Delayed, not denied

Research evidence excerpt

Delayed, not denied

Norske Skog

Quarterly estimates

Quarterly P&L

Source: ABG Sundal Collier, Company information

Q2 EBITDA of NOK 73m was below; net debt down

Q2 reported EBITDA of NOK 73m was below consensus at NOK 129m (ABGSCe NOK

164m). Paper was weaker on NOK 25m higher maintenance costs and NOK 15m higher

labour/distribution costs, while "Other" was softer at NOK -14m (+2). The company booked

NOK 84m in excess energy sales vs. NOK 41m in Q1; clean EBITDA would then arguably

be close to 0. Interest costs were NOK -75m (NOK -67m in Q1) while EPS was NOK -1.95

vs. consensus at NOK -1.1.

Cash flow of NOK 273m was better than the NOK -307m seen in Q1 due to NOK +470m in

CO2 compensation from Norway+France and NOK +300m from working capital. Net debt

came in at NOK 4,361m vs. NOK 4,502m in Q1, with capex of NOK 28m. Norske will receive

NOK 780m in Q3 (Saugbrugs sale, CO2) with NOK 55m gross capex remaining from the

conversion projects. This points to net debt of NOK ~3.6bn. Cash rose to NOK 723m vs.

NOK 653m in Q1.

Paper weaker, Packaging better q-o-q (Golbey)

Publication Paper Europe saw EBITDA of NOK 86m vs. our ABGSCe at 136m due to NOK

25m higher maintenance costs and NOK 15m higher labour/distribution costs. Packaging

paper had EBITDA of NOK +1m vs. our estimate of NOK 25m. Golbey landed at NOK -24m,

which is an improvement vs NOK -43m in Q1. Deliveries rose 6% q-o-q while production

rose 5% (Golbey ramp-up). Inventories were flat.

The NND/Saugbrugs transaction (NOK 330m gain) was delayed to Q3 instead of Q2 on 1

July, which we have adjusted for below.

Q3 EBITDA likely flat q-o-q; delays in France

Regarding Q3e, Norske should see NOK +10m from higher testliner prices, NOK +15m

from more Golbey production, NOK +10m from ~5% lower pulpwood prices, NOK -5m