Norske Skog continues to reduce debt and fixed costs despite challenging markets. Net loss was significantly influenced by non-cash items such as impairments and change in value of energy contracts.
Norske Skog had gross operating earnings (EBITDA) in the fourth quarter of 2012 of NOK 327 million, down from NOK 365 million in the third quarter. This decline was due to weak seasonal effects and NOK appreciation. Gross operating earnings for the full year 2012 were NOK 1 464 million, a reduction of NOK 51 million from 2011, mainly due to lower production capacity after the closure of Norske Skog Follum, sale of Norske Skog Bio Bio and Norske Skog Parenco.
Net profit before special items were NOK 432 million in 2012 compared to NOK 12 million in 2011. The net loss of NOK 2.8 billion for 2012 was heavily influenced by NOK 3.2 billion in impairments, change in value of energy contracts and restructuring expenses. Impairments reflect increased uncertainty about sales price expectations. In addition, reassessment of Norske Skog's business in Australasia and reduction in the expected useful life of Norske Skog Walsum influenced impairments.
Cash flow from operating activities was NOK 382 million before net financial payments in the quarter. Underlying interest expenses in 2012 fell from 2011 in line with the reduction of net debt.
– Our operating earnings before special items have improved in 2012. Although our mill portfolio was reduced by three mills in 2012, we have made profitability improvements through cost input efficiencies and reduced working capital and fixed costs. We have actively managed capacity to counter market imbalances, says Sven Ombudstvedt, President and CEO of Norske Skog.
– The main task ahead is to create a better balance between supply and demand, improve productivity and cut expenses to improve margins, says Ombudstvedt.
Net interest-bearing debt was reduced by NOK 1.8 billion in 2012, totalling NOK 6.0 billion at the year end. Net interest-bearing debt was reduced by NOK 264 million in the fourth quarter. Net interest-bearing debt has been reduced from NOK 14 billion at the beginning of 2009 to NOK 6.0 billion in 2012, a decrease of NOK 8 billion over the last four years.
- We have strengthened the company's financial position considerably through a substantial reduction in our net interest bearing debt in recent years, says Ombudstvedt.
