Norske Skog had gross operating earnings (EBITDA) in the fourth quarter of 2009 of NOK 472 million, down from NOK 642 million in the third quarter. Gross operating earnings for the full year 2009 were NOK 2.185 billion, a reduction of NOK 342 million from 2008 on a comparable basis. Net interest bearing debt was reduced by NOK 4.4 billion in 2009, totalling NOK 9.6 billion at year end. Demand for Norske Skog’s products was weak throughout 2009, and the market is characterised by record-low prices in Europe and continued overcapacity.
“Major improvements have been made, and the company's financial situation has been strengthened considerably in recent years. The main task ahead is to create a better balance between supply and demand, improve productivity and cut expenses to ensure consistency between cost level and profit," says Sven Ombudstvedt, who took over as CEO of Norske Skog on 1 January this year.
“We have defined several areas with cost-reduction potential. Cooperation with union representatives and mill management, simplification of the organisational structure and strengthening of strategic management functions will be critical success factors going forward,” says Ombudstvedt.
At the start of 2010, there are few clear signs of a rapid improvement in the markets for publication paper. However, demand may increase during the course of the year, compared with 2009 levels. Newsprint prices in most European markets are expected to be 15 to 20 per cent lower than in 2009. For magazine paper, which is to a lesser extent sold on an annual contract basis, the fall in price levels at the start of 2010 is 5 to 10 per cent. The new prices in Europe are at a very low level, and are not sustainable in the longterm. Price increases during the course of the year can be expected in South America and Asia, and new long-term contracts are under negotiation with the major customers in Australasia.
