Norske Skog: Good quarter despite turbulent operating conditions

Norske Skog’s EBITDA in the third quarter of 2022 was NOK 508 million, a decrease from NOK 905 million in the second quarter of 2022. The third quarter EBITDA was impacted negatively by reduced volumes and higher fixed costs per tonnes following the closure for conversion of PM3 to containerboard production at Norske Skog Bruck, reduced CO2 compensation in Norway and significant increases in energy and raw materials, which more than offset the increase in sales prices for all grades. The containerboard conversion projects are progressing as planned.

“Despite the turbulence in the energy and raw material markets, we have been able to sustain satisfactory margins on our publication paper products. Our conversion projects at Bruck and Golbey are progressing as planned, and will contribute to a long-term sustainable industrial platform,” says Sven Ombudstvedt, CEO of Norske Skog.

Cash flow from operations was NOK 627 million in the quarter compared to NOK 473 million in the previous quarter, positively impacted by the operating results and change in working capital. Operating earnings in the third quarter of 2022 were NOK 113 million compared to operating earnings in the second quarter of 2022 of NOK 1 195 million. The quarter was negatively affected by non-cash changes in fair value of energy contracts in Norway amounting to NOK 273 million. The Norwegian 2023 national budget proposal introduced a NOK 200 floor per tonne CO2 deduction in the CO2 compensation with retroactive effect for 2022. This will annually increase the energy costs for the Norwegian mills with NOK 140 million. Net loss in the quarter was NOK 11 million compared to a net profit of NOK 935 million in the previous quarter. Net interest-bearing debt was NOK 970 million at the end of the third quarter, with an equity ratio of 38%.

Status projects
The conversion of newsprint machines at Norske Skog Bruck and Norske Skog Golbey will add 760 000 tonnes of cost-competitive and low-emission containerboard capacity.

The Green Valley Energie (GVE) joint venture, in which Norske Skog Golbey has a 10% stake, has started the construction of the largest biomass boiler of its kind in France at the mill site of Golbey.

Total annual publication paper production capacity for the group is 2.0 million tonnes, with 1.7 million tonnes in Europe and 0.3 million tonnes in Australia. Norske Skog has numerous ongoing bio products and energy activities at all industrial sites.
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