Byggma ASA

Earnings Release • Nov 2, 2023

BYGGMA ASA - INTERIM REPORT Q3 2023

BYGGMA ASA - INTERIM REPORT Q3 2023

The Group’s sales revenues in Q3 2023 amounted to NOK 470.2 million which is NOK 95.1 million (16.8 %) lower than for the same period in 2022. The trend in sales revenue in Q3 2023 is positive in the Lighting segment, but lower for other segments compared to the same period in 2022. Year to date (YTD) 2023 sales revenues were NOK 1,651.6 million compared to NOK 1,948.7 million YTD 2022.

The Group achieved an EBITDA in Q3 2023 of NOK 47.4 million compared to NOK 136.7 million in the same period last year.

The operating profit in Q3 2023 was NOK 25.4 million compared to NOK 116.6 million in the same period last year. The operating profit YTD Q3 2023 was NOK 171.3 million compared to NOK 286.8 million YTD Q3 2022. The operating profit in Q3 2022 contains non-recurring items, see reconciliation of adjusted operating profit in the table above. The operating profit in Q3 2023 is higher for the Lighting segment, but lower for the other segments compared to the same period in 2022.

From 9 March 2023 the investment in Norske Skog ASA is classified as an investment in associate and is accounted for using the equity method in accordance with IAS 28. See note 12 for more information. Share of profit from associate was NOK 53.9 million in Q3 2023.

The Group achieved a profit before tax in Q3 2023 of NOK 56.2 million compared to NOK 115.5 million in the same period in 2022. Profit before tax YTD Q3 2023 was NOK 157.0 million compared to NOK 287.2 million YTD 3. kvartal 2022.

YTD Q3 2023, net financials amounted to an expense of NOK 60.8 million which is NOK 61.2 million weaker compared to the same period in 2022. The main reason for the increase in net financial expenses is increased interest rates and debt, and that there was a finance income on increased value of interest rate swaps in 2022. The gain on change in market value of interest rate swaps YTD Q3 2023 was NOK 4.6 million compared to a gain of NOK 19.9 million YTD Q3 2022. YTD net interest expenses (incl. payment for interest rate swaps) amounted to NOK 66.5 million YTD Q3 2023 which is NOK 53.5 million higher than for the same period in 2022. Interest on lease obligations amounted to NOK 2.5 million YTD Q3 2023 which is NOK 0.2 million lower than for the same period in 2022.

The liquidity reserve*) as at 30 September 2023 amounted to NOK 208.5 million, a reduction of NOK 100.1 million from 1 January 2023 and a reduction of NOK 84.6 million from 30 September 2022. The Board of Directors will maintain its focus on capital and cost-efficiency.

Net interest-bearing debt*) increased from NOK 1,425.4 million as at 1 January 2023 to NOK 1,447.0 million as at 30 September 2023. YTD Q3 2023 long-term borrowings of NOK 14.9 million as carried out, of which 14.3 million are due to new lease agreements.

Investments in tangible fixed assets and intangible assets YTD Q3 2023 totalled NOK 56.9 million which is NOK 41.5 million lower than in 2022. Of the investments made, capitalised lease agreements amounted to NOK 14.3 million.

The financial accounts for 2022 have been restated following a change in financial statement principle for Byggma Eiendom Lyngdal to investment property in accordance with IAS 40. See note 32 in Byggma ASA’s annual report for 2022 for more information.

Total assets increased from NOK 2,945.7 million as at 1 January 2023 to NOK 3,047.8 million as at 30 September 2023.

Booked equity as at 30 September 2023 was NOK 963.8 million (31.6 %), which is an increase of NOK 131.1 million compared to 1 January 2023 (28.3 %). The reasons for the change in equity are due to the profit of the year of NOK 134.8 million, a currency translation difference of NOK 1.1 million, loss on financial investment booked in other comprehensive income of NOK 11.0 million share of other comprehensive income from associate of NOK 8.4 million.

OUTLOOK

Byggma monitors the housing market continuously, as this is an important arena for the company. We see lower activity in some areas of the market but are experiencing increased sales of new product launches introduced to the market. During the last 12 months there are sold 13,973 and commissioned 16,047 housing units in the market for newbuilds. The need for housing units has been increased to 29 000 which can lead to serious consequences for the housing supply if the trend continues. When sales and commissioning are below the need, pent up demand grows, and more housing units will be produced at a later point in time. Meanwhile, we are still experiencing high activity in commercial buildings and public buildings. The renovation and extension market expects to see growth as the market to a larger extent is characterised by the fact that more people don’t change residence.

The vast increase in raw materials is the most important explanation for lower sales and commissioning of new housing units in 2023. Additionally, the interest rate development may affect the activity in the newbuild and the renovation and extension market. The conflict in Ukraine may also affect markets and factors as access to raw materials, energy and increased prices on imported goods. However, we see more stable prices on timber going forward, which may increase sales and commissioning of new housing units increasing the demand for building materials. This is supported by the upward adjustment of the official number of housing units needed in Norway to 29.000 per year. This may increase the demand for Byggma ASAs products in the medium and long term.

We experience the same market development for Byggma’s products outside Norway.

The market development has meant that the input factors for several of the segments are considerably more expensive. Byggma has implemented price increases during the last two years in order to maintain a reasonable margin.

Group management is continuously monitoring the situation in order to be able to implement cost reductions resulting from lower activity levels.

The board of directors is continuously considering various strategic adaptations and possibilities for alliances and transactions. The goal is to strengthen Byggma’s position in the Nordic building materials market.

In order to ensure further growth, investment in the sale of the Group’s products outside Norway is an important part of Byggma’s strategy. Innovation and technological development are vital components of the Group's growth strategy, driven by a forceful determination to invest in essential equipment and expertise to maintain its position as a leading player in the Nordic building materials market in the future. Byggma Group is firmly focused on achieving efficiency, dominance, and profitability.

Byggma is well positioned for implementing its enhancement processes for maintaining its position as a leading, efficient producer of building products. Several major investments have been made to streamline our processes. New investments in equipment have also been decided and this will enable greater efficiency. In principle, Byggma will be directing its investments toward digitization and automation of the production processes, including the

As per 30 September 2023 Byggma ASA owns ca. 18,5 % of the share capital in Norske Skog ASA. Together with related party Drangsland Kapital AS, Byggma controls ca. 24.1% of the shares in Norske Skog.

CEO in Byggma, Geir Drangsland, is CEO in Norske Skog with effect from 1 September 2023. Simultaneously he resigned as Chairman of the board in Norske Skog. Geir Drangsland has informed the board in Byggma that that he will resign as CEO in Byggma. The process of hiring a new CEO is started and the plan is to employ a new CEO in Byggma in the beginning of 2024.

It is an important part of Byggma’s strategy to strengthen its position as a leading original brand manufacturer of environmentally friendly and sustainable products in the Nordic building materials market. It is the Board’s opinion that completed adjustments and cost reductions entails that the group is well positioned and well prepared to tackle future challenges.

Byggma Group has a stable and highly competent work force and the supply for manpower is good. The group aims to be an attractive employer. We will continue to focus on ensuring that all employees in the Group can realize their human potential through their employment at Byggma.

Vennesla 2 November 2023

The Board of Directors of BYGGMA ASA