Byggma ASA

Report Publication Announcement • May 17, 2023

BYGGMA ASA - An English version of the already published Q1 2023 Interim Report is now available

BYGGMA ASA - An English version of the already published Q1 2023 Interim Report is now available

The Group’s sales revenues in Q1 2023 amounted to NOK 636.7 million, which is NOK 63.6 million lower than for the same period in 2022. The trend in sales revenue in Q1 2023 is positive in the Windows and Lighting segment, but lower for other segments compared to the same period in 2022.

The Group achieved an EBITDA in Q1 2023 of NOK 114.5 million, compared to NOK 101.9 million in Q1 2022.

"We are experiencing reduced activity in the building sector. We are happy that our operating revenues in Q1 2023 are significantly less reduced than the general development in the sector. This implies that Byggmas position within the sector is strengthened during the quarter," says CEO Geir Drangsland.

The operating profit for Q1 2023 was NOK 92.4 million, compared to NOK 81.6 million in Q1 2022. The operating profit in Q1 2023 is higher for the Panels segment, but lower for the other segments compared to the same period in 2022.

"Byggmas operating profit and operating margin increased materially in Q1 2023. We are very happy that our profitability has improved in these challenging times," says CEO Geir Drangsland.

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 -15.6 in Q1 2023.

The Group achieved a profit before tax in Q1 2023 of NOK 55.4 million, compared to NOK 86.9 million for the same period in 2022.

In Q1, net financials amounted to an expense of NOK 21.4 million in 2023, which is NOK 31.5 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. Year to date, net interest expenses (incl. payment for interest rate swaps) amounted to NOK 18.6 million in 2023, which is NOK 13.9 million higher than in the same period in 2022. Interest on lease obligations amounted to NOK 0.8 million, which is NOK 0.1 million lower than for the same period in 2022.

The liquidity reserve*) as at 31 March 2023 amounted to NOK 206.9 million, a reduction of NOK 112.4 million from 31 March 2022 and a reduction of NOK 101.7 from 31 December 2022. The Board of Directors will maintain its focus on capital and cost-efficiency.

Interest-bearing debt*) increased from NOK 1,462.5 million as of 1 January 2023 to NOK 1,555.8 million as at 31 March 2023. Year to date 2023, long-term borrowings of NOK 8.3 million was carried out, of which all are due to new lease agreements.

Investments in tangible fixed assets and intangible assets year to date 2023 totalled NOK 21.8 million, which is NOK 5.2 million higher than in 2022. Of the investments made, capitalised lease agreements amounted to NOK 8.3 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 of 1 January 2023 to NOK 3,041.0 million as of 31 March 2023.

Booked equity as of 31 March 2023 was NOK 881.1 million (29.0%), which is an increase of NOK 48.4 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 39.9 million, a currency translation difference of NOK -2.0 million, loss on financial investment booked in OCI of NOK 11.0 million and share of other comprehensive income from associate of NOK 21.7 million.

Outlook

Byggma monitors the housing market continuously, as this is an important arena for the company. We see somewhat lower activity in some areas of the market but are experiencing increased sale of new product launches introduced to the market. During the last 12 months there are sold 16,541 and commissioned 20,614 housing units in the market for newbuilds. The need for housing units have been increased to 29 000 which can lead to serious consequences for the housing supply if the trend continues leading to pent up demand. Meanwhile, we are still experiencing high activity in commercial buildings and public buildings. The renovation and extension market is expects to see growth as the market to a large extent don’t change residence.

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 a price decrease 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 are continuously considering various strategic adaptions 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 digitisation and automation of the production processes, including the environment and sustainability.

As per 31 March 2023 Byggma ASA owns ca. 18,0 % of the share capital in Norske Skog ASA and the CEO of Byggma is elected as chairman of the board in Norske Skog. Together with related party Drangsland Kapital AS, Byggma controls ca. 23.6% of the shares in Norske Skog.

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 of the boards 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 realise their human potential through their employment at Byggma.

Vennesla 16 May 2023

The Board of Directors of BYGGMA ASA