Norske Skog Q2 2016

Sven Ombudstvedt, CEOJuly 13th 2016

Key figures, second quarter of 2016 - In NOK million

Q2 2016 Q1 2016 Q2 2015 2015

Operating revenue 2 891 2 980 2 786 11 538

Gross operating earnings (EBITDA) 335 242 138 753

Gross operating margin (%) 11.6 8.1 5.0 6.5

Cash flow from operations before net financial items 321 285 89 66

Net interest bearing debt 6 353 8 043 7 531 8 523

3

0,00%

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Co

sts

/ V

A

Climate & Energy Environment Forest-related Labour Product Transport Trade & Commodity

Cost assessment- Paper and Paperboard (Source: Technopolis)

Regulatory costs in disfavor to European industry - 6%+ of VA since 2005

4

0,00%

0,50%

1,00%

1,50%

2,00%

2,50%

Climate &Energy

Environment Forest-related Labour Product Transport

Fees/Taxes/Charges CAPEX OPEX Administrative burden

Regulatory costs in disfavor to European industry - 6%+ of VA since 2005

Cost assessment- Paper and Paperboard (Source: Technopolis)

EnergyFibre

Paper

Publication paper(balance capacity to demand)

“Creating value from

Fibre and Energy”

$ $BIO-CHEMICALS

GEO-MINERALS

RENEWABLEENERGY

CO-GENERATION

SOLIDBIOFUELS

LIQUID BIOFUELS

Business Model

- Matching supply and demand- Competitiveness

6

Today

6

Tomorrow

100%

PublicationPaper

75%Publication

Paper

25%Bioenergy

25%Bioenergy

Expected revenue development

Value creation from effects of industrial synergies

7

Geothermal

Wood pellets

Biogas

From forestry waste to renewable heating fuel

8

Expanding the growth opportunities - now biogas project at Golbey

9

The Norske Skog Golbey story continues

Mill Director Yves Bailly

325 people

#1

In Western EuropeSite surface 70 ha

Newsprint for coldset and heatset offset

printing ; 40 to 48,8 g/m²

Production capacity

600 000 T/y €800 M€

Accrued investments

90%

Export sales

Norske Skog Golbey:

Start-up :1st line January 19922nd line January 1999

First investmentoutside of Norway

€ 250 / 300M€

Operating revenues

Wood : 40 %Recovered paper : 60 %

A major player in the European market

- In the heart of the European market

Our partners :- Daily & magazin- Retailer- Ads

Golbey: an industrial engine in the region- Development of synergies on our site to create the Green Valley cluster

Development projects at Golbey

Skilled team dedicated to our core business

Entrepreneurship spirit find opportunities to additional developments

On a long run*:

Le bois Santé

NorFILL

…and many other projects

(not sufficiently advanced for presentation)

Projects in accordance with Corporate Strategy (25 by 20):

Bioskog

Energy Island

Biogaz

…

*projects linked with :- Healthcare- Environmental legislation

Long run projects…

Wood by-products Wood powder Purified extract

16

Le Bois Santé® :From wood to food supplement for breathing comfort

R&D consortium (NSG, Harmonic Pharma, Labos)

Health and pharmaceutical patents

NSG patent on wood powder preparation on-going (mid-2017)

Search for 3rd partner to develop industrial and commercial step on-going

Harmonic Pharma health tests : on-going on-going

Flooring

PVC pipes

Small pieces

Plastic compound polymer

+

NorFILL ™:from waste fuel to new plastic products

Principle : replace mineral fillers in plastic compounds by ashes*

* Ashes : 60 000 tons per year

* From cost (1.5 M€/y) to earnings (to be estimated)

Boiler ashes

Mill boiler

Waste wood and mill sludge

Patent for plastic uses

Search for industrial filler producer partner on-going (2017)

Projects « 25 by 20 »

BioSkog

BioSkog

value

Principle: use local biomass to produce high value green molecule (sugar, lignine and proteins)

Key figures : wood consumption 40KT(bdt)/yr – GOE 10M€/yr

Waste as bio-fertilizer(minerals …)

Product for biochemie &bio-material (lignin)

Product for biotech industry (sugars)

Ligno-cellulose supply

(preparedwood waste

and byproducts)

1. Soft Chemical pretreatment

2. Enzymes treatment

Protéines

Pre-study

Main-study on-going

Demonstrator erection Q1-Q3 2017

Demonstrator start up Q4 2017

Beginning of the production unit erection Q4 2018

Production start up Q3 2019

Energy Island

Principle : Asset transfer (boilers, land, equipment,…) to supply steam to the Green Valley cluster

Key figures: 900 GWh/yr – 10 to 12M€ CAPEX

Energy Island

Energy Island

Biogas Project

Biogas production at Golbey

Strong engagement of the Ministry of Ecology, Sustainable Development and Energy

Strong benefit from industrial activity of NS Golbey

Simple process

Reduction of carbon footprint.

Production in Q4-2017, possibility to double production in a 2nd phase.

Experience from similar project at Norske Skog Saugbrugs

Project advantages

Lower waste water treatment cost: reduction of electricity and chemicals consumptions.

Norske Skog Golbey financial results improvement with the sales of biomethane

Attractive offtake contracts

Reduction of Green House Gases - fossil CO2

(3 100 t/an)

Improvement of the efficiency of the Waste Water Treatment Plant (WWTP).

Project in line with our Corporate Social Responsibility approach and circular economy.

Project timing

Injection

Q4 2017

Sales of BioGNV

2018

Production

Q4 2017

Erection

Q3 2017Project start up

Q3 2016

Sodding ceremony…

Thank you for your attention!