Norske Skog (NSKOG) Q2 2024 earnings summary

Executive summary

• Q2 2024 EBITDA reached NOK 471 million, driven by NOK 338 million insurance compensation at Saugbrugs and the first positive EBITDA in the packaging paper segment as containerboard deliveries increased.

• Price increases were implemented for both containerboard and publication paper to offset rising costs.

• Operating earnings improved to NOK 364 million, with profit before tax at NOK 471 million.

• Major projects include the ramp-up of Bruck PM3, Golbey PM1 conversion, and BCTMP pre-engineering at Saugbrugs, with a final investment decision expected in H1 2025.

• Maintained strong cash position after refinancing EUR 150 million bond with NOK 1,400 million unsecured bond.

Financial highlights

• Total operating income for Q2 2024 was NOK 3,763 million, up from NOK 3,404 million in Q1 2024.

• EBITDA margin improved to 15% in Q2 2024 from 3% in Q1 2024.

• Net profit for the period was NOK 245 million, compared to a loss of NOK 328 million in Q1 2024.

• Equity ratio stood at 40-41% at quarter-end.

• Net debt decreased to NOK 2,970 million, supported by strong cash flow and refinancing.

Outlook and guidance

• Expect 85% utilization at Bruck PM3 by year-end, with Golbey PM1 startup in H2 2024 to boost capacity by over 30%.

• Packaging Paper segment EBITDA is expected to be negative in 2024 due to Golbey PM1 start-up costs.

• Raw material and energy markets remain uncertain, with recovered paper and pulpwood costs elevated.

• BCTMP investment at Saugbrugs could unlock NOK 615 million in additional insurance compensation.

• Focus remains on reducing production costs and working capital to stay competitive.