Norske Skog's EBITDA in the third quarter of 2023 was NOK 327 million, a
decrease from NOK 380 million in the second quarter of 2023. The main driver for
the lower third quarter EBITDA was lower publication paper sales prices. The
cash flow from operations in the quarter was NOK 173 million. Deliveries of
packaging paper increased according to ramp-up plans, and Norske Skog Bruck
received favourable quality feedback from customers. The Norwegian government
proposed to increase the quota price floor for receiving CO2-compensation. 

"We are very pleased by the positive feedback from our containerboard customers,
and that we are well underway to become one of the leading independent supplier
of recycled containerboard in Europe. At the same time, we are maneuvering our
mills to be as cost effective as possible. By the end of the fourth quarter
2023, Saugbrugs PM5, in addition to PM4, will produce and deliver quality SC
magazine paper to our customers," says Geir Drangsland, CEO of Norske Skog. 

Cash flow from operations was NOK 173 million in the quarter compared to NOK 353
million in the previous quarter, mainly due to lower EBITDA, receivable
insurance compensation, and increased working capital. Operating earnings in the
third quarter of 2023 were NOK 36 million compared to operating earnings in the
second quarter of 2023 of NOK 146 million. The operating earnings in the quarter
were negatively affected by non-cash changes in fair value of energy contracts
in Norway amounting to NOK 131 million. Profit in the quarter was NOK 134
million compared to NOK 45 million in the previous quarter. The net profit was
affected by unrealized currency gain on euro denominated debt as NOK
strengthened in the period. Net interest-bearing debt increased from NOK 1 746
to 2 662 million at the end of the quarter, mainly debt related to the packaging
conversion at Norske Skog Golbey, and buy-back of own shares. The equity ratio
was unchanged at 42%.

Operations
Total annual publication paper production capacity for the group is 1.5 million
tonnes after the temporary idling of Norske Skog Saugbrugs PM6, with 1.2 million
tonnes in Europe and 0.3 million tonnes in Australia. Bruck (PM3) started
production of recycled containerboard paper in the first quarter, and Golbey
(PM1) plans to start in the second quarter of 2024. Norske Skog will after the
ramp-up of Bruck and Golbey have an annual capacity of 760  000 tonnes of
packaging paper production. 

According to Euro Graph, demand for standard newsprint in Europe decreased by
22% through August 2023 compared to the same period last year. SC magazine
demand decreased by around 27%. LWC paper demand decreased by around 28% through
August compared to the same period last year. According to PPPC trade statistics
for Australia, demand for newsprint and coated mechanical decreased by 15% and
14%, respectively, through August 2023 compared to the same period last year. 

Publication paper
Lower publication paper sales prices and lower delivered sales volume reduced
the operating income compared to the previous period. The sales price decrease
was driven by weak demand and a market imbalance for publication paper. In its
national budget for 2024, the Norwegian government has proposed to increase the
quota price floor for CO2 compensation, reducing the annual compensation by
approximately NOK 100 million, which negatively affects the EBITDA in the third
quarter by approximately NOK 80 million of which NOK 55 million relate to a
reversal of CO2 compensation recognised in the first half of 2023. In the third
quarter, Norske Skog recognised business interruption and property damage
insurance of respectively, NOK 135 million and NOK 67 million.

Variable costs per tonne decreased in the quarter, mainly due to lower contract
electricity prices in Norway and due to cost of materials in the second quarter
being extraordinarily high as a result of inventory draws. Fixed costs per tonne
increased due to higher operating expenses at Saugbrugs PM6, which will be
reimbursed by insurance coverage. Group capacity utilisation was 89% in the
quarter, 87% in Europe and 97% in Australasia. Saugbrugs PM6 is excluded from
the calculation from 27 April. The weak publication paper demand caused some
operational down-time in the quarter, which impacted the capacity utilisation in
Europe. 

Packaging paper
The packaging paper machine at Bruck is expected to operate at 60-70%
utilisation in the second year of operation and reach full utilisation during
the third year of production. The operating income for third quarter consists of
revenue from deliveries and gate fees from waste incineration, which were lower
than the variable and fixed costs in the period.

Key figures, third quarter of 2023
NOK million (unless otherwise stated)	
                          Q323   Q223   Q322   YTD23   YTD22
Income statement	 	 	 	 	 
Total operating income	 3 036	3 404  3 630   9 760  11 157
EBITDA	                   327	  380	 508   1 382   2 022
Operating earnings	    36	  146	 113	 267   1 901
Profit/loss for the period 134	   45    -11      -1   1 507
 	 	 	 	 	 
EBITDA margin %	          10.8	 11.2	14.0	14.2	18.1
Capacity utilisation publication paper %	
                            89	   77	  85	  81	  90
					
Cash flow					
Net cash flow from operating activities	
                           173	  353	 627	 956   1 295
Net cash flow from investing activities	
                          -949	 -695	-520  -2 012  -1 084

Balanse	          30.09.23  31.06.23  31.03.23  31.12.22  30.09.22
Total assets	   13 898    14 689    14 502    13 609    12 747
Equity	            5 880     6 208     6 045     5 909     4 859
Equity %	       42        42	   42	     43	       38


Status projects
«I want Norske Skog to strengthen its position as one of the leading European
wood processing companies. Our strategy is to improve the competitiveness of the
existing publication paper machines, to become a leading player within the
containerboard market in Europe, and to develop new revenue streams within wood
processing," says Geir Drangsland, CEO of Norske Skog.

Norske Skog Golbey conversion projects
At Norske Skog Golbey, the conversion of the newsprint paper machine (PM1) into
recycled containerboard paper production is progressing with full strength.
However, due to a revised plan for installation tasks, the start-up is expected
at the end of the second quarter of 2024. 
Norske Skog Golbey will eventually add 550 000 tonnes of new low-emission
packaging paper capacity after ramp-up completion in 2026, which will be fully
based on recycled fibre. Golbey PM1 will utilise renewable energy generated from
the biomass plant under construction at the Golbey industrial site (Green Valley
Energie). 

Norske Skog Skogn new TMP-line
Norske Skog Skogn has started ordering necessary refiners and equipment for the
net NOK 180 million new thermo-mechanical pulp (TMP) line, which substitutes
recovered paper with fresh fibre. The expected start-up will be in the second
quarter of 2024. The project proceeds according to budget and timeline. The new
TMP line will reduce variable costs, in addition to reducing NOx emissions,
fossil CO2-emissions and waste sent to landfill. As of the third quarter,
approximately NOK 45 million had been invested in the TMP-line.

Norske Skog Saugbrugs rockslide
The rockslide at Norske Skog Saugbrugs on 27 April caused material damage to
building structures, cranes, machinery, and equipment relating to paper machine
PM6. As a result, production at PM6 has been stopped and will likely remain out
of production for large parts of 2024. Norske Skog has property damage and
business interruption insurance in line with good market and industry practice. 
Coverage and self-retention are in line with Saugbrug's defined and adopted risk
strategy to create predictability and to limit the financial impact of
unforeseen incidents. 

Outlook
The development in the global economy is of vital importance for consumer
spending, and this impacts the publication paper and packaging industry, and
thus Norske Skog's operations and results. The global economy is expected to
remain weak for the remainder of 2023 and into 2024. The raw material and energy
markets, which are important for both publication paper and packaging paper
production, are expected to remain uncertain. Development of raw material and
energy prices are expected to be lower than the record levels experienced in
2022, but still above historical average levels, and uncertainty remains on how
the energy markets will develop in the coming periods.  

The level of input costs and demand for paper will continue to influence paper
sales prices in Europe. The decreased demand for publication paper and packaging
paper has initiated further announcements of capacity closures in the industry
to improve the imbalance in demand and supply for both publication paper and
packaging paper, but capacity utilisation is expected to remain weak in the
coming periods as further closures are required. Norske Skog's European
operations are cost-competitive, and the group will continue to temporarily
adjust production to customer demand. 

Norske Skog Saugbrugs PM6 will remain out of the SC market for large parts of
2024. PM5 will be restarted in the fourth quarter to serve some customers
previously served by PM6. Production of recycled containerboard in Bruck is
expected to development in the coming periods in line with a normal ramp-up
curve. In Australasia, price increases have been implemented impacting the
coming periods, but reduced demand in the region may require increased exposure
through higher export volumes. 

Norske Skog will continue to develop its industrial sites, among others within
bio products and renewable energy, both on a stand-alone basis and in
partnerships.

About Norske Skog
Norske Skog is a leading producer of publication paper with strong market
positions and customer relations in Europe and Australasia. The Norske Skog
Group operates four mills in Europe, which produce publication paper, recycled
packaging paper, energy and bioproducts. In addition, the Group operates one
paper mill in Australia. Norske Skog aims to further diversify its operations
and continue its transformation into a growing and high-margin business through
a range of promising energy and bio product development projects. The Group has
approximately 2 100 employees, is headquartered in Norway and listed on the Oslo
Stock Exchange under the ticker NSKOG.

Presentation and quarterly material
The company will not hold a live presentation, but will arrange a webinar today
at 08:30 CEST for pre-registered participants. The quarterly recording, the
presentation, the financial statements and the press releases are available on
www.norskeskog.com  and published on www.newsweb.no under the ticker NSKOG. If
you want to receive future Norske Skog press releases, please subscribe through
the website of the Oslo Stock Exchange www.newsweb.no. 


Norske Skog
Communications and Public Affairs