Norske Skog's EBITDA in the second quarter of 2022 was NOK 905 million, an
increase from NOK 610 million in the first quarter of 2022. Sales prices for all
grades increased in the quarter as a consequence of high energy costs in Europe
and a tight publication paper market. The containerboard conversions and energy
projects are progressing as planned.
"Despite turbulent raw material and energy markets during the quarter, we have
managed to achieve improved margins on our paper products. Our mills have been
operating at full capacity during the quarter. We expect that the market for
publication paper will remain tight also in the second half of 2022," says Sven
Ombudstvedt, CEO of Norske Skog.
Cash flow from operations was NOK 473 million in the quarter compared to NOK 196
million in the previous quarter, positively impacted by the improved operating
margins, but negatively impacted by change in working capital, being mainly an
increase in inventories, and trade and other receivables. Operating earnings in
the second quarter of 2022 were NOK 1 195 million compared to operating earnings
in the first quarter of 2022 of NOK 593 million. The quarter was positively
affected by non-cash changes in fair value of energy contracts in Norway
amounting to NOK 419 million. Net profit in the quarter was NOK 935 million
compared to a net profit of NOK 583 million in the previous quarter. Net
interest-bearing debt was NOK 1 012 million at the end of the second quarter,
with an equity ratio of 42%.
The conversion of one newsprint machine both at Norske Skog Bruck and Norske
Skog Golbey will add 760 000 tonnes of cost-competitive and low-emission
containerboard capacity. The containerboard production will be fully based on
recycled fibre, and will utilise green energy generated from the newly opened
waste-to-energy facility at the Bruck industrial site and the newly financed
biomass plant at the Golbey industrial site. These containerboard investments
are financed by debt facility agreements with an aggregate amount of EUR 265
million, having an average maturity towards the end of 2030.
"We are proud of being able to serve both the publication paper and the
packaging paper markets in a sustainable and profitable manner in the near
future," says Ombudstvedt.
The waste-to-energy plant at Bruck was officially opened by the Austrian Federal
Minister Leonore Gewessler and commenced production in April. PM3 at Bruck
ceased newsprint production on 10 July to prepare for the conversion of the
machine to recycled containerboard production. In June, Norske Skog announced
that the Green Valley Energie (GVE) joint venture, in which Norske Skog Golbey
has a 10% stake, will start the construction of the largest biomass boiler of
its kind in France at the mill site of Golbey, following recent completion of
debt financing. The biomass boiler will produce about 200 GWh of electricity
and about 700 GWh of renewable heat, thus generating CO2 savings of 210 000
tonnes per year and providing electricity equivalent to the consumption of more
than 13 000 homes.
"The Green Valley energy project is one more milestone in the ongoing transition
of Norske Skog towards new growth markets and sustainable energy. The biomass
boiler will ensure a stable, long-term supply of cost-competitive and 100
percent renewable steam as an alternative to fossil energy sources like natural
gas, shielding us from increasingly volatile energy markets for the Golbey
mill," says Ombudstvedt.
Norske Skog actively works to realise value from its industrial sites by
developing existing infrastructure and industry competence. The Norwegian
Minister of Trade and Industry Jan Christian Vestre officially opened the CEBICO
pilot plant for bio composites in Halden during the quarter. Saugbrugs has now
entered into several partner contracts to commercialise CEBICO. The
microfibrillar cellulose product CEBINA has successfully been applied in various
materials such as epoxy and spray filler. Through the partnerships with Ocean
GeoLoop at Norske Skog Skogn and Borg CO2 at Norske Skog Saugbrugs, Norske Skog
aims to pursue the opportunity to become CO2 net negative, and to explore
economically viable models for utilisation of biogenic CO2.
Total annual publication paper production capacity for the group is 2.1 million
tonnes, with 1.8 million tonnes in Europe and 0.3 million tonnes in Australia.
Norske Skog has numerous ongoing bio products and energy activities at all
Operating revenue increased from the previous quarter due to higher sales
prices. Delivered volumes were in line with the previous quarter. The price
increases in the quarter were driven by higher energy and other raw material
costs. Variable cost per tonne decreased in the quarter due to the start-up of
the waste-to-energy plant at Bruck, which reduced energy costs and CO2
emissions. The limited aivailability of high priced recovered paper caused some
sporadic short term operational down-time in the quarter. Fixed costs per tonne
increased somewhat due to higher valuation of the long term incentive programme
in the quarter. Group capacity utilisation remained high in the quarter at 91%.
According to Eurograph, demand for standard newsprint in Europe increased by 2%
through May compared to the same period last year. SC magazine demand decreased
by around 5%