Papermaker Norske Skog Q2 loss widens 62 pct on lower paper prices, higher costs, currency

Papermaker Norske Skog posts widened Q2 loss

OSLO, Norway — Norwegian papermaker Norske Skog said its second-quarter net loss widened 62 percent to 874 million kroner ($146 million) from 538 million kroner in 2009, due to lower paper prices, higher costs and changes in currency values.

The troubled newsprint and magazine paper manufacturer reported Thursday that its quarterly revenue slumped 11 percent to 4.58 billion kroner ($765 million) from 5.16 billion kroner a year earlier.

Norske Skog shares closed down 4.6 percent, at 7.50 kroner ($1.26), on the Oslo Stock Exchange.

The company blamed the result on a sharp fall in paper prices in Europe this year, along with a jump in the cost of pulp and other raw materials and an increase in the strength of the kroner.

The company gave a grim outlook, emphasizing “considerable uncertainty associated with the assessment of future prospects.”

The papermaker said prices and demand in Europe will remain low for the rest of the year. While growing demand and price in the other parts of the world may help offset the slumping European market, the price of raw materials will increase during the second half of 2010, Norske Skog said.

“We have to acknowledge that the second-quarter results are far below an acceptable level of profitability,” Chief Executive Officer Sven Ombudstvedt said. “Further debt reduction remains a top priority, and we are planning several additional initiatives in 2010.”

Such initiatives include the sale of surplus power and property in Norway, the company said, adding that it was reviewing whether also to sell property in Brazil.

The company also warned of cost cuts, including an unspecified number of layoffs, in the second half of the year.

Norske Skog employs 5,600 people and operates 14 mills in 11 countries.

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Online:

www.norskeskog.com