After a poor start to the year, the quantity of timber being supplied for processing in Norway has increased substantially. The result is that half way through the year the total has reached just over 4 million m³ – only 1% less than for the same period last year, according to figures issued by the Norwegian Forest Owners’ Federation (NFOF). However, it should be borne in mind that the annual result last year was the lowest since 1978.

The slow start to the year was caused by a number of factors: a very wet autumn, difficulties with respect to price negotiations and a stoppage in timber transportation to factories at the beginning of the year. In addition, although the operating conditions in the winter were good, the harvest was affected by the industry’s demands for delivery quantities to be evened out over the year.

Over the past five years, there has been a clear trend towards more uniform deliveries of pulpwood but at the same time there are equally clear signs that the total number of trees felled has dropped.

A further factor that influenced company results in the first quarter was the introduction of a special Norwegian business cycle tax that was adopted by the Norwegian Assembly in November last year. Even though the tax was rescinded in mid-January, the effect was to cause a reduction in planned activities and the delay of a number of projects, all of which impacted on company results in the first quarter.

Imports of timber and pulpwood were also low at the beginning of this year, but are being compensated for by increased imports in more recent months. Imports of sawn timber at 90,000m3 in May were an increase of 40% compared with the same month last year but the total for 2001 still lies below the level for 2000. So far this year 200,000m³ of sawn timber has been imported compared with 235,000m³ at the same time last year, the bulk of it coming from Russia and Sweden.

However, the position is reversed with respect to pulpwood imports. Despite a decline in May compared with the same month last year annual imports are still higher. So far, 826,000m³ have been imported into Norway compared with 797,000m³ in 2000. Sweden and Estonia are the most important sources for pulpwood, but smaller volumes also come from Germany, Latvia, Denmark and Russia.

There have been major developments in two large Norwegian forest industry companies, in both of which the Norwegian Forest Owners’ Federation has major shareholdings. Finnforest Corporation, part of the Finnish Metsäliitto Group, has acquired a majority holding in the Norwegian company Moelven and has also obtained European Commission approval for the move.

&#8220Imports of sawn timber at 90,000m3 in May were an increase of 40% compared with the same month last year but the total for 2001 still lies below the level for 2000. So far this year 200,000m3 of sawn timber has been imported compared with 235,000m3 at the same time last year”

NFOF has announced that it will retain its stake in Moelven – some 35% – and that it is willing to continue further development of the company together with Finnforest.

The second development is that Norske Skog has increased its share capital by issuing 23 million new shares at NKr140 per share. Gross proceeds from the offer amount to NKr3.22bn, which will go towards financing the acquisition of the Walsum and Parenco paper mills in Germany and the Netherlands respectively, plus an additional one-sixth interest in Pan Asia Paper, thus increasing its share in the company’s business to 50%.

Jan Reinâs, president and CEO of Norske Skog, says that the additional equity combined with cash flow will place Norske Skog in a strong financial position following completion of the two acquisitions and enable the company to become better known among a broad group of international investors. As a result of this equity offer, the level of ownership by international investors has increased significantly.

A promotion campaign to help sawmills achieve greater sales of their products has just been launched in Norway. ‘Market trends show that there is considerable growth potential for wood products that are produced and presented in the right way,’ says Lars Wilhelm Groholt of NFOF. ‘There is already a great deal of creativity and the will to succeed in many small and medium-sized timber companies in this country and the idea behind the scheme is to help develop this further.’

Norske Skog has indicated that it is willing to provide NKr40m, or 25% of the total finance needed for the project. Moelven has signalled its support and other funds will come from financial sources and the forestry and timber industries.

The objective of the scheme is to provide a profitable, development-oriented and ambitious Norwegian forest industry as a basis for providing a secure future and improved profit-ability in the years to come.