Norske Skog: Successful launch of packaging paper production and good cash flow from operations in weaker markets

Norske Skog’s EBITDA in the second quarter of 2023 was NOK 380 million, a decrease from NOK 675 million in the first quarter of 2023. The main driver for the lower second quarter EBITDA was lower publication paper sales prices. The cash flow from operations in the quarter was NOK 353 million. During the second quarter Norske Skog entered the packaging paper market with a successful production start-up of Bruck PM3, and the first rolls of packaging paper delivered to customers. The rockslide at Norske Skog Saugbrugs will likely keep the paper machine PM6 out of the publication paper market through the first half of 2024. An insurance compensation for business interruption is therefore recognized in the second quarter results. The start-up of the Golbey conversion project is postponed to the second quarter of 2024.

Despite the rockslide at Norske Skog Saugbrugs and weakened demand in all segments in the quarter, we have managed to maintain high sales volumes, healthy profitability and a strong financial position. This is also confirmed by the Board’s decision to initiate a share repurchase program. We will take necessary responsive actions to meet the challenging market environment in the next half year,”says Tore Hansesætre, CEO of Norske Skog.

Cash flow from operations was NOK 353 million in the quarter compared to NOK 430 million in the previous quarter, positively impacted by change in working capital of NOK 541 million, mostly related to decreased finished goods inventory, trade receivables, also reflecting the receipt of the CO2-compensation for 2022. Operating earnings in the second quarter of 2023 were NOK 146 million compared to operating earnings in the first quarter of 2023 of NOK 85 million. The operating earnings in the quarter were negatively affected by non-cash changes in fair value of energy contracts in Norway amounting to NOK 96 million. Profit in the quarter was NOK 45 million compared to a loss of NOK 181 million in the previous quarter. The net profit was less affected by unrealized currency losses on euro denominated debt than the previous period. Net interest-bearing debt was NOK 1 746 million at the end of the quarter, with an equity ratio of 42%.

The Board of Directors of Norske Skog ASA has decided to initiate a share repurchase programme instead of executing a dividend payment as earlier announced. This is in accordance with the authorisation granted at the annual general meeting. The maximum number of shares that can be repurchased is 9 426 470 shares, equivalent to 10% of the share capital of Norske Skog ASA and limited to a maximum consideration of NOK 472 million. See separate stock exchange release released today for more information.

Norske Skog Saugbrugs rockslide
The rockslide at Norske Skog Saugbrugs on 27 April caused material damage to building structures, cranes, machinery and equipment relating to paper machine PM6. As a result, production at PM6 has been stopped and will likely remain out of production through first half of 2024.
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