Borregaard (BRG) CMD 2024 summary

Strategic direction and specialization

• Continued focus on specialization in global niche markets, prioritizing high-value applications and leveraging unique raw materials, proprietary technology, and customer proximity to create high barriers to entry and reduce market risk.

• Organic growth is prioritized, with 16% of 2023 revenues from innovations and a strong, market-driven innovation portfolio.

• Sustainability is fully integrated, with all innovation and investments aimed at reducing CO2 emissions and improving environmental performance, targeting a 42% reduction by 2030 and net zero by 2050.

• Expansion in Asia is a key priority, with increased local presence and R&D capabilities to capture growth in agriculture, electrification, and industrial applications.

• Corporate culture emphasizes market orientation, innovation, continuous improvement, and a long-term perspective.

Innovation, product development, and market opportunities

• Innovation rate remains above 15%, with hundreds of small projects and NOK 211 million invested in R&D in 2023, supporting growth and risk mitigation.

• New green technology for lignin-based biopolymers is being commercialized, including a NOK 100 million demonstration plant and launch of LignoBrite for dishwasher tablets, with first sales expected in 2025.

• Regulatory changes, such as the EU ban on formaldehyde in animal feed, create new opportunities for bio-based products, with reauthorization for lignin use and new sustainable binders for aquaculture launching in 2024-2025.

• Ice Bear technology enables entry into high-purity cellulose markets, capturing 15,000–20,000 tons of high-value grades after competitor closures, with focus on food, pharma, and personal care.

• Investments in bio-based start-ups (Alginor, Kaffe Bueno, Lignovations, Oceanium) align with expertise and sustainability goals, aiming for synergies and revenue growth within five years.

Financial performance, targets, and investments

• Operating revenues grew at a 9% CAGR from 2019-2023, with EBITDA margin and ROCE consistently above 15% and strong EPS growth.

• Dividend policy targets 30–50% of net profit, with annual dividends nearly quadrupling since 2012 and a 13% annual growth rate.

• Major expansion investments include a 5–10% debottlenecking capacity increase at Sarpsborg, new green technology platforms, and further specialization in BioSolutions and BioMaterials.

• Environmental investments are prioritized, with CO2 emissions reduced by 8% in 2023 and further reductions planned through electrification and process improvements.

• Capital allocation remains disciplined, with 50% of free cash flow to shareholders, 30% to expansion, and 8% to bio-based startups, all within financial targets and leverage ratio at 1.23 and equity ratio at 54% (Q2-24).