Q4 2023 presentation
8 February 2024
Norske Skog Fibre processing industry
Strategic transition
Five high quality industrial sites
Eleven paper machines with supporting infrastructure for energy, fibre, and water
Quarter highlights
Fourth quarter 2023
Earnings positively impacted by insurance settlement
- Quarterly EBITDA of NOK 760m, incl. extraordinary net positive impact of NOK 655m from Saugbrugs and NOK 57m gain from Tasman sale
- Improved financial position and liquidity due to receipt of NOK 720m in insurance proceeds in the quarter
Paper and containerboard prices stabilise
- Publication paper markets remain weak and further capacity closures are required
- Containerboard demand returning, but market still experiencing excess capacity
Bruck PM3 ramp-up on plan in challenging market
- Positive customer feedback on containerboard deliveries from Bruck PM3, increased deliveries in January 2024
- Golbey PM1 progressing towards start-up in H2 2024
Saugbrugs PM5 restarted end of Q4 2023
- Successful start-up of PM5 and expect close to normal production and on-time deliveries during Q1 2024
- Progressing with evaluation of opportunities for PM6 and related infrastructure
Maintained good balance sheet following shareholder distributions
- Equity ratio of 42% and interest coverage ratio of 18.4x
- Completed NOK 415m share repurchase programme and paid dividend of NOK 0.67 per share, equivalent to NOK 57m
Profit/loss pre-tax
Financial position
Fourth quarter 2023
Book equity to total assets group covenant of min. 25%
Equity ratio Interest coverage ratio
EBITDA to net cash interest cost group covenant of min. 2.0x
Cash Net debt
NOKm
group covenant of min. NOK 100m unrestricted
NOKm (and leverage ratio) no group maintenance covenant
Equity ratio
Segment financials
Results driven by insurance and gain on sale
| NOK million |
Q4'22 |
Q1'23 |
Q2'23 |
Q3'23 |
Q4'23 |
QoQ |
YoY |
YTD
Q4'22 |
YTD
Q4'23 |
Chg. |
| Publication Paper Europe |
|
|
|
|
|
|
|
|
|
|
| Deliveries, kt |
300 |
245 |
267 |
258 |
270 |
5% |
-10% |
1 462 |
1 040 |
-29% |
| Total operating inc. |
3 551 |
2 864 |
2 843 |
2 405 |
3 028 |
26% |
-15% |
13 117 |
11 140 |
-15% |
| EBITDA |
1 131 |
763 |
429 |
335 |
723 |
116% |
-36% |
2 962 |
2 250 |
-24% |
| EBITDA margin |
32% |
27% |
15% |
14% |
24% |
|
|
23% |
20% |
|
| Publication Paper Australasia |
|
|
|
|
|
|
|
|
|
|
| Deliveries, kt |
63 |
56 |
63 |
60 |
63 |
5% |
0% |
252 |
242 |
-4% |
| Total operating inc. |
508 |
434 |
489 |
476 |
568 |
19% |
12% |
1 920 |
1 967 |
2% |
| EBITDA |
33 |
-23 |
-5 |
27 |
80 |
197% |
143% |
154 |
80 |
-48% |
| EBITDA margin |
7% |
-5% |
-1% |
6% |
14% |
|
|
8% |
4% |
|
| Packaging Paper |
|
|
|
|
|
|
|
|
|
|
| Deliveries, kt |
0 |
0 |
10 |
26 |
29 |
11% |
n.m. |
0 |
65 |
n.m. |
| Total operating inc. |
0 |
24 |
75 |
128 |
135 |
6% |
n.m. |
0 |
362 |
n.m. |
| EBITDA |
0 |
-38 |
-40 |
-31 |
-38 |
22% |
n.m. |
0 |
-147 |
n.m. |
| EBITDA margin |
n.m. |
-158% |
-54% |
-24% |
-28% |
|
|
n.m. |
-41% |
|
| Other |
|
|
|
|
|
|
|
|
|
|
| Total operating inc. |
61 |
61 |
89 |
133 |
152 |
14% |
147% |
580 |
434 |
-25% |
| EBITDA |
-81 |
-27 |
-2 |
-5 |
-6 |
17% |
-93% |
-12 |
-41 |
251% |
Q4 2023
Publication Paper Europe
- EBITDA positively impacted by business interruption insurance at Saugbrugs of NOK 625m
- Seasonally higher deliveries
- Prices stabilising, pressure from lower energy prices
- Margin pressure from high pulpwood prices for producers based in the Nordics
Publication Paper Australasia
- EBITDA positively impacted from gain on sale of assets from Tasman of NOK 57m
- Slight improvement in deliveries and improved market share in domestic markets
- Improved price terms in new contracts
Packaging Paper
- Production ramp-up continues in challenging markets
- Deliveries slow in the quarter, Bruck participating in annual contracts from January 2024 resulting in improved deliveries volume
- Market prices remain at depressed levels
Containerboard projects
Continued increase in delivery volumes
Golbey PM1
- Containerboard production start-up in H2 2024
- Close to all deliveries completed, with main exception being piping and electrical work
Bruck PM3
- Participating in annual delivery contracts starting from January 2024, improving delivery volumes
- Technical ramp-up performing in line with plan, excellent product quality and customer feedback
- Improving production cost as utilisation and process optimisation increases
Saugbrugs insurance settlement Ongoing process to determine future opportunities for Saugbrugs PM6
Insurance coverage Q4 2023
- Business interruption insurance: Recognised NOK 625m in other operating income
- Property damage insurance: Recognised NOK 103m in other operating income and NOK 51m in other operating expenses. Start-up costs for Saugbrugs PM5 of NOK 22m in other operating expenses
- Payment of NOK 720m received in Q4 2023
Insurance coverage 2024
- Property damage insurance: Expect to recognise NOK 264m in other operating income and NOK 34m in other operating expenses
- Final payment of NOK 215m for business interruption to be received in Q1 2024. Further NOK 615m to be received if and as investment costs accrue
Revenues from PM4 and PM5 developing as planned, continue to explore future opportunities for PM6
Raw materials
Spruce pulpwood prices at elevated levels and EUA price significantly down
Publication paper market
Publication paper prices under continued pressure in oversupplied market
Packaging paper market Demand growth returning, but industry operating rate remain low
Demand Operating rate
Outlook
Concluding remarks
- Recycled fibre and energy costs stabilising at lower levels, but pulpwood costs remain high
- Publication paper prices under continued pressure from weak market balance and lower input costs
- Containerboard prices stabilising at production cost in a challenging market with excess capacity
- Expect negative EBITDA from packaging paper segment in 2024 due to Golbey PM1 start-up in H2 2024
- Maintaining a strong liquidity position as investments near completion and debt repayments increase
- Significant focus on reducing production cost and working capital to maintain competitive position
green value
Norske Skog ASA Postal address: P.O. Box 294 Skøyen, 0213 Oslo, Norway Visitors: Sjølyst Plass 2, 0278 Oslo, Norway
Phone: +47 22 51 20 20 Email: [email protected] Email: [email protected]
This presentation contains statements regarding the future in connection with Norske Skog's growth initiatives, profit figures, outlook, strategies and objectives . All statements regarding the future are subject to inherent risks and uncertainties, and many factors can lead to actual profits and developments deviating substantially from what has been expressed or implied in such statements . We create