Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Borregaard ASA (FRA:BO4, Financial) reported an increase in EBITDA to NOK524 million, up from NOK482 million in the same quarter last year, driven by increased sales volume in biosolutions.
- The fine chemicals segment delivered a strong performance with significantly higher deliveries in bioethanol and a favorable product mix for pharmaceutical intermediates.
- The company announced a capacity increase at the biorefinery in Sarpsborg, with an investment of NOK490 million, expected to deliver a 5% to 10% capacity increase by 2027.
- Operating revenues in biosolutions increased by 8% compared to the third quarter last year, mainly due to higher sales volume in agriculture.
- Borregaard ASA (FRA:BO4) maintained a strong financial position with an equity ratio of 56% and a leverage ratio of 1.15.
Negative Points
- Increased wood costs and general cost inflation offset the higher sales volume, impacting the overall financial performance.
- Biomaterials segment experienced a lower result despite higher deliveries and price increases, due to increased wood costs and operating expenses.
- The biovanillin market remains challenged by a high supply of synthetic vanillin products, affecting sales.
- The company anticipates seasonal increases in energy consumption and energy-related raw material prices as winter approaches.
- Net currency effects were slightly positive but largely offset by increased hedging losses, impacting the financial results.
Q & A Highlights
Q: What is the total CapEx for debottlenecking for both steps?
A: We have presented a number for the first step today. We are not far enough in the process of the second step to give a number for the whole project. However, it will be a lower number for the second step, but still substantial. - Per Lyngstad, Chief Financial Officer
Q: Why are you guiding lower volumes in lignin? What has disappointed?
A: The markets are still soft in some areas, particularly construction-related markets. We assess whether to move products into different areas or inventory with higher values. This balancing effect is what you see now. The agricultural and battery segments have been strong, but construction remains soft. - Per Sorlie, President, Chief Executive Officer
Q: What assumptions for wood cost development going forward would be fair to assume when negotiating prices for 2025?
A: Several factors drive wood prices, including geopolitical events and EU regulations on sustainable forest management. We expect wood to become more scarce, leading to higher costs. Negotiations for the first half of 2025 will occur towards the end of the year. - Per Sorlie, President, Chief Executive Officer
Q: Which families of products in your agriculture portfolio are doing well, and what are the selling points valued by clients?
A: We have a diverse portfolio with close to 100 products in agriculture. There is no particular pattern; we sell across the spectrum from granulation to biostimulants. Our offerings are well-timed with market recovery, which clients appreciate. - Per Sorlie, President, Chief Executive Officer
Q: Can you comment on the main drivers for the uptick in deliveries for fine chemicals and the visibility going forward?
A: Fine chemical intermediates and bioethanol have variable delivery patterns. The strong deliveries this quarter are not indicative of a permanent increase. The fine chemical intermediates market is stable, while bioethanol is driven by EU biofuel demand. Long-term, we aim to position bioethanol in pharmaceuticals. - Per Sorlie, President, Chief Executive Officer
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
