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Norske Skog: High profit due to refinancing

Norske Skog successfully completed in the first quarter a EUR 290 million
senior secured notes issue and bond exchange, extending the maturity profile.
The profit after tax was 663 million in the first quarter mainly due to gains
on exchanged bonds.

- After these refinancing transactions, we have strengthened and secured our
long-term capital structure by enhancing our liquidity position, realizing
immediate de-leveraging and extended debt maturities, said Mr. Sven
Ombudstvedt, President and CEO of Norske Skog.

- Already completed and announced capacity cuts in the industry should lead to
an improved market balance for newsprint and magazine paper in Europe
effective in second half of 2015. However, our effective cost reduction
programs at every mill and a weaker Norwegian krone support operating
margins, particularly for the Norwegian units, says Sven Ombudstvedt,
President and CEO of Norske Skog.

Norske Skog's gross operating earnings (EBITDA) in the first quarter of 2015
NOK 192 million, slightly up from 190 million in the fourth quarter. EBITDA
were flat with a weak market for publication paper in Europe and low Asian
export prices for newsprint, outweighing positive foreign exchange rate
effects and an improvement at Boyer.

- We now see the positive effects of the conversion of one machine line from
newsprint to LWC at Boyer. We are the sole producer of publication paper in
Australia and New Zealand, which gives us a competitive edge in those
markets. Given the weak magazine paper markets in Europe, Walsum will be
under strategic review, says Sven Ombudstvedt, President and CEO of Norske

Key figures, first quarter of 2015 (NOK million)

| Q1 2015 Q4 2014 Q1 2014 2014 |
| Operating revenue 2 886 3 208 2 867 12 150 |
| Gross operating earnings (EBITDA) 192 190 153 801 |
| Gross operating margin (%) 6.6 5.9 5.3 6.6 |
| Gross operating earnings after depreciation -1 2 -28 66 |
| Restructuring expenses -3 -7 -2 -4 |
| Other gains and losses 121 29 38 39 |
| Operating earnings 116 24 8 102 |
| Share of profit in associated companies -7 -4 8 1 |
| Financial items 600 -858 -77 -1 357 |
| Income taxes -46 -178 16 -223 |
| Profit/loss for the period 663 -1 017 -45 -1 477 |
| Cash flow from operations before net financial items -387 641 54 948 |
The net profit of NOK 663 million in the first quarter of 2015 was
significantly impacted by gains on the bond exchange, mainly related to the
recent refinancing of the group. Net interest-bearing debt decreased by NOK
0.3 billion from year end 2014, from NOK 7.4 billion to NOK 7.1 billion, with
a gain on bond exchange offsetting a negative cash flow. Cash flow from
operating activities before net financial items was NOK -387 million (NOK 641
million in Q4 2014) mainly due to due to seasonality in working capital and
opportunistic capturing of supplier cash discounts.

Market and segments

Operating revenues were lower due to lower sales volume, more than outweighing
a positive foreign exchange rate effect. Cost of materials were flat compared
to last quarter, but fixed costs decreased slightly. Gross operating earnings
declined to NOK 95 million in the quarter, from NOK 129 million in the fourth
quarter, with a weak publication paper market in Europe.

Demand for newsprint and magazine paper in Europe decreased by 11% and 4%
respectively in the two first month of 2015 compared to the same period last
year. The mills reduced their capacity utilization to 82% (84% in Q4 2014) in
the quarter to avoid low margin sales and to support the company's commercial

Compared to the previous quarter, operating revenue decreased due to
seasonality and low Asian export prices for newsprint. Variable cost per
tonne in Q1 2015 was flat compared to the previous quarter. Fixed costs were
higher in Q1 2015 than in the comparing periods, reflecting a weaker NOK to
AUD and increased operating expenses following the conversion.

Demand for newsprint in Australia decreased by around 10% in the first two
months of the year compared to the same period last year, while demand for
magazine paper was relatively stable. The mills reduced their capacity
utilization to 88% (93% in Q4 2014) to avoid low margin newsprint exports.

Active capacity management

Total annual production capacity for the group is 3.0 million tonnes following the completion of the ramp-up at Boyer. In Europe the group capacity is 2.3 million tonnes, while in Australasia the capacity is 0.7 million tonnes. Capacity utilization for the group in the first quarter was 83% compared with 86% in the fourth quarter, as a result of active capacity management.
- The market remains challenging. We have performed active portfolio
management of our machine capacity in the first quarter, and we will continue
this policy in the next quarters. Already announced permanent capacity cuts
of more than 2.5 million tonnes in Europe and North-America in 2014 and 2015
in our product segments should be supportive to the market balance, and thus
future price levels, says Sven Ombudstvedt, President and CEO of Norske Skog.


The market balance for newsprint and magazine paper is expected to improve
into the second half of 2015, with all announced capacity closures in the
industry completed, giving room for price increases.

The group has a significant competitive advantage in Australia and New Zealand
being the sole domestic producer. Export markets for newsprint to Asia have
been challenging, but should improve with announced capacity closures in

Variable costs for the group are expected to remain relatively stable, while
fixed costs initiatives are set to continue.

Presentation and quarterly material

A recorded CEO presentation, the quarterly financial statements and the
presentation package are available In connection with
the Q2 release on 16 July, it will be an opportunity for the press to
participate in a mill tour at Norske Skog Saugbrugs along with the corporate
and local mill management.

Oslo, 23 April 2015
Norske Skog
Communications and Public Affairs

| For further information: |
| Norske Skog media: Norske Skog financial markets: |
|Vice President Corporate Communication Vice President Investor Relations |
|Carsten Dybevig Tom Rogn |
|Mob: +47 917 63 117 Mob: +47 948 55 659 |
|Twitter: @Norske_Skog |
Q1 2015 Norske Skog press release
Q1 2015 Norske Skog quarterly report
Q1 2015 Norske Skog presentation


This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Norske Skog via Globenewswire


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