Norske Skog’s Australasian operation has boosted pre-tax profit by 30 per cent despite plunging sales in the first half of 2015.

The Australasian business made a half-year EBITDA of $3.23m after making $1.7m in the second quarter, but sales fell 25 per cent to $177m from $233m last half year.

Gross operating margin also ticked up to 11.5 per cent after falling from 15.3 to 9.1 per cent for 2014, and deliveries increased 10.6 per cent to 310,000 tonnes.

Good local results were despite a massive $92m global Q2 loss that almost wiped out a $109m profit in Q1 after the Norwegian paper manufacturer lost $31.8m for 2014.

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Global revenue also dipped 3.6 per cent to $935m, compared to the first half of the previous year, and EBITDA fell 18.3 per cent to $54.4m.

The company says the falling Australian dollar, pressure from ‘challenging export markets for newsprint in Asia’, and 10 per cent lower demand for newsprint in Australia caused the sales hit.

Ramping up production at the Boyer, Tasmania mill and lower energy costs helped boost profitability, and the company’s three Australian mills increased capacity utilisation from 88 to 89 per cent between Q1 and Q2.

Norske Skog last year spent $85m to convert of one of Boyer’s two paper machines to produce lightweight coated (LWC) paper for magazines and catalogues, and demand for this paper held its ground.

“The group has a significant competitive advantage in Australia and New Zealand, being the sole domestic producer of newsprint and magazine paper,” Norske Skog says.

“However, the export markets for newsprint to Asia pose a challenge with historically low prices. A challenge that becomes larger as the domestic market declines.”

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