Consumables

Decision to cut capacity by 450,000 tonnes

Thursday 13. March 2008 - The corporate assembly in Norske Skog has today authorised the board to shut down a total newsprint production capacity of 450,000 tonnes.

An increasingly weak market has resulted in temporary production shutdowns at several Norske Skog mills in recent years. Our production capacity is therefore not being utilised in an efficient manner. At the same time, the continued excess capacity has resulted in a weak price trend for the company’s products.
 
A total of 450,000 tonnes of production capacity will be shut down. This amounts to about seven per cent of the company’s total global production capacity, and includes the following mills/paper machines: Permanent shutdown of Norske Skog Steti (130,000 tonnes), indefinite shutdown of PM2 at Norske Skog Follum (130,000 tonnes), and indefinite shutdown of Norske Skog Cheongwon (190,000 tonnes). The timing of the individual shutdowns will be decided by the board.
 
As mentioned earlier, the shutdowns will result in write-downs of about NOK 1.1 billion. This will be recorded in the accounts when the dates for the individual shutdown have been decided. The shutdowns will result in a fixed cost reduction of about NOK 250 million. In addition, an improvement in the contribution of about NOK 250 million has been estimated as a result of other mills with low variable costs taking over parts of the production and sales volumes from the units which are shut down.