Rynning-Tønnesen: I am not satisfied
'We are achieving the expected results of our turnaround programme, but the cost increases have been higher than presupposed. I am not satisfied with the result. Norske Skog's profitability must be improved and further structural measures will be considered, says chief executive Christian Rynning-Tønnesen.
Norske Skog's total production and sales volumes are virtually unchanged this quarter compared to the first quarter. Operating revenue in the second quarter was 6.8 billion Norwegian kronor, marginally more than in the first quarter. Costs for recovered paper increased by about 100 million Norwegian kronor compared to the first quarter. The result is also negatively affected by currency developments.
Even though demand for newsprint in Europe remains at the same level as previously, total deliveries from Europe have been reduced by 3.8 percent in the first half year compared to the same period in 2006. This is due to increased imports from North America. So far in 2007, demand in Asia is showing a positive trend compared to 2006.
Norske Skog is achieving its best results in Australasia and South America with gross operating margins of 28.2 percent and 24.6 percent respectively. The moving of a paper machine from Norske Skog Union in Norway to Norske Skog Pisa in Brazil is going as planned. All necessary licenses from the Brazilian authorities are now in place, and the paper machine will begin production in the second quarter of 2009.
In the second half of 2007, the profit improvement programme is anticipated to yield results as expected. Costs are expected to remain high.