Norske Skog’s Australasian operation has boosted earnings by 30 per cent this year despite a 24 per cent drop in sales as the paper giant makes another worldwide loss. The Australasian business made a $1.7m pre-tax profit in Q2, to bring the half year to $3.23m. However, sales were down by $56m from $233m last half year to $177m.

Sven Ombudstvedt, president and CEO of Norske Skog

The Norwegian paper manufacturer recorded a global loss of $94m for Q2, up from $24m in the same period last year, despite profitability in Australasian. The company says demand for newsprint in Australia declined by 10 per cent in the first five months of the year compared to the same period last year, while demand for magazine paper remained relatively stable. Norske Skog, which has three mills in Australia – Boyer, Tasman and Albury, says gross operating earnings improved year-on-year with the completion of the Boyer conversion and increased somewhat quarter-over-quarter with lower costs. The company blames the Australian currency for the revenue drop, saying the depreciating dollar as well as pressure from the ‘challenging export markets for newsprint in Asia’ made life difficult. The overall company numbers also shows declining revenue from $498m down to $460m for the second quarter compared to last year. Skog’s EBITDA decreased from $42m for Q2, 2014 to $23m for the second quarter in 2015. The company recorded a loss of $94m just for the second quarter compared to losing $24m in the same period last year. For its mills in the region, capacity utilisation was 89 per cent in the second quarter with magazine paper production at Boyer offsetting the challenges posed by the Asian export markets for newsprint.

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