Norske Skog’s EBITDA in the second quarter of 2020 was NOK 138 million, a
decrease from NOK 379 million in the first quarter of 2020, mainly due to
national restrictions on movement of goods and people  following the outbreak of
the corona pandemic. The restrictions had severe negative impact on operations
due to a sudden and considerable drop in demand for publication paper.

- The corona pandemic had significant negative effects on demand in all of our
markets. We have handled the challenging market conditions by adapting
production to demand on all of our sites except for normal pellets operations at
the Taupo plant in New Zealand. The work to convert two newsprint machines to
packaging grades at our Bruck and Golbey plants has high priority. Our strong
financial platform will be important in our strategy to continue the
transformation of our traditional publication paper operations into packaging
and new green growth initiatives, says Sven Ombudstvedt, CEO of Norske Skog.

Operating earnings in the second quarter of 2020 were NOK -122 million compared
to operating earnings of NOK 90 million in the first quarter of 2020 impacted by
impairment recognized in the quarter. Net loss in the quarter was NOK 59 million
compared to a net loss of NOK 374 million in the previous quarter. The previous
quarter was impacted by unrealised currency loss that was only partially
reversed in the second quarter as NOK was stronger at the quarter end.  
 
Cash flow from operations was NOK -109 million in the quarter compared to NOK
470 million in the previous quarter. The first quarter was to a large degree
positively impacted by CO2-compensation, the sale of CO2-allowances and currency
gain from the completion of the Albury sale. The second quarter was negatively
impacted by payment of income taxes mainly at Golbey. Net interest-bearing debt
was NOK 329 million at the end of the second quarter, with an equity ratio of
52%.

Key figures, second quarter of 2020 NOK MILLION (unless otherwise stated)	
                                              Q220   Q120   Q219   YTD20   YTD19
INCOME STATEMENT	 	 	 	 	 
Total operating income	                      2167   2771   3316    4938    6423
EBITDA	                                       138    379    444     517     873
Operating earnings	                      -122     90   1150     -32    1403
Profit/loss for the period	               -59   -374   1032    -433    1184
 	 	 	 	 	 
CASH FLOW	 	 	 	 	 
Net cash flow from operating activities	      -109    470    225     361     531
Net cash flow from investing activities	       241    408    -88     649    -180
 	 	 	 	 	 
OPERATING MARGIN AND PROFITABILITY (%)	 	 	 	 	 
EBITDA margin	                               6.4   13.7   13.4    10.5    13.6
Return on capital employed (annualised)	       0.8   20.2   26.8    11.1    26.6
 	 	 	 	 	 
Capacity utilisation (Production / capacity %)	69     86     90      78      89


Reindustrialisation of Norway
Norske Skog plans to invest and convert two newsprint machines at respectively
Bruck and Golbey. The significant drop in demand for publication paper is not
expected to be fully recaptured, and may at some point in the near future also
impact the operations at Norske Skog’s six publication paper machines in Norway.


- The corona pandemic has ignited a call for a speedy transformation of our
Norwegian publication paper operations to other segments within the pulp and
paper industry. We have several promising on-going projects within biocomposites
and –chemicals, and we are reviewing the opportunity to produce bleached
chemi-thermomechanical pulp in Norway. A Norwegian investment decision will
depend on long-term, stable market and political conditions within energy,
logistics and climate policy. Securing a robust operating environment with
strong political support would be the first step in a green re-industrialisation
of the entire energy processing industry in Norway, says Sven Ombudstvedt, CEO
of Norske Skog.


Segment information
Total annual production capacity for the group is 2.3 million tonnes. In Europe,
the capacity is 1.9 million tonnes, while in Australasia the capacity is 0.4
million tonnes.

Europe
Operating income decreased from the previous quarter due to lower sales volumes
mainly caused by reduced demand. Sales prices remained relatively stable
throughout the quarter. Variable cost per tonne decreased in the quarter due to
an underlying reduction in demand for input factors. In Norway, Norske Skog was
forced to resell unused energy contract volumes at prices substantially below
contract prices. Fixed costs were lower due to periodic temporary lay-offs
caused by machine down time. According to Eurograph, demand for newsprint in
Europe decreased by 21% through May compared to the same period in 2019. SC
magazine paper demand decreased by 15%, while demand for LWC magazine paper
declined by 21%. Our capacity utilisation was 70% in the quarter, down from 86 %
in the previous quarter.

Australasia
Sales volume and operating income decreased from the previous quarter due to
market effects caused by reduction in demand. Due to a sudden drop in the
Australasian demand for publication paper, the export to low priced Asian market
increased from the previous quarter. Total income includes gain from the sale of
the Tasmanian forest. Variable cost per tonne decreased in the quarter due to an
underlying reduction in demand for input factors. Fixed costs were down in the
quarter due to temporary lay-offs. According to official trade statistics,
demand for newsprint in Australasia declined by 24% through June compared to the
same period in 2019. Demand for magazine paper declined by 19%. Capacity
utilisation was 65% in the period, down from 85% in the previous quarter.


Outlook
The continued softening of the national restrictions caused by the global
coronavirus pandemic, is expected to have a positive effect on the demand for
publication paper as the retail trade in general will increase. The closure of
several printed publications globally may indicate that at least part of the
demand for publication paper will not return to the market. The market
uncertainty and low capacity utilisation may have a negative impact on sales
prices in the short run. However, lower sales prices in the second half of 2020
will to some degree be offset by a decrease in input costs from energy, pulpwood
and recovered paper.

The group will continuously monitor and evaluate the impact of the corona
situation on the company’s operations and business outlook. The health and
safety of the group’s employees are top priority under the circumstances.
Further operational as well as long-term structural measures could be
implemented at future dates. 
In light of these unprecedented and challenging circumstances, Norske Skog
remains committed to become a leading European producer of renewable packaging,
improve and optimise publication paper cash flows, and diversify and innovate
within fibre and energy.


About Norske Skog
Norske Skog is a world leading producer of publication paper with strong market
positions and customer relations in Europe and Australasia. The Norske Skog
Group operates four mills in Europe of which two will produce recycled
containerboard following planned conversion projects. In addition, the Group
operates two publication paper mills and a pellets facility in Australasia.
Norske Skog aims to further diversify its operations and continue its
transformation into a growing and high-margin business through a range of
exciting fibre projects. The Group has approximately 2,300 employees in five
countries, is headquartered in Norway and listed on the Oslo Stock Exchange
under the ticker NSKOG.


Presentation and quarterly material
There will be no live presentation by the company. The CEO presentation, the
quarterly financial statements and the press releases are available on
www.norskeskog.com and published on www.newsweb.no under the ticker NSKOG. If
you want to receive future Norske Skog press releases, please subscribe through
the website of the Oslo Stock Exchange www.newsweb.no.

Investors are invited to participate in a video conference at 10:00 CET, in
which Sven Ombudstvedt and Rune Sollie (CFO) will be available to address
questions. The conference call will be held in English. Please register your
video conference participation through the following email address:
ir@norskeskog.com. Video connection details will be distributed prior to the
conference to registered participants.


Norske Skog
Communications and Public Affairs

For further information:

Norske Skog media:
Kommunikasjonsdirektør                                                          
                                      
Carsten Dybevig
Mob: 917 63 117
Twitter: @Norske_Skog

Norske Skog financial markets:                                                  
                                              
Investor Relation Manager
Even Lund
Mob: +47 906 12 919