Good morning. Welcome to Borregaard's 1st Quarter 2026 Presentation. My name is Tom Erik Foss-Jacobsen. I'm the CEO of the company, and I'll be joined today by our CFO, Per Bjarne Lyngstad. Together, we will take you through this agenda. I'll start with the key highlights for the quarter and then give an update on the market situation across our business segments. I'll then summarize the outlook before handing over to Per Bjarne, who will walk you through the financial performance in more detail. Before we begin, just a quick reminder, for those of you watching the webcast live that, you're welcome to submit your questions at any time during the presentation, and we will address them at the end of the presentation.
Let's begin with the highlights for the first quarter. EBITDA came in at NOK 428 million, compared with NOK 511 million in the same quarter last year. In BioSolutions, we saw lower sales volumes within specialities compared with a very strong quarter last year. In BioMaterials, we delivered higher volumes, this was offset by lower sales prices and a weaker product mix. Fine Chemicals delivered a strong result, supporting the overall performance in the quarter. On the cost side, the higher energy costs and general cost inflation were partly offset by lower wood costs, and we had an insignificant net currency effect in the quarter.
Let's turn to BioSolutions. Within specialities, lower sales volume was partly compensated by higher sales prices. Deliveries to Agriculture and batteries were lower, compared again with a very strong Q1 last year. At this stage, we have no indication of a structural change in demand, but we see this rather as a temporary delay in the value chain driven by geopolitical factors, broader uncertainty, and customer destocking in this period. The average price in sales currency was marginally higher, with the price in Norwegian kroner being impacted by a weaker U.S. dollar and euro. Overall sales volume was 4% lower than Q1 last year.
Moving on to BioMaterials. In the quarter, sales volume was 10% higher compared with Q1 last year. This was driven by higher deliveries of Specialty Cellulose, partly due to higher sales to the Construction segment, but also increased sales of our highly specialized products to regulated markets and bioplastics. The average price in sales currency was 4% below Q1 last year, reflecting lower sales prices, where we also did some selective price adjustments, and also a weaker overall product mix. For BioSolutions, the average gross sales price in Norwegian kroner was also affected by a weaker U.S. dollar and euro.
Now to Fine Chemicals. For fine chemical intermediates, we delivered a strong quarter supported by a favorable product mix and higher deliveries. For bioethanol, we saw increased sales volume. This segment delivered significantly higher operating revenues, up 23% compared with the same quarter last year. I'll conclude my part with our outlook. In BioSolutions, sales volume for 2026 is forecast to be approximately 340,000 tons. For Q2, we expect sales volume around 90,000 tons. We expect a less favorable product mix in Q2 compared with the second quarter last year, primarily driven by the current temporary delay in the value chain mentioned.
In Biomaterials, sales volume for 2026 is forecast to be in the range 155,000 tons-160,000 tons, and the sales volume of highly specialized grades is expected to be slightly higher than in 2025. The average price in sales currency here is expected to be 3%-4% lower in the first half of 2026 compared with the second half of 2025, partly due to mix. For Q2, sales volume is expected to be in the range 40,000 tons-42,000 tons. As previously communicated, the preliminary decision in the U.S. dumping allegations is expected end of May.
In Fine Chemicals, the bioethanol sales prices are expected to be largely in line with 2025, and the sales volume for the fine chemical intermediates is expected to increase versus 2025. For fine chemical intermediates, the delivery patterns and product mix may vary from quarter-to-quarter. On the cost side, the cost development is expected as this. The wood costs in first half of 2026 are expected to be reduced by around 15% compared with the first half of 2025. At the same time, we see that the Middle East conflict is expected to impact our energy, logistics, and chemical costs negatively.
The net cost impact from raw materials, energy, and logistics is estimated to increase by NOK 40 million- NOK 60 million versus the second quarter last year, in addition then to the general cost increases. The uncertainty related to wars, conflicts, and tariffs is impacting both our markets, our cost base, and also our currencies. Consequently, we are now implementing targeted measures to address the cost development.
While the current supply disruptions and cost pressure on oil-based products are affecting certain parts of our markets and customers, we also believe that this may support a stronger case for bio-based alternatives Borregaard is offering, and then represent a longer-term opportunity for products like ours. Finally, Borregaard's highly diversified portfolio and broad customer base has a proven track record of providing resilience in times like this, in a volatile environment and through periods of uncertainty. We also think that this will prove its strength in a period like we're seeing now. With that, I'll hand the word over to our CFO, Per Bjarne Lyngstad, who will take you through the financial performance in more detail. Thank you.
Thank you, Tom Erik, and good morning, everyone. In the first quarter, Borregaard's operating revenues were 2% lower than in the same quarter last year. EBITDA, as Tom Erik said, was to NOK 428 million, compared with NOK 511 million last year. The result in Fine Chemicals increased, while BioSolutions and BioMaterials had the lower results. The lower result was mainly due to lower sales or sales volume of Specialties in BioSolutions and higher energy and other operating costs, except for the wood cost. Net currency effects were insignificant in the quarter, and the EBITDA margin ended at 21.3%, compared with 25.1% in the same quarter in 2025.
Earnings per share was NOK 1.82, compared with NOK 2.52 last year. The lower sales volume of Specialties was also the main reason for a 9% decrease in operating revenues in BioSolutions. EBITDA in this area was NOK 260 million compared with NOK 349 million last year. The lower sales volume was partly compensated by higher sales prices for Specialties. The result was also negatively impacted by higher energy costs. In addition, the net currency effects were, in this area, negative in the quarter. Due to the lower result, the Q1 EBITDA margin was 24.4%, compared with 29.6% in the very strong first quarter last year.
BioMaterials operating revenues in the first quarter were 6% higher than in the same quarter last year, mainly as a result of higher deliveries of Specialty Cellulose. EBITDA was NOK 102 million, compared with NOK 113 million in the same quarter last year. Higher deliveries of Specialty Cellulose, they were offset by lower sales prices and a weaker product mix. Lower wood costs were more than offset by an increase in other costs, mainly related to energy. Other costs have also increased due to higher prices for some chemicals, particularly sulfur, the cost for defending the antidumping case in the U.S., in addition to the general cost inflation.
Net currency effects were positive in BioMaterials this quarter, the EBITDA margin ended at 14%, compared with 16.4% last year. Higher deliveries of both fine chemical intermediates and bioethanol were the main reasons for a 23% increase in operating revenues for Fine Chemicals in the first quarter. EBITDA reached NOK 66 million, NOK 17 million above the first quarter last year. The improved result was due to higher deliveries and a favorable product mix within fine chemical intermediates and increased sales volume of Advanced bioethanol.
In addition, net currency effects were positive for Fine Chemicals in the quarter. The EBITDA margin ended at 30%, close to 3 percentage points above the same quarter last year. I said earlier, the net currency impact on EBITDA in the quarter was insignificant compared with the same quarter last year. A 10% stronger Norwegian kroner in the first quarter this year using Borregaard's currency basket was offset by a significant change in hedging effects. In the first quarter, we had a NOK 16 million gain on hedging compared with a loss of NOK 95 million last year.
Using currency rates as of yesterday, the net currency impact on EBITDA for the full year of 2026 is now estimated to be about zero. The corresponding impact for the second quarter is estimated to be positive by about NOK 10 million compared with the second quarter last year. Cash flow from operating activities was NOK 77 million in the first quarter. The low cash flow was due to a reduced cash effect from EBITDA, an increase in net working capital, and high tax payments in the first quarter. Net working capital increased mainly due to high deliveries in most areas towards the end of the quarter, resulting in an increase in accounts receivable. Investments were NOK 161 million in the quarter.
The largest expenditure were related to the upgrade of the electricity transmission, transformation capacity and the debottlenecking project at the Sarpsborg site, in addition to a capital increase in Alginor in the form of a convertible loan. Net interest-bearing debt increased by NOK 35 million in the quarter. At the end of the first quarter, Borregaard is still well capitalized with an equity ratio of 62% and a leverage ratio, which is net interest-bearing debt over EBITDA, of 1.18. That concludes today's presentation. Tom Erik and I will now be ready to answer any questions, both from the audience present here in Oslo and from those who follow the webcast. Our Director Investor Relations, Pål Espen Ramberg, will moderate webcast questions.
We have received some questions. The first one comes from Magnus Rasmusson at SEB regarding mix in BioSolutions. How confident are you that the weakness in Agri and batteries is temporary?
As we said, we read the current picture as a reaction to the geopolitical situation, intensified by the war now in Iran, which has also created a more broad uncertainty. We see also that this drives a destocking in the value chain. We have no indication from the market, from the customers that this is a structural change in demand. Customers are keeping up their forecasts for the year. As such, we see this as situation where customers are taking a cautious wait and see approach. Where is the oil price going? Where is the price on oil-related products, which they are heavily dependent on going? That means currently they're buying less, using what they have and take this approach. I think that's the view here.
Thank you. The next one is from Kristoffer Haugland in Arctic related to RYAM and BioMaterials. RYAM guides 18% higher ASP for Specialty Cellulose for 85% of its volume in 2026, and more for the remaining 15%. How should we think about the ASP in second half when you have flushed out the lower grades from the production hiccups last year?
As communicated earlier here, we have locked in, I would say , the major part of our cellulose business for the year 2026. We have some flexibility on a limited part of the volume. I think the main impact here will be when we go into 2027. I would also say that this situation may create some opportunities in the market where we will take those as we see the opportunities. As such on pricing, part of the volume is locked in.
Thank you. Another one from Magnus Rasmusson at SEB related to Middle East and the raw material cost. The cost increase driven by the Middle East, is it fair current spot prices for gas sulfur, or do you still benefit from the lags early sourcing in the cost guidance figure?
We have one month delay on natural gas. What we will see now in April is the average March price on LNG. There is a certain delay there. Overall, we are more or less at the present level. What we're seeing also in the first quarter is very high electricity prices in Norway, and they will probably not continue at the same level because it's getting warmer. Everything points to a higher electricity price and than last year- o f course, depending on the weather. We are on that part that we haven't really hedged or have long-term contracts on, we are more or less exposed to spot prices on energy.
Sulfur prices are on the rise. caustic soda is relatively stable, but we expect at least some increase now in the second quarter. All those things are involved. On the wood side, the prices for the first half are set, but the expectation there is that wood prices should go down in the second half of the year. How much is too early to tell. It's a mixed picture, but of course, there's a lot of uncertainty in the energy price. Remember that about 80% of our energy consumption are on long-term contracts or hedged. We have flexibility between natural gas and electricity on the spot side.
Thank you. Another one from Magnus Rasmusson at SEB. How do you view the preliminary result of the countervailing duty against Brazil, which was released recently?
I would say these are technical calculations and may not reflect the final outcome. We will wait and see until we have the preliminary saying here coming at the end of May. Countervailing duty is only a part of it. There's also talks about this antidumping type of pricing. I think it's too early to say. It's still open, I would say.
Thank you. The next one is from Kristoffer Haugland at Arctic. Spruce pulp prices are now down 26% from the peak. How are negotiations going for Q2? Mix in BioSolutions second quarter, should we expect similar trends and ASP as in Q1? Can you split the NOK 40 million-NOK 60 million higher cost year-on-year in Q2 on the different items?
Yeah. That's-
Yeah...
You take the cost.
... answer for the first and the last....
Yeah.
You'll take the middle one. On the wood price, I partly answered that. The negotiations for the second half on wood price has not started yet, so it's a bit early. We see that prices has come further down in Sweden. I'm sure many of you follow the statistics on the wood price coming from the Agriculture department in Norway. Everything points to a decrease, but I don't dare to say how much we will see in the second half. Probably less than we saw in the, we had a 15% reduction in the first half. It will probably be less than that, but it's early to tell. The last question was.
Relates to the split of the 40%-60%.
The split, because that's a net amount. With the wood prices, the 15% reduction in wood price, that's about roughly NOK 30 million positive per quarter. That means that the other elements, which is mainly energy, is NOK 70 million-NOK 90 million. That's the main elements there. A part of it is also increased sulfur price, it's not a very high part of the total. It's mainly related to what we foresee now on energy prices, the gas prices we observe in the market, which is of course uncertain, then what will happen with caustic also.
Hmm. Yeah. I can answer the market question related to BioSolutions' product mix. We have said that we're keeping our total volume for the outlook for the year, 340,000 tons, and we are also keeping the volume, as we said in the previous quarter, for Q2, we stick to the 90,000 tons. But we're also saying that we expect a less favorable mix in Q2 versus the same quarter last year. A reminder that also Q2 last year was a very strong year or quarter for the specialities. When we say that the impact here that we believe is temporary, I mean, we have just seen the first consequences of the outbreak or the Iran war. That was end of February. We have had one month in Q1.
This is definitely going to impact Q2 as well, and in particular, we see that the Asian market is impacted more than others. We also see this on, for example, the Agri market. We also have customers in India, which is definitely one country here being impacted here. We will see a less favorable product mix with within the same applications as we're mentioning in Q1. We are currently believing that the second half is more back normal. Who knows exactly outcome or what's going on now? I mean, it is a broad uncertainty and still, we believe it's temporary. How long remains to be seen.
Thank you. Another one from Kristoffer Haugland at Arctic related to construction volume in BioMaterials. You highlighted more sales to Construction segment. Is this structural or reallocation of the lower grades sold in the quarter?
If you look back at our Q1, the 2025 report we did, we said that for 2026 we had more intense competition in the Construction part of the business - in cellulose ethers, and that we had done some selective price adjustments. I would say our increased sales into Construction is reflecting also that our selective price adjustments have been working out well, and that we are gaining both business and market share in that part of the business.
Thank you. The next one is from Niclas Gehin at DNB, related to cost. Could you elaborate on what these targeted cost measures to address cost development are? Are price increases and surcharges also something you will consider? When might these measures start to take effect?
For the time being, we have initiated a project that will have targeted measures to address costs. It's too early for us to give exact details, we will definitely look at being more restrictive on recruitments. We will be more looking at the structure and initiatives we're driving and, in general, take a more restrictive approach to get costs down. We will get back with more details on that as this is still fairly new and in progress. The second part you asked for was? One more time.
Surcharges.
Yeah. We are discussing also this within our businesses. We're looking at the contracts, and we're looking at the impacts, and we have seen that a competitor has been out there with a quite significant surcharge. We are in discussions on this, and we'll over the few coming months, we will decide on how to approach it.
Thank you. The next one is from Fabian Jørgensen at Pareto, related to price hikes and surcharges. How do you consider your ability to offset cost increases with hikes in price or surcharges? Your track record from 2022 is strong, but with a slower Construction market, the market balance is significantly softer.
Yeah. I think I already answered to the surcharge part, and that we are in consideration of doing this. On price hikes, we, I would say the situation was a bit different in 2022 than versus today, with the overall market environment being a bit different. We are also looking at, again, contracts we have with our customers and the flexibility we have to do some moves on price and with price adjustments. This will be reported as we move on, how we implement this.
Yeah. Thank you. Another one from Fabian Jørgensen at Pareto related to Agri sales. Is there a risk that higher fertilizer prices affect your Agri sales negatively?
I think it's a bit challenged to see exactly what's gonna be the outcome of the current situation. We know fertilizer prices are going sky high. Farmers will be hit by this heavily. One thing is availability. The other thing is that they will be really hit by high costs. We think that our customers that are selling plant protection, plant nutrition products are currently looking at the impact on their own cost input factors.
What we see is also that we have products that actually makes the farmers able to use less fertilizer. I think we will see mixed impacts. Currently, the net impact is difficult to estimate exactly, but there will also be opportunities coming out of this. Especially as I most mentioned, in the longer term. Currently, we see a temporary situation where there's a wait and see and where they are deciding how to approach the situation.
The next one is from Sindre Sørbye at Arctic, also related to Agri. Petrochem-based product have surged in price, so has fertilizers. This should favor both pricing and volumes of Borregaard's Agri-based portfolio. When can we expect to see effect of this?
Well, again, the timing is difficult to be exact about. I think short term, we see exactly the impact we're seeing now - that sales is somewhat reduced, due to the uncertainty and that they're using this then situation also as a opportunity to reduce their inventories. We know they are using what they have in inventories. That's a consequence. I think, again, longer term, this may offer opportunities both for additional business, and also to do price adjustments upwards, definitely, where we are replacing synthetic products. As I mentioned, I think in the longer term, this is positive for bio-based solutions.
The next one is from Niclas Gehin at DNB. Could you say something about how the different activity level and sales volume were in March after the war bombings, relative to January and February, how is the start of Q2?
I would say that we can say we were also a bit surprised about March. March was definitely a slower month than we expected. That was when we really...
For BioSolutions, I think we have to stress that.
For BioSolutions-
Yeah.
Yeah, for BioSolutions in special. That was when we saw the impact starting and which is normally a very strong month for applications like Agri. Yeah.
Thank you.
Yeah, he also asked for the beginning of the quarter, but that's again, We'll get back to that.
Next time.
Yeah. We have said, less favorable product mix, so that there is some impact also into the quarter in general. Yeah.
Thank you. There are no more questions on the web. let's see if we have, something from the audience.
No. I think that was good and a good number of questions. Yeah. Thank you very much.
Thank you.