ANNUAL REPORT 1997 1 Main Figures Per Area
Total Page:16
File Type:pdf, Size:1020Kb
NORSKE SKOG ANNUAL REPORT 1997 1 Main figures per Area 1997 1996 1995 1994 1993 1992 1991 1990 1989 Area Paper Operating revenue NOK million 9,284 9,493 8,066 5,831 4,731 4,773 5,855 6,733 5,768 Operating profit NOK million 1,134 2,078 1,708 454 469 95 656 721 398 Operating margin % 12.2 21.9 21.2 7.8 9.9 2.0 11.2 10.7 6.9 Area Fibre Operating revenue NOK million 1,376 1,222 2,171 1,498 1,052 1,202 1,247 1,709 2,025 Operating profit NOK million 49 -127 682 178 -187 -176 -164 327 615 Operating margin % 3.6 -10.4 31.4 11.9 -17.8 -14.6 -13.2 19.1 30.4 Area Building Materials Operating revenue NOK million 2,667 2,579 2,333 2,048 1,704 1,688 1,725 1,960 1,911 Operating profit NOK million -16 27 96 146 85 64 9 107 93 Operating margin % -0.6 1.0 4.1 7.1 5.0 3.8 0.5 5.5 4.9 Operating revenue per market Operating revenue per product Rest of Other world 8% 2% Pulp 8% Norway 23% Newsprint Special grades 1% USA 10% 40% SC magazine paper 20% Other Europe 25% Germany 15% LWC magazine paper 9% UK 11% France 8% Building materials 20% 2 NORSKE SKOG ANNUAL REPORT 1997 1997 Highlights Price decline caused weaker result Growth in sawn timber Expansion in Eastern Europe Prices of paper and pulp fell during the In September, Norske Skog took over In November, Norske Skog took over first quarter of 1997. This led to a Hedalm Trelast's three mills in Hed- the ROTO newsprint mill (Norske reduction in operating profit from mark county. These companies, which Skog Steti) in the Czech Republic. The NOK 1,916 million in 1996 to NOK form part of our subsidiary Forestia mill's capacity is 100,000 tonnes, and 1,083 million in 1997. AS, have a total annual turnover of this is now being increased to 120,000 about NOK 250 million. tonnes. Record paper output In 1997 Norske Skog produced - for Major investments at Reorganisation of the building the first time - more than two million Norske Skog Tofte materials business tonnes of printing paper. New output Norske Skog decided in October to To create the conditions for more inde- records were set at the printing paper invest NOK 600 million in a compre- pendent development of these activi- mills Norske Skog Skogn, Norske hensive upgrade of Norske Skog Tofte, ties, Norske Skog's building materials Skog Follum, Norske Skog Golbey during the period 1997-2001. This business was reorganised in 1997 into and Norske Skog Bruck. will, among other things, increase the two subsidiary companies: Forestia AS mill's capacity from 360,000 tonnes of (sawn timber and board) and Norske Expansion of Norske Skog Golbey bleached sulphate pulp to 420,000 tonnes. Skog Flooring AS (flooring products). Norske Skog decided in April to expand Norske Skog Golbey by instal- Cogeneration plant at Skogn Concentration on core areas ling a second paper machine, with Industrikraft Midt-Norge DA, which During 1997 Norske Skog disposed capacity of 330,000 tonnes per year. is owned by Norske Skog (40%), four units which lay outside the This will give the mill a total capacity Elkem (40%) and Statoil (20%), noti- Group's core areas: the workshop busi- of nearly 600,000 tonnes. The new fied the authorities in November of its ness Folla Tech, and the building mate- machine is scheduled to come on stream plans to build a cogeneration plant at rials outlets Namsenbygg, Lundby in first quarter 1999. Norske Skog Skogn. Bruk Brumunddal and Lundby Bruk Rena, with a total turnover of about NOK 50 million. An increased demand for information is one result of modern mass culture. At the same time, both technology and economic developments have made it possible to meet this demand, among other things through special publications Aims and tasks in 1998 devoted to music, IT and lifestyle. Improved logistics and Organisation Projects sales support Norske Skog will start a three-year In addition to the expansion of Norske Norske Skog is working to become efficiency programme - Norske Skog Skog Golbey, with PM 2, and the more competitive. During 1998 it will 2000 - in 1998. The programme will upgrading of Norske Skog Tofte, begin utilising GLOSS (Global Logi- incorporate all current and new impro- Norske Skog is building a new waste stics and Sales Support) to achieve a vement activities at business centres treatment plant at Norske Skog more customer-friendly, streamlined and joint projects, in order to exploit Follum, and undertaking a major rebu- and cost-efficient planning of sales, Group synergies. The aim is to achieve ilding of PM 5 at Norske Skog Saug- production and distribution of printing the Group's target for return on total brugs. The two last-mentioned pro- paper. The project has a budget of assets of 13% by the year 2000 – and, jects will be completed during 1998. NOK 100 million. at the least, to achieve this as an ave- Total investments in 1998 at Norske rage throughout an economic cycle. Skog's mills in Norway and abroad will amount to just over NOK 3 billion. 4 NORSKE SKOG ANNUAL REPORT 1997 Board of Directors' Report The year 1997 figure for 1996 was NOK 1,732 mil- Consolidated operating revenue The 1997 result was marked by signi- lion. NOK mill. ficantly lower prices for printing paper The Group’s operating revenue than in 1996, while at the same time reached NOK 13,312 million (NOK 15.000 pulp prices remained low. During the 13,265 million). For printing paper - second half-year the supply/demand which accounts for about 70% of the 12.000 balance on paper markets became satis- Group's operating income - price factory, but the pulp market remained levels on local markets were, for much unstable. of the year, about 25% below 1996 9.000 The trend towards structural changes levels. The loss of income which this in the forest industry continued during entailed was partly offset by an incre- 6.000 1997. These changes led to greater ase in volumes. concentration and larger players, with Operating profit was NOK 1,083 a focus on core areas and the global million (NOK 1,916 million). The 3.000 market. Norske Skog intends to parti- trend over the year was favourable for cipate in this trend. The Group is well paper, and the final quarter showed a 0 prepared to do so, both financially and marked improvement, compared with 89 90 91 92 93 94 95 96 97 organisationally. the first quarter. The trend continued In 1997 Norske Skog decided on into 1998, and increases in paper pri- acquisitions and investments in new ces were put into effect from the New plant which increase the Group's prin- Year. Following a temporary impro- ting paper capacity by 20% or nearly vement during the autumn, pulp mar- 450,000 tonnes/year. At the same time, kets again weakened towards the end Consolidated profit new business opportunities were eva- of 1997, primarily because of high NOK mill. luated. inventories. During 1997 Norske Skog's buil- Price levels for the Group's main 2.500 ding materials business was restruc- products were lower than the average tured and organised into two wholly- level over an economic cycle. 2.000 owned subsidiaries, Forestia AS and Operating margin was 8.1% (14.4%), Norske Skog Flooring AS. This makes which is not satisfactory. Cash flow 1.500 it possible to invite other owners to from operations was NOK 1,615 mil- 1.000 participate in these companies. These lion (NOK 2,616 million). Return on moves enable Norske Skog to focus total assets reached 7.8% (14.1%), 5.00 increasingly on pulp and paper. Mean- which is markedly below the Group's while, the subsidiaries are better placed requirement for a 13% return on capi- 0 organisationally to focus more strongly tal, on average, over an economic cycle. on their core areas, and to compete Return on equity was 7.1.% (18.6%). -500 more efficiently within their respective Net financial items amounted to sectors, and increase profitability. minus NOK 455 million in 1997 -1.000 89 90 91 92 93 94 95 96 97 In 1997 Norske Skog sold four (minus NOK 262 million). Lower net small units - which lie outside the interest costs of NOK 196 million DriftsresultatOperating profit Group's core areas - with a total annual (NOK 285 million) were due to lower Profit after financial items Resultat etter finansposter turnover of NOK 50 million. interest rates and lower debt. Exchange rates fluctuated widely in Result and dividend 1997. Currency losses debited to the High output and slightly higher pulp accounts including unrealised losses prices in the second half-year did not amounts to NOK 269 million as of offset the decline in printing paper pri- 31.12.1997. This must be seen in the ces during the first quarter. The context of increased operating income Group's pre-tax profit for 1997 was owing to higher prices. At the same NOK 652 million. The corresponding time, currency-related reserves not NORSKE SKOG ANNUAL REPORT 1997 5 credited to the accounts totalled NOK quarter 1999. Total investments invol- corresponds to a pay-out ratio of 43% 62 million (NOK 81 million). ved are NOK 2.8 billion, and NOK 672 for l997, and makes the average pay- Tax costs for the year were NOK million of this had accrued by the end out ratio 20% over the past five years.