Good morning, and welcome to this second quarter 2023 presentation for Borregaard. My name is Per Sørlie. I'm the President and CEO of the company, and I'll be joined this morning by our CFO, Per-Bjarne Lyngstad, and we will take you through the following agenda. First, the highlights for the quarter. I will go through the market situation for the different business segments, and then the outlook. After that, Per-Bjarne will come back and talk about the financial performance of the company. Also let me remind you that you can submit questions online during the entire presentation, and we will revert with a Q&A session at the end of the presentation. On to the highlights for the second quarter.
We are really pleased to report an all-time high EBITDA for a single quarter of NOK 537 million, compared to NOK 445 million in the same quarter last year, which was the previous all-time high. In the BioSolutions, we saw a positive impact from our diversified market strategy, with 600 products across multiple applications. In BioMaterials, we saw increased sales prices. In Fine Chemicals, which had a very strong result, we saw both increased sale prices and high deliveries in the quarter. As reported in the previous two quarters, we also had a reduced margin and volume for traded vanillin products in this second quarter as well. Finally, also positive net currency effects had a significant impact on the result in the quarter. I will move on to BioSolutions.
The average price in sales currency is 3% below the same quarter last year. However, sales prices in sales currency were in line with the first quarter this year, but the average was influenced by the mix, and the sales volume to industrial products and applications increased in the quarter, whereas lower deliveries came into construction and specialty applications, and altogether, this affected the average sales price. However, we saw that the margin, EBITDA margin, that we realized on sales in the quarter was strong, even with this changed mix, and the changes in mix actually also contributed to an improved EBITDA margin in the quarter. A similar development in sales volume. The sales volume was 4% lower versus the same quarter last year, came in at 86,000 tons.
After Q1, we guided that the volume in Q2 would be between 80,000 and 85 ,000 tons. The actions that we implemented in our market strategy actually delivered well above the expectation for the quarter with 86 ,000 tons. Again, it was increased sales into several industrial applications that more than compensated for lower deliveries to other applications. As mentioned earlier, positive FX effects in this business area as well. On to BioMaterials. The average price in sales currency came in 13% higher than the same quarter last year. Prices in sales currency were in line with the first quarter 23, as we had guided for after the first quarter.
The sales volume was in line with the same quarter last year, came in at 36,800 tons. Lower sales of specialty cellulose to the construction market for cellulose ethers, as expected, and that affected the product mix. However, this was partly compensated by higher sales of other specialized products. In cellulose fibrils, we had both higher sales volume and increasing prices compared to the same period last year. Positive FX impact in this area as well. Fine Chemicals delivered a very strong result. We saw both increased sales prices and high deliveries compared to the same quarter last year. In particular, there was a strong quarter for bioethanol, but in this quarter, we also saw an improved product mix for the fine chemical intermediates. Here, positive impact from FX as well.
I will conclude with the outlook. The diversified market strategy is expected to mitigate effects of a potential recession. We saw the strength of the business model in this business area in the second quarter, and we feel that we are well prepared to manage any deviations that we see in demand. The total sales volume for 2023 is forecast to be slightly below the last year, 2022, and this will, of course, finally depend on the global economic development in general, but also the construction market in particular. The sales volume in the second quarter is forecast to be largely in line with the same quarter last year.
I should also add that the BioSolutions business, given the 86,000 tons we sold in the second quarter, actually, sold everything we produced. We had, as Per-Bjarne will come back to, the working capital was stable in the quarter, which meant that we didn't build any inventories during this quarter, and this is particularly relevant for BioSolutions. Total sales volume for 2023 is expected to be in line with the previous year. As we have talked about for a long time, the sales volume of highly specialized grades is expected to be lower than last year, and this, we are now seeing a further slowdown in the construction market for cellulose ethers.
However, this was well prepared from our side, sales to other applications will partly compensate for this reduced volume to the construction market. The sales growth for cellulose fibrils is expected to continue. Fine Chemicals, the sales prices for advanced bioethanol are expected to remain at the same level that we have seen in the H1 this year. The favorable market conditions for advanced biofuel that we see across several European countries is expected to remain in place. However, for fine chemical intermediates, in the H2, we expect lower deliveries and a weaker product mix compared to what we saw in the H1 of 2023.
Raw material and energy cost, we have concluded negotiations around wood costs for the H2, and the wood costs are expected to increase between 4% and 6% in the H2 compared to the H1. In the third quarter, the increased wood and labor costs are expected to offset lower energy and other raw material costs, so fairly stable cost development from Q2 into Q3. However, I just want to finish by reminding you that there is always a lot of uncertainty in the global economy right now, so cost inflation, interest rates, and uncertainty in general can impact, may impact Borregaard's markets as well, and we are following the situation closely to make the necessary actions if needed. That concludes the outlook, and I will hand over to Per-Bjarne for the financial performance and financial figures.
Thank you, Per, and good morning, everyone. In the second quarter, Borregaard's operating revenues increased by 13% compared with the second quarter of 2022, mainly as a result of higher prices and currency effects. EBITDA increased by NOK 92 million to an all-time high of NOK 537 million. Fine Chemicals and BioMaterials had result improvement, while BioSolutions had a decrease. Increased sales prices and positive currency effects were also the main reasons for the strong result and EBITDA margin. The net currency effects were positive by NOK 80 million, compared with the second quarter of 2022. Reduced energy costs were largely offset by increased wood costs and the general cost inflation. The EBITDA margin was 27.4% in the second quarter, close to 2 percentage points above the same quarter last year.
Earnings per share increased to NOK 2.84 in the quarter, compared with NOK 2.53 in the same quarter last year. Operating revenues in BioSolutions were 1% below the second quarter of 2022. Lower average price, due to the changes in product mix and lower sales volume, were offset by a positive currency impact. EBITDA was NOK 284 million, compared with NOK 305 million in the second quarter last year. Higher sales prices and a positive net currency impact were more than offset by reduced margin and volume for traded vanillin products and the changes in product mix. Reduced energy costs were partly offset by cost inflation for other operating expenses.
The EBITDA margin was 26.1%, close to the margin we achieved in the second quarter last year, and an improvement compared with the previous three quarters. In BioMaterials, the operating revenues increased by 22% compared with the second quarter of 2022, mainly due to higher prices and currency effects. EBITDA reached NOK 143 million, compared with NOK 91 million in the second quarter last year. The EBITDA improvement was mainly a result of increased sales prices and positive net currency effects. Lower energy costs were more than offset by higher wood costs and other operating expenses. For cellulose fibrils, sales volume and prices increased compared with the same quarter last year. The EBITDA margin in BioMaterials increased by to 21.6%, close to 5 percentage points above last year.
Increased sales prices and high deliveries, especially of bioethanol, were the main reasons for the close to doubling of operating revenues in Fine Chemicals. EBITDA increased by NOK 61 million to NOK 110 million . The significant result improvement was also due to increased sales prices and high deliveries, in addition to positive net currency impact. Bioethanol had a particularly strong quarter. In addition, the product mix in for fine chemical intermediates improved. The EBITDA margin in Fine Chemicals was close to 50% in the second quarter, significantly above last year and in line with the first quarter. The net currency impact on EBITDA was, as I said, positive by approximately NOK 80 million compared with the second quarter of 2022.
The positive impact came from a weaker Norwegian kroner, which weakened by approximately 13% compared with the second quarter last year, using Borregaard's currency basket. The impact from a weaker Norwegian kroner was partly offset by increased hedging losses. Hedging losses were NOK 65 million in the quarter, compared with a loss of NOK 3 million in the second quarter last year. Using currency rates as of yesterday, the net currency impact for the full year of 2023 is estimated to be positive by approximately NOK 215 million compared with 2022. The corresponding impact for the third quarter is estimated to be about NOK 40 million compared with the third quarter of 2022. Borregaard had a cash flow from operating activities of NOK 411 million in the second quarter.
The strong cash flow was affected by, of course, the cash effect from the all-time high EBITDA and a decrease in net working capital, partly offset by increased interest expenses and tax payments. Investments were NOK 261 million in the second quarter. Of this, NOK 124 million was invested in an increased ownership in the marine biotech company Alginor, bringing Borregaard's ownership up to 35%, fully diluted. Net interest-bearing debt increased by NOK 290 million in the quarter. The net interest-bearing debt was impacted by the dividend payment of NOK 324 million in April.
In June, Borregaard successfully placed NOK 500 million in new senior unsecured green bonds with a tenure of fi ve years and a coupon of three months NIBOR plus 1.25%. At the end of the second quarter, Borregaard was well capitalized, with an equity ratio of 47% and a leverage ratio, which is net interest-bearing debt over EBITDA, of 1.25. That concludes today's presentation. Per Sørlie and I will now be ready to answer any questions from those of you who follow the webcast. Our Director Investor Relations, Knut Harald Bakke, will moderate webcast questions.
Thank you. First question from Niclas Gehin of DNB Markets regarding bioethanol prices: What do you see as the largest risk to your current strong prices within bioethanol sales? Raw material markets, slower demand, or regulations?
Yeah, first, I would just like to explain that, you know, the Borregaard bioethanol business has a unique position. It's a second-generation bioethanol, which is a preferred product compared to most of the other products in the marketplace. Secondly, it's a co-product in our biorefinery, which means that we have a superior cost structure compared to players that are focusing only on bioethanol. Having said that, we have mentioned now several times that we are selling into the European market, the EU market, because there are favorable conditions in the EU, and that is, of course, down to regulations and requirements for inclusion of bioethanol, advanced bioethanol in gasoline. So I think that's the main driver. The market balance is clearly in our favor at the moment. There's a high demand compared to the supply situation.
Second question, also from Niclas Gehin of DNB Markets, regarding inventory levels: You said that your inventory level has not increased quarter-on-quarter. The absolute level is, however, relatively high compared to historical levels. Is this just a reflection of higher general raw material prices? Have you been able to take down the balance sheet risk or prepare for potentially slower sales ahead in any way?
Well, I... We talked about this after Q1 as well. The inventory levels are at a comfortable level. Remember that we came out of a situation where we closed down in BioSolutions, we closed down South Africa and Spain, and we had very low inventories because we opted to fulfill the contractual obligations that we had in the marketplace.
As we also mentioned in BioMaterials, during, well, over a year ago, that there was excessive demand for specialty cellulose. We had to really put our foot down on the brake to say that we cannot deliver anymore now because the inventories are too low. Right now, the inventories are at a normal level. They were at a normal level at the end of the first quarter. They are still at a normal level at the end of the second quarter.
Third question from Magnus Rasmussen of SEB regarding traded vanillin products: Are margins for traded synthetic vanillin and ethyl vanillin still expected to normalize in the H2 of 2023?
They are supposed to normalize in the H2 of 2023. Of course, at a much lower level than they were towards the end of 2021 and into the H1 of 2022. We have taken that comment out of the outlook, because it's going to normalize. Prices for ethyl vanillins, synthetic vanillins, are at a low level, maybe even below the historic level they used to be at.
Question from Anne Gjøen of Handelsbanken: Do you expect to be able to compensate increased costs with increased sales prices?
Well, generally, that's the ambition. As we have guided for right now, we don't see any reason why there should be escalating costs right now. We think that they are stable in the third quarter, and then we will come back after the third quarter and give some guidance on the cost development after that. In general terms, that's exactly what we have been exercising over the last couple of years, that we have tried to recover costs from the market through pricing, and that's what we have succeeded in doing.
Question from Martin Melbye of ABG: How will specialty cellulose prices move into Q3, quarter on quarter?
Well, that's a discussion with each customer, because, you know, there are surcharges on specialty cellulose, and the surcharges are there to compensate for higher costs, not to sort of influence the margin in absolute terms, in absolute kroner. You know, as you noted, we guided for a fairly flat cost development into Q3 from Q2, so that's the starting point for those discussions. Those are individual discussions with each customer. There is no really large indication in the cost that there should be a price reduction.
A follow-up question from Martin Melbye. Basically the same question for lignin prices in Q3, how will they move quarter on quarter?
The lignin prices are not sort of influenced by a surcharge situation, so that's Borregaard practice there is to adjust prices as we go along. We don't have many long-term contracts. We have some long-term contracts in place for the more specialty products, but other products are adjusted as we go along. We don't have any specific announcements around that, so I don't want to give any specific guidance on that.
That seems to conclude the Q&A session for the second quarter of 2023.
Okay, thank you very much.
Thank you.