Much of the Nordic pulp & paper industry stocks are already trading at near recession levels. For Norske Skog (OSE: NSG) there are also added company specific concerns. Given the current market situation, and that Norske Skog missed expectations, a sell-off was the inevitable results. The stock closed down over 30% and at lowest level for the session. The stock is down some 75% in half a year.
Second quarter revenue was 4.5 billion NOK and EBITDA 248 million. Result after taxes was minus 280 million. Cash flow from operations was still negative. Higher costs and currency effects weighed in negatively, the company has not been able to cut costs as well as peers. The company has made some divestments and aims to do more of those to continue to try to improve debt situation. Norske Skog says it now has sufficient financing to cover maturities in 2011 and 2012, with next big maturities coming from 2017 onwards.
Norske Skog expects newsprint prices to increase somewhat in H2. Input costs are expected to remain high but energy prices should moderate. Gross operating earnings are expected to improve from 2010 but to still be ’unsatisfactory’ Norske Skog plans to be active in seeking industry consolidation.
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