Welcome to this presentation of Debit's results for the 2nd quarter and first half of twenty twenty one. My name is Christian Bekken, and I am the CEO of Debbie. With me today, as always, I have our CFO, Marie Donaldson, who will take you through the financials. Our presentation includes some forward looking statement, so I would like to point your attention to our disclaimer. I will start with some highlights for the quarter before Marie will go more detail into our numbers.
We are very pleased with the result this year, both for the quarter and the first half of the year. The results for the quarter are by far the strongest result we have ever had, and we delivered significant growth over last year. This graph shows our net sales and EBITDA for the last 12 months. The results are most of all driven by a strong demand in all our markets. This has resulted in higher volumes sold in all our segments, which is the most important to us.
As you all know, there has been a shortage of All kinds of raw material this year causing an upward pressure on prices. This includes our most important raw material styrene as well as the price of EPS bids, which is the product we sell in segment growth. In addition to the strong result, Our operation and growth initiatives are processing as planned. Our operation performs stable and well. We have ramped up our recycling volumes in Portugal And we have completed the acquisition of both paper packaging company Honeycomb, Sellback and Isoprok.
On Monday this week, We also announced that we are initiating a refinancing process, enabling us to take our growth ambition to the next level. Now I will briefly take you through some numbers and highlights for the quarter. For the Q2, net sales are up by 88% compared to the Q2 of 2020. 27% of that are organic coming from higher volumes and increased sales price in all segments. We have an adjusted EBITDA of €31,600,000 almost a double of the same quarter last year.
This is our best quarter ever. In the Q1, we saw a historically sharp increase in the styrene prices and the price was at a historical high level already. This positively affected both revenues and profitability for segment raw while putting some pressure on our margins in the Downstream segment. As we have explained before, the sales price adjustments to our customers in our Downstream segments like approximately 1 quarter. This was also the case for the Q2 as the price of raw material continued upwards.
For the first half year of 'twenty one, we record revenues of EUR347,000,000 65% up from the first half twenty twenty. 60% of the growth is organic coming from higher volumes and of course higher prices. The strong market provides us with a strong result, but I would also like to underline that we outperformed the market. Part of this explanation is our integrated and diversified business model But once again proves us to be an advantage to us. It gives us stability and protect us against negative impacts in markets or other incident Like we have spoken about during our period now in COVID-nineteen, but the very same model also gives us opportunities To take advantage on strong market demand as we have and are still seeing in segment growth.
We have done what we can in segment growth to support our customers. We produce more, we are destocking our storage that put pressure on our logistics and of course we take out higher margin. This is one of the ways we outperform the market. In addition, I would take this opportunity to also Explain why our integrated model is important for our ability to become a circular company, which is a high priority to us. There is a major difference between being a company that recycle and a circular company.
Being Integrated enable us to be fully circular. We collect used material, we recycle and we use the recycled material into our production of new products. Higher raw material prices gives higher recycled material prices as well. And not only does this give more profitability to our circular companies, it also gives us recycled products with higher attractivity. And this puts positive pressure on everybody to change into circularity.
In other words, our integrated business model enables us to outperform the market, not only measured in result, but also in sustainability, positioning BEV in the lead of the change towards share clarity in our industry. In BEV, we have a strong focus on growth. Although the solid result this year provide us with a Solid financial position, we have recently initiated a refinancing process where we intend to establish a new financing framework. We do not do this because we have to, but because we have high ambition ambitions to take this company to the next level through attractive M and A opportunities. Marie will say more about this later on in the presentation.
But for example, one of the important thing, as I already have mentioned, is that we are going to continue to be the leading recycling consolidator in the market. We have several ongoing growth initiatives and there Here is some selected projects. In March, we announced our plans to establish a state of the art packaging hub at Houston Eyja. Here we will not only build our most modern and efficient fish box facility, but we will also be that will also be our most sustainable facility handling increasing volume of recyclable boxes, reusable pellets and other products for fish farming industry. During the Q2, the plans for the new home have progressed and we have entered into a conditional long term lease agreement with KMC Properties, We is responsible for setting up the facility and we have started the pre phase project.
As mentioned before, We also have a new box facility at Senja next to St. Marj new processing plant in Vanuyl. The facility is now ready for production. Our recycling facility in Portugal has wrapped up during the 1st 6 months, And we can now say that we are in full production. The facility has a capacity on approximately 10,000 tons.
Then at our installation center in Gurskoping, we have invested in a modern extrusion technology. The new technology will improve our production and efficiency, But most importantly, it will enable us to increase our use of recycled material in our production. Production at the Express line in Nynwusha being started towards the end of the Q2. Moving on to our acquisitions. We announced our agreement to acquire the majority late April.
And I spent some time on our Q1 presentation to explain why we think is a very good match. During the Q2, we work to finalize the agreement and to complete the transaction. We did that early in July. This agreement is a good example on how we work when we look to companies to acquire. We started this project 3 years ago and during these years we have looked into the market.
We have spent time with the management. We have been looking for synergies. We have been looking for opportunities to strengthen EsoBLOC in the near future. This time and analyze is why we believe this company will be strengthening Bevy in the long term. These resources and the time we also use is why BV often have success in our integration process later on.
Isabrok is the market leader in Europe for EP components to the automotive industry. And yes, we all know that automotive industry has been struggling for the last here, first due to the pandemic and now to the shortage of electrical components. At the same time, this industry is undergoing a major transition, going from conventional combustion engine to 0 emission electrical cars. We believe that ISUBLOG It's in an excellent position in this industry and we believe that the EPP components are excellent use in cars. They are shock absorbing, noise reducing and can replace other components to reduce weight.
This means that less energy is used, lowering emission from fossil cars and extending the range for electrical cars. Late July, ISBLOC was awarded 1 of the largest Nominations orders in the industry from German company Adient. The order is for car seats made out of EPP and it's worth approximately €50,000,000 And this will boost EZBROAD's revenues from 24% to 32%. And with that, Marie, I leave the word over to you.
Thank you. Good morning. Then we look more closely into the financials. As Christian was mentioning, this is again a quarter where we grow from both acquisitions and organic growth. And the organic growth is, of course, a mix between price and volume and also product mix.
But essential is that we grow volume wise in all four segments. The biggest impact from price you will find in raw where you have a lower impact from the price in our downstream segments, which means that the organic growth that you see is more coming from the increasing volumes. EBITDA has more than doubled. We end at 31.6 compared to 15.7% last year. And again, it's coming from the acquisition and it's coming from our segment ROA, where you find a lower contribution from or downstream segments for reasons that you are aware of.
To summarize before we go into the individual segments, we want again to highlight that we do Experience a very strong market in all our segments, in all our regions. Our operation is working Extremely well right now. We have a business model that again proves to be very robust Where we in times when we have highly increasing raw material prices as a group generate a very solid result even if we have lower contribution in our downstream currently. We have continued our growth journey with both Acquisitions and the investments in growth, organic growth opportunities as Christian is mentioning. And we also see the outcome from previous quarter's initiatives in our numbers in this quarter and that again means that we do the best quarter ever this second quarter.
If we then look into segment ROA, We have increasing volumes and of course also have a price impact on the top line, but we do also a fantastic EBITDA in this quarter. That comes from the volumes and it also comes from that there is a good market. We can sell the volumes that we produce to a very attractive price. But not just that because it's easy to say that it's a strong market, But we also have an operation of it in all the function that do it better and better. That means that procurement, They do a better job.
Our sales team in law do a better job and the operation is doing a fantastic job with continuously improving the production volumes. And the strong market, We do believe that that will continue for the rest of this year. In packaging and components, we have a top line that has increased approximately €30,000,000 compared to Q2 last year. €20,000,000 of that is coming €20,000,000 of that is coming from the decisions and €10,000,000 is coming approximately from the organic growth. There are 2 things to keep in mind here.
We do have lower volumes this quarter in Norway when it comes to fish boxes. And as you are aware of that goes Up and down from quarter to quarter. But Norway is in general product that As a higher margin, so we do have a margin dilution in this quarter due to this. But all in all, the volumes are higher in this year. Time flies and as you might recall, it was actually the Q2 last year, we Experienced first the impact from COVID.
And even if we were not that much impacted, We did have some lower volumes in the Q2 in particularly in segment packaging and components. So when we say that we have increasing volumes, it's easy to believe that, okay, that is due to that the Q2 last year was not that strong. But the volumes that we have in this quarter is actually higher than we also had in the Q2 in 2019. So we are growing. If you look at the EBITDA that has increased, it's all coming from acquisitions.
We do have lower contribution from our own building, if we call it that. Again, it is Because of regional product mix, we do have less sales in Norway in this quarter. They are picking up again in the Q3. It Goes up and down. It's not related to any market.
It's not related to customers. It's only due to the slaughter volumes in a specific quarter. And again, it's coming from that we do have the heavily increase in raw material prices where we do have a lag in the price adjustment towards the customers. So that means in the next quarter, the full impact from The price increases related to the upgone raw material prices will impact the numbers in the segment. EsoBLOC, we closed, as Christian mentioned, in July.
That means that as from The Q3 is a block will be consolidated into the group's numbers and that will be 100% into the packaging and component segment. Then we go to Insulation. And Insulation is as the other segments segment that is growing both organically and through acquisitions. We are very happy that the Netherlands are growing. They had decreasing volumes throughout 2020.
We saw a shift in this by the end of last year. They continue to grow in the Q1. They continue to grow in the second quarter. And yes, as for packaging component, it's just when you compare not only when you compare to 2020 and a quick quarter, if I call it that, It's also compared to 2019. It might stick out, but in this Segment we do have a lower EBITDA also with the acquisitions contributing positively And that is again due to the lag that we have in price adjustments to the customers.
And in Insulation, we have a higher percentage of raw material in the bill of material, which means that Insulation is more impacted from this Lag in the price adjustment compared to packaging. But this will again then catch up in the Q3 now when the prices have started to Stabilizes and decreased to some extent. Minority interest, this is a slide that we have had in our presentations from time to time and it's More to highlight how the joint ventures that we do have are reflected into our financials. We have a couple of joint ventures and the biggest one is in Germany and in France related to insulation And then we have some smaller ones as well. How we take this into our numbers is that we take our owner share of net Profit.
And if you look at the middle of this slide, you can see that our share of the net profit and what is consolidated into our financials is the €2,500,000 However, if you look at the performance of these companies, They have had an EBITDA year to date at €13,400,000 a few lines up. And in a normal valuation environment, we would have taken a percentage of EBITDA, which is the 4.8. So there is a difference between what we do consolidate and what would have been reflected in that normal valuation, so to say. So this is to highlight and it's also worth mentioning that we have extremely good Contributions from these minority interest and especially then from France and Germany that are the big ones. If we look into our consolidated full income statement, I I think that spoken about most of this.
We have an increasing net sales. Again, it's volume, it's acquisitions, it's prices that impacts. What you see is the raw material percentage is increasing as a percentage of sales due to and increasing raw material prices and considering that we cannot adjust sale prices instantly in our downstream. You might also notice that we have a higher goods for resale That is coming from BH. That is a trading company mainly production as well, but a lot of trading.
Personnel, of course, increases, depreciation increases, everything comes from all the acquisitions that we have done. Also maybe worth mentioning is that when I say that we have a good contribution from our joint venture, you might notice here that we We have a lower number this quarter compared to Q2 last year, but that is only due to that we had Acquisition adjustment for our entity in France last year with a positive 3.5. So underlying, they performed 0.0 last year to compare with 2.1 this year. Financial net has increased and Part of that is a revaluation of shares, hasn't anything to do with cash flow and the underlying tax Rate is at 27 percentage. Then shortly on the balance sheet, we have a net debt that amounts to €185,000,000 It's 106 if you exclude IFRS 16.
It has increased compared to year end. This is driven mainly by working capital. You will find that in the bottom where you can see that we Increases or working capital with the seasonality that we do have in our business. And on top of that, we also have an impact From the increase in raw material prices, which means that we tie more working capital throughout the value chain until the end of the year when it comes back. We did a private placement in the Q2 and those money will be used to pay for EsoBLOC.
And for those of you that might reckon that that then impact the leverage positively, That is yes, but we also have an extremely high working capital this quarter. So I would say that the trend of a decreasing Leverage where you can compare the 1.5 to year end and a decrease from Q1, That is a fair leverage number. We have also reclassified 1 of our bonds From being non current to be current, and that is due to that we have a majority in April on that one. And then lastly, a little bit about the Refinancing process that we initiated earlier this week. What we intend to do is that we Would like to redeem the 2 outstanding bonds that we have.
It's a total volume of EUR140,000,000. We want to replace that with a new bond with up to €160,000,000 intention is that that will be unsecured. It will
be a
sustainability linked bond. We think that this is the right thing to do, not only because of All the acquisitions and initiatives that we have in our pipeline, but also to continue to integrate our sustainability mindset in all our principles or in all our processes. So that has been a given for us that this needs to be Sustainability Linked Bond. And with that, we will also increase the credit facility that we have. I don't think it's not much to say about the cash flow.
We have a Positive cash flow, operating cash flow in this quarter and that is even though we have had High impact from increasing working capital. We have spent approximately €8,500,000 in CapEx. More than €2,000,000 of that is coming from our organic growth initiatives with Senia being one of those initiatives, for example. And with that, back to you.
Thank you, Mariel. I will now comment on the outlook for the next quarter. We are now well into the Q3, And we can say that volume development remains solid into the quarter. We continue to experience strong demand, and we Expect this to continue the rest of the year, as Marie said. The prices seems to be stabilizing on SMEs.
And official figures currently forecast the gap in buying a little bit higher than Q2 for EPS fees. And this is, as we have said, positive news for segment growth. And margin in Downstream segments is expected to catch up now when the raw material prices has stabilized. Summing up, we are well positioned for further growth. We have a solid operational performance providing us with a positive cash flow.
We have a proven business model that also gives us the opportunity to outperform the market. We experienced strong underlying demand. We have a robust financial position, and we will continue to pursue growth opportunities in line with our strategical priorities. And with that, I would like to open for any questions.
Okay. We have received Few questions from through the webcast. We will start with the first question from Herman Dahl, an analyst in Nordea. He says that Q2 was obviously an outstanding quarter, but that is also making it hard to compare it, give a little bit again With Q2 twenty twenty, can you give us some color on the split between increased prices, M and A growth and organic volume growth Across all segments. I guess, Marie, you will answer the question.
Yes. It is a tricky question because one? We cannot compare due to product mix and you have a regional mix As well in there and we have trading operation. But I think that what we can say is that in segment raw, we have a volume growth of Approximately 5% and residual 95% is priced then. And then you have a Lower impact in the other segments where you have volume increases that are more Close to 60 percentage and a price that is more 40 percentage.
But then keep in mind that in that you also again you have a Regional mix and you do have a product mix. So you need to take it for what it is.
Okay. We have another question from Herman as well. On the raw materials side, are you seeing any large greenfield projects Impacting the market balance in the European EPS market?
There is often debottlenecking So there is up and coming more capacity year on year in the market, but It's at least over 10 years since there was a greenfield project in segment raw, and we would have known if there were a big startup or something in Europe. So the answer is no.
And then a follow-up question regarding M and A activities. Are there any specific downstream market verticals You are now particularly focusing on in the M and A strategy?
Yes. As I have said numbers of times, when we do acquisitions, We do them in a separate way and there are at all times several acquisitions opportunities we are looking into. We are, as I refer again to Isobuq, having plans which have been there for 3 years. And we will continue to do it in this way. And as I've said earlier, I've said that we will continue to grow, especially in the recycling business so that we will reach our target on 60,000 tons.
We see a favorable insulation market to continue. And we also see both packaging attractive and we have, as you have seen now, acquired companies within the Paper Packaging segment. And we will continue to strengthen those position in addition to follow our geographical clear strategy to build ourselves up in Europe.
Okay. So last question. We have another question from saying that what is the rule of thumb Time lag from price expectations from raw into the other segments. Is it typically automatically correlated and already in agreed Form with giants in the downstream segments or is there other mechanisms, for example, competition impacting this?
Of course, it's competition always impacts the market. But we try to push the prices forward in this segment, obviously. And that, as we have spoken about now, is easier when the demand is high. And that, of course, is an additional push on prices. But in general, this is a market which works on a general stable level on pushing the prices forward.
But I will add on to what we have repeated in this sale as well. So we outperformed the market by being strategical in both our procurement and our sales of our product by destocking and buying forward contracts and so on. But then again, as I said, numbers time limited to a quarter in the time.
Yes. So summing up your answer is saying that the rule of sum, if there are any, is Approximately 3 months from the raw increase raw material increase until the prices
Yes.
Yes.
And we like to say that we try to outperform that at all time and we have done historically.
Okay. So then there's a question from Anders Hillebaul. You expect Q3 earnings in line with Q3. I guess that has to be Q3 earnings in line with Q2. Roughly, how much of the Q3 earnings will come from ISOB?
It's a difficult question, and it's No, it's a difficult question. It's a newly acquired company. We will continue to pursue more Control over the company, obviously, and more knowledge about the company, but the situation in their industry is in a very difficult position where the producers of cars have challenges with other products than our products. So that depends basically on that. So We would continue to believe that this company will softly or slowly ramp up to the normal level we have seen historically.
We don't expect that to happen next quarter. So basically, it will have little influence on our numbers Q3. That's the answer.
Okay. And then we have another question from Markus Kupec. How big do you think is the effect Of EsoBLOC on the packaging and components segments in the rest of the year in terms of sales and EBITDA?
Repeating my answer, it will have a low effect on the result due to the situation in the automotive industry. Obviously, you will have a turnover, which is if you analyze and just around €20,000,000 your own will impact on the result. We expect, as we have said before, this to improve in the next year. In the next year, you saw when we acquired the company and the company has an EBITDA about 10% in a normal year. So then you can add up the figures at that time.
But in the coming first half year, we don't expect the automotive industry to ramp up due to the lack of material or electrical components in automotive.
Anything you would like to add? No. No. Good. So we don't have any other Questions right now, let's give it 30 seconds.
Anyone wanting to add another question, please use the The function in the webcast window, and if you have other questions, you're welcome to contact us. I think there seems to be no more questions. So with that, I think we will conclude the presentation. As you also can see from the slide, We are planning a Capital Markets Day in late September. It's going to be the last week of September.
We don't know the exact date And place, probably Oslo or Freya. So we will come back to that as soon as possible. And with that, I think we conclude the presentation.
Thank you for your time.
Thank you.