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Norske Skog: Improved cash flow and operating conditions

Norske Skog's gross operating earnings (EBITDA) in the fourth quarter of 2015
were NOK 260 million, up from NOK 163 million in the third quarter. The
EBITDA improved from the third quarter due to higher sales volume and lower
costs. Higher sales and release of working capital in the quarter resulted in
a cash flow of NOK 363 million from operating activities before financial
items. The exchange offer launched on 5
January has been extended to 26 February 2016.

The net loss of NOK 304 million in the fourth quarter of 2015 was
significantly impacted by negative non-cash, unrealised foreign exchange
losses amounting to NOK 119 million on foreign denominated debt due to a
depreciation of NOK. A total cash interest in excess of NOK 250 million were
paid in the quarter. In addition, the last NOK 200 million of the USD 2015
bond was repaid. Net interest-bearing debt increased by NOK 0.1 billion in
the quarter to NOK 8.5 billion due to unfavourable foreign exchange effects.
Cash flow from operating activities before net financial items was NOK 363
million (NOK 2 million in Q3 2015). The working capital was seasonally
reduced by NOK 170 million in the fourth quarter.

- We are satisfied with higher sales, the improved cost- and cash flow
developments in the quarter, especially for the Norwegian units. The
weakening of the Norwegian krone has improved the operations for the
Norwegian units but has a negative effect on the net interest bearing debt,
says Sven Ombudstvedt, President and CEO of Norske Skog.

Exchange and consent solicitation offer have been extended to February 26

Norske Skog has extended the exchange offer launched on 5 January 2016 to 26
February 2016. The exchange offer is to holders of the notes due in 2016 and
2017 into a mix of new unsecured notes, perpetual notes, qualified
securitization financing notes (QSF) and equity rights.

The content of the exchange offer will remain unchanged. The reason for the
extension is a court order of 2 February 2016 in New York State (USA) for a
temporary restraining order (TRO) on the closing of the exchange offer until
conclusive court hearings are made on 24 February 2016. The TRO was requested
by Citibank on behalf of certain 2019 bond holders. A detailed stock exchange
notice regarding the extended exchange offer was published yesterday.

- Norske Skog will defend its position vigorously, and we see no merit in the
allegations made by the plaintiff in the court proceedings. Our exchange
offer to bondholders will benefit all the company's stakeholders, said Mr.
Sven Ombudstvedt, President and CEO of Norske Skog.

Market and segments

Operating revenue increased from the previous quarter with higher sales
volumes. Publication paper prices were relatively flat in the two periods.
Gross operating earnings improved quarter-over-quarter reflecting the higher
volumes and an enhanced competitive position for the Norwegian mills as NOK

Variable costs increased with the higher volumes, while fixed costs were up
partly due to NOK depreciation. Demand for newsprint and magazine paper in
Europe decreased by 6% and 5% respectively through November last year,
compared to the same period the year before.

Operating revenue increased from the previous quarter with a combination of
somewhat favourable pricing, sales volume and NOK depreciation. Variable
costs increased with higher volumes and NOK depreciation.

Fixed costs declined due to a reversal of environmental provisions, but were
negatively impacted by NOK depreciation. Gross operating earnings improved
quarter-over-quarter with favourable capacity utilization and the one-off
cost reduction.

Demand for newsprint in Australasia decreased by around 9% in the first eleven
months of the year compared to the same period last year, while demand for
magazine paper was relatively stable.

Active capacity management

Total annual production capacity for the group is 2.7 million tonnes. In
Europe the group capacity is 2.0 million tonnes, while in Australasia the
capacity is 0.7 million tonnes. Capacity utilization for the group in the
fourth quarter was 89%, compared to 85% in the third quarter.

The market balance for newsprint and magazine paper in Europe has improved,
reinforced by newly announced capacity closures in the industry. Capacity
utilisation in Europe improved seasonally to 86% in the period. Capacity
utilisation in Australasia was seasonally high at 96% in the period compared
to 92% in third quarter of 2015.

- We have been successful in pursuing an active capacity management policy to
enhance cash generation and improved the market balance. After a temporary
market curtailment, we restarted the third machine at Skogn to take advantage
of a considerable cost advantage, derived from a weakened Norwegian krone,
says Sven Ombudstvedt, President and CEO of Norske Skog.

Key figures, fourth quarter of 2015 (NOK million)

| Q4 2015 Q3 2015 Q4 2014 2015 2014 |
| Operating revenue 3 087 2 779 3 208 11 538 12 150 |
| Gross operating earnings (EBITDA) 260 163 190 753 801 |
| Gross operating margin (%) 8.4 5.9 5.9 6.5 6.6 |
| Gross operating earnings after depreciation 67 -27 2 -14 66 |
| Restructuring expenses -32 -2 -7 -53 -4 |
| Other gains and losses 26 43 29 -86 39 |
| Operating earnings 61 13 24 -153 102 |
| Share of profit in associated companies -18 -7 -4 -41 1 |
| Financial items -376 -782 -858 -801 -1 357 |
| Income taxes 29 33 -178 40 -223 |
| Loss for the period -304 -742 -1 017 -955 -1 477 |
| Cash flow from operations before net financial items 363 2 640 66 947 |

Update on new growth opportunities

Biogas at Saugbrugs
The NOK 150 million biogas project at Saugbrugs is on schedule for completion at the year-end 2016. The biogas facility will be at full run-rate contribution to gross operating earnings in 2017. Norske Skog is currently considering replicating the project at Skogn and Golbey.
Wood pellets in New Zealand
Nature's Flames pellets production has reached an annual capacity of 40 000 tonnes. Norske Skog considers to expand the production of pellets, given the considerable competitive export advantage. Pellets brings significant environmental benefits replacing fossil fuels.


The market balance for newsprint and magazine paper in Europe improved during the autumn of last year with the effects from capacity closures in the industry. This has led to high operating rates into 2016 and improved pricing across all publication paper grades. The domestic prices in Australasia are stable, while Asian newsprint prices have increased somewhat.
Favourable energy costs for our European mills and efficiency measures at all
mills are expected to reduce variable costs by 2-3% per ton in 2016. Fixed
costs initiatives continue at all mills towards a run-rate group level of NOK
600 million per quarter by year-end 2016.

The growth initiatives announced last year will start to contribute to gross
operating earnings this year, and is expected to reach full run-rate
contribution within a timeframe of 3-4 years.

Presentation and quarterly material

A recorded CEO presentation, the quarterly financial statements and the
presentation package are available onwww.norskeskog.com.

Oslo, 5 February 2016
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 |

This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

Q4 2015 Norske Skog quarterly report
Q4 2015 Norske Skog presentation
Q4 2015 Norske Skog press release


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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