Norske Skog forced to act
"With yet another disappointing quarter behind us, the need for a comprehensive restructuring becomes even more evident," says Christian Rynning-Tønnesen, Norske Skog's CEO.
The board of directors of Norske Skog expresses its concern over the development in the newsprint and magazine paper market, and the director's report states that the industry has to adapt to the falling demand in North America and parts of Europe to achieve satisfactory return.
The development in the demand for magazine paper globally is positive, while newsprint demand is down. The European market balance for newsprint is also affected by increased imports from Canada. This has led to lower deliveries and substantial newsprint stocks being established in Europe. Norske Skog reacts to this development by reducing production for the rest of 2007. Norske Skog has already decided to implement a temporary reduction of 200,000 tons in European newsprint production in 2008. Under the current market conditions, it is likely that this will have to be followed by more permanent measures, according to a press release from Norske Skog. The company has therefore decided to initiate a process to fully review all its paper machines.
"Norske Skog must be at the forefront of the market development and adapt production to the expected demand. Both the conversion of some paper machines to production of other paper grades and permanent closures will be considered," says Rynning-Tønnesen.
The profitability improvement program, which started one year ago, continues to yield results. The continuous improvement achieved up to the third quarter of 2007 equals annual improvements of 1.6 billion Norwegian Kroner, but these improvements are offset by cost increases. /AA