“The good trend with lower variable and fixed costs. Overall, we are in a better cost position this year compared to prior years, due to continued cost reduction programmes and better economies of scale at our remaining units,” says Sven Ombudstvedt, President and CEO of Norske Skog.
Norske Skog's gross operating earnings (EBITDA) in the 2Q 2014 were NOK 251 million ($40.6 million), up from NOK 153 million ($24.5 million) in the 1Q. The increase was due to lower energy and fibre costs, and lapse of one-off effects at Boyer (start-up LWC), Walsum and Saugbrugs (start-up new pulp plant).
Loss after tax for the period amounted to NOK -114 million ($18.5 million) in the 2Q, compared to a profit of NOK 11 million ($1.8 million) in the 1Q 2014. The result was impacted by unrealized foreign exchange losses of NOK 121 million ($19.6 million). Net interest-bearing debt increased by NOK 152 million ($24.6 million) to NOK 6 952 million, of which NOK 136 million ($22 million) related to a negative currency effect due to a weaker Norwegian krone.
A weaker Norwegian krone will be positive for the company's future results. Norske Skog repaid the remaining bonds of NOK 496 million ($80.3 million) with maturity in June. Cash flow from operating activities before net financial items was NOK 206 million ($33.4 million) in the 2Q, compared to NOK 54 million ($8.7 million) in the 1Q.
“Cost reductions and lower interest expense after repayment of June-maturities will improve profitability. This coupled with the completion of the major investment program over the last two years will increase cash flow significantly ahead. At the same time, we will continuously monitor the market situation, and if necessary implement active capacity management to counteract the effects of market imbalances,” says Sven Ombudstvedt, President and CEO of Norske Skog.
