Slower “initiation” of the converted LWC machine at Norske Skog’s Boyer Mill in Australia dented earnings for the paper manufacturing giant.
President and chief executive Sven Ombudstvedt says that while the group’s competitive position has improved as a result of continuous improvements, gross earnings in the third quarter of this year were down NOK43 on the previous one to NOK 208 million.
A statement says the decrease was due to “prolonged initiation” of the new LWC-production at Boyer and a planned nine-week stop at one of three machines at Skogn in Norway. Norske Skog will post a loss before tax of NOK 40 million for the quarter as a result (the after-tax loss is NOK 192 million).
In Australia and New Zealand, operating revenue increased because of the LWC machine compared to the second quarter, due to higher production after the start-up of the LWC-machine at Boyer. Demand for newsprint in Oceania fell by six per cent, and of and magazine paper by one per cent in the first eight months of this year compared with the same period last year.
The company says variable costs per tonne increased in the quarter compared to the previous quarter due to higher costs associated with LWC-production at Boyer. Fixed costs were slightly higher compared with the second quarter in part due to a stronger Australian dollar. Capacity utilisation was 94 per cent in the quarter compared with 91 per cent in the previous quarter.
Newsprint prices in Australasia are largely fixed through long-term contracts, with export volumes tracking international prices. The company says magazine paper prices are more short-term and among other factors, exposed to the relative strength of Australian dollar.