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Norske Skog ASA (OB:NSKOG) reported a pre-tax profit of NOK 120 million for the third quarter of 2025, despite ongoing challenges in its strategic transformation from publication paper to packaging paper. The company’s stock fell 2.07% following the October 24 presentation, reflecting investor concerns about declining EBITDA and negative margins in the packaging segment.
Quarterly Performance Highlights
Norske Skog delivered a pre-tax profit of NOK 120 million in Q3 2025, contributing to a year-to-date profit of NOK 610 million. However, EBITDA decreased to NOK 38 million, down from previous quarters. The company maintained a solid equity ratio of 43%, well above its minimum covenant requirement of 25%, while its interest coverage ratio stood at 4.4x, exceeding the minimum covenant of 2.0x.
As shown in the following chart of key financial figures for Q3 2025:
The company’s financial position remains stable with approximately NOK 1 billion in cash, though net debt remains significant at NOK 4.24 billion. Capital expenditures for the quarter were NOK 216 million, primarily directed toward the ongoing transformation strategy.
As illustrated in this financial position overview:
Strategic Transformation
Norske Skog continues its strategic shift from publication paper to packaging paper, with a target of reaching 760kt of recycled containerboard (RCCM) capacity. The company formally took over the containerboard machine PM1 at Golbey during the quarter, producing 28kt and delivering 24kt of packaging paper. Management expects continuous ramp-up toward full utilization during the first half of 2027.
The company’s transformation journey and industrial footprint are visualized here:
"We are making steady progress in our strategic transformation despite challenging market conditions," noted management during the presentation. "The formal takeover of Golbey PM1 marks a significant milestone in our journey toward becoming a major player in the packaging paper market."
Segment Performance
Norske Skog’s segment performance reveals a stark contrast between its traditional publication paper business and the emerging packaging paper segment. The publication paper division delivered 267kt with a positive EBITDA margin of 7%, while the packaging paper segment reported a negative EBITDA margin of -26%, reflecting the temporary profitability impact from the Golbey PM1 ramp-up.
The segment financial breakdown shows the detailed performance metrics:
The publication paper segment continues to generate positive results despite industry headwinds, benefiting from lower prices for pulpwood and recovered paper. Meanwhile, the packaging segment’s negative margin reflects the expected challenges during the initial ramp-up phase of new production capacity.
Market Dynamics
The publication paper market in Western Europe continues to face structural decline, with utilization rates at 84% for newsprint in 2025. Despite this challenging environment, Norske Skog maintains a competitive cost position in the market.
The following chart illustrates the publication paper market balance:
In contrast, the recycled containerboard (RCCM) market shows more stability with an 86% utilization rate in 2025, offering better long-term prospects for Norske Skog’s strategic pivot.
The packaging paper market dynamics are shown here:
Raw material costs have been a mixed factor for the company’s performance. Lower prices for pulpwood and recovered paper have partially offset price decreases in finished products, helping to maintain margins in the publication paper segment.
Outlook & Forward Guidance
Norske Skog acknowledged the "uncertain and volatile operating environment with continued pressure on profitability" in its outlook. The company is focusing on reducing production costs and working capital to maintain its competitive position while emphasizing the Golbey PM1 ramp-up.
Management expects to invest an additional EUR 15 million in gross capex at Golbey and anticipates receiving EUR 50 million in energy certificates and grants related to the containerboard project during 2025-27. A decision on the potential restart of Saugbrugs PM6 is expected by the end of the year.
The company’s outlook is summarized in this slide:
"We are monitoring our capital and liquidity position closely," management stated, "with ongoing initiatives to secure financial performance and competitive position going forward."
Despite the current challenges, Norske Skog remains committed to its transformation strategy, betting on improved market balance in the packaging paper segment by 2027-2029 while maintaining its leadership position in publication paper for as long as it remains profitable.
Full presentation:
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