Borregaard Asa

Good morning and welcome to Borgard's first quarter 2026 presentation. My name is Tom-Erik Foss-Jakobsen. I'm the CEO of the company and I'll be joined today by our CFO, Per-Bjørn Lyngstad. Together we will take you through this agenda. I'll start with the key highlights for the quarter and then give an update on the market situation across our business segments. I'll then summarize the outlook before handing over to Per Bjarne who will walk you through the financial performance in more detail. Before we begin, just a quick reminder for those of you watching the webcast live that you're welcome to submit your questions at any time during the presentation and we will address them at the end of the presentation. Let's begin with the highlights for the first quarter. EBITDA came in at 428 million Norwegian kroner compared with 511 million in the same quarter last year. In bio solutions, we saw lower sales volumes within specialties compared with a very strong quarter last year. In biomaterials, we delivered higher volumes but this was offset by lower sales prices and a weaker product mix. Fine chemicals delivered a strong result, supporting the overall performance in the quarter. On the cost side, the higher energy costs and general cost inflation were partly offset by lower wood costs, and we had an insignificant net currency effect in the quarter. Okay, then let's turn to biosolutions. Within specialties, lower sales volume was partly compensated by higher sales prices. Deliveries to agriculture and batteries were lower, compared again with a very strong Q1 last year. At this stage, we have no indication of a structural change in demand. But we see this rather as a temporary delay in the value chain, driven by geopolitical factors, broader uncertainty, and customer destocking in this period. The average price in sales currency was marginally higher, with the price in Norwegian kroner being impacted by weaker US dollar and euro. Overall, sales volume was 4% lower than Q1 last year. Moving on to biomaterials. In the quarter, sales volume was 10% higher compared with Q1 last year. This was driven by higher deliveries of speciality cellulose, partly due to higher sales through the construction segment, but also increased sales over highly specialized products through regulated markets and bioplastics. At the same time, the average price in sales currency was 4% below Q1 last year. reflecting lower sales prices, where we also did some selective price adjustments, and also a weaker overall product mix. As for bio solutions, the average gross sales price in Norwegian kroner was also affected by a weaker US dollar and euro. Now to fine chemicals. For fine chemical intermediates, we delivered a strong quarter supported by a favorable product mix, and higher deliveries. For bioethanol, we saw increased sales volume. Overall, this segment delivered significantly higher operating revenues, up 23%, compared with the same quarter last year. Then I'll conclude my part with our outlook. In biosolutions, Sales volume for 2026 is forecast to be approximately 340,000 tons. For Q2, we expect sales volume around 90,000 tons. We expect a less favorable product mix in Q2 compared with the second quarter last year, primarily driven by the current temporary delay in the value chain mentioned. In biomaterials, Sales volume for 2026 is forecast to be in the range 155 to 160,000 tons, and the sales volume of highly specialized grades is expected to be slightly higher than in 2035. The average price in sales currency here is expected to be 3 to 4% lower in the first half of 2026 compared with the second half of 2025, partly due to mix. For Q2, sales volume is expected to be in the range 40 to 42,000 tons. And as previously communicated, the preliminary decision in the US dumping allegations is expected end of May. In fine chemicals, the bioethanol sales prices are expected to be largely in line with 2025, and the sales volume for the fine chemical intermediates is expected to increase versus 2025. For fine chemical intermediates, the delivery patterns and product mix may vary from quarter to quarter. Then on the cost side, the cost development is expected as this. The wood costs in first half of 2026 are expected to be reduced by around 15% compared with the first half of 2025. At the same time, we see that the Middle East conflict is expected to impact our energy, logistics and chemical costs negatively. And the net cost impact from raw materials, energy and logistics is estimated to increase by 40 to 60 million Norwegian kroner versus the second quarter last year, in addition then to the general cost increases. The uncertainty related to wars, conflicts and tariffs is impacting both our markets, our cost base and also our currencies. Consequently, we are now implementing targeted measures to address the cost development. While the current supply disruptions and cost pressure on oil-based products are affecting certain parts of our markets and customers, We also believe that this may support a stronger case for buy-based alternatives Borgard is offering, and then represent a longer-term opportunity for products like ours. Finally, Borgard's highly diversified portfolio and broad customer base has a proven track record of providing resilience in times like this, in a volatile environment. and through periods of uncertainty. We also think that this will prove its strength in a period like we're seeing now. And with that, I'll hand the word over to our CFO, Per-Bjørn Lyngstad, who will take you through the financial performance in more detail. Thank you.

Thank you, Tom-Erik, and good morning, everyone. In the first quarter, Borregaard's operating revenues were 2% lower than in the same quarter last year. EBITDA, as Tom Erik said, was 428 million, compared with 511 million last year. The result in fine chemicals increased, while biosolutions and biomaterials had lower results. The lower result was mainly due to lower sales volume of specialties in biosolutions and higher energy and other operating costs, except for the wood cost. Net currency effects were insignificant in the quarter. And the EBITDA margin ended at 21.3% compared with 25.1% in the same quarter in 2025. Earnings per share was not 1.82 compared with 2.52 last year. The lower sales volume of specialties was also the main reason for a 9% decrease in operating revenues in biosolutions. EBITDA in this area was 260 million compared with 349 million last year. The lower sales volume was partly compensated by higher sales prices for specialities. The result was also negatively impacted by higher energy costs. In addition, the net currency effects were in this area negative in the quarter. Due to the lower result, the Q1 EBITDA margin was 24.4% compared with 29.6% in the very strong first quarter last year. Biomaterials operating revenues in the first quarter were 6% higher than in the same quarter last year, mainly as a result of higher deliveries of speciality cellulose. EBITDA was 102 million NOC compared with 113 million in the same quarter last year. Again, higher deliveries of specialty cellulose, they were offset by lower sales prices and a weaker product mix. Lower wood costs were more than offset by an increase in other costs, mainly related to energy. Other costs have also increased due to higher prices for some chemicals, particularly sulfur. The cost for defending the anti-dumping case in the U.S. in addition to the general cost inflation. Net currency effects were positive in biomaterials this quarter, and the EBITDA margin ended at 14% compared with 16.4% last year. Higher deliveries of both fine chemical intermediates and bioethanol were the main reasons for a 23% increase in operating revenues for fine chemicals in the first quarter. EBITDA reached 66 million NOK, 17 million above the first quarter last year. Improved result was due to higher deliveries and a favorable product mix within fine chemical intermediates and increased sales volume of advanced bioethanol. In addition, net currency effects were positive for fine chemicals in the quarter. The EBITDA margin ended at 30%, close to 3%-ish points above the same quarter last year. As I said earlier, the net currency impact on EBITDA in the quarter was insignificant compared with the same quarter last year. A 10% stronger Norwegian kroner in the first quarter this year, using Borregaard's currency basket. was offset by a significant change in hedging effects. In the first quarter, we had a 16 million NOX gain on hedging, compared with a loss of 95 million last year. Using currency rates as of yesterday, the net currency impact on EBITDA for the full year of 2036 is now estimated to be about zero. The corresponding impact for the second quarter is estimated to be positive by about 10 million NOK compared with the second quarter last year. Cash flow from operating activities was 77 million NOK in the first quarter. The low cash flow was due to a reduced cash effect from EBITDA. an increase in networking capital and high tax payments in the first quarter. Networking capital increased mainly due to high deliveries in most areas towards the end of the quarter, resulting in an increase in accounts receivable. Investments were 161 million NOK in the quarter. The largest expenditure were related to the upgrade of the electricity transmission transformation capacity and the de-bottlenecking project at the Sarsborg site, in addition to a capital increase in Algenor in the form of a convertible loan. Net interest bearing debt increased by 35 million NOK in the quarter. At the end of the first quarter, Beauregard is still well capitalized with an equity ratio of 62% and a leverage ratio, which is net interest bearing debt over EBITDA, of 1.18. And that concludes today's presentation, Tom Erik, and I will now be ready to answer any questions, both from the audience present here in Oslo and from those who follow the webcast. Our Director of Investor Relations, Paul Espen Ramberg, will moderate webcast questions.

We have received some questions. The first one comes from Magnus Rasmussen at SEB regarding mix in biosolutions. How confident are you that the weakness in agri and batteries is temporary?