Byggma ASA — Earnings Release 2021

Nov 4, 2021

BMA - Interim Report for the Third Quarter of 2021

BMA - Interim Report for the Third Quarter of 2021

The Group achieved a profit before tax in Q3 2021 of NOK 53.4 million, compared to NOK 46.2 million for the same period in 2020. Profit before tax in the nine first months of 2021 was NOK 156.0 million, compared to NOK 100.4 million in the nine first months of 2020. The operating profit for Q3 2021 was NOK 55.6 million, compared to NOK 50.9 million for the same period in 2020. The operating profit for the nine first months of 2021 was NOK 160.9 million, compared to NOK 134.5 million for the nine first months of 2020.

The operating profit in Q3 2021 is higher for the Beams segment compared to the same period in 2020. The Panels segment and Windows segment have lower operating profit, while the Lighting segment is on the same level.

The Group’s sales revenues in Q3 2021 amounted to NOK 546.0 million, which is NOK 64.4 million higher than for the same period in 2020. The trend in sales revenue in Q3 2021 is positive in all segments compared to the same period in 2020, except for the Windows segment that has some lower sales revenues. In the nine first months of 2021, sales revenues were NOK 1,712.4 million, compared to NOK 1,504.4 million in the nine first months of 2020.

Net financial expenses in the nine first months of 2021 amounted to NOK 4.8 million, which is an improvement of NOK 29.3 million compared to the same period in 2020. The main reason for the reduction in net financial expenses is the gain on the market value of the interest rate swap in the nine first months of 2021 of NOK 10.5 million, compared with the loss of NOK 19.1 million in the nine first months of 2020. Net interest expenses (incl. payment for interest rate swaps) amounted to NOK 14.5 million in the nine first months of 2021, which is NOK 0.6 million higher than for the same period in 2020. Of the interest expenses of NOK 14.5 million, interest on lease obligations amounted to NOK 3.0 million, which is NOK 0.2 million lower than for the same period in 2020.

The liquidity reserve as of 30 September 2021 amounted to NOK 246.7 million, a decrease of NOK 549.9 million from 1 January 2021 and a decrease of NOK 491.6 million from 30 September 2020. Paid dividend of NOK 558.6 million explains the lion’s share of the decrease. The Board of Directors will maintain its focus on capital and cost-efficiency.

Interest-bearing debt increased from NOK 597.0 million as of 1 January 2021 to NOK 644.6 million as of 30 September 2021. In 2021, long-term debt increased by NOK 45.7 million, of which NOK 7.2 million are due to new lease agreements.

Investments made in tangible fixed assets and intangible assets year to date of 2021 totalled NOK 70.2 million, which is NOK 30.9 million higher than in the same period in 2020. Of the investments made, capitalised lease agreements amounted to NOK 7.2 million.

Total assets decreased from NOK 2,131.9 as of 1 January 2021 to MNOK 1,757.9 as of 30 September 2021.

Booked equity as of 30 September 2021 was NOK 548.8 million (31.2%), which is a decrease of NOK 441.4 million compared to 1 January 2021 (46.4%). The reasons for the change in equity are due to the year-to-date result of NOK 122.0 million, dividend payment of NOK 558.6 million and a negative conversion difference of NOK 4.6 million.

Outlook

The Covid-19 pandemic has had only limited consequences for Byggma as of Q3 2021. The inflow of orders is good, and production at the factories and deliveries to customers are generally going as planned. Group management and management of the individual subsidiaries are following the situation closely and have taken

measures to limit any negative consequences, which the outbreak may have for employees and operations. If building materials outlets close and construction projects stop, this may have an impact on Byggma. Furthermore, restrictions any countries may make on retail trade could have an impact on access to input factors in production and sales revenues from these countries. The availability of input factors to production is intact, and significant elements of the input factors come from Norway and Sweden.

The forecast for the sale of new housing in the Norwegian market shows a positive development of 15% in the nine first months compared with the same period in 2020. Commission of newbuilds has increased 7% for the same period. The largest growth is in the detached houses market, with a growth of over 21% in sales and 27% in commissioning, while small houses have seen a growth of 9% in commissioning and 6% in sales in the nine first months of 2021 compared to the same period in 2020. This is positive for the company, as this is an important arena. Sales in August/September shows a decrease of 23% compared to the same period in 2020. Commissioning has increased 7% for the same period. The decrease in sales in August/September can lead to lower activity towards the end of Q2 2022. The activity is expected to grow from a relatively low volume of around 23,000 new homes per year to around 26,000. We are still experiencing high activity in the renovation and extension market. This market is expected to maintain a high activity, on level with 2020. There is uncertainty connected to the steep price increase on timber and building materials.

The market development has meant that the input factors for several of the segments are considerably more expensive. Byggma has implemented price increases with effect from 1 October 2021.

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

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. We are still experiencing a high growth in demand for Byggma’ s products outside Norway.

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. The 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 digitisation and automation of the production processes, including the environment and sustainability.

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.

Byggma Group aims to be an attractive employer. We will continue to focus on ensuring that all employees in the Group have the opportunity to realise their human potential through their employment at Byggma.

Vennesla 4 November 2021

The Board of Directors of BYGGMA ASA