Nordic Fibreboard

Quarterly Report • Nov 22, 2022

Company Nordic Fibreboard AS

Type Company Release

Category Management interim statement or quaterly financial report

Disclosure time 22 Nov 2022 08:00:00 +0200

Attachments:

• NORDIC FIBREBOARD AS_Interim Report Q3 2022.pdf (http://oam.fi.ee/en/download?id=6920)

• NORDIC FIBREBOARD AS_Vahearuanne 2022 3. kvartal.pdf (http://oam.fi.ee/en/download?id=6921)

Currency

Title

Unaudited financial results of Nordic Fibreboard AS for the third quarter of 2022

MANAGEMENT REPORT

Consolidated net sales for Q3 2022 were EUR 2.79 million (Q3 2021: EUR 2.33 million). The main business area is the production and wholesale of fibreboard, which recorded sales in Q3 2022 of EUR 2.78 million, an increase of 23% compared to Q3 2021. The remaining business area is real estate management of the property owned in Suur-Jõe street in Pärnu, who recorded sales of EUR 9 thousand in Q3 2022 (Q3 2021: 65 thousand).

The reason for the increase in sales revenue in Q3 2022 for Nordic Fibreboard Ltd was the ongoing strong demand for building materials in the construction sector, as reflected in both volume growth and price increases. That being said, towards the end of Q3 2022 we started to see a reduction in customers orders, reflecting the softening of business confidence as a result of negative macro factors, such as increasing interest rates, energy crisis, and higher food prices. As a result of these sentiments, Nordic Fibreboard is announcing the layoff of 8 production workers and is therefore reducing production capacity to keep up with the decline in demand.

The consolidated EBITDA of Nordic Fibreboard for Q3 2022 was EUR 193 thousand, the EBITDA margin was 7% (Q3 2022: EBITDA was EUR 356 thousand and the EBITDA margin was 15%). Compared to the Q3 2021 the Group`s gross margin decreased from 32% to 19% in the Q3 2022. The main reason for this reduction in profitability was due to the sharp increase in raw material costs, ie woodchips and energy, experienced during Q3 2022, which more than offset our price increases.

Total financial income of EUR 49 thousand was recorded in Q3 2022, which consist of the profit from the revaluation of Trigon Property Development (TPD) shares in the amount of EUR 79 thousand and the interest expense of loan obligations in the amount of EUR 30 thousand. In Q3 2021, the financial cost was EUR 159 thousand,

which consisted of the loss of EUR 128 thousand from the revaluation of TPD shares and the interest expense of loan obligations in the amount of EUR 31 thousand.

Group`s consolidated net profit for Q3 2022 was EUR 117 thousand (Q3 2021: profit EUR 73 thousand).

DIVISIONAL REVIEW

Revenue by business segments

	EUR thousand ----------+---------+---------+---------		EUR thousand
			Q3 2022 Q3 2021 9M 2022 9M 2021
---------------------------------------------+---------+---------+--------- Fibreboards production and sales	2,782	2,270	9,015	7,539
---------------------------------------------+---------+---------+--------- Real Estate Management	9	65	28	218
---------------------------------------------+---------+---------+--------- TOTAL	2,791	2,334	9,043	7,757

Profit by business segments

	EUR thousand ----------+---------+---------+---------		EUR thousand
			Q3 2022 Q3 2021 9M 2022 9M 2021
---------------------------------------------+---------+---------+--------- EBITDA by business units:
---------------------------------------------+---------+---------+--------- Fibreboards production and sales	201	344	1,114	1,337
---------------------------------------------+---------+---------+--------- Real Estate Management	(6)	11	(18)	10
---------------------------------------------+---------+---------+--------- Group transactions	(2)	1	(25)	(5)
---------------------------------------------+---------+---------+--------- TOTAL EBITDA	193	356	1,071	1,341
---------------------------------------------+---------+---------+--------- Depreciation	(125)	(123)	(372)	(380)
---------------------------------------------+---------+---------+--------- TOTAL OPERATING PROFIT	68	232	699	962
---------------------------------------------+---------+---------+--------- Net financial income/ costs	49	(159)	149*	267**
---------------------------------------------+---------+---------+--------- NET PROFIT	117	73	848	1,229

* Includes financial income of EUR 143 thousand in the first 9 months of 2022, received from the revaluation of the shareholding owned by the group in the real estate development company Trigon Property Development AS, and the dividends received from these (TPD) shares in the amount of EUR 105 thousand. ** Includes financial financial income of EUR 354 thousand in the first 9 months

of 2021 from the revaluation of TPD shares..

NORDIC FIBREBOARD LTD: Fibreboard production and sales

Fibreboard sales in Q3 2022 were EUR 2.78 million (Q3 2021: EUR 2.27 million). In addition to demand for construction materials remaining strong, the increase in sales revenue was also influenced by the price increases implemented during Q2 2022. The price increase was inevitable, as there has been a continuous increase in the price of raw materials and energy throughout 2022. Despite the decline in Estonian industrial production in the Q3 2022, the fibreboard order volume remained stable throughout the Q3 2022, which shows the strength of local north European markets.

The largest sales growth in Q3 2022, compared to Q3 2021, was reflected in the markets of Finland, Denmark and Latvia. Sales to Russia ended in May 2022 due to the sanctions imposed as a result of Russia's war on Ukraine.

The operating profitability, ie EBITDA, of the fibreboard activities in Q3 2022 was EUR 201 thousand, a decrease of 42% compared to the same period last year. This being caused by increased cost prices for woodchips, our main raw material, as well as higher electricity prices during Q3 2022.

FIBREBOARD SALES BY GEOGRAPHICAL SEGMENTS

	EUR thousand +---------+---------+---------+---------			EUR thousand
	Q3 2022 Q3 2021 9M 2022 9M 2021
-----------------+---------+---------+---------+--------- European Union	2,723	1,980	8,425	6,233
-----------------+---------+---------+---------+--------- Middle East	47	13	73	13
-----------------+---------+---------+---------+--------- Russia	0	269	427	1,083
-----------------+---------+---------+---------+--------- Asia	0	0	69	124
-----------------+---------+---------+---------+--------- Africa	0	0	0	46
-----------------+---------+---------+---------+--------- Other	12	8	21	40
-----------------+---------+---------+---------+--------- TOTAL	2,782	2,270	9,015	7,539

PÄRNU RIVERSIDE DEVELOPMENT: Real estate management

Pärnu Riverside Development owns the property located at Suur-Jõe 48 in Pärnu. The property has some rental tenants and rental income from real estate management was EUR 9 thousand in Q3 2022, (Q3 2021: EUR 65 thousand). The reason for the decrease in sales revenue was caused by the loss of the largest tenant at the end of 2021.

The real estate management EBITDA for Q3 2022 were negative EUR 6 thousand and net loss EUR 6 thousand (Q3 2021: EBITDA positive EUR 11 thousand and net profit EUR 11 thousand).

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AND CASH FLOW STATEMENT

As of 30.09.2022 the total assets of Nordic Fibreboard AS were EUR 9.4 million (30.09.2021: EUR 8.3 million). The liabilities of the company as of 30.09.2022 were EUR 4.7 million (30.09.2021: EUR 4.4 million), of which the Group has payables of EUR 1.0 million as at 30.09.2022 (30.09.2021: EUR 0.6 million) and borrowings of EUR 3.1 million as at 30.09.2022 (30.09.2021: EUR 3.3 million).

Receivables and prepayments amounted to EUR 1.3 million as at 30.09.2022 (30.09.2021: EUR 1.1 million). Inventories were EUR 0.9 million as of 30.09.2022 (30.09.2021: EUR 0.4 million). Fixed assets were EUR 6.7 million as of 30.09.2022 (EUR 6.6 million as of 30.09.2021).

During 2022 9M, the Group's cash flows from operating activities totalled cash inflow of EUR 617 thousand (2021 9M: cash inflow EUR 512 thousand). Cash outflows due to investment activities was EUR 93 thousand during 9M 2022, mainly consisting of investments into production assets of EUR 194 thousand and dividend received from TPD shares of EUR 105 thousand (9M 2021: cash outflow EUR 243 thousand). Cash outflows due to financing activities was EUR 111 thousand during 9M 2022, consisting of loans repaid of EUR 76 thousand and finance lease payments of EUR 35 thousand (9M 2022: cash outflow EUR 91 thousand). Net cash effect during 9M 2021 showed cash inflows of EUR 413 thousand, (2021 9M: cash inflows EUR 178 thousand).

OUTLOOK

NORDIC FIBREBOARD LTD

Demand for fibreboards was stabile during Q3 2022, however we are now experiencing a decline in customer orders. As a result of such drop in demand, we intend to reduce our production capacity and lay off 8 production workers. It has been an ongoing rise in the price of woodchips, our main input material, and at this stage the future outlook for woodchip prices remain unclear. Demand for woodchips has risen as a result of power plants now using more biomass, and sale of wood pellets have also increased as a result of increased heating costs. The uncertainty this autumn of the direction of the electricity market forced us to lock in electricity prices for period 1.1.2023 to 30.6.2024. We alleviated the impact of higher electricity prices in 2023, as a result of the new fixed electricity contract, by increasing our prices during Q4 2022.

PÄRNU RIVERSIDE DEVELOPMENT

We will continue to manage and develop the property on Suur-Jõe Street 48, Pärnu. A detail plan for the property is ongoing, with the intention of converting the property into a private residential property.

Income statement	Q3 2022	Q3 2021	9M 2022	9M 2021
----------------------------------+----------+----------+----------+---------- Revenue	2,791	2,334	9,043	7,757
----------------------------------+----------+----------+----------+---------- EBITDA	193	356	1,071	1,341
----------------------------------+----------+----------+----------+---------- EBITDA margin	7%	15%	12%	17%
----------------------------------+----------+----------+----------+---------- Operating profit	68	232	699	962
----------------------------------+----------+----------+----------+---------- Operating margin	2%	10%	8%	12%
----------------------------------+----------+----------+----------+---------- Net profit	117	73	848	1,229
----------------------------------+----------+----------+----------+---------- Net margin	4%	3%	9%	16%
Statement of financial position	30.09.2022 31.12.2021 30.09.2021 31.12.2020
----------------------------------+----------+----------+----------+---------- Total assets	9,389	8,063	8,301	7,650
----------------------------------+----------+----------+----------+---------- Return on assets	9%	15%	15%	14%
----------------------------------+----------+----------+----------+---------- Equity	4,698	3,850	3,878	2,648
----------------------------------+----------+----------+----------+---------- Return on equity	18%	31%	32%	41%
----------------------------------+----------+----------+----------+---------- Debt-to-equity ratio	50%	52%	53%	65%
Share	30.09.2022 31.12.2021 30.09.2021 31.12.2020
----------------------------------+----------+----------+----------+---------- Last Price*	1.74	1.95	2.20	0.45
----------------------------------+----------+----------+----------+---------- Earnings per share	0.18	0.27	0.55	0.24
----------------------------------+----------+----------+----------+---------- Price-earnings ratio	9.54	7.30	4.02	1.89
----------------------------------+----------+----------+----------+---------- Book value of a share	1,04	0.86	0.86	0.59
----------------------------------+----------+----------+----------+----------

Market capitalization, EUR thousand	7,828	8,773 9,898	2,025
----------------------------------+----------+----------+----------+---------- Number of shares, piece	4,499,061 4,499,061 4,499,061 4,499,061
EBITDA = Earnings before interest, taxes, depreciation and amortization EBITDA margin = EBITDA / Revenue Operating margin = Operating profit / Revenue Net margin = Net profit / Revenue Return on assets = Net profit / Total assets Return on equity = Net profit / Equity Debt-to-equity ratio = Liabilities / Total assets Earnings per share = Trailing twelve months (TTM) net profit / Total shares Price-earnings ratio = Last price / Earnings per share Book value of a share = Equity / Total shares Market to book ratio = Last price / Book value of a share Market capitalization = Last price * Total shares *http://www.nasdaqbaltic.com/
Consolidated statement of financial positions EUR thousand			30.09.2022 31.12.2021 30.09.2021
---------------------------------------------+----------+----------+---------- Cash and cash equivalents	470	57	204
---------------------------------------------+----------+----------+---------- Receivables and prepayments (Note 2)	1,345	902	1,118
---------------------------------------------+----------+----------+---------- Inventories (Note 3)	874	390	390
---------------------------------------------+----------+----------+---------- Total current assets	2,689	1,349	1,712
---------------------------------------------+----------+----------+----------
---------------------------------------------+----------+----------+---------- Investment property (Note 4)	1,156	1,152	1,139
---------------------------------------------+----------+----------+---------- Available-for-sale financial assets (Note 7) ---------------------------------------------+----------+----------+----------	787	644	805
Property, plant and equipment (Note 5) ---------------------------------------------+----------+----------+----------	4,755	4,915	4,642
Intangible assets (Note 6) ---------------------------------------------+----------+----------+----------		2 3	3
Total non-current assets ---------------------------------------------+----------+----------+----------	6,700	6,714	6,589
---------------------------------------------+----------+----------+----------
TOTAL ASSETS ---------------------------------------------+----------+----------+----------	9,389	8,063	8,301
---------------------------------------------+----------+----------+----------
Borrowings (Notes 8)	38	146	36

---------------------------------------------+----------+----------+---------- Payables and prepayments (Notes 9)	1,410	829	1,002
---------------------------------------------+----------+----------+---------- Short-term provisions (Note 10)		4 19	4
---------------------------------------------+----------+----------+---------- Total current liabilities	1,452	994	1,042
---------------------------------------------+----------+----------+----------
---------------------------------------------+----------+----------+---------- Long-term borrowings (Notes 8)	3,094	3,074	3,220
---------------------------------------------+----------+----------+---------- Long-term provisions (Note 10)	145	145	161
---------------------------------------------+----------+----------+---------- Total non-current liabilities	3,239	3,219	3,381
---------------------------------------------+----------+----------+---------- Total liabilities	4,691	4,213	4,423
---------------------------------------------+----------+----------+----------
---------------------------------------------+----------+----------+---------- Share capital (at nominal value) (Note 11)	450	450	450
---------------------------------------------+----------+----------+---------- Statutory reserve capital	45		0 0
---------------------------------------------+----------+----------+---------- Retained earnings (loss)	4,203	3,400	3,428
---------------------------------------------+----------+----------+---------- Total equity	4,698	3,850	3,878
---------------------------------------------+----------+----------+----------
---------------------------------------------+----------+----------+---------- TOTAL LIABILITIES AND EQUITY	9,389	8,063	8,301

*The notes to the financial statements presented on pages 14 to 24 are an integral part of these consolidated financial statements

Consolidated statement of profit or loss and other comprehensive income

EUR thousand ---------------------------------------+---------+---------+---------+---------		Q3 2022 Q3 2021 9M 2022 9M 2021
Revenue (Note 13)	2,791	2,334	9,043	7,757
---------------------------------------+---------+---------+---------+--------- Cost of goods sold (Note 14)	2,387	1,721	7,134	5,451
---------------------------------------+---------+---------+---------+--------- Gross profit	404	613	1,909	2,306
---------------------------------------+---------+---------+---------+---------
---------------------------------------+---------+---------+---------+--------- Distribution costs (Note 15)	278	251	919	891
---------------------------------------+---------+---------+---------+--------- Administrative expenses (Note 16)	90	131	315	445

---------------------------------------+---------+---------+---------+--------- Other operating income (Note 18) ---------------------------------------+---------+---------+---------+---------	33	2	33	5
Other operating expenses (Note 18) ---------------------------------------+---------+---------+---------+---------	1	1	9	13
Operating profit ---------------------------------------+---------+---------+---------+---------	68	232	699	962
---------------------------------------+---------+---------+---------+---------
Finance income (Note 19)	79	0	248	354
---------------------------------------+---------+---------+---------+--------- Finance costs (Note 19)	30	159	99	87
---------------------------------------+---------+---------+---------+--------- Profit before income tax	117	73	848	1,229
---------------------------------------+---------+---------+---------+--------- Corporate income tax	0	0	0	0
---------------------------------------+---------+---------+---------+--------- ---------------------------------------+---------+---------+---------+---------
Net profit for the period ---------------------------------------+---------+---------+---------+---------	117	73	848	1,229
---------------------------------------+---------+---------+---------+--------- Basic earnings per share (Note 12)	0.03	0.02	0.19	0.27
---------------------------------------+---------+---------+---------+--------- Diluted earnings per share (Note 12)	0.03	0.02	0.19	0.27

*The notes to the financial statements presented on pages 14 to 24 are an integral part of these consolidated financial statements.

TORFINN LOSVIK

Chairman of the board

Phone: +372 56 99 0988

torfinn.losvik@nordicfibreboard.com

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