Okay. I think we will start. I would like to welcome you to Bevy's first Capital Markets update, actually our first the presentation since we were listed in Oslo 1 year ago. My name is Charlotte Knutsen. I am responsible for and communications in Bevy.
I appreciate you take the time and also you following us on the webcast. We are really looking forward to share our story with you. First, I would like to point your attention to our disclaimer. The presentation includes a lot of forward looking statements. So please take a moment to read.
I will briefly take you through the agenda of today. Many of you have already met with our CEO, Christian Becken and Marie Danielsen, the CFO, as they conduct most of the Investor Relations meetings with investors quarterly presentations. Christian will talk about our growth ambitions before leaving the word to our Chief Operating Officer, which is Jonas Silichard. Camilla Bjerkle, our Director of Sustainability, We'll talk you through how we will become a circular company and how we will reduce our CO2 footprint. Willem Newman, our Director of Research and Development, will talk about innovation across our value chain.
And finally, Marie will put it all into perspective before Christian will give us give the concluding remarks. We will have a Q and A session after all the presentations, and all the presenters will come up for the Q and A. To those of you following us on the webcast, you can post your questions throughout the presentations, and we will try to answer them all in the end. We will take a short break after Camilla's presentation, which will be approximately 10, 20, 25 maybe. So we will give you a 1 minute introduction to Bevy.
Ever since our beginning in the Norwegian Archipelago, We have kept salmon fresh, delivered safe transportation for millions of meals And provided safe packaging for medicines and organs. With production facilities all across Europe, That keep houses warm and families cozy. We protect people by making shock absorbing components for
Cars,
bike helmets and child seats. We have facilities for recycling large Volumes of our packaging and we're using the material to create new products. By managing the entire chain From raw materials to the finished product, we can close the loop and lead the change towards a circular economy.
And with that, I will leave the word to Christian. Christian has grown up with BEV. He's actually grown up at BEV at the facilities. His father, Sven Becken, which is also here today, Founded Bevy with Christian's anchor, Gustaveitsa. And the Bakken family is still Bevy's largest shareholder.
Christian has been employed by Bevy for almost 20 years. He has been working in a range of different positions in the company. And in my opinion, he has an extreme attention to details. So he knows our company very well.
Thank you, Charlotte. I would have said that it's Nice to see you all, but I'm too nervous to feel nice. So first of all, I would like to thank Also my father, Sven Becken, the founder of BEV, for what he has started and to remind everybody that we and the company is now harvesting on many, many years of hard work and good decisions made by people. But most of all, I would like to thank the many people in BV organization Who is a part of BV today, bringing forward BV every day. My presentation is focused on how we plan to continue to grow.
Since my father and uncle started the company back in 1980, we have been on a journey, and we are still only in the early phases of this journey. Our vision in BEV, protecting people and goods for a better every day. This is not just words. We are really proud of our vision because it really capture exactly how we create value to our customers, our employees, The society and our owners. These images are all examples of how our solutions create value and how they protect people and goods.
Bicycle helmets, protecting people, food packaging, medicine packaging and so on. All these solutions are examples of high value products made by our own downstream segments to a range of industries and end users. And this is one of the key points in today's presentation, how we create value for our customers by offering specialized solutions that protect people and goods Yes, in Norway, we are mostly known for being a fish box producer to the salmon industry. Our history started at Freya Producing fish boxes, and we are still one of the largest fish box producers. But this is only now what makes approximately 15% of our revenues.
Nevertheless, a common factor for most of our products and solution is the benefit they offer. They are light white, Shock absorbing and has a superior thermally efficiency. They are cost efficient. They are durable, versatile and moisture resistant. For example, expanded polystyrene or EPS as we call it, consists of 98% air, and air is the best insulation you can get.
This makes our products extremely well suited for certain product groups. It insulates well In construction projects, it's easy to customize, making automotive parts, technical components, and it's the best way to protect food in transportation. Today, we almost only use material that is 100% recyclable, but one of our sustainability goals is to only produce recyclable products. We know that our license to operate is to only provide sustainable solutions in a circular value chain. And this is another of our key points in today's presentation, how we are working to become a circular company with circular value change for all our products.
We will talk a lot more on that topic today. To us, the materials We use and the markets we operate in has provided us with very good opportunities. As mentioned, we have been on a journey. From 2014, we have 6 doubled our revenues through both organic growth and 20 something acquisitions, Resulting in a corrugated growth of above 30%. The acquisitions includes a few transformative acquisitions Like StyroChem in 2014 when we bought our raw material supplier and became an integrated company And acquisition of Simba Holding in 2018 and many smaller acquisitions or add ons, you may say.
Our journey of growth has provided us with a strong market position. Through our 40 plus years of growth and M and As, We have moved from being a local Norwegian producer of fish boxes to a leading European provider of packaging, components and insulation solutions. With a broad European coverage with very local presence and know how. We have 44 facilities in 9 countries Or 60 facilities in 12 countries if we include the companies we hold minority interested in. We are located where our customers are, and we have over 2,000 employees who are all experts in their Customers and industries locally.
Our presence and know how have resulted in a long lasting customer relationships And enabled us to become a leader in both innovation and in circular solutions. PFE is the largest player in our industry in Europe, and we strongly believe in the competitive advantage our integrated model gives us. What does it mean to be integrated? It means that we produce our own raw material, Then we sell it both to external customers and to our downstream segments. In our downstream segments, we produce end products.
Before we collect those products again, we recycle it and we produce new raw materials again. And at this point as well Where we can outperform the market, being smart, selling the raw materials to external customers when that has an advantage On the contrary, when it doesn't have an advantage. Throughout the value chain, we have extensive industry knowledge, And our model has provided us with stable earnings in very volatile markets. Just to mention a few example, The oil price crashed 1.5 year ago. The pandemic, the consequences it gave us For the automotive industry, for the food industry, for the e commerce, to the current situation we see today With very high commodity prices and shortage of electrical components, and so the world goes on with many challenges.
For us, our integrated business model combined with our diversified end user base has proven to be a competitive advantage, Not only working as a stabilizer to our earnings, but it's also crucial to becoming a fully circular business. As mentioned, our diversified end user base has been a competitive advantage to us. We have currently divided our Downstream into 2 segments, insulation and packaging components. However, many of our technical components, The ones we deliver, which are a part of the Packaging segment, is delivered to the building and construction industry as we provide components to the heating, ventilation and air Conditioning Industry, HVAC, we call it. Within the Packaging segment, we have significant number of different end markets Such as food packaging, protective packaging, pharmaceuticals as you saw, automotive and so on.
All these market demand specialized and custom made products. And although the Insulation segment might seem quite commoditized, we have actually a range of specialized products in this segment as well. Some of them was shown in the movie. And the profitability is always where we add on the most value to our customers. In addition to being diversified across end markets, we are also diversified across regions.
Through the pandemic, we noticed that the different countries we operate in were in different phases when it came to restrictions, resulting in different Markets being affected at different times. Today, we are a European leading player with strong market position in most of the markets we operate in. And we have strong positions where we have sorry and where we have strong positions, we are also a specialized provider. Like insulation in the Netherlands, where we deliver high value added products, and like fish boxes in Norway, where the specialty lies also in the transportation, The logistics and the flexibility and the delivering capacity as well. We create the most value in the specialized markets where we have these strong market positions.
We believe that it is important to have strong market positions, and therefore, we will continue to consolidate the market and strengthen our positions. Now I have talked about our growth journey and where we are today. This has provided us with a very solid foundation for further growth. So now I'll run you through some opportunities ahead of us. We operate in growth markets.
These are 3 of the most important end markets going forward. And according to market analysts, they are set to have a 4% to 5% corrugated growth over the next 5 years. Summing up to an expected volume growth of 25% in this period. It has always been important, And it's still important for our company to position to take advantage of these markets. Looking at the construction market, where we are the market leader in Netherlands.
Through our acquisition of Esobau, A part of the Sumbra deal, as you can see from this graph in Netherlands, make up around 50% of our sales in the Insulation segment, Although less than 50% of the volume goes to this region. This means that the prices and the margins are higher in the Netherlands as the market is very advanced and with a high degree of value added products in our portfolio there. For example, the picture here, you see Slimfort, the product. On the other hand, we have the Nordics, which is more of a commoditized market with higher competition. We believe there is a potential for improvement in the Nordics, Including increased use of high value added products and further consolidation as well.
The whole of Benelux region has a similar product and market dynamics as the Netherlands. And therefore, we are looking for further strengthening our position in that region. Therefore, we have recently announced that we are progressing to finalize the acquisition of an insulation company in the Benelux regions. This is a good example on a typical transaction for BV, A well run company with a broad product offering where we see good synergies and cross selling potential. Here we strengthen our position in a profitable growth market.
Further to the automotive market, We currently experience a serious shortage of semiconductors, as we all know, following a significant impact from the pandemic in 2020. However, this industry is expected to grow, and the growth will mainly be driven by the boom of electrical cars. SBEV is a provider of EPP components, expandable polypropylene To cars, this means 2 things. 1, the number of cars produced in general is set to increase 2, the use of EPP components in electrical cars and in each car is also expected to increase, which brings me to another good example of a typical Baby transaction. Our acquisition of Isoblock earlier this year.
Through this acquisition, we are now the market leader in Europe with more than 20% market share of all cars produced in Europe. Although EsoBlock is currently also affected by the shortage of semiconductors, we believe in the long term fundamentals for the industry. And this company fits perfect to our operationals. The management team in Isobrok includes the best experts, And we are not only adding upstream and downstream capabilities, but important innovation capabilities as well. Here you can see some of the examples of the components delivered from Isoblock also and a selection of the customers.
Moving on to the more traditional packaging and components, mainly packaging. We see a very fragmented market with a high degree of customization. Here the market is mainly driven by the growing population, but also by the increasing demand for e commerce And the end users focus on the environmental aspect of the products. Following the mentioning change in consumer demand, including increased focus on environmental aspects, we continuously Seek to adjust our offering to meet the demand from the market and the customers. We want to provide the customers with the best packaging solution, No matter what the materials they are made from, sometimes it's EPS, other times it's paper based products, Sometimes it's also the combination of both.
Broadening the product offering to include complementary materials is important. But most important, it is to close the loop and to become circular. And we are really committed to closing the loop. What does this mean? Yes, we have announced that we have an annual recycling target on 60,000 tonnes.
I cannot think about anyone else to have the same target in the industry in Norway, but the target will change as we grow. To become 100% circular, We will need to take back the same amount of raw material which we put into the society each year. If we, for example, produce 200,000 tons And approximately onethree of those are used to products with a lifeline of less than 1 year. We need to take back onethree of those 200,000 tons to recycle them each year. This is our real goal.
My colleague Camilla will talk more about this and the importance of becoming circular And to reduce our footprint and the responsibilities we have later on today. Then we go back to talk about our journey of growth. In addition to the expected organic growth, We plan to continue to expand and strengthen our market position through acquisition going forward, still in line with the same firm principles That we have had for the last 40 years. And we have a strong Pipeline of attractive M and A opportunities. And we have a well established team and a process to execute on these opportunities.
Some of the opportunities have been in the pipeline for years, while others could be popping up due to timing on shorter notice. Some are transformative, like Simba, others smaller add ons. But even the ones popping up due to timing, We have known for years. We really do know the market we operate in. We continuously evaluate opportunities, and we are quite confident That we will continue to be the leading consolidator in the industry.
To summarize, What have you talked about? What does it mean? It means that we have created a solid platform for continued organic growth and M and As going forward. And we have spent 40 years on doing this. We have a strong market position in growth markets An organization with deep industry knowledge and a financial position backing it all up.
Within the current operational financial framework, we aim to roughly double our revenues, more than double our EBITDA and to increase the return on capital up to 20%. And with that, Jonas, I leave the floor to you.
Thank you, Christian. Thank you, Haloper.
Yes.
Christian has talked a lot about our integrated business model and how competitive Sorry, how it is a competitive advantage that enable stable earnings, but more is to become Circular for us. I will talk about how we work through the value chain And the complexity to it. And as Christian said, to be integrated means that we are producing raw material That is taking place in raw. We are doing the converting to the end products that is happening within the production, And we are collecting the EPS back from the market, and that has happened in the recycling. Although that we are an integrated player in our industry, there are more companies that are integrated, But not like us because we have the recycling capabilities.
Most of the EPS that we bring back is coming from the packaging and especially the food packaging That we can reuse into new raw material, into new end products as packaging solutions or insulation solutions. If we zoom in a little bit more on raw, Ro is actually our backbone, making this possible. Both factories that we have is located near the coastline Due to that we need efficient supply of raw material. And as Christian also said, We are shipping material to our own downstream production, but we are also shipping it to external customers, which gives us Better market dynamics and intelligence. The Finnish site It's covering the Nordics, while the Dutch side is covering the rest of Europe.
Both factories are well invested in modern technology. And Beav is one of few that has 2 sites. And that gives very stable production to the market. We are not depending on just one factory as our competitors are. And we are investing in new capacity To ensure specialties as recycled EPS raw material, but also other Specialized value added products.
And within our production, we always drive to improve margins by delivering value added solution to our customers. And we do this in different ways. Even though that we are Supplier of commodities, we are adding value to those products as well by offering private branding, Bundle sales, complementary material, but more important is that we are collecting The leftovers and the wastes. We are also a supplier of specialized products with high value, And those products has been taking days in a long term relationship with years of collaboration with our customers. We are often a part of the logistic, unloading the deliveries to our customers, Handling their material infeed to their processes.
This is adding value to us, But more important to our customers. But not all markets are the same. And Insulation Netherlands and Nordics are a good example of that. In the Netherlands, we are the market leader with high margins due to the high level of complex high value added products That we are selling into the market in an integrated solutions. In the Nordics, we are more of a Commodity supplier in a very highly competitive landscape.
But in both these examples, Insulation is contributing to raw by taking raw material from our upstream. And that is showing our strength in our integrated business model. Netherlands is a good example of what the Nordics strive to Become. And we see a potential of adopting best practice from the Netherlands to the Nordics. To be able to establish a strong market position, We are setting the market standards by developing specialized products for our customers.
And I would like just to give you one example, and that is the picture below. That is our shuttering system As an ICF system for foundation to houses. It has Orange Reinforcement made out of the same material as the EPS itself, Which make it fully recyclable. It's not 2 different material, it's 1 material. This product gives value to the construction site by shortening the production time.
And the reinforcement, the orange reinforcement that you see is actually doing that we can use less EPS. And when our customers is ordering those products, They will most likely also order the commodities from us, so called bundle sales. Insulation Norrskoping in Sweden, mid Sweden is one of our latest acquisition And we'll become a full range supplier of solutions in EPS, but also XPES to the construction industry. And we are doing that by really concentrating and focus on the recycled content within those products. We are still working to realize the full potential of that acquisition.
Now I will talk about packaging and components. There are similarities to insulation, and I will try to highlight the different with Packaging and Components. In the Packaging and Components segments, we are developing products close in a close collaboration together with our customers. That is the different compared to insulation when we are offering our customer new innovative products. The process of development developing product can take up to 5 years, creating very good relations with the customer.
It starts with one idea, either from our side or from the customer side, And every idea will be looked into as a future potential business. We develop specialized customized product and integrated solution, And it takes 5 years, so we have a really good opportunity to look at the pipeline all the time to see that we are in line with our targets. These are images of products that We have developed close with our customers, but the lifetime of these products Can vary. And I would like to give you some examples. In the top left corner, you see a car that is Volvo.
We are a supplier to Volvo. For Berve, that means that we are supplying EPP components To the Volvo Automotive Industry that reduce noise, that will save energy for heat and cold, And we are making the vehicle or the car lighter, so Volvo can extend the driving distance. Another example in the top row is the chainsaw from Husqvarna. We are delivering components that reduce vibrations for the user. And in the bottom row, as also Christian showed, we are a supplier to the medical industry.
And right now, we are supplying EPS trays to the COVID vaccine. Short lifetime products As the fish box, maybe also as the tray of COVID vaccine has short lifetime, And they are designed to be recycled. A general rule, long lifetime products It's a result of a long term development with the customer and the product is likely to be produced over and over again for years. Coming into the automotive industry. We do have long term development together with them, and that is a key.
I will come back to that. BAV, as Christian also were mentioning, Is one of the leading supplier within EPP Automotive in Europe as today. This being This means being in control of all the necessary approvals, certificates, All the high complex technology and also delivering quality. But what we are really focusing on right now is to be close in relationship to their design and development departments. BV can ensure recycled content, high quality, Innovation to safety critical and energy efficient components.
We do have a stable platform for further growth within the EPP and Automotive Industry. And we have recently won 2 tenders where one of the tender was delivering components to Tesla, the car. Unlike the Automotive business, with long term relationship and years of collaboration, we are delivering highly specialized packaging solutions. And our focus is to deliver the best packaging solution to the customer, regardless of material. We can today combine different material in the same product, ranged from biofoam That I know Ville will talk more about.
EPS, paper, cardboard, PE foil, EPP, Etcetera. Whatever material that will be used, we are always striving to add as much recycled material into the application or product. Just to give you an example that happens within 2 weeks ago. 1 of our biggest customer within components, Danfoss, maybe you have heard about them, Actually changed from a paper based packaging into a recycled plastic packaging because The best choice for Danfoss was to use this packaging material all over again 100 times to 500 times instead of creating a lot of paper waste. So by being a diversified supplier to our customers, We can grow together with our customers, follow our customer.
In Packaging, we have worked closely with the fish industry for decades. That is our history, our History from Freja. And over time, we have developed superior products and become an integrated part of their value chain. Fish boxes are specially designed for recycling due to its short lifetime, But more important is the design for food safety. In addition to the product properties, Value are added into services as we are monitoring the customer warehouse And making sure that the forecast, the order, the production and the delivery is happening just in time.
We are also taking care of the unloading of fish boxes at their site and taking care of their infeed into their processes. Adding to this, through those close collaboration with the fish industry over time, we have moved towards circularity with our joint venture in Poland. And I will describe this a little bit more in details. Fish boxes are being produced in Norway to the salmon slaughteries. Salmon are being shipped to Poland to a company called Mulpul that is processing the fish into food.
In our joint venture that also include a factory, we are taking care of the fish box. By washing the fish box, Compacting the EPS, palletizing the compacted EPS to PS Granulate. And the PS granulate are being shipped back to our raw factory in Finland that will use this material Instead of virgin material, a new raw material with recycled content will be shipped again to Norway. This is to close the loop. And as we have already stated, Closing the loop is our license to operate in the future.
And every single tonne of collected material Is saving 75% of CO2 compared with virgin material. We want to capture as much of the waste streams as possible. And we are doing that through collection of leftovers from building sites and from our customers' factories. And to do this efficiently, We are developing a waste handling system to monitor the waste streams. We are setting up collection hubs for various material to make sure that the material will be recycled.
And through collaboration with authorities, waste management companies, We are planning to do this at scale. And also one more good example. Recently, we have signed an LOE with the site 0 in Sweden, Svensk plus Ottervinning. That is the largest waste collector of plastic within Sweden, and that is really strengthen We are present where our customers are located, both in recycling, logistic and production. As an example, Salmar is building a new fish slaughtery up North Norway, Senja, And we are building our fish box factory wall to wall with Salma.
Similar cases will happen In more places across Europe. This enable collaboration, strong relationship that will last for decades and make it difficult for our competitors to enter. Our key strategic priorities include continued focus On innovation, which enable us to achieve circularity, And that is our license to operate in the future. This will make sure that Our organic growth can continue and M and As will be possible. Innovation also means energy efficiently that we are reducing energy consumption with new process technology That I know that my colleague Camilla will give you a little bit of heads up upon.
So by that, Camilla, I welcome you to the stage. And Camilla is our Director of Sustainability.
Thank you, Jonas. Hi. I will try to give you an overview of The sustainability challenges or maybe possibilities confronting our industry today and how BEMV are working to adapt to a more [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Sustainable production and consumption. And I will start with our key strategic priorities. And [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Seen from a sustainability perspective, we are today in a transition period where sustainability And climate change are the most important topic on the agenda.
And if BEV as a company are to succeed In adapting to a more sustainable production and consumption, we are we need to adapt to a more circular economy. But in order to become circular, we need innovation in search for more sustainable products and solutions. And at least, we need to increase our market position when it comes to collection and recycling. And our sustainability strategy is based on 3 pillars: Becoming circular, actively engaged in partnership and contributing to an inclusive society. And I will not go through the whole strategy today, but focus on what PV means is the most material topic, namely becoming circular.
But I just want to highlight that becoming circular and actively engaged in partnership are interlinked. We are not able to succeed in becoming circular if we are not cooperating with our stakeholders in the whole value chain. And I will, in my presentation, highlight this several times. But why is circularity so important? Reading the circularity GAAP report tells us that our current economy are 8.6% circular.
But if we look at the Norwegian economy, the Norwegian economy are only 2.4% circular, Meaning that our economy are still linear, and we have a massive circularity gap that we need to close. And We know that 65% of our greenhouse gas emissions are related to material management. So there is a huge potential to increase sorry, there is a huge potential to use circular economy as a strategy to reduce our impact and contributing to reaching the Paris agreement. And I will use EPS as an example. Today, 1,800,000 tons of EPS are supplied to the market.
Out of this, only onethree is collected. And one reason for this low percentage is that 78% of the EPS Supply to the market goes into products in the construction sector, meaning going into products with a lifetime more than 50 years. But we know that EPS, In some cases, are not sorted out and goes into the mixed waste streams. So there is a large amount of EPS that are not included in these numbers. However, 75% of the collected waste are coming from packaging.
And out of this, 33% is recycled, meaning 67% are going to incineration or landfill. If we look at EPS from the construction sector, 9% is being recycled. This is mainly also due to that EPS from the construction sector is contaminated with Or contaminated, making it difficult to be being recycled. So 91% are going to Landfill or Inclineration. EU has set a target to increase recycling of plastic packaging to 55% by 2,030, meaning that With the current recycling capacity, there is a gap of 22%.
But EU has also set a target to increase recycled content to 30% by 2,030. And with the current collection capacity, this means that if the industry are going to reach the target of 30% recycled content. Everything we collect today needs to be recycled in order for us to have enough recycled raw materials. So that is I think the biggest challenge today is collection and recycling.
So to increase
our collection capacity and to increase our capacity and to increase our recycling capacity. And Bevy decided early that we needed to change our business model and take responsibility and to lead the change in becoming circular. In 2018, we established BV Circular and set the ambitious goal that we wanted to collect the same amount of raw materials that we supply to the market annually. We also established Use Reuse initiative to increase awareness that we need to sort out and to collect EPS as the EPS is a material that are 100% recyclable. And since 2018, we have invested EUR 10,000,000 in greenfields, [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Machines and Acquired Recycling Companies.
So in just 3 years, We have gone from 0 to a collection and extrusion capacity of 20,000 tons, [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] And we are very proud of that. And in August, we also issued a sustainability linked Bond, committing ourselves to collect 45,000 tons within 2024 And 60,000 tonne within 2026. Yes. So this is the context. Sorry, just some water.
And what we have done so far. And I will go now go through some of our commitments and give you some examples of what we are working with in order to become circular.
And I would
just want to highlight that Becoming circular, it's not just about collection and recycling. We also need to lean our production. We need to increase our resource efficiency, focusing on making more of less and at the same time using with renewable energy. And we must work to keep our products in the economy for as long as possible, Meaning that we are working to give our products longer life, either because the product itself lasts longer Or because the product can be reused. And then, of course, we need to close the loop, Meaning that we need to design our products so they are able to be recycled and go back into the loop and to collect.
And if we manage to lean, keep and close our activities, We will use fewer resources, providing similar needs and at the same time, reducing our greenhouse gas emissions. If we look at Pervis most material topic, it is our consumption of energy, Raw materials and transportation that we need to focus on. When it comes to energy, We are focusing on mainly 2 things: energy efficiency and transition to renewable energy sources. And as Jonas was mentioned, energy efficiency is part of our daily operation. We are working with it every day.
But And we are also cooperating with our suppliers to invest in new production system that will reduce our cycle time in production. And here, it is where we have the most potential to really increase energy efficiency by 25%. However, we need to switch to renewable energy sources. And as a company, BV have said that within 2,030, 50% of our energy sources needs to be Non fossil. Currently, 20% are non fossil, mainly due to that We are using natural gas yet to produce steam in order to foam or mold our products.
We have started to look for alternatives. And in one of our production sites in Sweden, we have managed to reduce the CO2 emission by 50% by replacing natural gas with bio oil. The main challenge today is limited capacity on national grid to electrify. It's limited access to Renewable Energy Sources. So we are dependent on government intervention and to collaborate with our stakeholders to find good solutions.
Our design team Are also working constantly to reduce raw material in our products. And as Jonas was mentioning in his presentation, reducing the amount of raw material in our product is where we really could do an effort. But we have also committed ourselves to use 50% non fossil raw material in our products by 2,030. And in 2019, We really reached a milestone where we were able to produce the first 100% recycled EPS raw material. So we are now in a ramp up where we are starting to use recycled materials in our products, running test productions and are starting to identify products where we can increase the use of recycled content.
And when it comes to transportation, Also here, we have an ambitious target, 50% non fossil fuel by 2,030. In 2020, I assume that none of the transportation Was non fossil. So here, we have a huge yes, far away to go. But last this year, we have managed to sign a contract with 1 transportation company in Sweden That are 100% fossil non fossil. But As the same as with renewable energy sources, the main challenge today is access to non full cell transportation.
But we are also working to find suppliers closer to our sites in order to reduce transportation and are cooperating with our suppliers to find more sustainable solutions. Yes. And we are working to keep the products in the economy. We are working closely with our customers to identify products That can be included in a subscription model and can go in a loop. One example of this is the Bevy Box.
Today, we have produced 100,000 Bevy Boxes That has been reused 50 times today. Most likely, it can be reused maybe 100 times. By reusing the boxes 50 times, we have prevented the production of 5,000,000 boxes or prevented the use of 7,500 tons of raw material. Here is where we really can do an effort and an impact in reducing our environmental footprint. By offering a subscription model, BV is also the owner of the product, The owner of the raw material, meaning that we have the raw material storage in the market, making sure to having access to high quality raw material that eventually will be collected and Used to produce new products.
We are also working to together with the customers to look for how we can reuse our products. One example of that is that we are collecting leftovers from Volvo, taking it back, reshaping it to new products, meaning that we are reducing cost, reducing consumption of raw materials in reducing the amount of waste. And then we need to close. And as mentioned earlier, our main challenge is to make sure that EPS are sorted out for collection. And we are mainly working, as Jonas also was talking about, investing in Collection hub to secure increased collection and sorting, collaborating with our customers And municipalities and are actively looking for M and A opportunities.
And when it comes to mechanical recycling, we have reached a capacity of 20,000 tons and are investing in new extruders in order to increase our capacity. However, the limitation with mechanical recycling [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] It's that it the waste needs to be cleaned. So waste coming from construction sector That are contaminated, we have to find other solution in order to close the loop. And therefore, dissolution and chemical recycling is needed. And Wille will come back to that, I think, to talk a bit about this topic.
In all sectors, we see regulation to increase circularity and reduce greenhouse gas emissions. In the construction sector, we see the energy performance of buildings directive with requirements to increase energy efficiency. In the automotive sector, we have the end of life vehicle directive aiming at reducing waste. We also see that our customers, Such as Volvo have set a target to reduce CO2 emissions For 1 car by 25% within 2025, meaning that Volvo again are setting requirements to their suppliers to increase recycled content, increase the share of non fossil energy sources And for plastic packaging, a ban for single use plastic has been introduced. We have a producer responsibility scheme.
There is target to increase share of Collected plastic for recycling. There is a plastic tax on the way. Recyclability and increased recycled content are regulation that will come. And we, as a company, welcome all of these regulations. It is easy to talk about sustainability, and it's easy to talk about circularity, but it's much more difficult to implement it.
There is a lot of challenges. But as a company, we see a huge potential and exciting opportunities for new partnerships and new innovations. And if we, as an industry, can manage to become circular, We have an excellent chance to address climate change, and we are committed to lead the change together with our stakeholders. Thank you. And I think now we will have a 10 minute break and then continue with the presentation.
I guess that everybody is back. My name is Phil Nourmenen. I'm Research and Development Director of Pevi. I'm here to tell you about the innovation and with the research and development of Pevi. In the beginning of the presentation, I will focus on the setup, how the Research and development activities has been done in PV.
Then I continue with the highlights of different development things. And in the end of the presentation, I will focus on recycling. But let's Warm up a little bit with a funny picture. In this picture, you can see a guy who has done Really fantastic innovation. He has invented a wheel.
Really world changing innovation. But apparently, you can see also that he has made a quite common mistake in research and development work. Do you know what it is? He forget to ask the customer that what is actually needed. That kind of a mistake cannot happen in Bevy.
We are working so close together with the customer that we always know what the customer demand Okay. Innovation, nothing is that black and white. What do you think would the guy in vendor will if he would have asked the customer? This slide you have seen already in the previous presentations. What I'm especially happy of is That the innovation is selected to be part of one key priority for the PEVI Group.
Circular economy. Of course, circular economy is heavily depending on innovation. Some of the recycling technologies or circular economic technologies are already available, but there is plenty of different things what you still need to develop. There are some technologies are simply not existing. Profitable growth.
This is supporting really well our innovation actions. We are by doing acquisitions, we are constantly increasing our know how and product portfolio. And I especially like this word profitable, because I always like to say that In research and development, you should have fun. It's really fun to innovate new things. But we are not doing it for fun.
We need to be profitable. You can divide Our research and development activities in 3 different parts. We have the raw material development, then we have packaging and components, And then we also have the insulation part. In raw material development, The main site is located in Netherlands in Ettenlo. But we also have research and development resources available in Porvoo site And in our EPP production sites in Poland and Germany.
Further on, everything which is done In terms of development of circular business, that is also handled in raw site. Packaging and Components, like Jonas already mentioned earlier, that is done really tightly together with the customer. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] So it needs to be present locally. That is handled in every individual business unit. But we have strong departments in Netherlands and in Denmark.
So in that sense, if help is needed, of course, this Netherlands and Denmark units can give it to the other business units. The main location for Insulation Development is also located in Netherlands. They have really, let's say, good track record from last 20 years, And they are really able to give fantastic ideas for the rest of the insulation business units. It doesn't mean that we don't have Development resources available in other installation sites, but the main hub is in Netherlands. And of course, even though we have separate research and development in these three different parts, it doesn't mean that we don't work together.
Of course, we work together. Some comparison to our competitors. We are really the largest vertically integrated player. And that gives us Really good benefit in terms of development or research and development, if you want to say it so. One benefit is for sure is that we have access to know how throughout the value chain.
We know what is going on in the markets. Really, access to the business intelligent. We know what the customer demand is. We know what should be developed. Then one benefit is, of course, testing.
If we want to design or develop a new thing, easy to test in our organization. There is always somebody who can help us in terms of testing. We can do it always inside our group. One thing what I want to highlight also is the resources in equipments. We have lap scale equipments.
We have pilot scale equipments. And in production scale, You just name it. We have pretty much everything what you can figure out in processing of plastics. By working together, in the last bullet point, you can see already one highlight. We succeeded to increase the capacity in our At the raw materials side by 25 kt without any major investments, unbelievable achievement by working together.
Well, in some sense, you can also divide our research and development in these 3 different categories. Commodities, okay, in normal insulation boards, fish boxes, simple packaging articles, those are Really normal and commodity business for us, but it doesn't mean that there is no space for improvements. Of course, there is. And we are always looking for ways to make products better. Specialized products.
In the picture, you see a special product which is incorporated in the air ventilation or air conditioning machine. But it doesn't necessarily need to be product As such, it can also be material, some special material. We are frequently checking what is going on in world. If there is some special materials which we see that we could take benefit of or which could be useful for us, We are definitely ready for continue to work with that kind of a product or material. In the Credit Solutions, that I consider to be some kind of extra service on top of these products, like in deliveries Or whatever.
Then few words about the materials. Of course, EPS is the main product for us or main material for us. Many of our competitors, they are feeling that EPS is already Like a dog bone, all the meat is already chewed off from the bone, but that is not how we see it. We definitely feel that there is a lot of things still that what we can improve. Recyclability and recycling, of course, that is obvious.
But also insulation values, fire behavior, mechanical properties, strength, Any kind of special features, for example, antibacterial properties. Those things can be added to EPS, And definitely, we can create more value by doing so. XPS. That If ever you can claim that, that is commodity, but it is extremely important for us, especially in terms of recycling. We can add already now quite a lot of free cycling material into XPS production, and we are developing it further So that we can increase the loading of recycled material in XPS.
And there is still some space to Improve also in different kind of properties, especially in mechanical properties. EPP. By ISOP acquisition, we got access even to EPP raw material production. So for sure, EPP will have a more Focus in research and development, too. What I would like to emphasize is the extrusion forming process.
We are the only one in the world who is now producing EPP in extrusion foaming, and it has clear benefit in the cost structure. We can basically do EPP cheaper than our competitors. Of course, we need to have autoclave process also available for certain products because autoclave process Has an advantage in terms of quality of EPP products. Biofoam, we were the 1st company to come out with the biofoam product. Our biofoam is polylactid acid based.
It's biodegradable And it's based on the renewable raw materials. Fantastic product. In that sense, You can even say that with BioPharm, you can BioPharm could replace EPS. Okay. There is still minor In the product properties, but you could do it already now.
The disadvantage or let's say the problem has been price. Material prices for or renewable material prices are sky high. So in that sense, biofoam is still meant for quite niche markets. But you have to realize, like I mentioned, that it's Biodegradable and using renewable raw materials, at some point price doesn't matter. Then let's go into highlights.
Fish boxes. Okay. Maybe you could even claim that what kind of a highlight is fish box. It's only a box. Well, I would say that, that is Fantastic product, fish box.
There is enormous amount of development on the background Before you have the fish box in your hand. There is it starts from the raw material development, machinery development, Optimizing your production and even the service for your customer, everything needs to be developed. And EPS Fish Box is still the way best product to back fish. There is no competitive product which can Performance as good as EPS both. Automotive parts, excellent example working together with your customer.
That needs to be done really close with your customer. And again, it requires huge amount of development work on the background To take us there where we are now when we have the extrusion forming possibilities, we have really efficient production and Comprehensive design capabilities. Window frame is an example of joint cooperation together with Downstream and customer. Together with Netherlands Downstream, Denmark Upstream and 1, Our good customer, we were able to develop UV stabilized EPS and window frame made from it, Which is even working in elevated temperature. Great example of joint effort.
Exire. Exire is non burnable EPS. Let me repeat it. Non burnable. Come on, EPS always burns, but this was doesn't.
This was this one will not burn. Fantastic example, how you can play with the features. The non burnable properties achieved by a coating. So we have actually changed the fundamental properties of EPS to be something else. Then SlimFort.
I think that Christian and Jonas, both of them already mentioned SlimFort. I think that the SlimFort solution is one of the most Brilliant solutions what we have ever developed. It contains different densities, even different colors, Metal inserts and everything is designed to help the customer to install the product as easy as possible. And because of that, it has been huge success in Netherlands. And last but not least, green line, 100% recycled EPS.
We were the first ones. Great. Then let's go to recycling. These are the recycling technologies what is available for Plastic recycling generally, but more deal date per recycling of EPS or polystyrene. Direct reuse, I guess that we have done already decades.
It means that we use our off specs in raw material production back to the Process or cuts off in insulation production, we feed it back in the process. Mechanical recycling, That is containing everything where you keep the polymer as it is. So chemically, the product stays the same. Dissolution process is something which is dropping between mechanical and chemical recycling. And then chemical recycling, That means that you break down the polymer in smaller hydrocarbon compounds.
By combining all these different technologies, you are actually able to achieve Carbon neutral ecosystem. And I guess that, that should be the ultimate goal. I always say that When you have carbon in this recycling loop, as long as you keep the carbon in, It's fine. Don't release the carbon. Well, to be honest, of course, you always have some leakages.
There is always some waste generated though. Some of the loop is leaking, some carbon out from the recycling loop. But those leakages should be replaced with the renewable styrene and pentane in our case. And actually, Some kind of a test quantities of renewables, styrene and Pente are already available. Like mentioned, Direct reuse that we have done already decades.
Now we are focusing on mechanical recycling. In this picture, it's called recycling extrusion. We know that, that is the easiest way to recycle plastics and polystyrene, and we also know that, that will be used in future For sure. At the same time, we are investigating that basically that when it would be right time for us Jump in the train of dissolution and chemical recycling. Those are not proven technologies yet in production scale.
So for us, it's wise to wait a while and see how they actually works. Mechanical Recycling, we can consider that, that is already established quite well in our company. We have really joined effort with our circular business, upstream and downstream. We started already 2017 with a joint venture in Poland, which is recycling the fish boxes And the EPS extrusion production in Porvoo site, which is using those recycled fish boxes and feedstock. 2019, we developed at 100% recycled grade.
And the next big step will be the big extruder In our Etel site in Netherlands. 25 kt of capacity Recycling polystyrene in EPS production. But we shouldn't forget XPS production. That is extremely important part of the recycling story. In XPS Production, we are able to add quite a lot of recycled material.
Dissolution. Dissolution process has 2 major benefits In terms of recycling, it's really a separation process, which means that we are able to remove All the contaminants, even pigments and other plastics and other. Because of that, It is much more easier for us to get a full approval for this kind of a product, which is recycled with the dissolution. We have already invested in the company called Polo Steward in Canada. That is only some kind of a, let's say, investigation investment.
We want to have the access to all the data and technical know how what they are doing. And we want to know how it goes in Montreal with the full scale project what has already been starting up. Further on, we are Participating the project in Europe, PS Loop, where pretty much all the different DPS producers are present. And that side has, I guess, started already. The original idea was that HPCD, the former flame retardant agent, would be removed with this system.
Then chemical recycling. Chemical recycling, you can Divide in 2 different parts. You have so called depolymerization and then you have feedstock cracking. Depolymerization means that you break down the polymer to its original monomer. In our case, it would mean that polystyrene It's conveyed back to styrene.
And feedstock cracking means that you will go even Further down, you break the polymer to smaller hydrocarbon compounds. Depolymerization, I consider that with technology provider, that is something that we might be able to do ourselves. But feedstock cracking is done in big oil refineries, so it means that we need to have a partner This is only an example. What is going on in world with the depolymerization? Depolymerization projects.
There is 1, 2, 3, 4, 5, 6, 7 different projects started or starting up in world. We are pretty much discussing all of these companies. And our target is that we would be we would have an To recycle styrene, at least test quantities in the beginning. But the main message from this picture is that we are really in the beginning. It takes roughly 5 years before the depolymerization technology is really proven.
You can see that there is Is it even for at least 3 different technology provider? You don't know what technology is the best. At least 5 years before this is really proven. And we know that what is the most efficient way to do the depolymerization. 10 years, roughly.
And then we start to have really industrial scale volumes coming out from depolarization. Then let's go to final conclusion. I always say that research and development is all about the people. That is actually what it is. It's up to the people to innovate something.
It's about smart, creative, Intelligent and ambitious people. And I think that we have them. It means also that we are constantly looking to increase our resources in terms of people. If we see that if we meet the smart people who we see that could contribute to our research and development, We are ready to hire that person. Sustainable R and D strategy.
This is extremely important. Everything what we developed already in the beginning, we evaluated that in terms of sustainability. And if it somehow violates the strategy what we have selected towards sustainability, Then we stop it already in the beginning. Integrated development through the value chain. That was already mentioned that it gives us a lot of benefits that we are working in the all different parts in the value chain, Especially creating the know how, knowing what is going on in the markets And be able to test easily different things.
And then finally, strategical R and D acquisitions. Even though we have really smart people in our organization, it might be the case sometimes. However, really unlikely that somebody is even smarter than us. But if that happens, Then Kristian can always buy the company or the technology. Thank you.
That is all from my side. And now I would like to invite Marit Danielsen to tell you about the financial things.
Thank you. Okay then. Christian and the team has told you about BEV, what we are doing, how we are doing it and where we are heading. So I will try to put some financial perspective into this. And Kristian already told you that we are striving for approximately doubling our revenue and more than doubling our EBITDA.
And that might sound aggressive, but I would say that it's ambitious. And why do I say that? I say that because you need to put that into a perspective. And that you can do by looking into the history. And what you see on this page is the last 5 years and where we are coming from.
And then you can also Understand that when we say that we intend to do this again, we are the same team that will do this with some additional Core competencies, it should be fully doable. What we have done is that We have gone from being a Nordic commodity producer to a European service and solutions supplier. We have gone from being exposed to a rather limited end customer market to much more broad end customer market, and we have a regional diversification. We have gone from being rather low in our vertical integration with low volumes sold from our upstream into our downstream to be much more integrated. And we have gone from a linear business model into a circular business model.
And of course, we have this model. And of course, we have turned from a private owned company to a public company. That sets the scene a little bit from where we are or from to what we are heading. And what have we done then? Or how have we been able to increase our EBITDA from the SEK 31,000,000 only a few years back to now LTM to over €80,000,000 It is, of course, a well run operation that is the foundation for everything.
And then we have been able to capitalize on the investments that we have done in organic growth. And then on top of that, we have all the acquisitions Where we have been able to take out the synergies, we do have scale advantages. So that is an add on to this. And I would like to go back to what Willi mentioned in the beginning of his presentation. As an example, when we look at raw, When we acquired Simba, we had 2 chemical plants all of a sudden.
And we do not only buy companies to turn them around and to learn them And this is how beer we do it. We do it because we know that 2 competent companies and management, they can do a lot together. And again then, with small investments, we managed to increase the capacity from 65,000 tons to 90,000 tons. That's a huge percentage in one of the chemical plants, only by sharing experience. I think also key has been for insulation to go from a Commodity producer with Sweden as the main market to be a more advanced value added insulation solution provider with an exposure to the European market.
And same goes for packaging and components. We had a rather limited product portfolio back in 2017. And then we acquired Simbra. We acquired a lot of fish box industries in Norway. So I would say that, that has also contributed a lot to this.
And then not visible yet into the numbers is the acquisition of EsoBlock, where we now have become the major EPP component producer in Europe, and that we will capitalize on going forward. So moving then into the future. We are striving for approximately then doubling our revenue in 5 years' time. We believe that approximately onethree will come from organic growth, but then that 2 thirds and a major part will come from acquisitions. We see clear potential across all the segments in all the regions within different technologies.
So we will see growth everywhere. But on this slide, you see the most important growth area that we have identified. Benelux in Insulation segment, that is 50 percentage of our Insulation segment today. There is very strong macro data out there that substantiate strong growth for the future. And that, in addition with M and A activities, will drive insulation.
We believe strongly in food packaging, mainly in Norway, it is, of course, the salmon industry, but it's also other food industry in the Norwegian market. We are shortly up in production in our new facility in Senja that Jonas was mentioning, next to Salmar's new slaughtering. We have communicated that we intend to build a new packaging hub at Hitler That will also supply materials to the food industry. And then we acquired BDH, And that is pretty much only a year ago. That is also providing mainly packaging to the food industry, and that we and we'll continue to capitalize on.
Therefore, Food Packaging Norway is important. Automotive, we believe that, that is a growing market and that we will or that, that market will rebound. And that, in combination that we will continue to consolidate the European EPP component market, We'll add growth. And then starting with the acquisition actually of BDH because they had with paper packaging solution in their product portfolio. And then we acquired a company called Honeycomb in Denmark a few months back.
That is the start for our complementary paper packaging segment that we believe will be of importance for the future. Sure. And that will be a complement to our existing customers, but we also believe that this will bring new customers to us. And then finally, we come back to circular again and again. But we will, of course, continue to grow our circular operation.
And this is both when it comes to collecting EPS streams, but also to convert it into new raw materials. And then looking at the EBITDA, it is, of course, the same drivers, and I will come back to that. But overall, we believe that the margins that we have today, that is We do not believe that we will increase our margin as much. It will be the stable level that we are at today. But what is Important is that we increase our capital efficiency, and we measure that as a return on the capital employed.
And raise a page just on that topic later on in this. So that is key. And then one could wonder that how will then the contribution look like in 5 years' time if All this is happening. And if you then look to the left, you see how the EBITDA where does the contribution come from today. And we operate in 3 segments today, and approximately each of them contribute between 30% to 40% each.
That will not be the case in 5 years' time. If we start with raw, They will contribute less, but they will have a stable contribution to the group. With acquisitions that we will do, their integration will increase, which means even more stable return for the group. We are also intending to expand our extrusion capacity, And that means that we increased the capacity to produce recycled raw materials that will contribute to this. And then opposite, we have had this year in this year an extremely high, what we call GAAP.
That is the gross margin in segment raw for different reasons. We have built a business model on a normalized margin level for the future. So raw will contribute in percentage less. Increasing will Circular do because we, as Camilla has mentioned, we have just started. We started late in 2018.
We have spent a lot of start up costs. We have set the foundation with The management with a team that runs it. So we have set the cost base. Now it is about continue to get the streams and to be able to compact the volumes further and to make it then more profitable. Insulation, 3 drivers, and that will increase in percentage.
Christian We spoke about our Insulation segment that is pretty much divided into 2 different businesses. We have the Nordic market that is more commodity, low margin today, and we have the Benelux area that is approximately 50% and high margin. We have the strong macro data in the Benelux and in the Netherlands. So we believe that The Benelux region will grow in relation the most within this segment, and there is, again, the highest margin. But we also see that we have a great potential in the Nordics to increase the margins with adding new products and also increasing the underlying margins in current operation.
And then, of course, M and A initiatives. This will be an area where we will invest in, and it's coming back to the products that contribute positively to the society. And we need energy efficient houses, so extremely important. And then new Packaging and component. We have now all of a sudden divided this into 3 different buckets, where we have the more traditional packaging and component that will be a little bit less, but then we have now automotive and also paper packaging.
And if we start with a more traditional packaging and component area. There, we believe that the growth will come from organic initiatives. And again, it will be the food industry, mainly in Norway, that we believe is the driver for this with the initiatives now at Senja, Hittra, among other things, and also BDH then. And then we have automotive. And now it's not really fair because now we do not have Isoblock in the left circle since we acquired them in July.
But we intend to continue to grow in Automotive. So and to by company to further consolidate the market there. So that, we believe, will be up to a 10 percentage contribution to our EBITDA base. And then on top of that, We have only started the paper packaging efforts that we also believe will be an important contribution to us in the future. Just before we leave the earnings and more to highlight this.
I think most of you are very familiar with that. But we have had a very Strange is the wrong word, but different year when it comes to the EPS prices this year. Normally, we talk about the gap that is the difference between what we buy the styrene for and what we sell the EPS raw material for. So this is basically Normally, that is quite stable. The margin is between €350,000,000 to €400,000,000 per ton.
And if you would take this curve and go back to 10 years, it is the same. It goes in that corridor. Then something happened here, and that's not for this presentation. But we have had an Extremely high margin in segment raw, and that you can also see then on segment raw's number. But what you also see is then what is happening and from a financial perspective, why it's so good to have an integrated business model.
Because then downstream, they turned opposite. They suffer from the increasing raw material prices. So they have a dip in their EBITA. But in the totality, to the very right, we have a stable margin. So that is why we are not that Afraid of volatile raw material prices because we know that in a totality and with further integration, We can keep our margins stable.
Then I guess that this is the $1,000,000 question. If we say that we are going to grow double, twothree will come from M and A. How much will we spend? And here, you have the answer. We believe that we will spend around €300,000,000 to €350,000,000 over the next 5 years in M and As.
And approximately more will be spent on insulation acquisition, and we believe that we will spend quite a lot in paper and less in Automotive and less with Circular, but in total between the EUR 300,000,000 to €350,000,000 And to remind you again a little bit about the targets that we are looking for. We are looking for well run companies. We are not looking for turnaround cases. We want them to have a clear synergy potential, and that is not that we can only take out synergies in the acquired companies. It's that they have a strong management.
They have a very good business model. We can be better together. So it's a cross synergy impact. And of course, they should have a healthy long term outlook. And it's Quite common that we acquire companies that have a lower return or EBITDA than we have.
And what we then can manage to do and what we would like to show on This page is a few examples on how we managed to increase the EBITDA step by step. It doesn't happen overnight. It takes time. But as you can see, both BW Automotive that we acquired on a very low EBITA percentage It's now up on a boe average level. And BDH holding same step by step, slowly increasing their margins.
So then the M and As. Then we also need to spend some on organic growth because we are also going to grow onethree from that. Normally in the history, we have spent approximately 2.5 percentage Our revenue in CapEx that is related to just maintaining the normal operation, adding equipment, becoming a little bit more efficient. That will not change. That, we believe, is still sufficient because we have rather well equipped facilities.
But then on top of that, we have spent and we will continue to spend more in greenfield projects. And we also need from time to time to spend the CapEx in relation to integration in M and A situations. And at this time, we have identified that we, in the coming 3 years, will need to spend close to EUR 40,000,000, EUR 50,000,000 In such projects, and we have spoken about them already, we intend to build a new packaging hub in Norway at Hittra. We intend to expand our extrusion capacity to produce recycled raw materials and to support full circularity. And we also need to spend money on ICT [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] T or information communication and digitalization, and that is across the organization to be ready for the future.
Then I mentioned that it is not the EBITA percentage that is the most Important for us. We believe that, that will continue to be on a rather stable level. You will not see a big shift up here. But What we are striving for is to increase the return on our capital employed. And again, going back and looking at the history, we have been doing this over the last year.
And what we believe is that with this plan. We should be close to the 20 percentage in 2026. And where will this come from then? It is again that you need to invest in good production. You need to create a very Robust operation.
We need to invest in R and D so that we get all these good value added products to the market. And we need to continue with M and As where we can take out the synergies and become better together. So that is the key that drives this. And then Maybe also a question that one could ask is that how are you going to fund this? And we are going to fund that with the financials that we now have available because we did a big refinancing just a month ago for 5 years.
That is then supporting this financial model. So what we have is, of course, the cash that we generate in our normal operation. And then we now have an increased bond facility where we can increase further under this framework that is up to the EUR 250,000,000 Then we have a not utilized credit facility on the EUR 80,000,000. So that, in combination, supports this business or financial model. And then we have this is something that we have discussed in the management team.
But when we have discussed this financial model and this ambition, growth plan. We have discussed and concluded that we will never jeopardize our balance sheet. So for that reason, we have kept our leverage target to the SEK 2,500,000,000, which I believe you are familiar with. So we should be able to grow, but we will grow in a pace that we never jeopardize our balance sheet and But we should, at all times, strive to be below the SEK 2.5 billion in leverage. And then finally, before I leave it back to Christian again, it's also our promise that we will continue to distribute dividends in line with our dividend policy.
And it's for the same reason that how will we do this? Yes, we will do this in a pace so that we have a strong balance sheet. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] So always have a balance between the cash flow or financial position and again then ending in that we can distribute dividend. So I think that's it.
I don't know if it's possible to have concluding remarks on this. So I will just take us out of the box. We can look at here. Obviously, we are a company, and we are promising a lot. And yesterday, we had a meeting with our Board of Directors, And we have a dry run.
It's a new word, dry run. We don't have time for dry run-in our companies, but in the nighttime and in the morning, there we do dry runs. And I was asked, is this too good to be true? And I reflected over that Yesterday, when we had a dinner and also this morning, yes, in today's perspective, it might be too good to be true. We are very aware of what we are promising the market.
We have discussed it, and we are a management that And the organization that stands behind these promises we give to the market. But it's not too good to be true. But it's like I started in my presentation. It is hard work over 40 years, and it's a hardworking organization still working together. Have worked together now for 10 years with most of you, and I am very confident that we will deliver on this, maybe not always quarter by quarter.
But this is what is good with this presentation. When you look in the long run, when you look at the fundamentals, we will deliver on that. And if you take to the last page. We will, in a 5 years' time, look at the company Which has doubled our EBITDA, have a return on capital on 20%, with low leverage, and we have the capacity to pay dividend as we go. So that is my concluding remarks for today.
And then we open for questions.
Okay. So we open for questions from the audience. And also we have received some questions from the webcast. So if there are any questions from the audience, we might start with Hermann from Nordea. Marie, you can come up and Chris and Jonas come up.
Thanks, and thanks for a very thorough presentation. Fantastic to see what you're doing on sustainability and also on the growth going forward. I have two questions. The first is regarding installation in the Nordics and in Benelux And on how you're looking at the possibility to obtain the same margins in the Nordics as you've Obtaining in Benelux with specialization and increased sales of those kind of products. The second one is towards your situation.
You're clearly ahead of competition with regards to recycling. How are you looking at the ability to obtain premium pricing on the recycled products, both At the moment and also going forward in the 5 year perspective.
We start with question number 2. I think that For us, the commitment in recycling is absolute. And our commitment to do profitable growth, it's also absolute. In the shorter perspective, those can cross each other as they have done for the last 3 years. We have actually spent more money on recycling without getting a premium on it.
I think it's difficult for us to say that the market are willing to pay a premium next year or the year after that. It's we shouldn't think like this. We should we know our business, as Camilla was speaking about. We know the demands that are coming. I think that we are more aware of what is coming than the market are.
So we would just leave it to the market, but I am very confident that the result will be That the lack of recycled raw material will be the future and the premium prices will be there. But in that sense, that is a price for all of the market. It's still the same products. So if it's a difference or not, it's still the same products. So in the long run, I am sure that we will pay for the work done in recyclable products.
Should I pay the second the first question was more about Insulation and
Yes. If I understood your question correctly, Could we adopt the high margin from the Netherlands into the Nordic and how to achieve that? And yes, that could be done. We should also remember that the Nordic is a different market compared with the Dutch market, but certain technologies, certain products could be adopted, and that work is being in progress as we speak. And there are more competitors in the Nordic market compares with the Dutch market.
So the market Without saying this, the market needs some kind of consolidation as well in the Nordic to achieve this.
Okay. I'll take a question from the Internet or the webcast. What are the assumptions for organic sales growth until 2026? And can you explain what are the key drivers for EBITDA margin expansion, please?
You take the second, and I take the first. I think that we named also the figures of the market we were most exposed to ours, And they have a corrugated growth of 5%. Wasn't it a question? But emphasizing on this, It's more to understand how committed the company is to actually look at what products is there in 5 years, To choose the markets and to choose the products which are there in 5 years from now. We spend a lot of Time together with our organization on understanding this.
Also, all know that plastic bags are not there in also not know There is a risk of plastic bags not being there in 5 to 10 years from now. But we all know that bicycle helmets are in there 5 years from now, one way or another. So that's looking at the market. You can develop a bicycle helmet. It can be a fladed Bicycle helmet, it can be a normal bicycle helmet, but you know the market.
So to understand where you should put your resources in growth market, I think that's the most important thing. And we do believe that, that organic growth and our position will bring us to grow those 25%, which we spoke about in the presentation.
Jan, no, we didn't say that we will have margin increases, which I think question was, but to remain then on a good, stable EBITA level, I think it's 3 drivers. One is back looking at the segments. Insulation, we do have very strong macro data for the Benelux market, that is a high margin business for us. So that in combination with being able to take up the margins in the Nordic We'll contribute well. Then we believe strongly in the Norwegian food market.
That is noncyclical. So that also creates stability over time, and we believe that will grow both through the initiatives in the new fish box factories and the intended investments and also from BDH. And then the third is automotive, where we only have started, and we now are in a rather tricky situation. But we know, again, based on macro statistics, That car production will come up again and that we also see as a driver for Good contributions coming years.
Just a quick follow-up question. Why would you not assume any margin expansion As you are doubling the revenue base, should there not be any positive effects from economies of scale or improvements of product mix, For example, higher share of value added products, particularly in the Nordics. Marie?
I'll take that question because it's a difficult question because I have to explain then that the part of the business model to Bevy is to acquire company and to focus on the synergies to improving those companies together. And in the big picture, that is more of the amount we are talking about. Of course, every day we are working. Every morning, we wake up and we try to improve the processes We do every day. So in that sense, we should improve margins, but also you have an inflation of costs.
So it's a difficult situation to discuss. I think it's more, if you call it, down to earth, to talk about the realistic level is to keep and maintain the Cost structure we have on our products today. And in terms of what we're talking about in insulation and higher added value products, yes, in some countries, we will Have better results due to improvements, but in other parts as well, which we have spoken about today, there will be difficulties due to various reasons. So in general, we will maintain our margins on what we do, and then we will try to Do better margins over the acquisitions we do and the synergies we take out for the company.
Okay. We have a more questions. If you're spending EUR 300,000,000 to EUR 350,000,000 on acquisitions, how much will be financed by shares or own funds and debt?
There is two sides. We can finance everything, as Marie showed, by our own capabilities financially. But it's also a privilege to be a part of the BEV journey. I think that many of the companies joining BV in the future will also become shareholders due to the fact that they will be a part of the journey As we are an industry company made for industry people. So that's an invite to people, owners that have Companies that can be a part of the Baby Journey.
Okay. We'll take a few more from the webcast. What are your criteria for M and A in terms of profitability of target companies?
As we always say, we like companies which has held a stable earnings over time, earning between 5% 10% EBITDA, where we see the synergy potential to take them up to the level which Berri is at now. So that is a standard, but It's a very complex picture, more than EBITDA and more than but that's the simple answer.
I think we answered this The next one, CapEx requirement per year to reach 2026 targets. I think that was in your presentation, Marie?
Yes. That is approximately the 2.5 percentage of revenue as a base. And then on top of that, we have, as per today, projects in the pipeline. Not started, but that we would like to move on in the range of EUR 40,000,000 to EUR 50,000,000.
You mentioned your jointly owned downstream facilities. Could you elaborate a bit on the medium- to long term ambition for these minority Yes, minority interests, both in terms of growth and margins going forward, but also whether you have the goal to making them fully owned eventually.
Obviously, if you look at Bevis strategy, and I cannot speak our joint owned companies. So it's but from Bevy's view, it's a target to Make them wholly owned by us, but it's various of aspects bringing up to this. We have the same targets for the joint owned companies as we have for ourselves, The same expectations, everything is the same for our joint owned companies as it is for us. And obviously, it's a strategical position, and we will, at all time, consider what is best for the company in terms of having those strategical positions or not.
We just have a few more. And then if there are any questions from the audience, we'll take that. Natural gas prices for the winter. Keep rising. How big is the natural gas in your raw materials needs?
Is there a gas price at which you will need to curtail some of your production? I guess you want to make Could
that be a question for you, Camilo? No,
but it's difficult to understand how much of our production It's impossible to answer that even with our detailed knowledge. I do not think that's possible to have In the top of our head now. So we can come back to that question. Yes, exactly.
Yes. Of
course, it will have an impact, but the increase will not be that sky high that it would Some kind of meaning to our production.
In general, the cost level we see now in Europe Will affect our companies as all companies in material prices, in energy prices and so on. But in terms of in the total, It is less of our cost structure. It will not have severe impact, and we do not see anything that it Will really impact our company today.
Okay. Just a few more. One, if you take EBITDA the last 12 months of €83,000,000 and correct for normal GAAP, There is what is then your corrected starting point relatively to 2026 a goal of EUR 170,000,000.
But then I think we are back to that you cannot on a look at one individual segment because if that wouldn't be the case, then we would have seen much higher earnings in our downstream. So It's back to that always need to look at the total. So we believe that the total is Still a valid base.
Yes, I totally agree. I think it was very clear on the presentation as well where you see the overall margin, so the overall company. And we have That communicated that very thoroughly. And then direct, so I think that's the expectation going forward as well.
Yes. And follow-up question for that. Using more raw material internally would automatically increase margins due to higher intra group revenues, with lower group revenues. Could you elaborate a little around this compared to no change in overall EBITDA margins for 2026.
As well. But we will continue to grow our volumes in raw, and we will continue to acquire companies as well. So we will be integrated to a bigger part. But on the other hand, we always sell to market price, internally, externally. So it's more about
And you
have to remember, in internally. So it's more about
And you have to remember, in terms of our growth and all our targets, also the recycling We are building up to reach 60,000 tonne. We'll even out the total capacity if you include that with the raw material production as well. So you will always we are striving for having the same balance between raw material, both virgin and recycled, and the Downstreams we have.
Okay. And then regarding the gap between the styrene and EPS prices during the autumn this year, what's your expectations?
I think we were like communicating that on the Q2 report. And I think that our expectation going forward and we promise not Speaking short term here in this meeting, but I'll do one exception. So our expectation is that we will see the same strong market in What we call the short time of next half year, we see no changes in the pictures which we have shot. I think we communicated that on the Q2 presentation, so that it's not forecasting in any way.
And there's another question regarding which I think we have Marie has answered. The negative impact on earnings in first half this year from high raw material prices, I assume this person then thinking about the downstream segments. How large is that impact? And when will you have compensated for this? And I think we partly answered that because we compensate for that through the raw material segment.
And This will we also were pretty clear on the Q2 outlook that we expect the Q3 and Q4 to be Strong quarters. Capital is currently cheap, and there is a lot of companies looking for acquisitions. How much are multiples increasing on targets?
Yes. Back to our fundamentals. As I have said in the presentation, it is Everything is timing. And obviously, capital is cheap, but we will continue what we have done for 40 years, and everything has an But still again, we need to look at for the next 10, 20 years. And in the next 20 10 to 20 years, both the capital cost will change and the Companies will change and the prices of companies will change.
We will try to remain an Then they are stand alone.
Lars, just a second.
Thanks.
With your history going back, Creating this integrated value chain. I know the history with starting with Styer Chem. You seem to be successful in taking out a lot of the raw material risk, and you managed to build a larger company with less risk. Then you've had a phase of a lot of M and As, building many verticals. When you then Give strategy going 5 years forward today.
Very impressive with the focus on sustainability, giving Other attributes and also with the interesting R and D strategy on understanding market opportunities. For me, it's not clear that the very strong focus on M and A, buying cheap and making them Profitable into your margin level rather than trying to have a strategy where maybe the focus could be more on Where are where could you have where could you use your pricing power? If you have the best market knowledge, you have You're exposed to a lot of these verticals. I really see an opportunity to be a more profitable company Through penetrating the most attractive segments rather than building broad and going for volume markets. But maybe there's something that I quite don't understand because I really see Baby as a Company that could be very profitable and the most profitable through your R and D focus on 100% recyclable Products, so there's something there that I'm still looking for you to be even more profitable.
I like your question. It's a challenging question because you are asking if we Do not have more plans to be more profitable. And I promise you, in the market strategies, in the operational strategies, in the R and D strategies, In all over the companies, we have shown for the last year that we are aiming for being profitable. Even in our circular strategy, we are aiming for being more profitable. So on that side, I would expect our company to become more profitable.
But we are also very humble because we are we have 40 years experience in our company. And market, they go up and down. And you sometimes it's very easy to see, okay, here is a market. For example, now we see a market in raw material. It's easy to have high margin, and there is many one exiting out of this market.
You can use all your time and spend all your resources on that. 2 years, maybe 3 years afterwards, they changed. It's become different again. And then you see the downstream. And I think that is the fundamentals of our company, Not to be more and more profitable.
Obviously, we want to be more and more profitable, and we have shown that we are more and more profitable. But to impact the society With our knowledge on how to bring companies together, to bring customers together and to really innovate for the future, that is our Profession in terms of taking over company and acquiring companies and making them stronger together. So it's more than an acquisition strategy where we acquire cheap companies. I have never come to a company and said, I want to acquire your company cheap. It's like saying, you have a bad company, I want to buy it.
I look at companies with potential. I look at companies with the possible synergies between us and companies that can make a future better together with us than they are standalone. From there, we have the strategy of growing, merging companies more than acquiring them. But I understand your question. I hope that it was more clarification on how we are thinking.
I think it's impossible to have a margin on 25% for industry company, for example, But it's not impossible for Bjorg to have 17% next year.
Okay. Then we just have one final And I don't know, it's about will Quamseh Properties benefit from the new acquisitions?
No. So we in PV, if it's KMC Properties, if it's SAGAX or whomever, we always look at the possibilities of optimize our capital structure in terms of sometimes divest companies or divest properties as well. So this is what we will continue to do
always. So with that, we say thank you for attending.