Good capacity utilisation, with high export levels and lower costs, counteracted the effects of the weak market development in Europe and Australia.
The significant reduction in debt was a result of strong cash flow.
Gross operating earnings in the third quarter were NOK 365 million, compared to NOK 393 million in the previous quarter. The weak markets in Europe and Australasia were offset by lower variable- and fixed costs and effective production adjustments.
- Despite very challenging markets, we have been able to implement effective production adjustments, considerable cost reductions and a significant debt reduction this year, says President and CEO in Norske Skog, Sven Ombudstvedt.
Cash flow from operating activities (before financial items) was NOK 550 million, an improvement of NOK 162 million from the same quarter last year. The good cash flow for the period was a result of an effective realisation of trade receivables and reduction of inventories. Net interest-bearing debt during the quarter decreased from NOK 6.9 billion to NOK 6.3 billion, and has decreased by NOK 1.6 billion this year, primarily due to cash flow from operating activities and asset sales.
- We have had a significant decrease in debt of NOK 1.6 billion so far this year. This helps to strengthen our financial position going forward, says Ombudstvedt.
Key figures third quarter 2012 (NOK million)
The net loss for the period was NOK 433 million, compared with a loss of NOK 1 841 in the corresponding quarter last year. Operating revenue was NOK 4 115 million, compared with NOK 4 799 million in the same quarter last year. The decrease was due to reduced production capacity after the divestment of Bio Bio and the closure of Follum, combined with lower sales volumes in a weak market.
The sale of the Parenco mill to H2 Equity Partners in the Netherlands was completed on 2 October.
During the quarter, Norske Skog announced the closure of a newsprint machine at the Tasman mill in New Zealand, and conversion of a newsprint machine to magazine paper production at the Boyer mill in Australia. This will result in a total closure of around 250 000 tonnes of newsprint capacity in Australasia.
Norske Skog expects relatively stable volumes and margins for the rest of the year, when the Parenco transaction is taken into account. The company will actively adapt production to match market demand and will continue its efforts to reduce fixed costs and net interest-bearing debt.