q4 '07 financial details market up date [read-only] nok million q4 2007 q4 2006 change...
TRANSCRIPT
Norske Skog
Q4 2007
Financial figures Group (details)Segmented ResultsMarket Update
2
P&L account Q4 2007 vs Q3 2007NOK Million Q4 2007 Q3 2007 Change Operating revenue 6 956 6 641 316Distribution costs (592) (631) 39Cost of materials (3 709) (3 778) 69Changes in inventory (473) 31 (504)Employee benefit expenses (860) (875) 15Other operating expenses (546) (537) (8)Restructuring expenses - - -Other gains and losses 4 983 69 4 915 Gross operating earnings 5 761 919 4 841Depreciation and amortisation (719) (712) (7)Impairments (4 866) - (4 866) Operating earnings 176 208 (31)Share of profit in associated companies 1 6 (5)Financial items (259) 66 (326)
Profit before tax (82) 280 (362)Income tax expense (828) (75) (753)
Net profit (910) 205 (1 115)
Attributable to minority interests (30) (16) (14)Attributable to equity holders of the Company (880) 221 (1 101)
3
P&L account Q4 2007 vs Q4 2006NOK Million Q4 2007 Q4 2006 Change
Operating revenue 6 956 7 704 (747)Distribution costs (592) (630) 39Cost of materials (3 709) (3 931) 222Changes in inventory (473) (277) (196)Employee benefit expenses (860) (878) 18Other operating expenses (546) (646) 100Restructuring expenses - (45) 45Other gains and losses 4 983 (1) 4 984
Gross operating earnings 5 761 1 296 4 465Depreciation and amortisation (719) (729) 10Impairments (4 866) - (4 866)
Operating earnings 176 567 (391)Share of profit in associated companies 1 - 1Financial items (259) (249) (10)
Profit before tax (82) 318 (400)Income tax expense (828) (109) (719)
Net profit (910) 209 (1 119)
Attributable to minority interests (30) (36) 5Attributable to equity holders of the Company (880) 245 (1 124)
4
P&L account 2007 vs 2006NOK Million 2007 2006 Change
Operating revenue 27 118 28 812 (1 694)Distribution costs (2 400) (2 521) 121Cost of materials (15 214) (15 498) 284Changes in inventory 144 (102) 246Employee benefit expenses (3 495) (3 800) 305Other operating expenses (2 221) (2 187) (34)Restructuring expenses - (484) 484Other gains and losses 4 463 (288) 4 751
Gross operating earnings 8 395 3 932 4 463Depreciation and amortisation (2 878) (3 226) 348Impairments (4 840) (3 233) (1 607)
Operating earnings 677 (2 527) 3 204Share of profit in associated companies 37 202 (165)Financial items (479) (1 155) 676
Profit before tax 235 (3 480) 3 716Income tax expense (917) 463 (1 380)
Net profit (683) (3 017) 2 334
Attributable to minority interests (65) (208) 143Attributable to equity holders of the Company (618) (2 809) 2 191
5
EBITDA - Clean to IFRS
NOK mill 2007 Q4 2007 Q3 2007 2006 Q4 2006
Clean EBITDA 3 939 775 851 4 702 1 328
Reversals:
Value change energy contracts 4 729 4 489 236 135 55
Value change derivatives (370) 439 (158) (541) (72)
Value change other assets 27 27 0 0 0
Realised gain/loss commodities 71 31 (11) 144 36
Other gains and losses 0 0 2 (24) (6)
Restructuring expenses (0) (0) (0) (484) (45)
EBITDA, IFRS 8 395 5 761 920 3 932 1 296
EBITDA margin, IFRS 31,0 % 82,8 % 13,9 % 13,6 % 16,8 %
6
EBIT - Clean to IFRS
NOK mill 2007 Q4 2007 Q3 2007 2006 Q4 2006
Clean EBIT (1 060) 56 139 1 476 599
Reversals:
Value change energy contracts 4 729 4 489 236 135 55
Value change derivatives (370) 439 (158) (541) (72)
Value change other assets 27 27 0 0 0
Realised gain/loss commodities 71 31 (11) 144 36
Other gains and losses 0 0 2 (24) (6)
Restructuring expenses (0) (0) (0) (484) (45)
Impairments (4 840) (4 866) 0 (3 233) 0
EBIT, IFRS 677 176 208 (2 527) 567
EBIT margin, IFRS 2,5 % 2,5 % 3,1 % -8,8 % 7,4 %
7
Clean EBITDA / EBIT per quarter
EBITDA/EBIT adjusted for the value of power contracts, provision cost energy cost in South America and restructuring expenses.
In addition, the EBIT is adjusted for impairments.
925
97
1 038
171
1 085
282
1 251
424
1 328
599
1 175
440
1 138
425
851
139
775
56
4Q2005
1Q2006
2Q2006
3Q2006
4Q2006
1Q2007
2Q2007
3Q2007
4Q2007
EBITDA
EBIT
8
Clean EBITDA margins per segment Q4 2007 vs Q3 2007
14,2 %
16,9 %
4,8 %
7,8 %
11,4 %10,8 %
23,5 % 22,5 %21,0 %
14,9 %
12,9 %13,9 %
0,0 %
5,0 %
10,0 %
15,0 %
20,0 %
25,0 %
EuropeNews
EuropeMagazine
Asia News AustralasiaNews
SouthAmericaNews
TotalSegments
Q4 07Q3 07
9
EBIT margins per segment Q4 2007 vs Q3 2007
6,2 %
9,0 %
-3,1 %
-0,6 %-1,0 %
-2,0 %
3,5 % 3,1 %
9,1 %
5,7 %
2,1 %
3,1 %
-4,0 %
-2,0 %
0,0 %
2,0 %
4,0 %
6,0 %
8,0 %
10,0 %
EuropeNews
EuropeMagazine
Asia Australasia SouthAmerica
TotalSegments
Q4 07Q3 07
10
Clean EBITDA Margin 2001-2007
EBITDA adjusted for the value of power contracts, provision cost energy cost in South America and restructuring expenses.
24,9
19,5 19,621,3
19,320,0
17,618,8
16,816,815,8
18,1
15,116,7
13,014,5
16,0
18,416,4
17,516,6
12,811,4
0,0
5,0
10,0
15,0
20,0
25,0
30,0
2/02
3/02
4/02
1/03
2/03
3/03
4/03
1/04
2/04
3/04
4/04
1/05
2/05
3/05
4/05
1/06
2/06
3/06
4/06
1/07
2/07
3/07
4/07
11
Financial Items
in MNOKQ4-07 Q3-073) Q4-06 2007 2006
Net interest cost -289 -291 -254 -1,098 -1,013 Interest rate derivatives 38 13 14 72 38Currency gain/loss 28 370 98 668 -17 Other financial items -37 -25 -107 -120 -163 Total financial items -260 67 -249 -478 -1,155
Gearing 1) 1.05 0.98 0.96 1.05 0.96Net interest bearing debt 2) 16,408 16,231 17,320 16,408 17,3201) Gearing = Net interest bearing debt / Equity
2) Net interest-bearing debt = Interest bearing debt – Cash and Cash equivalents - Interest rate swaps (fair value hedge)
3) Corrected split on Net Interest Cost and Interest Rate Derivatives
12
NSI trade weighted currency index
94,5
91,6 92,0
88,3 88,787,9
86,687,3
88,6
85,9
88,3
90,1
88,5
87,1
82,3
84,8
88,2
85,7
91,6
87,6
76
78
80
82
84
86
88
90
92
94
96
Q1'04
Q2'04
Q3'04
Q4'04
Q1'05
Q2'05
Q3'05
Q4'05
Q1'06
Q2'06
Q3'06
Q4'06
Q1'07
Q2'07
Q3'07
Q4'07
NSG
Fx
Inde
x (1
/1/0
2=10
0
Avg Q'ly Index Avg 2004 Avg 2005 Avg 2006 Avg 2007
13
Balance SheetNOK Million 31.12.2007 30.09.2007 ChangeASSETS Deferred tax asset 11 99 (88)Other intangible assets 132 2 945 (2 812)Property, plant and equipment 28 401 30 621 (2 220)Investment in associated companies 234 219 15Other non-current assets 529 416 113Total non-current assets 29 307 34 300 (4 993)Inventories 2 731 3 130 (400)Receivables 3 811 3 765 46Cash and cash equivalents 1 792 1 966 (173)Other current assets 5 618 1 053 4 565Total current assets 13 953 9 914 4 039TOTAL ASSETS 43 260 44 214 (954) Paid in equity 12 310 12 310 (0)Retained earnings 3 322 4 168 (846)Minority interests 365 386 (22)Total equity 15 957 16 864 (907)Pension obligations 519 503 16Deferred tax 2 033 1 492 541Interest bearing non-current liabilities 17 294 17 111 183Other non-current liabilities 1 686 1 931 (244)Total non-current liabilities 21 533 21 037 496Interest-bearing current liabilities 1 141 1 201 (61)Trade and other payables 3 702 3 573 129Tax payable 73 186 (113)Other current liabilities 814 1 353 (539)Total current liabilities 5 770 6 313 (543)Total liabilities 27 304 27 350 (46)TOTAL EQUITY AND LIABILITIES 43 260 44 214 (954)
Net interest bearing debt 16 407 16 231 176
14
Balance SheetNOK Million 31.12.2007 31.12.2006 ChangeASSETS Deferred tax asset 11 216 (205)Other intangible assets 132 3 056 (2 923)Property, plant and equipment 28 401 33 547 (5 146)Investment in associated companies 234 333 (99)Other non-current assets 529 425 104Total non-current assets 29 307 37 577 (8 270)Inventories 2 731 2 688 43Receivables 3 811 3 999 (188)Cash and cash equivalents 1 792 397 1 395Other current assets 5 618 569 5 049Total current assets 13 953 7 653 6 299TOTAL ASSETS 43 260 45 230 (1 970) Paid in equity 12 310 12 309 1Retained earnings 3 322 5 791 (2 469)Minority interests 365 450 (85)Total equity 15 957 18 550 (2 594)Pension obligations 519 530 (12)Deferred tax 2 033 1 804 230Interest bearing non-current liabilities 17 294 14 712 2 582Other non-current liabilities 1 686 1 756 (70)Total non-current liabilities 21 533 18 802 2 731Interest-bearing current liabilities 1 141 3 114 (1 973)Trade and other payables 3 702 3 833 (131)Tax payable 73 123 (50)Other current liabilities 814 808 6Total current liabilities 5 770 7 878 (2 108)Total liabilities 27 304 26 680 623TOTAL EQUITY AND LIABILITIES 43 260 45 230 (1 969)
Net interest bearing debt 16 407 17 320 (913)
15
Balance Sheet – Q4 Currency Effect
Gross Assets less non-interest bearing debt
Distribution as of 31.12.2007:NOK 29%EUR 23%AUD 13%NZD 8%USD 5%CNY 4%KRW 15%Other 3%
Debt
Distribution as of 31.12.2007:NOK 4%EUR 50%AUD 13%NZD 0%USD 24%CNY 3%KRW 6%Other 0%
Increase in Q4: NOK 107 mill Increase in Q4: NOK 232 mill
Decreased equity: NOK -125 mill.
Currency rate change
Q3-Q4:
EUR 3,1%AUD -0,8%NZD 2,0%USD -0,6%CNY 2,1%KRW -1,7%
16
Balance Sheet – YTD Currency Effect
Gross Assets less non-interest bearing debt
Distribution as of 31.12.2007:NOK 29%EUR 23%AUD 13%NZD 8%USD 5%CNY 4%KRW 15%Other 3%
Debt
Distribution as of 31.12.2007:NOK 4%EUR 50%AUD 13%NZD 0%USD 24%CNY 3%KRW 6%Other 0%
Decrease in 2007:NOK -1942 mill Decrease in 2007:NOK -1260 mill
Decreased equity: NOK -682 mill
Currency rate change
YTD:
EUR -3,4%AUD -3,5%NZD -4,5%USD-13,5%CNY -6,2%KRW-13,4%
17
Debt Maturity Schedule Q4 2007
DEBT MATURITY SCHEDULE AS OF 31.12.2007Norske Skog
4,094
1,1411,497
4,520
3,526
1,249 1,082 1,082
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2008 2009 2010 2011 2012-14 2015-16 2017-19 2033
NO
K m
illio
n
18
CashFlow Q4 2007 vs Q3 2007 (NOK million) Q4 2007 Q3 2007 ChangeEBITDA incl. restr. costs 5 761 919 4 842 Adjustment of non-cash items in EBITDA1) (4 869) (80) (4 789) Change in W orking Capital 287 197 90 Operational Cash Flow 1 179 1 036 143 Cash from net financial items (317) (120) (197) Taxes paid (341) (144) (197) Levered Operational Cash Flow 521 772 (251) Investments (capex) (599) (449) (150) Sale of operational fixed assets 9 4 5 Other investments / divestments - - - Sale of shares - - - Dividend received - 87 (87) Dividend paid - - - Free Cash Flow (69) 414 (483) New equity - - - FX and other non cash items on cash and debt (54) 817 (871) Change in net interest bearing debt (123) 1 231 (1 354)
19
CashFlow Q4 2007 vs Q4 2006
(NOK million) Q4 2007 Q4 2006 ChangeEBITDA incl. restr. costs 5 761 1 296 4 465 Adjustment of non-cash items in EBITDA 1 (4 869) 82 (4 951) Change in W orking Capital 287 (56) 343 Operational Cash Flow 1 179 1 322 (143) Cash from net financial items (317) (593) 276 Taxes paid (341) (56) (285) Levered Operational Cash Flow 521 673 (152) Investments (capex) (599) (589) (10) Sale of operational fixed assets 9 2 7 Dividend paid - - - Free Cash Flow (69) 86 (155) New equity - - - FX and other non cash items on cash and debt (54) 378 (432) Change in net interest bearing debt (123) 464 (587)
20
CashFlow 2006 vs 2007(NOK million) 2007 2006 ChangeEBITDA incl. restr. costs 8 395 3 932 4 463 Adjustment of non-cash items in EBITDA1) (4 313) 856 (5 169) Change in Working Capital (391) (566) 175 Operational Cash Flow 3 691 4 222 (531) Cash from net financial items (1 011) (1 365) 354 Taxes paid (514) (169) (345) Levered Operational Cash Flow 2 166 2 688 (522) Investments (capex) (1 746) (1 722) (24) Sale of operational fixed assets 15 11 1 737 Other investments / divestments - 1 213 (11) Sale of shares 5 - - Dividends received 87 - - Dividend paid (1 049) (1 046) (3) Free Cash Flow (522) 1 144 (1 666) FX and other non cash items on cash and debt 1488 599 889 Change in net interest bearing debt 966 1 743 (777)
21
CashFlow by quarter 2005 - 2007
(NOK million) Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007Clean EBITDA, segments 956 1 072 1 093 1 287 1 408 1 243 1 208 903 865Clean EBITDA, other/elim (31) (34) (8) (40) (80) (68) (70) (52) (90)Clean EBITDA, total 925 1 038 1 085 1 247 1 328 1 175 1 138 851 775Other EBITDA (112) 1 (257) (482) (32) (383) (215) 69 4 986 IFRS EBITDA 813 1 039 832 765 1 296 792 923 920 5 761Non-cash in EBITDA (6) - 280 494 82 418 218 (80) (4 869)Change in WC 556 (518) (213) 221 (56) (379) (496) 197 287Total 550 (518) 67 715 26 39 (278) 117 (4 582) Operational CF 1 363 521 899 1 480 1 322 831 645 1 037 1 179 CF from net financials (249) (231) (316) (225) (593) (247) (327) (120) (317)Paid taxes (87) (39) (9) (65) (56) 23 (52) (144) (341) "Levered CF" 1 027 251 574 1 190 673 607 266 773 521
Capex (807)(333) (468) (332) (589) (199) (499) (449) (599)
CF after Capex 220 (82) 106 858 84 408 (233) 324 (78)
Segmented results
23
Financial Summary - SegmentsEurope
NewsEurope
MagEurope
Total PanAsia AustralasiaSouth
AmericaRevenue Q4 06 2 446 1855 4301 1577 1048 375
Q1 07 2 190 1624 3814 1381 969 312Q2 07 2 257 1556 3813 1433 985 345Q3 07 2 156 1767 3923 1329 940 316Q4 07 2 351 1715 4066 1367 971 309
EBITDA Q4 06 466 226 692 290 246 180Q1 07 446 149 595 301 277 70Q2 07 456 148 604 241 278 85Q3 07 364 138 502 143 211 47Q4 07 334 83 417 156 228 65
EBIT Q4 06 244 80 324 110 88 131Q1 07 266 (10) 256 137 102 26Q2 07 280 2 282 82 104 46Q3 07 194 (10) 184 (26) 29 18Q4 07 146 (54) 93 (14) 34 28
EBITDA % Q4 06 19,0 % 12,2 % 16,1 % 18,4 % 23,4 % 48,1 %Q1 07 20,4 % 9,2 % 15,6 % 21,8 % 28,6 % 22,4 %Q2 07 20,2 % 9,5 % 15,8 % 16,8 % 28,2 % 24,6 %Q3 07 16,9 % 7,8 % 12,8 % 10,8 % 22,5 % 14,9 %Q4 07 14,2 % 4,8 % 10,2 % 11,4 % 23,5 % 21,0 %
EBIT % Q4 06 10,0 % 4,3 % 7,5 % 7,0 % 8,4 % 35,0 %Q1 07 12,1 % -0,6 % 6,7 % 9,9 % 10,5 % 8,3 %Q2 07 12,4 % 0,1 % 7,4 % 5,7 % 10,6 % 13,3 %Q3 07 9,0 % -0,6 % 4,7 % -2,0 % 3,1 % 5,7 %Q4 07 6,2 % -3,1 % 2,3 % -1,0 % 3,5 % 9,1 %
24
Operational Summary - Segment
Europe News
Europe Mag
Europe Total Asia Australasia
South America
Production Q4 06 537 328 865 376 203 76(000 tonnes) Q1 07 536 308 844 389 198 73
Q2 07 537 322 859 391 213 77Q3 07 525 330 855 385 211 78Q4 07 494 324 817 375 209 75
Deliveries Q4 06 567 338 905 397 211 76(000 tonnes) Q1 07 497 304 801 364 194 70
Q2 07 517 296 813 392 196 77Q3 07 510 352 862 381 200 80Q4 07 562 339 901 361 215 76
Production/ Q4 06 99 % 96 % 98 % 84 % 90 % 97 %Capacity (%) Q1 07 97 % 89 % 94 % 96 % 90 % 94 %
Q2 07 97 % 93 % 96 % 97 % 97 % 99 %Q3 07 95 % 95 % 95 % 96 % 96 % 100 %Q4 07 88 % 93 % 90 % 93 % 96 % 94 %
Deliveries/ Q4 06 104 % 99 % 102 % 89 % 94 % 97 %Capacity (%) Q1 07 90 % 88 % 89 % 90 % 88 % 90 %
Q2 07 94 % 86 % 91 % 97 % 89 % 99 %Q3 07 93 % 102 % 96 % 95 % 91 % 103 %Q4 07 100 % 97 % 99 % 90 % 99 % 95 %
25
Europe Newsprint
NOK mill Q4 07 Q3 07 Q4 06 2007 2006Operating revenue 2 351 2 156 2 446 8 954 9 072EBITDA 334 364 466 1 600 1 742EBIT 146 194 244 886 768Gross operating margin 14,2 16,9 19,1 17,9 19,2
Shipments 562 510 567 2 087 2 175Production 494 525 537 2 092 2 151Production / capacity 88 95 99 95 99
26
Europe Magazine
NOK mill Q4 07 Q3 07 Q4 06 2007 2006Operating revenue 1 715 1 767 1 855 6 662 6 748EBITDA 83 138 226 518 933EBIT (54) (10) 80 (72) 282Gross operating margin 4,8 7,8 12,2 7,8 13,8
Shipments 339 352 338 1 291 1 279Production 324 330 328 1 284 1 279Production / capacity 93 95 96 93 93
27
Asia
NOK mill Q4 07 Q3 07 Q4 06 2007 2006Operating revenue 1 367 1 329 1 577 5 510 6 096EBITDA 156 143 290 841 1 072EBIT (14) (26) 110 179 327Gross operating margin 11,4 10,8 18,4 15,3 17,6
Shipments 407 381 397 1 498 1 562Production 375 385 376 1 505 1 553Production / capacity 93 96 84 93 87
28
Australasia
NOK mill Q4 07 Q3 07 Q4 06 2007 2006Operating revenue 971 940 1 048 3 865 3 897EBITDA 228 211 246 994 719EBIT 34 29 88 269 68Gross operating margin 23,5 22,4 23,5 25,7 18,4
Shipments 215 200 211 805 826Production 209 211 203 830 798Production / capacity 96 96 90 95 89
29
South America
NOK mill Q4 07 Q3 07 Q4 06 2007 2006Operating revenue 309 316 375 1 281 1 399EBITDA 65 47 120 267 469EBIT 28 18 71 115 289Gross operating margin 21,0 14,9 32,1 20,8 33,5
Shipments 76 80 76 302 293Production 75 78 76 303 297Production / capacity 96 100 97 97 96
30
“Clean” EBITDA by quarter
• Q3 2006 is restated
Q4 2005 Q1 2006 Q2 2006 Q3 2006 1 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007Europe newsprint 309 421 390 465 466 446 456 364 334Europe magazine 220 254 176 277 226 149 148 138 83Europe total 529 675 566 742 692 595 604 502 417Asia 1 170 242 268 197 290 301 241 143 155Australasia 164 66 167 240 246 277 278 211 228South America 93 89 92 108 180 70 85 47 65Total regions 956 1 072 1 093 1 287 1 408 1 243 1 208 903 865Other activities 25 11 (0) 0 0 - 0 4 (5)Corp. Center, elim. etc (56) (49) (12) (40) (81) (68) (79) (57) (85)Clean EBITDA 925 1 034 1 081 1 247 1 327 1 175 1 129 849 775Other gains and losses 208 5 4 5 - - 9 - - Value changes power contracts - 67 - 13 55 (22) 26 236 4 489 Value changes derivatives - (126) (213) (130) (72) (396) (255) (158) 439 Value changes other assets - - - - - - - - 27 Realised gain/loss commodities - 65 29 14 36 37 14 (11) 31 Special, non-recurring items - (5) (6) (7) (6) (2) - 2 - Grid dispute, Brazil (50) - - - - - - - - Restruct Union (270) - - - (45) - - - - Restruct Parenco - - (63) - - - - - - Restruct Turnaround - - - (376) - - - - - EBITDA under IFRS 813 1 040 832 765 1 296 792 923 919 5 761
31
“Clean” EBIT by quarters
• Q3 2006 is restated
Q4 2005 Q1 2006 Q2 2006 Q3 2006 1 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007Europe newsprint 37 148 153 223 244 266 280 194 146Europe magazine 93 86 10 106 80 (10) 2 (10) (54)Europe total 130 234 163 329 324 256 282 184 92Asia 1 23 50 83 9 110 137 82 (26) (14)Australasia (39) (105) 12 73 88 102 104 29 34South America 45 42 48 68 131 26 46 18 28Total regions 159 221 306 478 653 521 514 206 140Other activities 17 6 (0) 0 0 0 0 4 15Corp. Center, elim. etc (79) (60) (28) (59) (55) (81) (98) (70) (99)Clean EBIT 97 167 278 419 598 440 416 139 56Other gains and losses 208 5 4 5 - - 9 - 1 Value changes power contracts - 67 - 13 55 (22) 26 236 4 489 Value changes derivatives - (126) (213) (130) (72) (396) (255) (158) 439 Value changes other assets - - - - - - - - 27 Realised gain/loss commodities - 65 29 14 36 37 14 (11) 31 Special, non-recurring items - (5) (6) (7) (6) (2) - 2 - Grid dispute, Brazil (50) - - - - - - - (0) Write-down PanAsia - - (43) - - - - - - Restruct Union (270) - - - (45) - - - - Write-down Union (155) - - - - - 26 - - Restruct Parenco - - (63) - - - - - - Loss Forestia (24) - - - - - - - - Restruct Turnaround - - - (376) - - - - - Permanent impairment - - - (3 190) - - - - (4 866) EBIT under IFRS (195) 172 (14) (3 252) 567 57 236 208 176
Norske SkogMarket updateFebruary, 2007
33
Demand changes 2007 vs 2006
Standard Newsprint World (YTD Nov): (0,5%)
Standard Newsprint
Standard & Improved Newsprint
Magazine Paper
Total
(10,3%) (8,3%) 4,8% (3,2%)
Standard Newsprint S
Korea
3,0%
Standard Newsprint
China
8,5%Standard Newsprint Far East
Total3,1%
S America
Standard Newsprint
7,8%
W. Europe E. EuropeEurope Total
Source: PPPC, Cepiprint, NSI internalFar-East, Brazil and World figures are ytd November, China is ytd October 2007 Other regions December ytd.
Standard Newsprint
Standard & Improved Newsprint
Magazine Paper
Total
(1,1%) (1,4%) 2,7% 0,6%3,6% 4,1% 19,8% 9,9%
(0,3%) (0,6%) 4,4% 1,7%
Standard Newsprint
Standard & Improved Newsprint
2,4% 1,7%
Australasia
34
Newsprint & OUNC - EuropeOUNC = Improved newsprint & other uncoated publication papers
Demand in Europe:Q4 07/Q4 06: 0.2%
2HY 07/2HY 06 : -1.0%
YTD December: -0.6%
Total deliveries from Western Europe:Q4 07/Q4 06: -0.6%
2HY 07/2HY 06 : -1.2%
YTD December: -2.3%
Total deliveries of Newsprint from North America to Western Europe:
YTD December: + 58%
Volumes back to levels in 2004/2005
Reference price Newsprint December:€550/mt for 45g/m2
+ 4% from Dec 2006
Source: Cepiprint
Newsprint, 45 g/m2, Germany
400
450
500
550
600
650
700
2Q 1
994
1Q
199
54Q
199
53Q
199
62Q
199
7 1
Q 1
998
4Q 1
998
3Q 1
999
2Q 2
000
1Q
200
14Q
200
13Q
200
22Q
200
3 1
Q 2
004
4Q 2
004
3Q 2
005
2Q 2
006
1Q 2
007
4Q 2
007
EU
R/t
NP+OUNC Demand in Europe
0500
1 0001 5002 0002 5003 0003 5004 000
2002
Q1
Q3
2003
Q1
Q3
2004
Q1
Q3
2005
Q1
Q3
2006
Q1
Q3
2007
Q1
Q3
1000
tonn
es
35
Newsprint - North AmericaStd. Newsprint demand:
Q4 07/Q4 06: -9.0%
2HY 07/2HY 06: -9.8%YTD December: -10.3%
Uncoated Mech Papers (excl. SC) demand:
Q4 07/Q4 06: +3.7%
2HY 07/2HY 06: -0.3%YTD December: -2.3%
Combined Std NP & Uncoated Mech (excl. SC) demand:
Q4 07/Q4 06: -5.8%
2HY 07/2HY 06: -7.4%YTD December: -8.3%
Reference price Newsprint December:$625/mt for 45g/m2
+$20 since October 2007-$75 since December 2006
Newsprint, 45 g/m2, US East Coast
400
500
600
700
800
900
2Q 1
994
1Q
199
5
4Q 1
995
3Q 1
996
2Q 1
997
1Q
199
8
4Q 1
998
3Q 1
999
2Q 2
000
1Q
200
1
4Q 2
001
3Q 2
002
2Q 2
003
1Q
200
4
4Q 2
004
3Q 2
005
2Q 2
006
1Q 2
007
4Q 2
007
USD
/t
Newsprint + Uncoated Mechanical (without SC grades) Demand in North America
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
2002
Q1
Q3
2003
Q1
Q3
2004
Q1
Q3
2005
Q1
Q3
2006
Q1
Q3
2007
Q1
Q3
1000
tonn
es
Source: PPPC, RISI
36
Newsprint shipments from N. Am. to Europe
North American market share in Europe
-
50
100
150
200
250
Q1-200
4Q2-2
004
Q3-200
4Q4-2
004
Q1-200
5Q2-2
005
Q3-200
5Q4-2
005
Q1-200
6Q2-2
006
Q3-200
6Q4-2
006
Q1-200
7Q2-2
007
Q3-200
7Q4-2
007
Tonn
es in
000
's
0 %
1 %
2 %
3 %
4 %
5 %
6 %
7 %
8 %
NA exports to Europe Market share in %
Source: PPPC
37
Canadian share of European newsprint market
Source: PPPC
0
2 000
4 000
6 000
8 000
10 000
12 000
1991
1993
1995
1997
1999
2001
2003
2005
2007
tonn
es (0
00's
)
0 %
2 %
4 %
6 %
8 %
10 %
12 %
14 %
Mar
ket S
hare
(%)
European DemandCanadian exports as % of European demandTrend
38
400
440
480
520
560
600
J02
M M J S N J03
M M J S N J04
M M J S N J05
M M J S N J06
M M J S N J07
M M J S N
Europe US
Newsprint Paper Prices in 45g and in EUR/t Europe and North America
Source: RISI Paper Trader January 2008
Price difference €115 in December 2007
39
SC Magazine Paper - Europe
Demand in Europe:
Q4 07/Q4 06: +3.4%
2HY 07/2HY 06: +4.8%
YTD December: +4.1%
Total deliveries from Europe:Q4 07/Q4 06 : +0.8%2HY 07/2HY 06: +2.7%YTD December: +2.4%
Reference price SC December:
€590/mt, unchanged since Feb 2007
-20€ since Dec 2006
Source: PPPC, Cepiprint, RISI
SC, 56 g/m2 roto, Germany
500
550
600
650
700
750
800
2Q 1
994
1Q
199
54Q
199
5
3Q 1
996
2Q 1
997
1Q
199
84Q
199
8
3Q 1
999
2Q 2
000
1Q
200
14Q
200
13Q
200
2
2Q 2
003
1Q
200
4
4Q 2
004
3Q 2
005
2Q 2
006
1Q 2
007
4Q 2
007
EUR
/t
SC Magazine Demand in Europe
0
250
500
750
1 000
1 250
2002
Q1
Q3
2003
Q1
Q3
2004
Q1
Q3
2005
Q1
Q3
2006
Q1
Q3
2007
Q1
Q3
1000
tonn
es
40
CMR Magazine Paper - EuropeCMR = Coated Mechanical Reels (LWC, MWC & HWC)
Demand in Europe:
Q4 07/Q4 06: +7.0%
2HY 07/2HY 06 : +5.8%
YTD December: + 4.5%
Total deliveries from Europe:
Q4 07/Q4 06: + 3.4%
2HY 07/2HY 06: + 2.4%
YTD December: + 0.7%
Reference price CMR December 2007
€660/mt, unchanged since February 2007
-20€ since December 2006
Source: PPPC, Cepiprint
CMR, 60 g/m2 offset, Germany
600
650
700
750
800
850
900
950
1000
2Q 1
994
1Q
199
5
4Q 1
995
3Q 1
996
2Q 1
997
1Q
199
8
4Q 1
998
3Q 1
999
2Q 2
000
1Q
200
1
4Q 2
001
3Q 2
002
2Q 2
003
1Q
200
4
4Q 2
004
3Q 2
005
2Q 2
006
1Q 2
007
4Q 2
007
EUR
/ t
CMR Demand in Europe
0
500
1 000
1 500
2 000
2 500
2002
Q1
Q3
2003
Q1
Q3
2004
Q1
Q3
2005
Q1
Q3
2006
Q1
Q3
2007
Q1
Q3
1000
tonn
es
41
Magazine Paper Prices - Europe and North America
SC Paper Prices
400
600
800
1000
2Q 1
997
1Q
199
8
4Q 1
998
3Q 1
999
2Q 2
000
1Q
200
1
4Q 2
001
3Q 2
002
2Q 2
003
1Q
200
4
4Q 2
004
3Q 2
005
2Q 2
006
1Q 2
007
4Q 2
007
EU
R/t
SC Europe 56 g SC USA 52 g / 35 lb
LWC Paper Prices
400600800
10001200
2Q 1
997
1Q
199
84Q
199
8
3Q 1
999
2Q 2
000
1Q
200
14Q
200
1
3Q 2
002
2Q 2
003
1Q
200
4
4Q 2
004
3Q 2
005
2Q 2
006
1Q 2
007
4Q 2
007
EU
R/t
LWC Europe 60 g / 40 lb LWC USA 60 g / 40 lb
Source: RISI
42
Asia
Demand standard newsprint:YTD November 2007
– Far East total: + 3.1% – Non-Japan Far-East: + 5.2%– China: + 8.5% (YTD October)– South Korea: + 3.0% (YTD December )– India: +6.1%
Prices Q4 2007Korea USD 660 (46 gsm)China USD 511 (48.8 gsm excl. vat)India USD 615 (45 gsm)Hong Kong USD 562 (48.8 gsm)
Source: PPPC, Cepiprint, NSI internal
43
Australasia - 2007 vs 2006
Demand Standard Newsprint:
YTD December: +2.4%
– Stronger retail economy
– Tasman Mill downtime at end of Q4.
Prices:
Australia: Newsprint down 7% from July 1st 2007
New Zealand: Newsprint down 4.5% from July 1st 2007 with intention to remain unchanged until the end of 2008
Source: PPPC, Cepiprint, NSI internal
44
South America 2007 vs 2006
Demand – Standard NewsprintRegional demand: + 7.9 % Brazil demand: +1.1%
– Customers reduced their inventory level (from 60 to near 40 daysestimated to December 2007)
Brazil consumption: +12% due to new titles and increased circulation/ad lineage.
Prices Downward pressure on prices in Brazil bottoms out in Q4.Price Brazil 45g December 2007 = USD 600/t
Source: PPPC, Cepiprint, NSI internal