Good morning. Welcome to Borgestad Group's first quarter presentation for 2026. My name is Pål Feen Larsen, and I'm the CEO of Borgestad ASA. With me today, I have Bendik Persch Andersen, the Group CEO of Höganäs Borgestad. We'll together take you through this first quarter presentation. Start with some highlights. For first quarter 2026, Borgestad Group delivered a result before tax of NOK -28 million, compared to a NOK -21.6 million in first quarter 2025. First quarter is a quarter where the activity is low due to Nordic refractory market in general, mostly due to climate and seasonality within maintenance business for Höganäs Borgestad. For Höganäs Borgestad, market conditions have been increasingly challenging across the Nordics. As part of the global steel value chain, the Norwegian ferroalloy sector has been affected both by the international steel demand and by specific developments in the Norwegian market.
Trade measures introduced by the European Union on imports from Norway, combined with persistently high electricity prices in northern Norway, have led to temporary shutdowns and reduced activity at several ferroalloy plants. These factors have had negative impact on revenue and margins during the period. A general slowdown in Sweden and the Finnish market has intensified competition and increased price pressure, negatively affecting both revenue and margins for the group. Despite a challenging market environment, it's important to emphasize that Höganäs Borgestad has a solid underlying operational performance. The Höganäs Borgestad Group has initiated comprehensive internal improvement initiatives aimed at further adapting and professionalizing the organization. These measures include improved project execution and cost discipline, as well as focus on organizational development and competence building.
Together, these efforts have strengthened and will continue to strengthen the group's resilience in a volatile market environment and have established a stronger platform for profitable growth and market conditions to improve. For Agora Bytom, first quarter is considered strong, considering several tenant changes during the period. The changes include temporary reductions in rental income related to the onboarding of new tenants. Based on the changes within the center, to increase year-over-year both for revenue and EBITDA is a good performance. At first glance, the cash and net interest-bearing debt can be viewed as weaker than last year. This is due to timing effect of paid dividend. In 2025, dividend was distributed to shareholders in second quarter, while in 2026, dividend was distributed in first quarter. Borgestad Group remains solid and fully financed. Before going into details, we will start with a brief introduction to Borgestad.
Borgestad is a company with a lot of history with industrial and shipping roots dating back to early 1900s. Over the years, we have now evolved into an industrial investment company, currently invested in real estate and industrial refractory industry. Looking ahead, we aim to take positions in niche segments with consolidation potential where we see that we can make a difference. We operate as active owners, meaning that we work closely and support our portfolio companies to drive operational improvements. In addition to profitability, capital efficiency is always a priority, ensuring resources are deployed effectively. We take a data-driven approach, continuously measuring everything we do. Additionally, M&A has been and will continue to serve as a tool to strengthen the competitive position of our portfolio companies.
Our current portfolio consists of two key assets, Agora Bytom, a fully owned shopping center, and refractory supplier, Höganäs Borgestad, which we hold a stake of 69.7% ownership in. Agora Bytom is a modern shopping center located in the city center of Bytom in Poland. The center is 52,000 sq m large of gross area with nearly 34,000 sq m of leasable area. With close to 5 million visitors annually, Agora Bytom holds a leading position in its primary catching area. Höganäs Borgestad is a manufacturer and supplier of high-quality refractory products and installation services, serving industries that rely on high-temperature processes such as steel, cement, and pulp and paper. With a strong presence in Norway, Sweden, and Finland, Höganäs Borgestad is the market leader in the Nordic region. Let's go into some details for first, real estate and Agora Bytom.
Agora Bytom continued its positive trend with improvement driven by revenue growth by 5.2% in the quarter. EBITDA for first quarter increased from NOK 10.3 million in 2025 to NOK 10.7 million in first quarter 2026. First quarter was a quarter with a lot of changes, and new tenants opened mostly at the end of the quarter and beginning of second quarter. Agora Bytom has a positive momentum on signing leases and had by end of first quarter, an occupancy rate of 96.4%. As part of the increase in occupancy, also the total area for commercial square meters is increased by converting common areas to leasable areas. Based on the occupancy rate, and that most changes have been implemented for new tenants in first quarter, the remainder of the year is expected to be relatively stable on operations, but with increased performance for revenue and EBITDA, quarter- by- quarter going forward.
Agora Bytom obtain a BREEAM In-Use certification during first quarter. The certificate confirms a solid standard of environmental performance, energy efficiency, and sustainable building management. Going forward, Borgestad will focus on increasing rent levels by replacing tenants with low rents. As of March 26, debt stands at EUR 28.9 million, maintaining a sustainable financial position. It's worth mentioning that Agora Bytom started amortization in April 26, after our amortization free period, over two years. This is according to the agreed schedule with Bank Pekao, as we agreed when we refinanced the center in end of 2023, and the debt is due at 31st of December 2028. Tenant turnover at Agora Bytom decreased by 3% in first quarter, compared to the same period in 2025. Number of visitors are stable in the quarter.
It's estimated that decrease in turnover among the tenants is due to changes of tenants in the 1st quarter. The Polish economy growth has been resilient and above the EU average growth, despite the trade turmoil and ongoing war in neighboring Ukraine. Borgestad expects continued positive development in consumer spendings in Poland, and this should lead to better performance for the shopping center going forward. Agora Bytom benefits from a diverse tenant base and a healthy weighted average unexpired lease term of about four years, ensuring low contract duration risk and high visibility for the years ahead. Contract duration are well spread over time, with the 1st due date for top 10 tenants at first quarter 2028, and more than 55% of contract measured by number of square meters is due 2029 or later.
Local management is actively engaged in ongoing negotiations with both existing and potential new tenants to further strengthen the tenant mix and occupancy levels. I leave the word to you, Bendik.
Thank you, Pål. Höganäs Borgestad reported a first quarter revenue of NOK 181 million, down from NOK 186 million in the same quarter last year. EBIT for the quarter came in at NOK -18.3 million, compared to NOK -11.5 million in the same quarter last year. This is largely reflecting the general slowdown in the European and Nordic refractory markets, in addition to some challenges in our own project execution. As Pål mentioned in the introduction, market conditions remain demanding, with several customers within multiple industries having temporary shutdowns or delaying projects, which in the short term is resulting in lower overall utilization across Nordic refractory players, which inevitably is impacting us as well.
This has been particularly visible in Sweden and also now in February and March, also among ferroalloy producers in Norway, which have been affected by both the recently introduced tariffs on Norwegian ferroalloys into the EU and by unusually high electricity prices during the winter in the northern parts of Norway. While the weaker performance is clearly driven by the broader market downturn, with similar trends being reported by refractory players across Europe, it's also evident that we have internal improvements to make. In particular, there is a need to further professionalize parts of the organization. To address this, we have initiated a range of measures, both at the group level and within each single subsidiary.
As highlighted in previous presentations, the Nordic refractory market is characterized by pronounced seasonality, with lower activity levels during the winter months, as the activity level is typically picking up in the first part of second quarter and peaking in third quarter. This year's first quarter has been no exception, with limited project activity throughout the quarter. Looking ahead, we expect a substantial pickup in both revenues and profitability in the second and third quarter. To mitigate some of this seasonal slowdown during winter, we are also further intensifying our focus on securing projects for execution in Q4 2026 and Q1 2027. Okay. Finally, a brief update on the Bjuv sale leaseback agreement, where we do not have any meaningful updates since our Q4 2025 report.
For those less familiar with the background, in late 2023, Höganäs Borgestad signed an agreement to divest two properties in Bjuv to the local municipality. As part of the structure, we secured the option to lease the properties back for up to five years, giving us the necessary flexibility while planning for relocation of production. Following a complaint from a local resident regarding the transaction price, the Administrative Court in Malmö set aside the agreement in March 2025, referring to insufficient documentation supporting the valuation. The municipality appealed this ruling in April and provided additional supporting material, and in June 2025, the court agreed to reopen the case. In December 2025, the Court of Appeal ultimately ruled in favor of the transaction, clearing the way for the sale to proceed.
In January this year, however, the same individual filed a further appeal, and the case is now being reviewed by the Supreme Court. Based on typical timelines, we expect a final decision prior to the summer or just after this summer. We remain confident in the outcome, and once the transaction is finalized, intend to resume planning of future production, which has been put on hold while waiting for the legal process.
Going to financials. Turning to the financials for Borgestad Group, we start with the P&L. Revenue is stable in first quarter 2026. EBIT decreases in first quarter compared to same period 2025 due to increased depreciation in Höganäs Borgestad and a write-down of fixed asset in connection with the tenant change in first quarter 2026 for Agora Bytom. The fact that Höganäs Borgestad has a weaker start of the year. Net financials are stable year-over-year. Looking at the balance sheet, working capital stands at NOK 199.1 million, a decrease from NOK 216.6 million as of March 31st, 2025. Mainly driven by decreased trade receivables and inventory within Höganäs Borgestad. Per March 31st, total interest-bearing debt stood at NOK 456.4 million, while net interest-bearing debt was at NOK 335 million.
As communicated, the debt in connection with Agora Bytom has in April 2026 started amortization according to plan and agreement with Bank Pekao. The property in Bjuv remains classified as held for sale pending the expected court decision in near-term future. Borgestad expect that the process will be finalized in 2026 with closing of the transaction, of course, conditional of the positive Supreme Court decision. Net cash flow from operating activities for the period was positive at NOK 11.8 million. Cash flow from investing activities was negative with NOK 8.4 million, and it's a 50/50 split in investments between Agora Bytom and Höganäs Borgestad. Net cash flow from financial activities is negative with NOK 34.5 million compared to NOK -9.8 in first quarter 2025. The main difference is timing of dividend payment. Dividend was paid in first quarter 2026 and second quarter 2025, as earlier mentioned.
Per March 31st, available liquidity stood at NOK 121.5 million, including NOK 75.3 million undrawn credit facility for Höganäs Borgestad, meaning that Borgestad have a good cash situation going into high season. To summarize, Borgestad delivered as communicated and expected in first quarter 2026. Borgestad expect the group to deliver improved underlying results and stronger cash flow with continued positive margin development in both the refractory and property segments over time. To be a bit more specific, Borgestad expects Höganäs Borgestad to deliver the coming quarters as mainly in 2025, quarter- by- quarter. While for Agora Bytom, we expect a small decrease both in revenue and EBITDA quarter- by- quarter going forward compared to 2025. Cash flow remains solid and net debt at a sustainable level. Borgestad expects to continue the good development going forward on a longer term. We got any questions, Bendik?
Yeah. We have got two questions. Starting with the first. What caused the increase in right of use assets and lease liabilities?
Yeah. Both items on the balance sheet increase quite heavily and is due to the fact that Höganäs Borgestad signed one or two leases with quite a long timing effect.
We have a question regarding the sale leaseback in Bjuv. Is a cash receipt expected immediately in the case of a favorable ruling in the Bjuv case? I can start answering. As I said, we do expect to have a decision either just before the summer or in August. We intend in close dialogue with the municipality to close the transaction as soon as possible following a favorable ruling. We do expect the cash proceed, so the first tranche of three to be distributed closely after transaction. We will do some debt amortization, whereas most of the cash proceeds will be distributed as dividend.
Yeah.
Presumably.
Yeah.
Yeah.
Any other questions?
No other questions.
Thank you for participating, and have a nice day.
Thank you.
Thank you.