Borregaard (BRG) Q2 2024 earnings summary

Executive summary

• Q2 2024 EBITDA was NOK 510 million, down from NOK 537 million year-over-year, with strong BioSolutions performance and improved product mix offset by weaker BioMaterials results, higher wood costs, and negative currency effects.

• Operating revenues for Q2 were NOK 1,949 million, nearly flat compared to NOK 1,963 million in Q2 2023, with a solid EBITDA margin of 26.2%, about two percentage points lower than last year.

• Earnings per share for Q2 were NOK 2.45, compared to NOK 2.84 in the same quarter last year, mainly due to higher depreciation and financial costs.

• Cash flow from operating activities was strong at NOK 546 million, up from NOK 411 million, aided by reduced net working capital.

• Net interest-bearing debt at quarter-end was NOK 2,170 million, stable quarter-over-quarter but up from NOK 1,791 million at year-end 2023.

Financial highlights

• BioSolutions operating revenues increased 3% year-over-year to NOK 1,117 million, with EBITDA at NOK 318 million, an all-time high for the segment.

• BioMaterials operating revenues fell 6% year-over-year to NOK 622 million, with EBITDA at NOK 90 million, down from NOK 143 million, impacted by lower prices and higher wood costs.

• Fine Chemicals saw a 2% drop in operating revenues to NOK 223 million, with EBITDA of NOK 102 million, slightly below last year's record, and stable bioethanol prices.

• Negative net currency effects totaled NOK 30 million, mainly due to increased hedging losses.

• Profit for the period was NOK 245 million, a 15% decrease year-over-year.

Outlook and guidance

• BioSolutions full-year sales volume forecast remains at approximately 330,000 tonnes, with Q3 expected at 80,000–85,000 tonnes; biovanillin market remains pressured by synthetic supply.

• BioMaterials 2024 sales volume expected to exceed production output, with Q3 volume projected at 42,000–44,000 tonnes and average sales price to rise 1%-2% in H2 versus H1.

• Fine Chemicals intermediates sales volume expected to increase over 2023, with stable market conditions for bioethanol.

• Wood costs are expected to rise 8% in H2 versus H1, but lower energy and raw material costs in Q3 will partly offset this.

• Continued uncertainty in the global economy and geopolitical risks, with no significant upturn anticipated.