Q3 2021 presentation

22 October 2021

Quarterly reports and presentations in the Quartr app

Sustainable and innovative industry ENTERING

Leading publication paper producer with five industrial sites globally
Ongoing transition into higher growth and higher value markets
Becoming a leading independent European recycled containerboard company in 2023
Packaging market growth and margin outlook strengthened since announcement
High return waste-to-energy project improving green energy mix in Q2 2022
Promising biochemicals and materials projects with CEBINA, CEBICO and Circa
Industrial sites portfolio provide foundation for further industrial development

2 1) Norske Skog is the largest shareholder with ~26% ownership position in Circa; 2) Installed capacity for biofuel and waste from recycled paper of 230 MW

Third quarter in brief

Considerable price increases for all product grades in Q3 2021 and into Q4 2021

Publication paper market tightening following significant capacity closures over past 18 months, further closures announced for 2022-23
Further price increases required both in Q4 2021 and Q1 2022 to compensate for continued increases in energy and raw material prices

EBITDA of NOK 111m in the quarter

EBITDA improvement from previous quarter, but margins remain at low and unsustainable levels
Significant negative impact from energy and raw material costs

Tasman sales process

Sale of energy contract and employee redundancy payments settled in the quarter
Net positive cash impact in the quarter of NOK 70 million

Entered into credit facilities for conversion projects following end of quarter

▪ Attractive terms for EUR 265 million debt financing with average maturity towards the end of 2030

Margins impacted by volatile and uncertain cost environment

Segment financials for Q3 2021

	Segment financials

NOKm	Q3 2021	Q2 2021	Q3 2020	YTD 2021	YTD 2020
Europe
Total operating income	2,183	1,872	1,727	5,765	5,513
EBITDA	113	14	84	233	488
EBITDA margin	5.2%	0.8%	4.9%	4.0%	8.9%
Production (1 000 tonnes)	428	381	341	1201	1086
Deliveries (1 000 tonnes)	433	403	362	1218	1080
Production / capacity	96%	85%	72%	90%	76%

Australasia
Total operating income	426	482	447	1,397	1,580
EBITDA	0	7	- 7	- 2	119
EBITDA margin	0.0%	1.4%	-1.6%	-0.1%	7.5%
Production (1 000 tonnes)	62	79	75	230	238
Deliveries (1 000 tonnes)	68	87	79	246	246
Production / capacity	87%	69%	69%	77%	73%

Other activities
Total operating income	61	36	50	157	136
EBITDA	- 2	- 4	- 4	9	-18

Utilisation of 96% (equivalent to full utilisation)
Realised prices in the quarter up ~15% to previous quarter
Significant increase in raw material prices (energy and recovered paper)
Utilisation of 87% (Tasman no longer part of paper capacity)
Tasman closed on 30 June 2021
Boyer is the only domestic publication paper supplier

Western European publication paper market tightening as capacity closures surpass COVID-19 demand loss

Publication paper demand stabilising as COVID-19 restrictions ease

Publication paper demand Western Europe, million tonnes

Publication paper capacity closures since H2 2020

Capacity closures in Western Europe, thousand tonnes

Price increases in Q3 2021 and into Q4 2021, with significant further increases required and expected

News 45g SC rotogr. 56g LWC offset 60g

Energy and fibre costs squeezing industry margins to unsustainable levels

Sources: RISI, Nord Pool, TTF 1) 1.11 sorted graphic paper for deinking in Germany; 2) Dutch Title Transfer Facility (TTF) natural gas price

On schedule for start-up in six months of +400 GWh sustainable energy production

EU Green Deal: Circular Economy Action Plan Reduce landfill to a maximum of 10 % of municipal waste generated by 2030

Waste-to-energy plant with proven technology and turnkey installation contract from Valmet
On time and on budget for start-up in Q2 2022
Invested EUR 55m to date of total EUR 72m investment (EUR 17m remains)
Drawn EUR 38m to date of EUR 54m loan facility (EUR 16m remains)
Significant positive environmental impact by diverting 160k tonnes of RDF¹ from landfills
Replace ~0.7 TWh of gas consumption and reduce CO² emissions with 150k tonnes

9 1) Refuse-derived fuel (RDF) is a fuel produced from various types of waste such as municipal solid waste (MSW), industrial waste or commercial waste; 2) Based on historical and normalised energy prices

Industry low CO² footprint enabling annual CO² emission allowance surplus

10 Source: European Commission

2013 2014 2015 2016 2017 2018 2019 2020 2021

Net surplus 2021 expected at ~200k allowances, however additional ~60k allowances purchased through the year and no allowances sold
Indication to receive gross ~420k allowances annually in period 2021-2025. Annual fossil CO² emissions of ~220k tonnes (prior to waste-toenergy plant)
Waste-to-energy plant at Bruck will reduce CO² footprint with 150k tonnes annually, start Q2 2022
Allowance sale income booked quarterly based on annual expected surplus, but cash proceeds received upon sale
Cost compensation booked quarterly, cash proceeds received the year after booking

Full steam ahead into the containerboard market

Containerboard projects in progress Site preparations and equipment orders underway

Invested EUR ~20m as of Q3 2021

Project investment of EUR 350m (large share on contract)

Expected EBITDA of EUR 70-80m

Based on historical trend prices and full utilisation in 2025-26

EUR 265m debt financing

ECA¹ -backed debt financing of ~75% of investment amount

Q4 2022 first production

Stepwise commercial introduction

760 000 tonnes

Recycled containerboard production capacity

11 1) ECA = Export Credit Agency

Becoming a leading independent supplier of recycled containerboard

PM1 (FID completed)

235k tonnes newsprint capacity
Convert to 550k tonnes containerboard

Start-up in Q4 2023
Capex estimate of EUR ~250m

PM2 (future conversion candidate)

330k tonnes newsprint capacity
Ongoing production during PM1 conversion
Strong candidate for future conversion
Feasibility studies concluded

Norske Skog Bruck – Austria

PM3 (FID completed)

125k tonnes newsprint capacity
Convert to 210k tonnes containerboard
Start-up in Q4 2022
Capex estimate of EUR ~100m

PM4 (future conversion candidate)

265k tonnes LWC magazine capacity
Ongoing production during PM3 conversion
Strong candidate for future conversion
Feasibility studies concluded

Top recycled containerboard suppliers in Europe (includes announced capacity)

Capacity, million tonnes

Liquidity and financing in place to meet capital expenditure commitments over next two years

Liquidity position as of Q3 2021 and remaining capital expenditure commitments

EURm

EUR ~66m of remaining expansion capex that is not covered by debt facilities, well within existing liquidity of EUR ~144m
Additional liquidity expected from operational cash flow less maintenance capex over next two-year period
Potential for further liquidity from asset sales, including Nature's Flame pellets facility, property projects and Tasman mill assets
Current net debt of EUR ~100m to increase as remaining expansion capex of EUR ~350m¹ is incurred over next two years
Capex driven increase in net debt expected to be alleviated by operational cash flows less maintenance capex in the same period
EUR 265m conversion financing (EUR 193m in Golbey and EUR 72m in Bruck), ~75% of investment amount
Repayment expected to commence upon completion, with average maturity towards the end of 2030

Norske Skog will enter the large, growing and established recycled containerboard market in Q4 2022

Lightweight and strong fluting and testliner board
Inevitably circular from 100% recycled fibre
Supporting e-commerce with sustainable packaging
Replacing plastic where and when possible

Projects chosen on basis of first quartile cash cost position enabled by fundamental properties of the machines

15 Source: External industry consultant (third-party), cost data as of Q3 2019 1) Europe excluding Russia

Recent capacity additions absorbed by the market as containerboard prices continue to increase

Circa sees strong headwinds from volatile global markets, but company potential remains intact

Capex for Circa's ReSolute demonstration plant up from EUR 32m to EUR 50-55m and 6 months delay driven by unprecedented increase in raw material prices
Circa will work to remain fully financed on capital raised by discussing with suppliers, optimising scope, exploring vendor financing and grant opportunities

Promising market opportunity remains intact

Patented process for scale production of high-value biochemicals
Process verified through 15 years of research and five pilot plants
Core product, Cyrene, is a high-performance sustainable alternative to toxic solvents
LoI¹ with Merck KGaA and direct discussions with brand owners regarding Cyrene
Increasing regulatory restrictions for use of fossil and harmful solvents
Support from the EU through a EUR ~12m grant under Horizon 2020

Norske Skog holds ~26% and will remain a long-term partner and shareholder

CEBINA enters a new product segment with first commercial sales for use in water-based paints

CEBINA applied to water-based paints

First commercial sales in Q4 2020 for epoxy floors
Recently entered into water-based paints as a new commercial application area
Contract encompasses regular volume sales at an annual size of NOK ~500 000 with potential for further growth
Demand currently within existing capacity of 100-500 tonnes depending on grade
Several commercial discussions ongoing and potential for entry into international sales agreements
Capacity expansions will be considered depending on demand development
Potential expansions will be modular and utilise existing facilities and infrastructure

Reducing the environmental impact is at the forefront of all business decisions

Kg CO² direct and indirect (scope 1 and 2) emissions per tonne produced¹

A-Excellent reporting in line with best practice. Good description of material issues and relevant results. Clear strategy and specific, quantifiable targets.

✓ Industry low CO² intensity under the EU ETS² in 2020
✓ New energy efficiency initiatives being introduced in 2021³
✓ Waste-to-energy boiler reducing CO² footprint with 150 000 tonnes from H1 2022
✓ Reduced electricity consumption and steam from new biomass boiler in Golbey following conversion project
✓ Detailed 2020 CSR report issued applying the Global Reporting Initiative Guidelines

19 1) Scope 1 includes direct emissions from stationary fuel combustion, transportation and mobile sources. Scope 2 includes indirect emissions from steam and power imports; 2) ETS = Emission Trading Scheme, Norske Skog is a net receiver of carbon emission allowances, indicating that Norske Skog is among the top 10% of producers employing the Best Available Techniques from a sustainability and environmental perspective; 3) The NEXT and Therminator energy efficiency projects announced at the Norske Skog Saugbrugs mill in March 2020 came on stream in 2021 and further improved the energy efficiency of Norske Skog, the projects are supported by the NOx Fund and Enova

Outlook

Publication paper markets

Improving operating rates in the industry
Considerable paper price increases in H2 2021 and into 2022
Continued high prices for energy, recycled fibre and other input factors
Remain a reliable supplier of all publication paper grades

Strategic shift into new markets

Enter into international sales arrangements for CEBINA in Q4 2021
Semi-industrial CEBICO pilot of 300 tonnes starting in Q4 2021
Bruck waste-to-energy facility start-up Q2 2022
First containerboard production to start in Q4 2022

CMD

25 November 09:00 – 12:00

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.

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