Borregaard Asa

Good morning and welcome to this third quarter 2024 presentation for Beauregard. My name is Per Sørli and I'm the president and CEO of the company and I'll be joined this morning by our CFO Per Bjarne Lyngstad. At the end of the presentation we will conduct a Q&A session and if you are watching this live on web you are Welcome to put forward questions throughout the presentation and we'll come back at the end of the presentation and give you some comments. We'll take you through this agenda. I'll talk about the highlights on the market side in the third quarter. go through the different business segments. And we have also announced today that we will initiate a capacity increase at the biorefinery in Salzburg. And then I will conclude with the outlook. And then Pibbjarne will come back and take a closer look at the financial figures. The highlights for the third quarter we delivered, we are pleased with an EBITDA of 534 million compared to 482 in the same quarter last year. This was driven first and foremost by increased sales volume in bio solutions. We had higher deliveries as predicted in biomaterials, but this was more than offset by increased wood costs and other operating expenses. The fine chemicals delivered a strong result with significantly higher deliveries in bioethanol and a favorable product mix for pharmaceutical intermediates. Slightly positive net currency effects, so that did not really move the needle on the result and explain why we had an increase in the result. If you take a look at the different business segments, first the biosolutions markets. The sales volume increased by 7% from the same quarter last year. We have a very broad offering into agriculture and when we look across our sales, this volume increase was driven primarily by sales into agriculture. The average price in sales currency was in line with the same quarter last year. And biovanilin is still impacted by the high global supply of synthetic products. So that was not the main explanation why the results improved in this particular business area. Neither was the currency a big factor in moving the result upwards. Then if you go to biomaterials, the average price in sales currency came up 2% compared to the previous quarter. And this was in line with our guidance that we had implemented certain price increases where possible, according to our different contracts. You can also say that the average price in sales currency came up 2% compared to the same quarter last year. And this was a combination of price and particularly mix. Of course, we also saw significantly higher deliveries. The sales volume came from below 35,000 tonnes to about 41,000 tonnes in the quarter. If you look at the year to date now, you can see that we are supplying and delivering more than we produce this year in line with our guidance. Also in this business area, the currency did not really have a big impact on the result development. Then finally, the fine chemicals market or business segment. We had a very strong quarter in this business, probably the best ever quarter we have reported. This was a combination of two things. We had a very favorable product mix in fine chemical intermediates. And in bioethanol, we had significantly higher deliveries than we had in the same quarter last year. And I think that unusually high deliveries for a single quarter. Also, again, the currency did not play a big factor in the result development in this particular business area. Then we have announced an expansion investment to increase the capacity at the biorefinery in Salzburg. And this will be done through a series of de-bottlenecking investments, the total expansion investment of 490 million Norwegian kroner. And this is the first of two planned steps to increase the capacity towards 2027. And this was also mentioned at the CMD in September, that we were close to approving this kind of an investment. These two steps will deliver between five and ten percent capacity increase and the good thing about these projects is that they will deliver increased volume across the whole portfolio so there will be more lignin-based biopolymers. where this raw material, I would say, is quite unique. Also in specialty cellulose and finally in bioethanol. And the production output is expected to increase gradually from late 2026. There will be other benefits from these investments as well, both on the environmental side and on the cost side. There will be reduced costs through energy savings and reduced caustic soda consumption. And the CO2 effluents to water will come down as a result of these investments. So there are a number of benefits and as with the de-bottlenecking, it should be an economical way to increase the capacity. Then I will Round off with the outlook, which is focusing on the fourth quarter and hence quite short today. The sales volume in the fourth quarter is expected to be in the range of 70,000 to 75,000 tonnes for bio solutions and the continuous strong sales into agriculture, as we have seen throughout the first three quarters as well. We don't expect a big change in the biovanilin market. There is still a high supply of synthetic vanilin products, and we think that this will happen, continue, as long as the investigations conducted in the EU and the US around these dumping accusations are ongoing. In biomaterials, we will expect to deliver approximately 35,000 tonnes in the fourth quarter. In fine chemicals, the deliveries both of bioethanol and fine chemical intermediates will come down compared to the very high levels that we saw in the third quarter. And again, a few reminders, the energy consumption, spot energy prices and energy related raw material prices are expected to seasonally increase as we go into the winter period. The annual maintenance stop at the Salzburg site was conducted in October, so that will be visible in the accounts for the fourth quarter. And of course a general reminder that there is a lot of uncertainty in the world right now and we will have to follow that and make necessary adjustments as we go along. So that completes my presentation and I will hand over to Per Bjarne.

Thank you, Pierre, and good morning, everyone. In the third quarter, Beauregard's operating revenues were 14% above the third quarter of 2023, mainly due to higher sales volumes. EBITDA increased by 42 million NOC to 524 million. The result in biosolutions and fine chemicals improved, while biomaterials had a lower result. We saw higher sales volume in all business segments in the quarter. However, the effect of higher sales volume was partly offset by increased wood cost and an increase due to the general cost inflation. Net currency effects were slightly positive by 5 million NOK compared with the same quarter last year. The EBITDA margin was 27% in the quarter, close to last year's all-time high margin. Earnings per share increased to 2.51 Norwegian kroner compared with 2.38 last year. Operating revenues in biosolutions increased by 8% compared with the third quarter last year due to higher sales volume. EBITDA reached 271 million NOK, an improvement of 36 million. The higher sales volume, mainly to agriculture, was the main reason also for the result improvement. Operating expenses were at the same levels as in the corresponding quarter last year, if we take the higher sales volume into account. Net currency effects were slightly positive for BioSolutions in the quarter. The EBITDA margin increased by close to 2 percentage points to 26.3%. Significantly higher deliveries of specialty cellulose were the main reason for a 20% increase in operating revenues for biomaterials. EBITDA was 131 million NOC compared with 161 million in the same quarter last year. The higher deliveries and price increases for certain cellulose grades were more than offset by increased wood costs and other operating expenses. The net currency impact in biomaterials was insignificant. Compared with the second quarter this year, the EBITDA margin in biomaterials improved, but was about 9% below the all-time high margin in the third quarter last year. In fine chemicals, significantly higher deliveries of bioethanol resulted in a 24% increase in operating revenues compared to last year. EBITDA reached 122 million NOC, an all-time high result for this business segment. The main reason for the stronger result were the high deliveries of bioethanol and a favourable product mix for fine chemical intermediates. Net currency effects were also insignificant in this business segment. The EBITDA margin increased to 50%, about 6 percentage points above the same quarter last year. As I said, the net currency impact on EBITDA was positive by 5 million NOK compared with last year. The positive currency impact came from a close to 3% weaker Norwegian kronor using Borregaard's currency basket. The impact from a weaker Norwegian kronor was largely offset by increased hedging losses. Hedging losses were 86 million NOK in the quarter compared with 62 million in the same quarter last year. Using currency rates as of yesterday, the net currency impact for the full year of 2024 is estimated to be negative by about 20 million NOK compared with 2023. The corresponding impact for the fourth quarter is estimated to be positive by 10 million NOK compared with the fourth quarter of 2023. Beauregard had a cash flow from operating activities of 391 million NOK in the third quarter. The cash flow in the period was positively affected by the cash effect from a high EBITDA, which was partly offset by an increase in net working capital. Investments were 287 million NOK in the quarter. The main expenditure was the 150 million NOK investment in Alginor. Net interest bearing debt was reduced by 97 million NOK in the quarter. At the end of the third quarter, Beauregard was well capitalized with an equity ratio of 56% and a leverage ratio, which is net interest bearing debt over EBITDA, of 1.15%. And that concludes today's presentation. Per Sørli and I will now be ready to answer any questions from those present here in Oslo and those who follow the webcast. Our Director of Investor Relations, Knut Harald Bakke, will moderate webcast questions.

Thank you. We will start with a question from Martin Melby from ABG on COPEX. What is the total capex for de-bottlenecking for both steps?