• EBITDA (Q4 2024): NOK398 million, up from NOK327 million in Q4 2023.
• Full Year EBITDA (2024): NOK1,874 million, compared to NOK1,781 million in 2023.
• Return on Capital Employed (2024): 17.1%, down from 18.3% in 2023.
• Dividend Proposal (2024): NOK4.25 per share, a 13% increase from last year, representing 52% of net earnings.
• BioSolutions Sales Volume (Q4 2024): Increased by 7%.
• BioMaterials Sales Volume (Full Year 2024): 160,000 tons, 11% higher than 2023.
• Fine Chemicals Sales (Q4 2024): NOK138 million, lower than historical context.
• Operating Revenues (Q4 2024): 9% higher than Q4 2023.
• EBITDA Margin (Q4 2024): 22.8%, 2.4 percentage points above Q4 2023.
• Earnings Per Share (Q4 2024): NOK1.30, up from NOK1.20 in Q4 2023.
• Full Year Operating Revenues (2024): NOK7.6 billion, a 7% increase from 2023.
• BioSolutions EBITDA (Q4 2024): NOK251 million, NOK79 million above Q4 2023.
• BioMaterials EBITDA (Full Year 2024): NOK434 million, compared to NOK534 million in 2023.
• Fine Chemicals EBITDA (Full Year 2024): NOK336 million, slightly above 2023.
• Cash Flow from Operating Activities (Q4 2024): NOK314 million.
• Investments (Full Year 2024): NOK861 million.
• Net Interest-Bearing Debt (End of 2024): Increased by NOK449 million.
• Equity Ratio (End of 2024): 53%.
• Leverage Ratio (End of 2024): 1.20.

• Warning! GuruFocus has detected 1 Warning Sign with BOM:533519.

Release Date: January 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Borregaard ASA (FRA:BO4) achieved an all-time high EBITDA of NOK1,874 million for the full year, driven by increased specialization and strong results in BioSolutions.
• The company reported a 9% increase in operating revenues for the fourth quarter compared to the same period in 2023, mainly due to higher sales.
• BioSolutions segment saw a 7% increase in volume in the fourth quarter, with strong sales into agriculture, contributing to a robust performance.
• The Board proposed a 13% increase in dividends to NOK4.25 per share, reflecting a commitment to stable and progressive dividends.
• Borregaard ASA (FRA:BO4) is investing in environmental projects, such as the air preheater technology, which will reduce CO2 emissions by 7,000 tons and improve energy efficiency.

Negative Points

• Higher wood costs offset the positive results in BioMaterials, impacting overall profitability.
• Fine Chemicals segment experienced low deliveries in the fourth quarter, resulting in lower operating revenues compared to historical levels.
• The company's return on capital employed decreased to 17.1% from 18.3% in the previous year.
• Depreciation increased due to higher investments and leased assets, impacting earnings per share.
• The net currency impact was slightly negative for the full year, affecting overall financial performance.

Q & A Highlights

Q: Why was there no significant release in net working capital in Q4 2024, given it was the weakest movement since 2018? A: Per Lyngstad, Chief Financial Officer: The strong sales and production towards the end of the year increased inventories, which affected net working capital. Despite this, the average net working capital decreased for the year, indicating normal fluctuations within expected ranges.

Q: What caused the increase in depreciation, and is it a permanent change? A: Per Lyngstad, Chief Financial Officer: The increase is due to higher investments and increased depreciation on leased assets, including storage. While depreciation related to leasing may decrease over time, increased investments will continue to raise depreciation levels.

Q: How has Borregaard managed to keep wood costs stable despite rising commodity prices? A: Per Sorlie, President, Chief Executive Officer: Borregaard sources wood from a mix of geographies and types, including wood chips and pulpwood. Logistics costs, which account for about 25% of wood costs, also play a significant role in maintaining stable costs.

Q: Will the sales prices for Borregaard's bioethanol in 2025 be similar to 2022 levels, and how will this affect EBITDA? A: Per Sorlie, President, Chief Executive Officer: While prices may align with 2022 levels, other factors like volume growth in Fine Chemical intermediates and bioethanol will positively impact EBITDA, making direct comparisons to 2022 challenging.

Q: Why is Borregaard guiding for only 1% volume growth in BioSolutions for 2025 despite strong growth in 2024? A: Per Sorlie, President, Chief Executive Officer: The focus remains on improving the product mix and increasing sales of specialties, which drive profitability more than overall volume growth. The 2025 guidance reflects a normalized supply level.

Q: How will the new investment impact LNG consumption? A: Knut-Harald Bakke, Director of Investor Relations: The investment will further reduce Borregaard's dependency on LNG, which has already decreased significantly since the energy crisis in 2022-2023. Increased electricity contracts will also contribute to reduced LNG consumption.

Q: What triggered the NOK30 million environmental provision in Q4, and are all environmental liabilities covered? A: Per Lyngstad, Chief Financial Officer: The provision addresses legacy issues from a former mercury-based chlor-alkali plant. While not all liabilities are fully covered, Borregaard has made provisions based on current estimates and continues to monitor environmental issues.

Q: What are the main drivers behind the increasing wood prices, and will this trend reverse in 2025? A: Per Sorlie, President, Chief Executive Officer: Factors include reduced wood supply due to the Russian invasion of Ukraine and sustainability pressures. While Borregaard can manage these costs, the trend's reversal depends on global demand and supply dynamics.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.