Norske Skog reports 40 per cent fall in profit

By PAM GRAHAM

Norske Skog, the Finnish company that owns the former Fletcher Challenge Paper newsprint mill in Kawerau, has reported a 40 per cent fall in second-quarter profit in New Zealand and Australia.

Earnings before interest and tax fell to 103 million krona ($24.3 million) in the second quarter from 173 million krona ($41 million) a year ago, even though production rose to 207,000 tonnes from 204,000 tonnes.

The company runs Australian and New Zealand assets together and does not break out the New Zealand numbers.

The profit decline was largely due to a fall in the local price of newsprint because costs were being controlled and production was strong, said Rob Lord, the company's Sydney-based chief, who took over from former All Black David Kirk.

The high Australian and New Zealand dollars were eroding small increases in international benchmark prices of newsprint when prices were converted into local currencies, he said.

The company has a global cost-cutting plan and has yet to say whether that will produce job losses in New Zealand.

"Output is going up, sales are good and cost control is good, so really we're just waiting for the prices to improve," Lord said.