Quarterly Report • Jul 15, 2022
Quarterly Report
Open in ViewerOpens in native device viewer
Alternative performance measure, see page 22 for definition.
Figures in parentheses are for the corresponding period in the previous year.
| 1.4 - 30.6 | 1.1 - 30.6 | 1.1 - 31.12 | ||||
|---|---|---|---|---|---|---|
| Amounts in NOK million | Note | 2022 | 2021 | 2022 | 2021 | 2021 |
| Operating revenues | 2 | 1,744 | 1,511 | 3,359 | 2,930 | 5,805 |
| EBITDA1 | 445 | 416 | 845 | 718 | 1,372 | |
| Operating profit | 346 | 314 | 637 | 509 | 952 | |
| Profit/loss before taxes | 2 | 322 | 296 | 599 | 472 | 873 |
| Earnings per share (NOK) | 2.52 | 2.34 | 4.70 | 3.81 | 6.95 | |
| Net interest-bearing debt1 | 11 | 2,105 | 1,605 | 2,105 | 1,605 | 1,417 |
| Equity ratio1 (%) |
51.8 | 56.2 | 51.8 | 56.2 | 60.1 | |
| Leverage ratio1 | 1.40 | 1.29 | 1.40 | 1.29 | 1.03 | |
| Return on capital employed1 (%) |
17.2 | 13.7 | 17.2 | 13.7 | 16.1 |
EBITDA MARGIN1 EBITDA1
EBITDA1 EARNINGS PER SHARE CUMULATIVE
Borregaard's operating revenues reached NOK 1,744 million (NOK 1,511 million)2 in the 2nd quarter of 2022. EBITDA1 increased to NOK 445 million (NOK 416 million), an all-time high quarterly result for the Group. The result increased in BioSolutions and Fine Chemicals while there was a decrease in BioMaterials. The net currency impact on EBITDA1 was positive compared with the 2nd quarter of 2021.
Higher sales prices and a strong product mix, partly offset by cost increases, were the main reasons for the EBITDA1 improvement in BioSolutions. Higher sales prices did not fully compensate for increased energy and raw material costs and lower deliveries in BioMaterials. For Fine Chemicals, the EBITDA1 increase was due to increased sales prices, partly offset by lower deliveries and increased costs.
Other income and expenses1 were NOK 12 million net positive in the 2nd quarter of 2022. This was mainly related to sale of assets in the closed lignin operation in South Africa. The realised value was higher than the provision made in 2020.
Operating profit reached NOK 346 million (NOK 314 million). Net financial items were NOK -24 million (NOK -18 million). Profit before tax was NOK 322 million (NOK 296 million). Tax expense of NOK -78 million (NOK -67 million), gave a tax rate of 24% (23%) in the quarter.
Earnings per share was NOK 2.52 (NOK 2.34).
Cash flow from operating activities was NOK 182 million (NOK 458 million). The cash flow was negatively affected by a significant increase in net working capital. This was mainly due to increased sales prices, affecting accounts receivable, and higher inventory values.
Dividend of NOK 499 million (NOK 249 million) was paid in the 2nd quarter, of which NOK 224 million was related to an extraordinary dividend.
Borregaard's operating revenues increased to NOK 3,359 million (NOK 2,930 million) in the 1st half of 2022. EBITDA1 increased to NOK 845 million (NOK 718 million). The result increased in all business areas compared with the
Alternative performance measure, see page 22 for definition.
Figures in parentheses are for the corresponding period in the previous year.
1st half of 2021. The net currency impact on EBITDA1 was positive compared with the 1st half of 2021.
BioSolutions' EBITDA1 improved due to higher sales prices and a strong product mix, partly offset by substantial cost increases. The improved result in BioMaterials was mainly due to higher sales prices for speciality cellulose and an improved product mix, which more than compensated for lower deliveries, increased energy spot prices and higher raw material costs. The improvement in Fine Chemicals was due to higher sales prices, partly offset by lower deliveries and increased costs.
Other income and expenses1 were NOK 12 million net positive in the 1st half of 2022. This was mainly related to sale of assets in the closed lignin operation in South Africa.
Operating profit was NOK 637 million (NOK 509 million). Net financial items amounted to NOK -38 million (NOK -37 million). Profit before tax was NOK 599 million (NOK 472 million). Tax expense was NOK -146 million (NOK -110 million), giving a tax rate of 24% (23%).
Earnings per share was NOK 4.70 (NOK 3.81).
In the 1st half of 2022, cash flow from operating activities was NOK 110 million (NOK 697 million). The cash flow was negatively affected by a significant increase in net working capital. This was mainly due to increased sales prices, affecting accounts receivable, and higher inventory values. CASH FLOW FROM OPERATING ACTIVITIES
| 1.4 - 30.6 | 1.1 - 30.6 | ||||
|---|---|---|---|---|---|
| Amounts in NOK million | 2022 | 2021 | 2022 | 2021 | 2021 |
| Operating revenues | 1,098 | 885 | 2,046 | 1,697 | 3,469 |
| EBITDA1 | 305 | 272 | 566 | 477 | 942 |
| EBITDA margin1 (%) |
27.8 | 30.7 | 27.7 | 28.1 | 27.2 |
BioSolutions' operating revenues reached NOK 1,098 million (NOK 885 million). EBITDA1 increased to NOK 305 million (NOK 272 million).
The EBITDA1 improvement was mainly due to higher sales prices and a strong product mix, partly offset by cost increases (energy, raw materials and freight). Net currency effects were positive.
The average price in sales currency was 23% higher than in the 2nd quarter of 2021. In particular, there was a positive development for applications within agriculture, construction, oilfield chemicals and batteries.
A tight market for synthetic vanillin and ethyl vanillin continued to have a positive impact.
The sales volume was 10% lower compared with the same quarter last year. The 2nd quarter of 2021 was positively affected by sales from inventories.
In the 1st half of 2022, BioSolutions had operating revenues of NOK 2,046 million (NOK 1,697 million). EBITDA1 increased to NOK 566 million (NOK 477 million).
Higher sales prices and a strong product mix were the main reasons for the EBITDA1 improvement, partly offset by substantial cost increases (energy, raw materials and freight). Net currency effects were positive.
The average price in sales currency was 23% higher than in the 1st half of 2021 due to price increases, an improved product mix and the effect of reduced sales volume to low-value markets.
Total sales volume was 10% lower than in the 1st half of 2021 due to lower raw material supply in 2022 and sales from inventories in 2021.
Sales price and sales volume include lignin-based biopolymers and biovanillin.
Alternative performance measure, see page 22 for definition.
2 Figures in parentheses are for the corresponding period in the previous year.
3 Average sales price is calculated using actual FX rates, excluding hedging impact.
4 Metric tonne dry solid.
| 1.4 - 30.6 | 1.1 - 31.12 | |||||
|---|---|---|---|---|---|---|
| Amounts in NOK million | 2022 | 2021 | 2022 | 2021 | 2021 | |
| Operating revenues | 540 | 482 | 1,072 | 1,005 | 1,878 | |
| EBITDA1 | 91 | 102 | 188 | 166 | 284 | |
| EBITDA margin1 (%) |
16.9 | 21.2 | 17.5 | 16.5 | 15.1 |
Operating revenues in BioMaterials were NOK 540 million (NOK 482 million) in the 2nd quarter. EBITDA1 was NOK 91 million (NOK 102 million).
EBITDA1 was negatively affected by lower deliveries and increased energy and raw material costs, partly compensated by higher sales prices and net currency effects. Lower deliveries were due to timing of shipments in the quarter and sales from inventory in the 2nd quarter of 2021.
The average price in sales currency increased by 23%, mainly as a result of price increases. The specialty cellulose market continued to be tight with strong demand.
Operating revenues were NOK 1,072 million (NOK 1,005 million). EBITDA1 was NOK 188 million (NOK 166 million).
Higher sales prices for speciality cellulose and an improved product mix more than compensated for increased energy spot prices, higher raw material costs and lower deliveries compared with the 1st half of 2021. The net currency impact was positive.
The average price in sales currency was 21% higher than in the same period last year. The high sales volume in the 1st half of 2021 was due to a significant inventory reduction.
Sales price and sales volume include speciality cellulose and cellulose fibrils.
5 Average sales price is calculated using actual FX rates, excluding hedging impact.
6 Metric tonne.
Alternative performance measure, see page 22 for definition.
| 1.4 - 30.6 | 1.1 - 31.12 | |||||
|---|---|---|---|---|---|---|
| Amounts in NOK million | 2022 | 2021 | 2022 | 2021 | 2021 | |
| Operating revenues | 119 | 155 | 262 | 245 | 491 | |
| EBITDA1 | 49 | 42 | 91 | 75 | 146 | |
| EBITDA margin1 (%) |
41.2 | 27.1 | 34.7 | 30.6 | 29.7 |
Fine Chemicals' operating revenues were NOK 119 million (NOK 155 million). EBITDA1 increased to NOK 49 million (NOK 42 million).
EBITDA1 improved due to higher sales prices and a favourable product mix, partly offset by lower deliveries and increased costs. The net currency impact was slightly positive.
Fine chemical intermediates had a favourable product mix and high production volume. Raw material costs have increased substantially, driven by energy prices.
Prices for bioethanol increased compared with the 2nd quarter of 2021.
Sales revenues include pharma intermediates and bioethanol.
Operating revenues in Fine Chemicals were NOK 262 million (NOK 245 million). EBITDA1 was NOK 91 million (NOK 75 million). EBITDA1 in the 1st half improved due to higher sales prices, partly offset by lower deliveries and increased costs. The net currency impact was positive.
Borregaard has a significant currency exposure which is hedged according to the company's hedging strategy. The impact of currency rate fluctuations will be delayed as a result of the currency hedging strategy. Compared with the 2nd quarter of 2021, the net impact of foreign exchange on EBITDA1 , including hedging effects, was NOK 60 million. Hedging effects were NOK -3 million (NOK -4 million) in the quarter.
Compared with the 1st half of 2021, the net impact of foreign exchange on EBITDA1 , including hedging effects, was NOK 90 million. Hedging effects were NOK 7 million (NOK -19 million) in the 1st half.
Assuming currency rates as of 14 July 2022 (USD 10.25 and EUR 10.25) and based on currency exposure forecasts, Borregaard expects a net impact of foreign exchange on EBITDA1 of approximately NOK 60 million in the 3rd quarter of 2022 and NOK 215 million for the full year, compared with the corresponding periods last year.
Cash flow from operating activities in the 2nd quarter was NOK 182 million (NOK 458 million). The cash flow was negatively affected by a significant increase in net working capital. This was mainly due to increased sales prices, affecting accounts receivable, and higher inventory values related to cost increases and timing of shipments. Tax payments was higher than in the 2nd quarter of 2021.
Investments amounted to NOK 81 million (NOK 125 million). Expansion investments1 totalled NOK 24 million (NOK 32 million).
In the 1st half of 2022, cash flow from operating activities was NOK 110 million (NOK 697 million). The cash flow was negatively affected by a significant increase in net working capital. This was mainly due to increased sales prices, affecting accounts receivable, and higher inventory values related to cost increases and timing of shipments.
The cash effect from an improved EBITDA1was partly offset by higher tax payments compared with the 1st half of 2021.
Investments amounted to NOK 168 million (NOK 220 million). Replacement investments were NOK 128 million (NOK 152 million). Expansion investments1 totalled NOK 40 million (NOK 68 million).
Dividend of NOK 499 million (NOK 249 million) was paid out in the 2nd quarter, of which NOK 224 million was related to an extraordinary dividend. In the 1st half of 2022, the Group has sold and repurchased treasury shares with a net proceed of NOK 11 million (NOK -42 million). Realised effect of hedging of net investments in subsidiaries was NOK -80 million (NOK 17 million).
On 30 June 2022, the Group had net interest-bearing debt1 totalling NOK 2,105 million (NOK 1,605 million), an increase of NOK 688 million from year-end 2021.
At the end of June, the Group was well capitalised with an equity ratio1 of 51.8% (56.2%) and a leverage ratio1 of 1.40 (1.29).
Environment, health and safety (EHS) are integral parts of Borregaard's business model.
Greenhouse gas emissions (GHG, scope 1 and 2) and emissions of organic material (COD) were in line with the 1st half of 2021. The total recordable injuries per million hours worked (TRIF, rolling 12 months) were 4.0 (4.5). The number of days of absence due to injuries decreased compared with the same period last year.
Sick leave increased to 4.3% (3.4%) mainly due to Covid-19 related absence.
The table below shows key sustainability measures and targets. For further details on parameters and targets, see the Sustainability and corporate responsibility chapter in Borregaard's 2021 Annual Report, pages 54, 60, 65 and 78.
| 30.6.2022 | 30.6.2021 | 31.12.2021 | Target 2022 | Long term (2030) |
|
|---|---|---|---|---|---|
| Greenhouse gas emissions (Scope 1, `000 tonnes) * | 79 | 78 | 153 | 42% reduction | |
| Greenhouse gas emissions (Scope 2, `000 tonnes) * | 31 | 33 | 65 | N/A | from 2020 |
| COD (organic material) in process water discharged | 58 t/day | 58 t/day | 55 t/day | 55 t/day | 40 t/day |
| Total recordable injuries per million hours worked, rolling 12 months (TRIF) |
4.0 | 4.5 | 3.5 | 0 | 0 |
| Sick leave % | 4.3 % | 3.4 % | 3.7 % | 3.5 % | 3.0 % |
* Emission figures as of 30.6.2022 are based on best estimate at the time of reporting.
In the 2nd quarter, 95,412 share options were exercised at a strike price of NOK 65.95 per share, and 13,000 share options were exercised at a strike price of NOK 70.30 per share.
In the 2nd quarter, Borregaard repurchased a total of 103,667 treasury shares at an average price of NOK 183.49.
Total number of shares outstanding on 30 June 2022 was 100 million, including 243,120 treasury shares.
Total number of shareholders was 8,024. Borregaard ASA's share price was NOK 160.20 at the end of the 2nd quarter compared with NOK 174.40 at the end of the 1st quarter of 2022 and NOK 222.00 at the end of 2021.
The share was traded ex dividend on 8 April and dividend was paid out on 21 April 2022.
The positive market development for BioSolutions is expected to continue in the 2nd half of 2022, and additional price increases have been implemented from 1 July. In 2022, the total sales volume is expected to be slightly below the 2021 volume. The new biovanillin capacity will continue to be gradually phased into the market. The market balance for synthetic vanillin and ethyl vanillin is expected to be affected by increased supply in the 2nd half.
In BioMaterials, the average price in sales currency will be approximately 30% above the 2021 level in the 3rd quarter of of 2022, following an additional 10% price increase related to a surcharge for increased costs. Total sales volume for the full year is expected to be lower than in 2021, and aligned with the production volume. However, the volume of highly specialised grades is expected to be in line with 2021. Sales growth is expected to continue for cellulose fibrils.
The market conditions for biofuel in several EU countries are favourable with increased sales prices. Bioethanol sales will mainly be into these markets in 2022. Deliveries of fine chemical intermediates and bioethanol is expected to be higher in the 2nd half of 2022 than in the 1st half.
Energy and raw material costs will increase further in the 2nd half of 2022 compared with the 1st half of 2022. Energy spot prices represent the largest uncertainty for the rest of the year. Wood costs will increase by 25-30% in the 2nd half of 2022 compared with the 1st half. The cost inflation in western economies and consequences of the war in Ukraine may impact the global economy and Borregaard's markets. Borregaard will continue to closely monitor cost inflation and market development and implement relevant measures if required.
Alternative performance measure, see page 22 for definition.
Figures in parentheses are for the corresponding period in the previous year.
3 Metric tonne dry solid
We confirm that, to the best of our knowledge, the unaudited interim condensed financial statements for the period 1 January to 30 June 2022, have been prepared in accordance with IAS 34 Interim Financial Reporting, and that the information in the financial statements gives a true and fair view of the business
of the Group and the Group's assets, liabilities, financial position and overall results, and that the half year report provides a fair overview of the information set out in the Norwegian Securities Trading Act section 5-6, fourth paragraph.
Sarpsborg, 14 July 2022 The Board of Directors of Borregaard ASA
Signed HELGE AASEN Chair
Signed MARGRETHE HAUGE
Signed TERJE ANDERSEN
Signed
TOVE ANDERSEN
Signed JOHN ARNE ULVAN
Signed RAGNHILD ANKER EIDE
Signed
ARUNDEL KRISTIANSEN
Signed
PER A. SØRLIE President and CEO
| 1.4 - 30.6 | 1.1 - 30.6 | 1.1 - 31.12 | ||||
|---|---|---|---|---|---|---|
| Amounts in NOK million | Note | 2022 | 2021 | 2022 | 2021 | 2021 |
| Operating revenues | 2 | 1,744 | 1,511 | 3,359 | 2,930 | 5,805 |
| Operating expenses | -1,299 | -1,095 | -2,514 | -2,212 | -4,433 | |
| Depreciation property, plant and equipment | -110 | -101 | -218 | -207 | -416 | |
| Amortisation intangible assets | -1 | -1 | -2 | -2 | -4 | |
| Other income and expenses1 | 3 | 12 | - | 12 | - | - |
| Operating profit | 346 | 314 | 637 | 509 | 952 | |
| Financial items, net | 4 | -24 | -18 | -38 | -37 | -79 |
| Profit before taxes | 322 | 296 | 599 | 472 | 873 | |
| Income tax expense | 5 | -78 | -67 | -146 | -110 | -213 |
| Profit for the period | 244 | 229 | 453 | 362 | 660 | |
| Profit attributable to non-controlling interests | -8 | -4 | -16 | -17 | -32 | |
| Profit attributable to owners of the parent | 252 | 233 | 469 | 379 | 692 | |
| EBITDA1 | 445 | 416 | 845 | 718 | 1,372 |
| 1.4 - 30.6 | 1.1 - 30.6 | |||||
|---|---|---|---|---|---|---|
| Amounts in NOK | 2022 | 2021 | 2022 | 2021 | 2021 | |
| Earnings per share (100 mill. shares) | 6 | 2.52 | 2.34 | 4.70 | 3.81 | 6.95 |
| Diluted earnings per share | 6 | 2.52 | 2.34 | 4.69 | 3.80 | 6.94 |
| 1.4 - 30.6 | 1.1 - 30.6 | 1.1 - 31.12 | ||||
|---|---|---|---|---|---|---|
| Amounts in NOK million | Note | 2022 | 2021 | 2022 | 2021 | 2021 |
| Profit for the period | 244 | 229 | 453 | 362 | 660 | |
| Items not to be reclassified to P&L | ||||||
| Actuarial gains and losses (after tax) | - | - | - | - | 55 | |
| Total | - | - | - | - | 55 | |
| Items to be reclassified to P&L | ||||||
| Change in hedging-reserve after tax (cash flow) | 8 | -486 | -34 | -362 | 102 | 86 |
| Change in hedging-reserve after tax (net investment in subsidiaries) |
8 | -78 | -2 | -69 | 3 | -9 |
| Translation effects | 126 | 12 | 122 | 3 | 25 | |
| Total | -438 | -24 | -309 | 108 | 102 | |
| The Group's comprehensive income | -194 | 205 | 144 | 470 | 817 | |
| Comprehensive income non-controlling interests | 1 | -4 | -8 | -16 | -28 | |
| Comprehensive income owners of the parent | -195 | 209 | 152 | 486 | 845 |
| Amounts in NOK million | Note | 30.6.2022 | 31.12.2021 |
|---|---|---|---|
| Intangible assets | 13 | 86 | 89 |
| Property, plant and equipment | 13 | 4,273 | 4,191 |
| Right-of-use assets | 345 | 351 | |
| Other assets | 9 | 237 | 339 |
| Investments in joint venture/associate company | 4 | 144 | 173 |
| Non-current assets | 5,085 | 5,143 | |
| Inventories | 1,035 | 792 | |
| Receivables | 9 | 1,469 | 1,107 |
| Cash and cash deposits | 11 | 90 | 124 |
| Current assets | 2,594 | 2,023 | |
| Total assets | 7,679 | 7,166 | |
| Group equity | 10 | 3,899 | 4,222 |
| Non-controlling interests | 76 | 84 | |
| Equity | 3,975 | 4,306 | |
| Provisions and other liabilities | 361 | 257 | |
| Interest-bearing liabilities | 9, 11 | 1,926 | 1,320 |
| Non-current liabilities | 2,287 | 1,577 | |
| Interest-bearing liabilities | 9, 11 | 272 | 224 |
| Other current liabilities | 9 | 1,145 | 1,059 |
| Current liabilities | 1,417 | 1,283 | |
| Equity and liabilites | 7,679 | 7,166 | |
Equity ratio1 51.8 % 60.1 %
| 1.1 - 30.6.2022 | 1.1 - 31.12.2021 | ||||||
|---|---|---|---|---|---|---|---|
| Amounts in NOK million | Note | Controlling interests |
Non controlling interests |
Total equity |
Controlling interests |
Non controlling interests |
Total equity |
| Equity 1 January | 4,222 | 84 | 4,306 | 3,668 | 110 | 3,778 | |
| Profit/loss for the period | 469 | -16 | 453 | 692 | -32 | 660 | |
| Items in Comprehensive Income | 8 | -317 | 8 | -309 | 153 | 4 | 157 |
| The Group's Comprehensive income | 8 | 152 | -8 | 144 | 845 | -28 | 817 |
| Paid dividend | -499 | - | -499 | -249 | - | -249 | |
| Buy-back of treasury shares | -23 | - | -23 | -118 | - | -118 | |
| Exercise of share options | 9 | - | 9 | 38 | - | 38 | |
| Reduced tax payable of exercised share options | - | - | - | - | - | 0 | |
| Shares to employees | 33 | - | 33 | 28 | - | 28 | |
| Option costs (share based payment) | 5 | - | 5 | 10 | - | 10 | |
| Transactions with non-controlling interests | - | - | - | - | 2 | 2 | |
| Equity at the end of the period | 3,899 | 76 | 3,975 | 4,222 | 84 | 4,306 |
| Amounts in NOK million Note 2022 2021 2022 2021 |
2021 873 |
|---|---|
| Profit before taxes 322 296 599 472 |
|
| Amortisation, depreciation and impairment charges 111 102 220 209 |
420 |
| Changes in net working capital, etc. -221 69 -602 74 |
256 |
| Dividend/share of profit from JV & associate company 4 31 - 31 - |
6 |
| Taxes paid -61 -9 -138 -58 |
-124 |
| Cash flow from operating activities 182 458 110 697 |
1,431 |
| Investments property, plant and equipment -81 -125 -168 -220 and intangible assets * |
-556 |
| Investment in associate company 4 - - - - |
-145 |
| Other capital transactions 4 -1 6 3 |
9 |
| Cash flow from investing activities -77 -126 -162 -217 |
-692 |
| Dividends -499 -249 -499 -249 |
-249 |
| Proceeds from exercise of options/shares to employees 10 7 17 34 46 |
59 |
| Buy-back of treasury shares 7 -19 -32 -23 -88 |
-118 |
| Gain/(loss) on hedges for net investments in -111 8 -80 17 subsidiaries |
-14 |
| Net paid to/from shareholders -622 -256 -568 -274 |
-322 |
| Proceeds from interest-bearing liabilities 11 737 200 837 300 |
300 |
| Repayment from interest-bearing liabilities 11 -339 -239 -353 -456 |
-814 |
| Change in interest-bearing receivables/other liabilities 11 70 2 68 -6 |
-1 |
| Change in net interest-bearing liabilities 468 -37 552 -162 |
-515 |
| Cash flow from financing activities -154 -293 -16 -436 |
-837 |
| Change in cash and cash equivalents -49 39 -68 44 |
-98 |
| Cash and cash equivalents at beginning of period -16 100 5 96 |
96 |
| Change in cash and cash equivalents -49 39 -68 44 |
-98 |
| Currency effects cash and cash equivalents 27 4 25 3 |
7 |
| Cash and cash equivalents 11 -38 143 -38 143 at the close of the period |
5 |
| *Investment by category | |
| Replacement investments 57 93 128 152 |
398 |
| Expansion investments1 24 32 40 68 |
303 |
Borregaard ASA is incorporated and domiciled in Norway. The address of its registered office is Hjalmar Wessels vei 6, Sarpsborg.
These unaudited Interim Condensed Consolidated Financial Statements are prepared in accordance with IAS 34 Interim Financial Reporting. Borregaard ASA is the parent company of the Borregaard Group presented in these Interim Condensed Consolidated Financial Statements.
The same accounting principles and methods of calculation have been applied as in the Consolidated Financial Statements for 2021 for the Borregaard Group.
The same use of estimates has been applied as in the Consolidated Financial Statements for 2021.
| 1.4 - 30.6 | 1.1 - 31.12 | |||||
|---|---|---|---|---|---|---|
| Amounts in NOK million | 2022 | 2021 | 2022 | 2021 | 2021 | |
| Borregaard | 1,744 | 1,511 | 3,359 | 2,930 | 5,805 | |
| BioSolutions | 1,098 | 885 | 2,046 | 1,697 | 3,469 | |
| BioMaterials | 540 | 482 | 1,072 | 1,005 | 1,878 | |
| Fine Chemicals | 119 | 155 | 262 | 245 | 491 | |
| Eliminations | -13 | -11 | -21 | -17 | -33 |
There is limited intercompany sales between the different segments and eliminations consist essentially of allocations from the corporate headquarter.
cont. next page
| 1.4 - 30.6 | 1.1 - 30.6 | 1.1 - 31.12 | |||
|---|---|---|---|---|---|
| Amounts in NOK million | 2022 | 2021 | 2022 | 2021 | 2021 |
| Borregaard | 445 | 416 | 845 | 718 | 1,372 |
| BioSolutions | 305 | 272 | 566 | 477 | 942 |
| BioMaterials | 91 | 102 | 188 | 166 | 284 |
| Fine Chemicals | 49 | 42 | 91 | 75 | 146 |
| Reconciliation against operating profit & profit before tax | |||||
| EBITDA1 | 445 | 416 | 845 | 718 | 1,372 |
| Depreciations and write downs | -110 | -101 | -218 | -207 | -416 |
| Amortisation intangible assets | -1 | -1 | -2 | -2 | -4 |
| Other income and expenses | 12 | - | 12 | - | - |
| Operating profit | 346 | 314 | 637 | 509 | 952 |
| Financial items, net | -24 | -18 | -38 | -37 | -79 |
| Profit before taxes | 322 | 296 | 599 | 472 | 873 |
| 1.4 - 30.6 | 1.1 - 30.6 | ||||
|---|---|---|---|---|---|
| Amounts in NOK million | 2022 | 2021 | 2022 | 2021 | 2021 |
| Borregaard | 1,720 | 1,491 | 3,311 | 2,885 | 5,715 |
| BioSolutions | 1,072 | 865 | 2,001 | 1,658 | 3,392 |
| BioMaterials | 530 | 472 | 1,051 | 985 | 1,840 |
| Fine Chemicals | 118 | 154 | 259 | 242 | 485 |
| Eliminations | - | - | - | - | -2 |
Operating revenues consist of sales revenues and other revenues such as commissions, revenues from waste received for incineration etc.
Other income and expenses1 of NOK 12 million in the 2nd quarter of 2022 are mainly related to sale of assets in the closed lignin operation in South Africa. The realised value was higher than the provision made in 2020.
| 1.4 - 30.6 | 1.1 - 30.6 | ||||
|---|---|---|---|---|---|
| Amounts in NOK million | 2022 | 2021 | 2022 | 2021 | 2021 |
| Net interest expenses | -16 | -15 | -29 | -31 | -59 |
| Currency gain/loss | -7 | - | -6 | 1 | -8 |
| Share of profit/-loss from an associate | - | - | -1 | - | -2 |
| Other financial items, net | -1 | -3 | -2 | -7 | -10 |
| Net financial items | -24 | -18 | -38 | -37 | -79 |
Borregaard holds 25% of the shares in Alginor ASA as of 30 June 2022.
The tax rate of 24.4% (23.3%) for the first six months of 2022 is a compilation of the tax rates in the various countries in which Borregaard operates and has taxable income. The corporate income tax rate in Norway is 22%.
In addition to the compilation of the tax rates in the various countries in which Borregaard operates and has taxable income, the income tax rate for the Group is also impacted by the following: LignoTech Florida is a limited liability company (LLC) which is taxed on the owners' hand. Profit before tax is 100% consolidated
in the Borregaard Group, whereas the tax expense is calculated based on Borregaard's 55% ownership. Consequently, profit attributable to non-controlling interests for LignoTech Florida (45%) is calculated on profit before tax. Share of profit after tax from the joint venture, LignoTech South Africa, is accounted for as part of operating profit and profit before tax (due to IFRS 11). There are carry forward losses in the Group which will not be recognised as deferred tax assets, and hence increase the Group's tax rate.
The share capital consists of 100 million shares. The company holds 243,120 treasury shares. As of 30 June 2022, there are 100,014,274 diluted shares (99,742,686
as of 31 December 2021). Earnings per diluted share were NOK 2.52 in the 2nd quarter (NOK 2.34 in the 2nd quarter of 2021).
During the 2nd quarter of 2022, 95,412 share options were exercised at a strike price of NOK 65.95 and 13,000 share options were exercised at a strike price of NOK 70.30 per share.
The Group Executive Management and other key employees hold a total of 1,302,055 stock options in five different share option programmes in Borregaard.
| Stock options | Issued 2018 | Issued 2019 | Issued 2020 | Issued 2021 | Issued 2022 |
|---|---|---|---|---|---|
| Number of stock options | 116,055 | 337,000 | 400,000 | 249,000 | 200,000 |
| Strike price (NOK)* | 65.95 | 70.3 | 94.6 | 175.70 | 223.75 |
| Vesting period | 3 years | 3 years | 3 years | 3 years | 3 years |
| Expiry date | 7 February 2023 | 6 February 2024 | 13 February 2025 | 16 February 2026 | 17 February 2027 |
* Strike prices as at 30 June 2022 have been adjusted for dividend paid since issuance of stock options.
The statement of comprehensive income shows changes in the value of hedging instruments, both cash flow hedges and hedges of net investments
in subsidiaries (hedging reserve). These figures are presented after tax.
| 30.6.2022 | 30.6.2021 | 31.12.2021 | ||||
|---|---|---|---|---|---|---|
| Amounts in NOK million | Cash flow hedges |
Hedges of net investments in subsidiares |
Cash flow hedges |
Hedges of net investments in subsidiares |
Cash flow hedges |
Hedges of net investments in subsidiares |
| Tax effect year-to-date | -63 | -65 | 41 | -41 | 39 | -45 |
| Hedging reserve after tax | -225 | -195 | 153 | -114 | 137 | -126 |
For financial instruments that are recognised at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation at the end of each reporting period.
The following measurement levels are used for determining the fair value of financial instruments:
• Level 3 — Valuation techniques (for which the lowest level input that is significant to the fair value measurement is unobservable)
There were no transfers from one level to another in the measurement hierarchy from 2021 to the 2nd quarter of 2022. Borregaard has no items defined as level 1. The bond is determined as measurement level 3. The fair value of the bond is deemed to equal its book value.
Set out below is a comparison of the carrying amount and the fair value of financial instruments as of 30 June 2022:
| 30.6.2022 | 31.12.2021 | ||||
|---|---|---|---|---|---|
| Amounts in NOK million | Level | Carrying amount | Fair value | Carrying amount | Fair value |
| Non-current financial receivables | 2 | 203 | 203 | 188 | 188 |
| Non-current derivatives | 2 | 18 | 18 | 136 | 136 |
| Current derivatives | 2 | 60 | 60 | 116 | 116 |
| Total financial assets | 281 | 281 | 440 | 440 | |
| FINANCIAL LIABILITIES | |||||
| Non-current financial liabilities | 2, 3 | 1,928 | 1,928 | 1,322 | 1,322 |
| Non-current derivatives | 2 | 237 | 237 | 30 | 30 |
| Current financial liabilities | 2 | 272 | 272 | 224 | 224 |
| Current derivatives | 2 | 125 | 125 | 32 | 32 |
| Total financial liabilities | 2,562 | 2,562 | 1,608 | 1,608 |
| Amounts in NOK million | Level 1 | Level 2 | Level 3 | |
|---|---|---|---|---|
| Financial instruments 30.6.2022 | -2,281 | - | -1,881 | -400 |
| Financial instruments 31.12.2021 | -1,168 | - | -768 | -400 |
The financial instruments are measured based on observable spot exchange rates, the yield curves of the respective currencies as well as the currency basis spreads between the respective currencies.
| Amounts in NOK million | 30.6.2022 | 31.12.2021 |
|---|---|---|
| Share capital | 100 | 100 |
| Treasury shares | - | - |
| Share premium | 1,346 | 1,346 |
| Other paid-in capital | 869 | 822 |
| Translation effects | 212 | 98 |
| Hedging reserve (after tax) | -420 | 11 |
| Actuarial gains/Losses | 41 | 41 |
| Retained earnings | 1,751 | 1,804 |
| Group equity (controlling interests) | 3,899 | 4,222 |
As of 30 June 2022, the company held 243,120 treasury shares at an average cost of NOK 200.97.
| Amounts in NOK million | 30.6.2022 | 31.12.2021 |
|---|---|---|
| Non-current interest-bearing liabilities | 1,926 | 1,320 |
| Current interest-bearing liabilities including overdraft of cashpool | 272 | 224 |
| Non-current interest-bearing receivables (included in "Other Assets") | -3 | -3 |
| Cash and cash deposits | -90 | -124 |
| Net interest-bearing debt1 | 2,105 | 1,417 |
| - of which impact of IFRS 16 Leases | 369 | 371 |
The members of the Group Executive Management of Borregaard held a total of 633,475 stock options in the Company as of 30 June 2022.
No impairment indicators have been identified in the Borregaard Group's property, plant and equipment or intangible assets in the 2nd quarter of 2022.
There have been no other events after the balance sheet date that would have had a material impact on the financial statements, or the assessments carried out.
In the discussion of the reported operating results, financial position and cash flows, Borregaard refers to certain measures which are not defined by generally accepted accounting principles (GAAP) such as IFRS. Borregaard management makes regular use of these Alternative Performance Measures and is of the opinion that this information, along with comparable
GAAP measures, is useful to investors who wish to evaluate the company's operating performance, ability to repay debt and capability to pursue new business opportunities. Such Alternative Performance Measures should not be viewed in isolation or as an alternative to the equivalent GAAP measure.
| MEASURE | DESCRIPTION | REASON FOR INCLUDING | |||
|---|---|---|---|---|---|
| EBITDA | EBITDA is defined by Borregaard as operat ing profit before depreciation, amortisation and other income and expenses. |
Shows performance regardless of capital structure, tax situation and adjusted for income and expenses related transactions and events not considered by management to be part of operating activities. Management believes the measure enables an evaluation of operating performance. |
|||
| EBITDA MARGIN | EBITDA margin is defined by Borregaard as EBITDA divided by operating revenues. |
Shows the operations' performance regardless of capital structure and tax situation as a ratio to operating revenue. |
|||
| 1.4 - 30.6 | 1.1 - 30.6 | 1.1 - 31.12 | |||
| EBITDA | 2022 | 2021 | 2022 | 2021 | 2021 |
| Operating profit | 346 | 314 | 637 | 509 | 952 |
| Other income and expenses | -12 | - | -12 | - | - |
| Amortisation intangible assets | 1 | 1 | 2 | 2 | 4 |
| Depreciation and impairment property, plant and equipment | 110 | 101 | 218 | 207 | 416 |
| EBITDA | 445 | 416 | 845 | 718 | 1,372 |
| 1.4 - 30.6 | 1.1 - 30.6 | ||||
|---|---|---|---|---|---|
| EBITDA MARGIN | 2022 | 2021 | 2022 | 2021 | 2021 |
| EBITDA | 445 | 416 | 845 | 718 | 1,372 |
| Operating revenues | 1,744 | 1,511 | 3,359 | 2,930 | 5,805 |
| EBITDA margin (%) (EBITDA/operating revenues) | 25.5 | 27.5 | 25.2 | 24.5 | 23.6 |
| MEASURE | DESCRIPTION | REASON FOR INCLUDING | ||
|---|---|---|---|---|
| EQUITY RATIO | Equity ratio is defined by Borregaard as equity (including non-controlling interests) divided by equity and liabilities. |
Equity ratio is an important measure in describing the capital structure |
||
| EQUITY RATIO | 30.6.2022 | 30.6.2021 | 31.12.2021 | |
| Total equity | 3,975 | 3,971 | 4,306 | |
| Equity & liabilities | 7,679 | 7,070 | 7,166 | |
| Equity ratio (%) (total equity/equity & liabilities) | 51.8 | 56.2 | 60.1 |
| MEASURE | DESCRIPTION | REASON FOR INCLUDING |
|---|---|---|
| EXPANSION INVESTMENTS | Borregaard's investments are either categorised as replacement or expansion. Expansion investments is defined by Bor regaard as investments made in order to expand production capacity, produce new products or to improve the performance of existing products. Such investments include business acquisitions, pilot plants, capital ised research and development costs and new distribution set-ups. In 2021, the major expansion investments in Borregaard were related to the investment in Alginor ASA and |
Borregaard's strategic priorities are special isation and diversification, increase value added from the biorefinery, develop business areas and to continue emphasis on ESG along the entire value chain. To be able to deliver on those priorities, expansion investments are needed. As such, expansion investments are important information for investors. One of Borregaard's financial objectives is to have an internal rate of return >15% pre-tax for expan sion investments. |
| the biovanillin capacity expansion. |
| 1.4 - 30.6 | 1.1 - 30.6 | ||||
|---|---|---|---|---|---|
| EXPANSION INVESTMENTS | 2022 | 2021 | 2022 | 2021 | 2021 |
| Investments property, plant and equipment and intangible assets |
81 | 125 | 168 | 220 | 701 |
| Replacement investments | -57 | -93 | -128 | -152 | -398 |
| Expansion investments | 24 | 32 | 40 | 68 | 303 |
| MEASURE | DESCRIPTION | REASON FOR INCLUDING |
|---|---|---|
| OTHER INCOME AND EXPENSES | Other income and expenses is defined by Borregaard as non-recurring items or items related to other periods or to a discontinued business or activity. These items are not viewed as reliable indicators of future earn ings based on the business areas' normal operations. These items will be included in the Group's operating profit. |
To be able to compare the EBITDA from year to year, significant non-recurring items not directly related to operating activities, are included in Other income and expenses. |
| 1.4 - 30.6 | 1.1 - 30.6 1.1 - 31.12 |
|
| OTHER INCOME & EXPENSES | 2022 | 2021 | 2022 | 2021 | 2021 |
|---|---|---|---|---|---|
| Other income & expenses | 12 | - | 12 | - | - |
| MEASURE | DESCRIPTION | REASON FOR INCLUDING |
|---|---|---|
| NET INTEREST-BEARING DEBT | Net interest-bearing debt is defined by Bor regaard as interest-bearing liabilities minus interest-bearing assets. |
Net interest-bearing debt provides an indicator of the net indebtedness and an indicator of the overall strength of the statement of financial position. Net interest-bearing debt is part of Borregaard's financial covenants (leverage ratio) and is important in understanding the capital structure. |
| NET INTEREST-BEARING DEBT | 30.6.2022 30.6.2021 31.12.2021 |
| Total non-current interest-bearing liabilities | 1,926 | 1,346 | 1,320 |
|---|---|---|---|
| Total current interest-bearing liabilities including overdraft of cashpool | 272 | 508 | 224 |
| Non-current interest-bearing receivables (included in "Other assets") | -3 | -3 | -3 |
| Cash and cash equivalents | -90 | -246 | -124 |
| Net interest-bearing debt | 2,105 | 1,605 | 1,417 |
| MEASURE | DESCRIPTION | REASON FOR INCLUDING | ||
|---|---|---|---|---|
| LEVERAGE RATIO | Leverage ratio is defined by Borregaard as net interest bearing debt divided by last twelve months' (LTM) EBITDA. |
Leverage ratio is an indicator of the overall strength of the statement of financial position. Borregaard has a targeted leverage ratio between 1.0 and 2.25 over time. Leverage ratio is one of Borregaard's financial covenants on long-term credit facilities. |
||
| LEVERAGE RATIO | 30.6.2022 | 30.6.2021 | 31.12.2021 | |
| Net interest-bearing debt | 2,105 | 1,605 | 1,417 | |
| EBITDA | 1,499 | 1,247 | 1,372 | |
| Leverage ratio (net interest-bearing debt/EBITDA) | 1.40 | 1.29 | 1.03 |
| MEASURE | DESCRIPTION | REASON FOR INCLUDING | |
|---|---|---|---|
| CAPITAL EMPLOYED | Capital employed is defined by Borregaard as the total of net working capital, intangible assets, property, plant and equipment, right of-use assets and investment in joint venture and associate company minus net pension liabilities. |
Borregaard uses capital employed as basis for calculating ROCE. |
|
| CAPITAL EMPLOYED (END OF YEAR) | 30.6.2022 30.6.2021 31.12.2021 |
||
| Capital employed (end of year) | 6,779 5,854 6,043 |
| MEASURE | DESCRIPTION | REASON FOR INCLUDING |
|---|---|---|
| RETURN ON CAPITAL EMPLOYED (ROCE) |
Return on capital employed (ROCE) is defined by Borregaard as last twelve months' (LTM) capital contribution (operating profit before amortisation and other income and expenses) divided by average capital employed based on the ending balance of the last five quarters. |
ROCE is an important financial ratio to assess Borregaard's profitability and capital efficien cy. One of Borregaard's financial objectives is to have ROCE >15% pre-tax over a business cycle. |
| RETURN ON CAPITAL EMPLOYED (ROCE) | 30.6.2022 | 30.6.2021 | 31.12.2021 |
|---|---|---|---|
| Capital employed end of: | |||
| Q2, 2020 | 6,091 | ||
| Q3, 2020 | 6,103 | ||
| Q4, 2020 | 5,904 | 5,904 | |
| Q1, 2021 | 5,884 | 5,884 | |
| Q2, 2021 | 5,854 | 5,854 | 5,854 |
| Q3, 2021 | 5,991 | 5,991 | |
| Q4, 2021 | 6,043 | 6,043 | |
| Q1, 2022 | 6,421 | ||
| Q2, 2022 | 6,779 | ||
| Average capital employed | 6,218 | 5,967 | 5,935 |
| EBITA | 30.6.2022 | 30.6.2021 | 31.12.2021 |
|---|---|---|---|
| EBITDA | 1,499 | 1,247 | 1,372 |
| Depreciation and impairment property, plant and equipment | -427 | -429 | -416 |
| EBITA | 1,072 | 818 | 956 |
| RETURN ON CAPITAL EMPLOYED (ROCE) | 30.6.2022 | 30.6.2021 | 31.12.2021 |
| EBITA | 1,072 | 818 | 956 |
| Average capital employed | 6,218 | 5,967 | 5,935 |
| Return on capital employed (ROCE) (%) (EBITA/average capital employed) | 17.2 | 13.7 | 16.1 |
| $\cdots$ |
|---|
| $\cdots$ | ||
|---|---|---|
| ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | ||
| . | ||
FÆRD.no
Borregaard ASA P.O. Box 162, NO-1701 Sarpsborg, Norway Telephone: (+47) 69 11 80 00 Fax: (+47) 69 11 87 70 E-mail: [email protected] www.borregaard.com
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.