Norske Skog (Buy, TP: NOK32.00) - Unfounded concerns

Since the Q3 report that showed that Norske Skog is in good shape in difficult markets, the share price is down c40% on apparent concerns that Norske Skog will become financially distressed. However, after scrutinising the balance sheet and the debt payment structure, we believe the situation is under control. With our earnings forecasts largely intact, we have upgraded to BUY (HOLD) and reiterate our NOK32 target price following the recent share price weakness, in our view based on unfounded co...

September: Pulp shipments -10% y-o-y

Stora acquires a Finnish sawmill company

Back on the tightrope

Norske Skog (Hold, TP: NOK32.00) - Decent earnings in tough markets

Due to better prices for, and in turn profits in, publication paper, Q3 EBITDA was just above our forecast, and we were encouraged by Norske Skog guiding for slightly better paper shipments in Q4. Still, reflecting recent weak industry newsflow and no sign of the oversupply in Europe improving and thus nor prices of paper or containerboard, we have cut our 2025–2026e EBITDA by c10%. Given this and what we view as a relatively stretched balance sheet, we have cut our target price to NOK32 (38), b...

Q3 EBITDA in-line

Wood is up and Pulp is down

Too much gearing for comfort

Norske Skog will report its next quarterly results on 18 October. Capacity cuts, but price hikes muted. Too much gearing for comfort – '25e could be problematic.

Norske Skog (Hold, TP: NOK38.00) - Costly delay prompts downgrade

In addition to adjusting our model for delays and capex overruns for the Golbey project, we have taken a more cautious view on the earnings outlook for the publication paper business. This has led to a substantial cut in our 2024–2025e earnings, and we do not foresee attractive earnings until 2026e. While this is negative and leads to concerns about the relatively high debt, we continue to like the long-term transformational story and believe Norske Skog has good control of its balance sheet. We...

August: Pulp shipments -10% y-o-y

July: Pulp shipments -4.0% y-o-y

June: Pulp shipments -4.5% y-o-y

Liquid packaging board just got a bit more risky

All in

Q2 above, Q3 likely weaker. Paper — better demand, more supply cuts, higher prices. Pulp is better than paper, and covenant breach less likely.

Norske Skog (Buy, TP: NOK60.00) - In good shape

We have made small changes to our 2024–2027e EBITDA after the Q2 results, which showed decent profitability in challenging market conditions. We continue to believe Norske Skog is strong in its niches, offering attractive low-cost mills and a healthy balance sheet. Short-term, the volume leverage from the ramp-up of the packaging business in France remains compelling, in our opinion, as does the business rationale for a possible new pulp line investment longer-term. We reiterate our BUY and NOK6...

Q2 above, Q3 likely weaker

Norske Skog (Buy, TP: NOK60.00) - Transformational story intact

Due to a less-positive view on prices and a more cautious outlook on the ramp-up of Norske Skog’s conversion investments in packaging, we have again lowered our 2024–2025 earnings forecasts. Still, we believe the long-term transformational case is intact. On a positive note, management has revealed its plans for a potential new pulp investment at its Saugsburg mill, which we believe is likely to be highly value-accretive. We reiterate our BUY and NOK60 target price.

June: Pulp shipments flat y-o-y

Costs push prices higher

A long list of price increases as costs push prices higher. Q2e EBIT likely down q-o-q: higher maintenance costs. Smart to buy when macro is low.

Q2 preview

Norske will report its next quarterly results on 12 July. We reiterate BUY with a TP of NOK 46 (40). Q2'24e "clean" EBITDA of NOK 70m.