Stora Enso's consumer board machine at Beihai Mill in China successfully started production on 26 May. The first consumer board on reel was produced 18 months after the start-up of Stora Enso's large-scale mill construction project in Beihai, Guangxi region. The project started from a greenfield site. In addition to the board machine, it includes a full site with infrastructure, power plant, water and effluent treatment capacities. Highest levels of work safety standards have been followed. With a peak of 5,500 workers on site, over 16 million working hours have been accomplished with only one Lost Time Accident.
Norske Skog’s gross operating earnings (EBITDA) in the third quarter 2017 were NOK 143 million, a decrease from NOK 190 million in the second quarter 2017. Gross operating earnings declined despite an increase in sales volume in Europe due to NOK appreciation, and less domestic demand in Australasia resulted in more low-margin export sales. Operating earnings in the third quarter was NOK 73 million compared to negative operating earnings of NOK 52 million in the second quarter of 2017. Net loss in the third quarter was NOK 9 million compared to a net loss of NOK 546 million in the second quarter 2017, mainly due to non-cash currency effects on debt and changes in the valuation of power contracts. Cash flow from operations declined to a negative NOK 162 million in the quarter from a positive NOK 187 million in the second quarter. Net interest-bearing debt increased by NOK 459 million to NOK 7 038 million in the third quarter, reflecting a negative cash flow for the period and unpaid interest costs related to the ongoing recapitalization process. At the end of the third quarter, the group had a negative book equity of NOK 689 million.
As part of the ongoing recapitalization process, the board has decided not to pay interest on the group’s outstanding debt. The cash balance at the end of the third quarter was NOK 426 million and is sufficient to support the operations until a recapitalization solution takes place. Norske Skog’s board and administration continue discussions with the creditors to launch as soon as possible a new and broadly supported offer for converting debt to equity and a new bond.
We are very pleased with the high production efficiency at the mills considering the difficult financial position of the group. Rising input factor costs combined with an improved market balance, reflecting significant capacity closures and conversions in the industry this year, demands higher publication paper price into 2018, says Lars P.S. Sperre, CEO of Norske Skog.
Key figures, third quarter of 2017 (NOK million) Q3 2017 Q2 2017 Q3 2016 2016 Operating revenue 2 911 2 848 2 918 11 849 Gross operating earnings 143 190 251 1 049 Gross operating margin (%)4.9 6.7 8.6 8.9 Gross operating earnings after depreciation -11 32 95 367 Restructuring expenses -2 -10 -1 -67 Impairment – – – -1 238 Other gains and losses 85 -75 20 -127 Operating earnings 73 -52 114 -1 065 Share of profit in associated companies – -46 -3 -211 Financial items -75 -445 84 1 044 Income taxes -8 -3 -5 538 Profit/loss for the period -9 -546 190 306 Cash flow from operations -162 187 19 230 Net interest bearing debt 7 038 6 579 6 172 6 302 Capacity utilization rate (%) 94 91 93 93
Higher input factor costs are headwinds for Norske Skog into 2018. The market balance for publication paper in Europe is supported by capacity closures and conversions in the industry. The resulting high operating rate as well as cost pressure from raw materials lead to price increase expectations for 2018.
A structural demand decline domestically in Australasia is a challenge, while higher export prices for newsprint to low-margin markets in Asia offset some of this decline. Both Norske Skog’s margin improvement program and the diversification strategy can not be fully implemented before the group’s recapitalization is in place.
more at: http://www.norskeskog.com/Default.aspx?ID=2890&t=2017-11-23T07:00:06+01:00