Norske Skog: Normalised profitability despite energy volatility

Norske Skog’s EBITDA in the first quarter of 2022 was NOK 610 million, an increase from NOK 422 million in the fourth quarter of 2021. Sales prices for all grades increased in the quarter as a consequence of unprecedented high energy costs in Europe and a tightened publication paper market situation. The European mills operated at full capacity during the quarter. The pellets facility Nature’s Flame was sold at a gain of NOK 175 million in the quarter.

“We have been able to sustain normalised margins on our publication paper products despite the price volatility on raw material and especially energy during the quarter. Following significant capacity closures in the industry over the last two years, the demand for publication paper now exceeds available capacity, causing our mills to run at full capacity,” says Sven Ombudstvedt, CEO of Norske Skog.

Cash flow from operations was NOK 196 million in the quarter compared to NOK 317 million in the previous quarter, positively impacted by the improved operating margins, but negatively impacted by change in working capital, being mainly an increase in trade and other receivables. Operating earnings in the first quarter of 2022 were NOK 593 million compared to operating earnings in the fourth quarter of 2021 of NOK 479 million. Net profit in the quarter was NOK 583 million compared to a net profit of NOK 400 million in the previous quarter. Net interest-bearing debt was NOK 924 million at the end of the first quarter, with an equity ratio of 37%.

Norske Skog sold the Nature’s Flame pellets company for a consideration of NZD 47.8 million to Talley’s Group, a New Zealand-based food company in the quarter. The gain recognised on the sale in the quarter was NOK 175 million.
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