Lower prices and export markets in Australasia challenged Norske Skog, but the Global papermaker still came out ahead, thanks to foreign exchange gains.

Third quarter results show gross operating earnings (EBITDA) of NOK 163 million (up from 138 million) partly as a result of the weakening of the Norwegian krone, while contributing to a NOK 900 million non-cash increase in the net interest bearing debt.

A net loss of NOK 742 million was "significantly impacted" by negative unrealised foreign exchange losses amounting to NOK 525 million on foreign denominated debt due to a significant depreciation of NOK, the company said.

While satisfied with the cost development in Europe, president and chief executive Sven Ombudstvedt said the company was challenged by low export prices from Australasia. "We meet the challenging market for publication paper by a cash driven commercial policy, and continued efforts to cut costs and improve productivity," he said.

Operating revenue in Europe increased slightly despite lower sales volume due to the deconsolidation of the Walsum mill. Underlying publication paper prices were relatively flat. Depressed price levels for newsprint and magazine paper also led to a reduction in selling prices year-over-year due to depressed European price levels for newsprint and magazine paper.

Demand for newsprint and magazine paper in Europe decreased by seven per cent and four percent respectively through August of 2015, compared to the same period last year, but capacity utilisation improved to 82 per cent, with one machine at Skogn remaining out of operation throughout the quarter for commercial reasons.

In Australasia, operating revenue declined with more export sales at low prices, depreciation of the Australian dollar, and discontinuation of the two-year amortisation of the old contract break-fee compensation. Additionally, the Asian newsprint price remained at historical low levels.

Ombudstvedt reported that variable costs increased somewhat with higher production, while fixed costs were slightly lower due to ongoing cost improvement programmes. Gross operating earnings improved slightly year-over-year, but were markedly down quarter-over-quarter.

Domestic demand for newsprint - down by around ten per cent in the first eight months of the year compared to the same period last year - and the Asian price level are challenging, while demand for magazine paper was relatively stable. Capacity utilisation has risen to 92 per cent from 89 per cent in Q2 2015.

Total annual production capacity for the group is 2.8 million tonnes - 2.1 million tonnes in Europe and 0.7 million tonnes in Australasia.

Capacity utilization for the group in the third quarter was 85%, compared to 82% in the second quarter.

Ombudstvedt says following the deconsolidation of Walsum and ongoing tissue conversion at Bruck, Norske Skog has "only prime capacity" left in its portfolio. "We will continue to pursue an active capacity management policy to support cash generation and improved market balance," he says.

A recorded CEO presentation, the quarterly financial statements and the presentation package are available on www.norskeskog.com.