Borregaard ASA

Operating revenues increased 3% year over year in the second quarter, driven by higher sales volume in all areas. EBITDA was NOK 515 million versus NOK 522 million in the same quarter last year; the EBITDA margin was 24.4%, about 1 percentage point lower year over year and 3 percentage points higher sequentially. EPS was -NOK 1.27, reflecting a NOK 337 million impairment on Alginor and a NOK 30 million accrual for Sarpsborg ground stabilization; adjusted EPS was NOK 2.35, and year-to-date adjusted EPS was NOK 4.17. Cash flow from operating activities was NOK 695 million, investments were NOK 194 million, net interest-bearing debt increased by NOK 16 million, and quarter-end leverage was 1.2x with an equity ratio of 59%. For guidance, BioSolutions 2026 volume is now expected to be about 335,000 tons, BioMaterials is expected to exceed 160,000 tons, Q3 BioSolutions volume is expected around 85,000 tons, and Q3 BioMaterials volume around 40,000 tons. Wood costs in the second half of 2026 are expected to be 3%-4% lower than in the first half, and the company expects annual cost savings of NOK 150 million from its improvement program, with full annual effect from 2028.

The CEO emphasized resilience in a diversified business model, noting solid operational performance despite higher energy, logistics, and chemical costs and some unfavorable product mix in parts of the portfolio. He said BioSolutions saw improved specialty and agricultural sales versus Q1, but that timing and mix remain variable rather than indicating a structural change in demand. He also highlighted targeted price actions and selective surcharges, the new NOK 150 million cost-improvement program, and a commitment to execution and cost discipline.

The CFO said operating revenues rose 3% and EBITDA held at NOK 515 million, with BioMaterials and Fine Chemicals improving while BioSolutions declined. He quantified a negative net cost impact of about NOK 40 million versus last year, slightly positive net currency effects of about NOK 5 million, and noted hedging gains of NOK 74 million versus a NOK 34 million loss last year. He also pointed to the NOK 337 million Alginor impairment, NOK 30 million Sarpsborg accrual, NOK 695 million in operating cash flow, NOK 194 million of capex, and a strong balance sheet with 59% equity ratio and 1.2x leverage.

Analysts pressed on whether lower urea prices were changing BioSolutions agriculture demand, and management said specialty and agri sales improved versus Q1, with plant nutrition and animal feed doing well, while crop protection still felt effects from the Middle East-related situation. Questions also focused on the improvement program, and management said it includes a hiring freeze, reduced replacement hiring, sharper prioritization, and lower activity levels. On pricing and competition, management said selective price adjustments and surcharges were working, especially in BioMaterials against Chinese ethers, and that the debottlenecking project has not yet contributed to EBITDA; its effect is expected later.