Norske Skog ASA

Investor Presentation • Jul 16, 2020

Q2 2020 presentation

16 July 2020

www.norskeskog.com

Second quarter in brief

Weak Q2 2020 EBITDA of NOK 138 million due to COVID-19

• Restrictions significantly impacting volumes
• Publication paper prices unchanged in the quarter
• Includes gain of approximately NOK 86 million from sale of Tasmanian forest, underlying EBITDA of NOK 52 million

Announced entry into packaging with conversion projects in Golbey and Bruck

• First production of containerboard planned in H1 2023
• Expected annual EBITDA of EUR 70-80 million from converted machines at full utilisation

P

Completion of Tasmanian forest sale

Maintains robust financial position

• Cash position of NOK 1,487 million
• Net interest-bearing debt of NOK 329 million

Forestry and industry in general have seen limited support from Norwegian authorities

Need for re-industrialisation of Norway

Publication paper volumes significantly impacted by COVID-19

• Restrictions imposed due to COVID-19 impacting sales volume particularly in May and June, utilisation of 69% in the quarter
• Prices largely unchanged during the quarter, but change in product mix and increased exports to lower priced markets impacted achieved prices
• Lower variable costs mainly resulting from reduced energy prices and recovered paper prices
• Reduction in fixed costs as a result of temporary layoffs at most mills following market-related downtime
• Favourable FX in the quarter with NOK remaining weak
• Change in other items includes gain on sale of Tasmanian forest, but more than offset by sale of CO² allowances and Alburyrelated gains in Q1 2020

EBITDA bridge Q1 2020 to Q2 2020

Maintaining a strong cash position

Bridging the cash and cash equivalents from Q1 2020 to Q2 2020 1,659 -109 -128 374 -268 -41 1,487 Cash Q1 2020 Operating cash flow Capital expenditure Asset sale Dividend payment Other Cash Q2 2020 NOKm

• Cash of NOK 1,487m¹ , gross debt of NOK 1,816m, and net debt of NOK 329m end of quarter
• Capital expenditure of NOK 128m in the quarter
  • Maintenance capex of NOK 62m
• Expansion capex of NOK 66m, mainly relating to the Bruck multifuel boiler and NEXT / Therminator energy efficiency projects at the Saugbrugs mill
• Proceeds from asset sales of NOK 374m
• Dividend payment of NOK 268m (NOK 3.25 per share)

COVID-19 restrictions impact European earnings

• Newsprint, SC and LWC demand decreased by 21%, 15% and 21%, respectively through May this year
• Prices unchanged
• Modest signs of improvement
• Favourable raw material prices
• Favourable FX

Continued streamlining in Australasia with forest sale

• Newsprint and magazine demand decreased by 24% and 19%, respectively through June this year
• Increase in low margin exports
• Favourable raw material prices
• NOK ~86m gain from forest sale

Strategy

Growth opportunities ahead

Illustrative over-the-cycle EBITDA

Exciting portfolio of fibre and energy projects

Introducing 765,000 tonnes of containerboard capacity

Remain a committed producer of publication paper and maximise cash flows

Entering the packaging market

Norske Skog Golbey – France

• Convert PM1 to 555,000 tonnes of recycled containerboard capacity¹
• Total capex estimate of EUR 250m
• Boiler to be constructed securing competitive steam supply
• Limited equity investment, partnership with Véolia
• Norske Skog Bruck – Austria
  • Convert PM3 to 210,000 tonnes of recycled containerboard capacity²
  • Total capex estimate of EUR 90m
  • Boiler under construction to generate revenue and savings of EUR ~19m
  • Local debt funding of EUR 54m, project capex of EUR 72m
• Investment in brownfield conversion projects limited to approximately EUR 350m during 2021 to 2023
• Final investment decisions expected in H1 2021, estimated production start in H1 2023, full capacity utilisation end of 2025
• Estimated annual EBITDA from containerboard machines of approximately EUR 70-80m at full utilisation¹
• Containerboard market driven by megatrends within ecommerce and sustainable packaging, securing long-term operations
• Established presence in recycled fibre markets
• Boilers secure sustainable and competitive steam supply
• Site configurations enable cost-leadership positions
• Balancing the newsprint market through capacity reductions of 360,000 tonnes in Western Europe

9 1) Current PM1 capacity of 235,000 tonnes newsprint; 2) Current PM3 capacity of 125,000 tonnes newsprint

Pellets – Green and profitable energy production

• Nature's Flame, a pellets company fully owned by Norske Skog
• State of the art pellet plant in Taupo, New Zealand
• Annual capacity of 85,000 tonnes and expected earnings of NZD ~5m per year
• Pellets produced from sustainably sourced fibre residues and geothermal energy
• Fonterra¹ converting a coal boiler to run on Nature's Flame pellets (48,000 tonnes annually), reduce carbon emissions with the equivalent of 32,000 cars

10 Source: Fonterra "Fonterra's Te Awamutu site moves to pellet power" (30 January 2020) 1) World leading dairy product producer based in New Zealand

CEBINA – Sustainable alternative to existing additives

• Cellulose nano fibrils developed at Norske Skog Saugbrugs since 2010
• Close collaboration with Rise PFI, technical partners and potential customers
• Environmentally friendly product based on chemical pulp and hydro energy
• Pilot plant at Saugbrugs with capacity of up to 500 tonnes
• Developed as a strength enhancer in publication paper
• Ongoing tests with customers in drilling fluid, glue and coatings

Norske Skog secures cornerstone position as largest shareholder in Circa Group

• Norske Skog increases ownership stake in Circa Group Pty Ltd from 10% to 27.7%
• Circa Group is an Australia-based producer of advanced and sustainable bio chemicals, with a commercial demonstration plant located at the Norske Skog Boyer mill in Tasmania
• Patented process for production of CyreneTM, Levoglucosenone and other unique biochemicals from sustainable waste biomass
• Chemicals recognised for their exceptional properties through ~1,000 trials by researchers, industry experts and global companies
• CyreneTM is a new low toxicity biodegradable industrial solvent developed for a +1 million tonne market currently dominated by petrochemical based products
• CyreneTM was used in production of the highest quality conductive graphene ink ever reported through a study by the University of Manchester¹ ("birthplace" of Graphene). Graphene is a material that could enable game-changing electronic innovations
• Further opportunities include bio-polymers and pharmaceuticals (e.g. Levoglucosenone is being explored as a starting molecule to produce Ribonolactone for the production of promising COVID-19 treatments, including Remdesivir)

12 1) Pan, K. et al. Sustainable production of highly conductive multilayer graphene ink for wireless connectivity and IoT applications. Nature Communications

Green re-industrialisation of Norway

Norwegian mills at risk

• Proposal to establish a Green Restructuring Fund of NOK 10 billion
• Available for the 40-50 largest energy-intensive industrial companies in Norway
• Need for major investments due to the corona pandemic
• The pandemic may have created a new lasting sectorial market balance
• Pre-requisite of being climate neutral by 2030
• Funds available for significant value creation and securing jobs in local communities
• Schemes are processed via established channels (Enova, Innovation Norway)

• Political framework must be in place to develop Norwegian industry:
• Energy market: implement measures that improve Norwegian competitive energy market advantages
• Grid tariffs: stop the proposed sharp increases
• Logistics: increase investments in infrastructure for rail and roads
• CO2 compensation: ensure the continuation of the CO2 scheme in line with EU's scope

Outlook

Clear priorities in the short term

• Secure the health and safety of our employees
• Actively adapt to market changes
• Maintain a robust balance sheet

Execute on strategy in the long term

• Become a leading producer of renewable packaging
• Remain a producer of all publication paper grades
• Develop the downstream forest industry in Norway

www.norskeskog.com

Improve and reposition Australasian operations

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: info@norskeskog.com Email: ir@norskeskog.com

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.