 The Norwegian forest company Norske Skog plans to cut down its production capacity. Company's financial result is unsatisfactory and measures must be taken for improving profitability.
Acceptable revenue is an absolute prerequisite for maintaining and developing Norske Skog as a strong, efficient and active company, says Mr Christian Rynning-Tønnesen, Norske Skog's group manager.
The group management has decided to temporarily cut down the production of newsprint in Europe. The reduction will amount to 200,000 tons in 2008. In addition, decisions have already been made to reduce production by circa 70,000 tons in the second half of 2007.
A 200,000 ton reduction represents circa 10 % of Norske Skogs's production capacity of newsprint in Europe. A considerable part of reductions must be made in the Follum and Skogn plants in Norway. Somewhat smaller cut-downs must also be made in Parenco in the Netherlands and in Golbey in France.
Mr Gudbrand Kvaal, manager of the Norwegian Forest Owners' Federation, comments that the situation is very unpleasant, but something has to be done in order to improve the balance between supply and demand in the newsprint market.
- However, the most important factor for us is that for the time being the situation does not seem to have any negative consequences for the demand for pulpwood. There is a boom in the sawn timber market and in consequence demand for pulpwood is also important. Swedish forest industry has recently increased its pulpwood prices. Investments in bio-energy will constitute an alternative market for parts of the timber supply. We still intend to increase our purchases from Norwegian forest owners in future years.
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