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Norway's Norske Skog is making a loss on lower revenue from its New Zealand newsprint business after closing a paper machine at its Tasman Mill, and the large industrial user doesn't like the cost of electricity here.
Norkse Skog Tasman reported revenue of $140.65 million in the year ended Dec. 31, 2013, down from $238.1 million in 2012, according to accounts filed to the Companies Office. The company made an operating loss before financing costs of $66.65 million in 2013, reduced from a loss of $349.26 million in 2012 when it booked a $221 million impairment charge on fixed assets.
Gross profit, which just takes into account cost of sales, was $61.62 million in 2013, down from $100 million in 2012. The bottom line loss of $83 million was reduced from a loss of $249.87 million in 2012.
The company closed a 50-year-old paper machine at its Tasman Mill at Kawerau on Jan. 9, 2013, removing160,000 tonnes of newsprint capacity from the Asian export market. The one remaining machine produces newsprint predominantly for the New Zealand and Australian markets.
The parent's annual report in 2013 reveals the world's second-largest newsprint maker had issues with the cost of electricity in New Zealand in that year. In March 2013 it decided to reduce production "due to the energy price development in New Zealand", according to the annual report. The company also noted high electricity price in New Zealand in its first quarter accounts and is due to report second quarter accounts on July 17.
The Norske Skog Tasman accounts filed in New Zealand show most of a $17.75 million provision for restructuring was used in 2013 but $17.5 million of a $28.75 million provision for rehabilitation still had to be used. About 110 jobs went in Kawerau when the paper machine closed and the accounts show redundancy costs of $1.2 million in 2013.
Still, the news is not all bleak for the mill selling to the declining newsprint industry. The parent's annual report notes Tasman's work on making biofuel from sawdust with Z Energy as an example of creative ideas being pursued by the group.