Paper maker Norske Skog says lower newsprint gross earnings outside Europe at the end of last year were the result of lower volumes in Australasia and relatively higher export to South East Asia with lower margins.

The company says gross operating earnings improved in the fourth quarter, “partly due to lower costs”.

 Market prices of pulp and recovered paper had fallen substantially from their highest level during the second quarter. A weaker NOK also contributed positively.

The company also reported a “substantial improvement” in gross earnings from magazine paper, the result of “relatively high” deliveries.

“Even for the year as a whole, gross operating earnings improved, from NOK 1,413 million in 2010 to NOK 1,515 million in 2011,” says a statement. The underlying improvement in gross operating earnings for the year was approximately NOK 400 million as there were positive non-recurring items in 2010.

“These numbers confirm that underlying operations are gradually improving, in line with our guidance through the year. But the market is still challenging, and we keep up our vigorous efforts to improve the group’s competitive position and financial headroom,” says president and chief executive Sven Ombudstvedt.

“Full year 2011 showed a moderate drop in demand for our products, but there are substantial geographical differences, and we need to adapt to a changing market. We are very pleased with the significant improvement in the leverage (net interest bearing debt/EBITDA), and we believe this will continue in 2012,” he says.

During the fourth quarter the group’s net interest-bearing debt was reduced from NOK 8.1 billion to NOK 7.9 billion.

Operating earnings – minus NOK 841 million in the fourth quarter, compared to minus NOK 1,883 million in the third quarter of 2011 and minus NOK 46 million in the fourth quarter of 2010 – were “strongly affected” by restructuring expenses in connection with the closure of the Follum mill and rationalisation Walsum in Germany, and also by “lower valuations of commodity contracts and derivates”.

Net loss was minus NOK 592 million, compared to minus NOK 1,841 million in the third quarter of 2011 and minus NOK 260 million in the fourth quarter of 2010.