Norske Skog’s gross operating earnings (EBITDA) in the second quarter 2017 were NOK 190 million, an increase from 158 million in the first quarter 2017. The European units contributed less to gross operating earnings than in the first quarter ; whereas, the Australasian units gross operating earnings improved.
Operating earnings in the second quarter was NOK -52 million compared to positive operating earnings of NOK 2 million in the first quarter of 2017. Net loss in the second quarter was NOK 546 million compared with a net loss of NOK 274 million in the first quarter 2017. Cash flow from operating activities before net financial items seasonally increased from NOK 175 million in the first quarter 2017 to NOK 226 million in the second quarter 2017.
In Europe, a positive currency effect in the quarter was offset by high maintenance costs and inflation of recovered paper prices. Australasia had normal production after some production problems at Boyer in the first quarter. The Board decided to defer interest payment of NOK 211 mill on the existing 2019 senior secured notes (SSN), 2026 senior notes and the 2020 Norwegian Securitization Facility (NSF) to support the operating business, which contributed to the cash balance at the end of the quarter of NOK 496 million.
Net interest bearing debt increased by NOK 0.2 billion from the end of the first quarter to NOK 6.6 billion, as a result of a weaker Norwegian krone against the euro. The equity was negative NOK 558 million at the end of the second quarter compared to positive NOK 39 million at the end of the first quarter.
Norske Skog has received a commitment letter for a EUR 16 million liquidity facility from the majority holders of the SSN bond and the NSF loan to support operational business. Norske Skog plans to launch a revised recapitalization proposal to improve the liquidity, equity and debt position of the group. In addition, Norske Skog has introduced a cost reduction program for all operating units, which is targeted to add to an annual improvement of NOK 500 million from 2019. The program intends to realize margin improvements throughout the entire value chain, including both revenue and variable costs enhancing measures, and some targeted fixed cost initiatives, offsetting underlying inflation.
– We continue to make our units more competitive and robust through a new comprehensive cost reduction programs. At the same time, there are significant progress in realizing the new growth initiatives. All these measures will be effectuated simultaneously but further progress depends on a successful outcome of the on-going recapitalization process, says Lars P.S. Sperre, CEO of Norske Skog.
Key figures, second quarter of 2017 (NOK million) Q217 Q117 Q216 2016 Operating revenue 2 848 2 693 2 891 11 849 Gross operating earnings (EBITDA) 190 158 335 1 049 Gross operating margin (%) 6.7 5.9 11.6 8.9 Gross operating earnings after depreciation 32 8 149 367 Restructuring expenses -10 – -46 -67 Impairment – – -1 238 -1 238 Other gains and losses -75 -7 -10 -127 Operating earnings -52 2 -1 146 -1 065 Share of profit in associated companies -46 -6 -204 -211 Financial items -445 -260 1 359 1 044 Income taxes -3 – 10 220 538 Profit/loss for the period -546 -274 229 306 Cash flow from operations before net financial items 226 175 321 953 Net interest bearing debt 6 579 6 399 6 353 6 302
Outlook: The market balance for publication paper in Europe is supported by industry capacity closures and conversions. This has resulted in a relative high operating rate for newsprint and SC magazine paper. The LWC magazine segmented though remains oversupplied.
more detail at: http://www.norskeskog.com/Default.aspx?ID=2890&t=2017-08-23T07:00:32+02:00