OSLO, Norway (AP) — Norske Skog, one of the world's largest newsprint makers, will idle machines in Europe and Asia and cut production after posting net losses Thursday for the fourth quarter and full year.
The Oslo-based group proposed slashing production by 504,000 tons annually, indefinitely shutting down one paper machine in Norway, and closing the Norske Skog Steti mill in the Czech Republic and Norske Skog Cheongwon unit in South Korea. The cuts represent about seven percent of current capacity.
The company may also trim its headquarters staff and sell assets not directly linked to paper production, such as its Oslo headquarters complex.
Norske Skog said demand for newsprint declined 9 percent in North America in the quarter, as more people and advertisers migrate to the Internet. Exports from Canada are also taking an increasing share of the European market.
The Oslo-based group said its net loss for the October through December quarter was 910 million kroner ($165 million), including special items and write downs. A year earlier, the group posted a net profit of 209 million kroner.
Adjusted for minority interests, the fourth quarter net loss was 880 million kroner ($160 million) compared to year-earlier profits of 245 million kroner, it said.
''Cost increases and overcapacity have reduced Norske Skog's profitability to a level which is not financially sustainable,'' said chief executive Christian Rynning-Toennesen. ''In order to improve profitability, we have to make fundamental cost improvements in the operation and administration of the company.''
The company's shares declined less than 1 percent to 30.40 kroner ($5.53) in early trading, but shares have declined 70 percent in the past year.
Norske Skog said its revenues for the fourth quarter were 6.96 billion kroner ($1.26 billion), compared with 7.70 billion kroner a year earlier.
The group reported an annual net loss, excluding minority interests, of 683 million kroner ($124 million), a sharp improvement on the 3.02 billion kroner net loss it posted for 2006. Revenues for 2007 were 27.1 billion kroner ($4.93 billion), compared with 28.8 billion kroner in 2006.
Norske Skog has repeatedly announced production cuts, layoffs and restructuring over the past two years as the paper industry adapts to falling demand and prices, coupled with higher costs.
The company has 19 mills and about 10,000 employees in 14 countries.
