Norske Skog bets big on recycled packaging as Europe's demand soars

Norske Skog is shifting its focus, moving away from traditional publishing paper to concentrate on recycled packaging board. The change comes as demand for sustainable materials surges across Europe. Success hinges on upgrades at key plants and favorable market conditions.

The company's transition revolves around two major projects. At the Skogn mill in Norway, the NOR-book paper initiative must integrate smoothly to meet ongoing customer needs. Meanwhile, the Golbey plant in France has installed new packaging machines, which need to run efficiently for the plan to succeed.

Demand for recycled packaging board in Europe has risen sharply over the past five years. Annual growth stands at 4–6%, driven by EU circular economy rules and recycling rates exceeding 85%. Germany leads consumption with around 6 million tonnes yearly, followed by the UK (4 million), France (3.5 million), and the Netherlands (2 million).

Profitability also depends on external factors. Government incentives for sustainable packaging and lower emissions play a crucial role in maintaining competitiveness. However, the restructuring remains susceptible to Europe's volatile energy markets and stricter EU CO₂ regulations.

Investors adopt a wait-and-see stance as the company implements its strategy. Shares currently trade at 21.00 NOK, with a relative strength index (RSI) of 22.4.

The company's future relies on bringing new packaging capacity to market and ensuring retrofitted plants operate reliably. If successful, the move could align Norske Skog with Europe's push for greener materials. But challenges like energy costs and regulatory changes will shape the outcome.