Norske Skog : Q124

Q1 2024 presentation

19 April 2024

We create green value

Norske Skog

Fibre processing industry

Strategic transition

Publication paper

Packaging paper

Fibre projects

Five high quality industrial sites

Eleven paper machines with supporting infrastructure for energy, fibre, and water

Publication paper

Capacity: 1 590kt		Skogn
Packaging paper	Oslo, HQ	Norway
Saugbrugs
Capacity: 760kt (2025-26)	Golbey	Norway
France	Bruck

Net debt NOK 3.2bn

Austria

2020-22	2023-24	2025-26
Invest	Ramp-up	Harvest
2

Remaining net expansion capex NOK 0.4bn

Cash NOK 1.9bn and liquidity NOK 2.3bn

2023 CDP Climate Change Score "A-"

Boyer

Australia

Quarter highlights

First quarter 2024

Earnings negatively impacted by deconsolidation of Tasman and lower CO2 prices

Quarterly EBITDA of NOK 76m impacted negatively by NOK 46m from Tasman deconsolidation Negative NOK 32m revaluation of surplus balance of CO2 allowances due to price decline

Positive development in containerboard and publication paper markets, but closures still required

Price increases for containerboard implemented in March, further increases are necessary

Stabilising demand for publication paper and market for longer contracts returning

Continued growth in containerboard, Golbey PM1 on track for start-up in H2 2024

Bruck PM3 delivering 38kt of containerboard in the quarter, expect around 85% utilisation of design capacity by H2 2024 Start-up of Golbey PM1 will increase Norske Skog's total production capacity with more than 30%

Maintaining a strong cash position as debt repayments increase

Equity ratio of 41% and interest coverage ratio of 11.9x

Repurchased EUR 34.4m of outstanding bonds after the quarter

3

Key figures

First quarter 2024

Deliveries volume

Thousand tonnes

Total operating income

NOKm

EBITDA

NOKm (and margin)

Pre-tax profit

NOKm

400
350
		26	29	38
300			64	71	74
	52	70

4 000

3 500

3 000

3 320	3 404

3 763

3 036

2 688

800		760

1. 675

800

600

400

586

250			52	27	27
	60	39
200
150			214	222	236
100			208
189

2 500

2 000

1 500

1 000

500
	380
400
327
300
200

200
112
	41
0
-200		-148

50

0

500

0

100		76
0

-400

-600

-382

Q1'23	Q2'23	Q3'23	Q4'23	Q1'24
		News SC	LWC	RCCM

Q1'23	Q2'23	Q3'23	Q4'23	Q1'24
Operating revenue	Other operating income

Q1'23	Q2'23	Q3'23	Q4'23	Q1'24
20%	11%		11%	20%	3%
			EBITDA

Q1'23 Q2'23 Q3'23 Q4'23 Q1'24

Profit/loss pre-tax

4

Financial position

First quarter 2024

Equity ratio

Book equity to total assets

group covenant of min. 25%

100%

90%

Interest coverage ratio

EBITDA to net cash interest cost

group covenant of min. 2.0x

40x

35.8x

Cash

NOKm

group covenant of min. NOK 100m unrestricted

3 500

Net debt

NOKm (and leverage ratio)

no group maintenance covenant

3 500	3 246

80%

70%

60%

35x

30x

25x

29.9x

26.1x

3 000

2 500

2 000

2 894

2 673

2 463

2 036

1 915

3 000
2 662	2 590
2 500
2 000
1 746

50%			42%	42%	42%
42%	41%
40%

20x		18.4x

1 500

1 500	1 305

30%

20%

15x

10x

11.9x

1 000

1 000

10%
0%
Q1'23	Q2'23	Q3'23	Q4'23	Q1'24

Equity ratio

5x

0x

Q1'23 Q2'23 Q3'23 Q4'23 Q1'24

Interest coverage ratio

500

0

Q1'23	Q2'23	Q3'23	Q4'23	Q1'24
Unrestricted cash	Restricted cash

500

0

Q1'23	Q2'23	Q3'23	Q4'23	Q1'24
0.4x	0.7x	1.2x	1.5x	2.5x
			Net debt

5	Note: Figures according to definitions in loan agreements

Segment financials

Results driven by CO2 price and Tasman deconsolidation

NOK million	Q1'23	Q2'23	Q3'23	Q4'23	Q1'24
Publication Paper Europe
Deliveries, kt	245	267	258	270	262
Total operating inc.	2 864	2 843	2 405	3 028	2 058
EBITDA	763	429	335	723	166
EBITDA margin	27%	15%	14%	24%	8%
Publication Paper Australasia
Deliveries, kt	56	63	60	63	59
Total operating inc.	434	489	476	568	438
EBITDA	-23	-5	27	80	-74
EBITDA margin	-5%	-1%	6%	14%	-17%
Packaging Paper
Deliveries, kt	0	10	26	29	38
Total operating inc.	24	75	128	135	177
EBITDA	-38	-40	-31	-38	-7
EBITDA margin	-158%	-54%	-24%	-28%	-4%
Other
Total operating inc.	61	89	133	152	158
EBITDA	-27	-2	-5	-6	-9

Q1 2024

Publication Paper Europe

EBITDA margin of 8% negatively impacted by NOK 32m from decline in CO2 prices

Lower newsprint deliveries due to unplanned stops

Average prices 3% down from previous quarter

Following the quarter, Norwegian CO2 compensation for 2023 received and around 100k allowances sold

Publication Paper Australasia

EBITDA negatively impacted by deconsolidation of Norske Skog Tasman with NOK 46m

Underlying EBITDA negative due to larger share of lower priced export deliveries

Packaging Paper

Continued growth in containerboard deliveries, expect positive EBITDA from Bruck PM3 in Q2 2024

Average price in the quarter equal to previous quarter as price increases implemented throughout March offset price reductions in January and February, higher prices reflected from beginning of Q2 2024

6

Containerboard ramp-up

Continued increase in delivery volumes

Golbey PM1

Containerboard production start-up in H2 2024

Final piping and electrical work being completed and expect production commissioning start in Q3 2024

Remaining gross capex of NOK 1.0bn to be paid until Q3 2025, and NOK 0.6bn of energy certificates and grants to be received until Q1 2027. Thus, remaining net capex of NOK 0.4bn

Bruck PM3

Continued growth in production and deliveries, expect around 85% utilisation end of 2024 in line with plan

Excellent product quality and customer feedback

Continue to improve production efficiency as utilisation and process optimisation increases

7

Update on Saugbrugs

Ongoing process to determine future opportunities for Saugbrugs PM6

Insurance coverage Q1 2024

Business interruption insurance: No recognition in the quarter, but received cash payment of NOK 215m

Property damage insurance: Recognised NOK 52m in other operating income and NOK 2m in other operating expenses. Cash payment of NOK 88m received

Remaining insurance coverage

Property damage insurance: Expect to recognise similar amounts over next three quarters as in Q1 2024. Additional NOK 295m expected to be recognised in other operating income following identification of potential expansion project at Saugbrugs

NOK 615m to be received and recognised in the event of project investments and as investment costs accrue

Delivery of SC magazine paper from PM4 and PM5 developing positively

8

Raw materials

Spruce pulpwood prices at elevated levels and EUA price significantly down

Energy prices Germany		Recycled paper prices Germany		Spruce pulpwood prices Norway		CO2 (EUA) price
EUR per MWh		EUR per tonne		NOK per solid cubic metre		EUR per allowance

100					300
90
80					250
70					200
60
50					150
40
30					100
20					50
10
0					0
2019	2020	2021	2022	2023	2024
	Electricity	Natural gas

2019

2020

2021

2022

2023

2024

RCP 1.11		OCC 1.04

600					100
					90
500					80
400					70
					60
300					50
					40
200					30
100					20
					10
0					0
2019	2020	2021	2022	2023	2024

Spruce pulpwood

2019	2020	2021	2022	2023	2024
			EUA

9	Source: Nordpool, Trading Economics, RISI, Miljødirektoratet

Publication paper market

Publication paper prices remain at low levels as demand stabilises

Publication paper prices Germany		Monthly publication paper demand and capacity Western Europe
EUR per tonne		Thousand tonnes

1 400
1 200
1 000
800
600
400
200
0
2019	2020	2021	2022	2023	2024

LWC offset 60g		SC roto. 56g		Newsprint 45g

1 800
1 600
1 400
1 200
1 000
800
600
400
200
0
2019	2020	2021	2022	2023	2024
		Demand	Capacity

10	Source: RISI, PPPC