSF"), thereby postponing interest payments of about EUR 5 million, to support the operating business. Norske Skog will use the 30-day grace periods to continue constructive discussions with all stakeholders regarding its ongoing effort to achieve a consensual recapitalization transaction for the Norske Skog group. The company will continue to follow and evaluate the situation thoroughly before the end of the grace periods, said Mr. Lars P.S. Sperre, President and CEO of Norske Skog.
*Strong net sales
*Ramp-up at Gruvön (KM7) reached EBITDA break-even
*Excellent production quarter with increased operational efficiencies
*Net sales grew by 2% to SEK 6 520 million (6 364). Excluding currency effects net sales grew by 5%
Adjusted EBITDA increased by 27% to SEK 1 003 million (791), mainly due to the ramp-up at Gruvön
*Operating profit amounted to SEK 528 million (280)
*Net profit was SEK 377 million (164)
Comments by the CEO
The first quarter has been good. Not only did we have stable and high availability in our production, but our net sales also grew to an all-time high level and earnings improved substantially. The stronger performance is based on deliving within our three focus areas; ramping up the new board machine at Gruvön (KM7), ensuring a safe and stable production, and implementing cost and efficiency measures. The ramp-up at Gruvön reached EBITDA break-even in the first quarter, which is an important milestone for the entire company.
Also market conditions improved during the first three months of this year. Sales momentum was positive in both product areas and our total order pipeline at the end of March was almost 50% higher than the same time last year. Looking forward, we expect stable and improved market conditions and to implement higher prices in several of our segments. We see increasing demand for liquid packaging board for the full year. On the supply side we expect selective cost increases for raw material in the second half of the year and higher costs for overseas transportations as a consequence of the constrained container shipping situation.
Although vaccination programmes are being rolled out widely and at a higher speed, the coronavirus pandemic is not over yet. In all of our operations we need to stay prudent and continue to take preventive actions. The maintenance shutdown at Gruvön in April has been carried out with meticulous precautionary measures to avoid the spread of infection and disease. I am delighted that our colleagues at Gruvön have managed to accomplish this comprehensive shutdown successfully and without compromising the safety of employees and contractors.
The new board machine at Gruvön is gradually increasing its output of high-quality board material and the ramp-up has now entered a stage of product portfolio optimization within the Board product area. The certification of liquid packaging board from the new machine is proceeding in collaboration with our customers, although at a slower rate than we would wish for due to the coronavirus pandemic.
In January, the Board of Directors decided to invest in a new recovery boiler at the Frövi mill. After that, ground work has been initiated and Andritz has been awarded the contract for the recovery boiler. The new boiler will improve environmental performance and provide opportunities for enhanced efficiency and is planned to be in operation by the end of 2023.
Our priorities for the years ahead have not changed. Health and safety is the top priority. We must do everything we can to reduce the accident rate. Furthermore, we will strive to increase customer satisfaction through our constant quality management work, progress with the commercial ramp-up at Gruvön and by ensuring a competitive wood supply. Cost and efficiency measures will continue and the estimated positive effect of our cost and efficiency programme is SEK 250 million in 2021 and SEK 65 million in 2022. We have also initiated a digitalization project to realize opportunities through common ways of working and automated processes.
In parallel with disciplined work with these priorities, we are developing opportunities for profitable growth for the longer term. Sustainability will remain at the core of our strategy and we are committed to playing our part to reduce our carbon footprint in line with the Paris agreement.
President and CEO
The quarter in review
SALES AND RESULTS
Net sales for the first quarter grew by 2% amounted to SEK 6 520 million (6 364). Excluding currency effects sales rose by 5%, driven by higher sales volumes and an improved sales mix.
Adjusted EBITDA increased to SEK 1 003 million (791), mainly due to higher sales as a result of the positive trend of the ramp-up at Gruvön, as well as lower costs for raw materials.
No items affecting comparability impacted the results for the first quarter (25).