NORSKE SKOG 2004 Annual Report
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NORSKE SKOG Annual report 2004 Young readers - the key to our future Name: Bewi “What if there suddenly was nothing to read?” Age:10 Country: Indonesia Name: Linn “There are too many boring mums and dads in the newspapers, but I also Age: 10 see people I know sometimes .” Country: Norway Name: Menaye “Now that I know how to read, I know all the things I need to know in Age: 16 the whole world.” Country: Ghana Name: Hunj Age: 9 “There are too few cartoons in the newspapers.” Country: Vietnam Name: Vitauts Age: 15 “I think I like the sport best when I read newspapers.” Country: Lithuania Name: Tricia “Without letters, we’d have to speak ALL the time.” Age: 8 Country: Tobago Name: Rajiv “If I couldn’t read, I wouldn’t know that half of the world already rides Age: 12 Country: India a bicycle.” Name: Marieke Age: 13 “I get my hands dirty when I read newspapers – I like that!” Country: Netherlands Contents 002 We will be best in class CEO Jan Oksum is staking out the future course for Norske Skog 006 Market Can newspapers survive the texting generation? 010 Nor brand 011 Technical customer service 012 Products 014 Production Leading position in Asia 016 Europe 018 South America 020 Australasia 022 Asia 023 North America 024 The world of Norske Skog 026 Supply & Logistics 028 Research & Development 031 Production capacities 032 Environment Beacon for sustainable development 035 Moving in the right direction 037 Policy 040 Raw material 044 Energy 046 Emission 049 Noise, waste and transport 052 Mill figures 054 Social responsibility Tomorrow’s newspaper readers – today’s vandals and victims 056 Young readers 060 Health and safety 064 Employees 073 Local community 078 Capital market Fair pricing in the market 079 Investor Relations 082 Financing and liquidity 084 Risk management 090 Corporate governance Confidence is crucial for lasting value creation and a winner culture 094 Board of directors 095 Corporate managment 096 Annual report 097 Director’ report 102 Annual accounts 2004 group 120 Annual accounts 2004 Norske Skogindustrier ASA 128 Articles of association of Norske Skogindustrier ASA Cover: 129 Glossary THE KEY: Reading skills are the key to a better future. Together with its customers, Norske Skog has involved itself in efforts to stimulate 131 GRI index interest in reading among children and young people. 136 Main financial figures and 2004 in summary Annual report 04 1 2 Annual report 04 CEO Jan Oksum Introduction With 25 years behind him in the company, chief executive Jan Oksum knows what he is talking about in staking out the future course for Norske Skog. The aim is to be recognised as a world leader in the paper industry. That calls for more than good financial results. We will be the best in class orske Skog intends to surprise and impress the world. We will be the best at what we do. Last year, which N was my first as chief executive, I had the pleasure of visiting almost all our mills and offices. I am convinced that we have the qualities required to be a world leader in the paper industry. That is our vision. That is what we will be striving towards. Those of us who work in Norske Skog are able and committed people who know our business and are willing to do our utmost to reach our goal. We represent a resource which will be further developed with knowledge and wisdom. Our board has adopted a revised vision, values, goals and strategy which are clear and ambitious, put positive pressure on us, and sharpen our whole organisation. VIGOROUS We have frequently demonstrated that we set high targets, take risks and deliver. We keep our promises. Through strategic acquisitions over a few months in 2000, we were able to establish ourselves as a global newsprint and Annual report 04 3 Introduction magazine paper producer with activities on live up to our strategy of being a low-cost pro- due to be dispatched in the autumn of 2005. five continents. ducer. Our ability to deliver high-quality This new paper machine will be the largest Two years ago, we launched an improve- products at the lowest possible cost represents and most efficient in Asia. The Chinese ment programme which aimed to make NOK a significant contribution to the success of our newsprint market is expanding strongly, and 2 billion in savings. Many of the experts who customers. we expect this growth to continue during the follow our company initially doubted whether We have a good foothold in Europe, and run-up to the Beijing Olympics in 2008. we could hit this target. It has been met, not fine positions in Australasia and South China already consumes more newsprint than least because of good team spirit and colla- America. In these two regions, we rank as the the UK and Germany, the two largest markets boration at all levels. We are well equipped to only large company to produce newsprint in Europe. At the same time, per capita con- meet fresh challenges in the market. from plantation-grown pine. We are also very sumption is only a twentieth of the European We have defined new ambitions for future strongly placed in Asia through our holdings level. expansion to enhance profitability, and seve- of 50 per cent in Pan Asia Paper Company, the ral roads lead to growth. We will expand our continent’s largest newsprint producer out- ACCEPTING RESPONSIBILITY existing business, but new acquisitions could side Japan, and 34 per cent in Malaysian We have committed ourselves to contribute to become relevant at some time. Our approach Newsprint Industries. sustainable development. Customers, suppli- to continued growth is a prudent one. We The first reels of paper from the new ers and the world at large can rely on us. We keep market trends under observation, and PanAsia mill in China’s Hebei province are take work on environmental issues seriously. take a pragmatic attitude to assessing new opportunities in our core business. One absolute requirement is that all growth must be profitable. Our overriding goal is to deliv- er the best shareholder value in the paper industry. GLOBAL ADVANTAGES Although we have experienced a couple of dif- ficult years, with low prices for our products, we view the future with great confidence. Our ambition to become a world leader reflects the faith we have in the future of the industry and in our strength and ability to follow and adapt to market developments. One feature of the paper industry is the high level of capital tied up in its facilities. That applies particularly to us, because we have made a number of substantial acquisi- tions. We have thereby secured a global pro- duction base, which provides good opportu- nities for further investment to develop mills with special competitive advantages. We also GOOD DIALOGUE: The company’s human resources receive the chief executive’s full attention. Jan have access to cheap raw materials and Oksum visited Norske Skog Skogn on his first day at the helm. While there, he met Christian Håpnes favourably-priced energy. This means we can (left) and Tore O Hoem. 4 Annual report 04 Introduction One absolute requirement is that all growth must be profitable. Our overriding goal is to deliver the best shareholder value in the paper industry. Our values build on the UN universal declara- COMMUNICATION LINK tion of human rights. These are not just fine The media sector is changing very rapidly words to us, but commitments which are and, as a link in the value chain for the world’s demonstrated in specific actions. We were leading communication companies, we must accordingly the first international pulp and keep abreast of these developments. We see paper company to sign a global agreement on that everyone is fighting for the public’s time employee rights with the International and attention. Mobile telephony and the Federation of Chemical, Energy, Mine and internet are developing swiftly, and compet- General Workers’ Unions (ICEM). On that ing with the printed word. But time is not basis, we have also developed a close and good standing still in the traditional media, which collaboration with our unions through sever- are also pursuing rapid product development. al channels – most recently the creation of a There is little to suggest today that newspa- Global Employee Forum. The latter provides a pers and magazines will lose their important common meeting place for employees and position in the market. But neither we nor our management, where we can give and receive customers can afford to rest on our laurels in information and discuss relevant issues relat- seeking to meet people’s requirements for a ing to Norske Skog. product on which they want to spend their We also accept our social responsibility to time. As a world leader, we will be staying in the local communities in which our opera- the forefront of developments. tions are pursued. Mills and employees involve themselves in a number of areas in these communities. We support many activi- ties which help to improve the quality of life, health and knowledge. Together with our customers, we are mak- ing a contribution internationally to improve reading skills among children and young peo- ple. We cooperate with the World Association of Newspapers on introducing the Newspapers in Education programme, partic- ularly in new democracies where working conditions for a free press have improved. This commitment has both social and com- mercial objectives. International surveys show that the level of reading skills is not accept- able, even in western countries.