May 04, 2007. /Lesprom Network/. Input factors for newsprint and magazine paper production became more expensive in the first quarter of 2007, when Norske Skog paid 6-7% more for recovered paper and pulpwood. At the same time, the company noted that its turnaround programme had a positive effect of roughly NOK 200 million ($33.4 million) on results for the period. "The whole organization is making a major effort to implement our extensive turnaround," says chief executive Christian Rynning-Tønnesen. "That's allowing us to respond to higher costs and a market which remains demanding." Gross operating earnings before special items for the period totalled NOK 1.18 billion ($196.9 million), compared with NOK 1.27 billion ($211.9 million) for the fourth quarter of 2006. Net operating earnings were NOK 440 million ($73.4 million), compared with NOK 538 million ($89.8 million) in the previous three-month period. Compared with the first quarter of 2006, gross operating earnings rose by NOK 141 million ($23.5 million). Fixed costs were substantially lower as a result of the restructuring of the mill portfolio, the turnaround and last year's rebuilds in Australasia. Demand is expected to develop relatively well for the rest of the year, with the exception of the North American market. The newsprint market in Europe remains good, with demand on a par with 2006. A significant slump in demand for newsprint in North America and overcapacity in China are affecting the European market through increased imports of newsprint from Canada and less scope for exports to Asia. Norske Skog is a world leading producer of newsprint and magazine paper, with 18 paper mills around the world.