Brighter prospects for Norske Skog

ONGOING investments at the Boyer Mill and another at Saugbrugs in Norway were progressing well and would improve profit margins at both mills from next year, according to paper-maker Norske Skog's report for the second quarter of 2013.

"Despite falling demand, we are experiencing high capacity utilisation of our machines and overall improved margins," Norske Skog president and CEO Sven Ombudstvedt said of the company's global operations. "This shows that our employees manoeuvre the ship well. However, we will actively continue our efforts to cut costs and improve productivity, and if necessary, close or convert paper machines," Mr Ombudstvedt said.

Permanent capacity cuts of more than a million tonnes have been announced in Europe this year as a result of the fall in demand for paper. Combined with expected price increases in the second half, continued favourable exchange rate development and stable raw material costs, this contributes to a brighter outlook, Mr Ombudstvedt said.

The company's investment projects are progressing according to plan. In Australia, $84 million is being invested in the conversion of a machine at Boyer from the production of newsprint to catalogue paper.