toppledermøte nho Østfold 11.06.2014 per a. sørlie president & ceo

ToppledermøteNHO Østfold

11.06.2014

Per A. Sørlie President & CEO

Agenda

• Business model and strategy

• Innovation management

• Strategic priorities

High value added through full raw materials utilisation

Borregaard’s biochemicals are sustainable and environmentally friendly substitutes to petrochemicals

Sustainable biorefinery business model with strong value creation

Borregaard is a global leader in biochemicals

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Specialty cellulose

Lignin Vanillin Bioethanol

Construction materialsCosmeticsFood TabletsPaint/ varnishFiltersTextiles

Concrete additivesAnimal feedAgrochemicalsBatteriesBriquettingSoil Conditioner

FoodPerfumesPharmaceuticals

Pharmaceutical industryBio Fuel Paint/ varnishCar care

Integrated production system serving diverse markets

Sustainable biorefinery business model with strong value creation

Borregaard operates the world’s most advanced biorefinery

Description

Integration models· Own

integrated· Partner

integrated · Independent

Revenue by end-market (2012)

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Global niche player with market leading positions

Global niche player with a market driven organisation

Sales distribution (2012)

Other Businesses(16%1)

Specialty Cellulose(41%1)

Performance Chemicals (43%1)

Technology leader and largest supplier of lignin-

based products with global market access2,3

Leading global specialty cellulose supplier4,

significant producer of 2nd generation bioethanol5

Only producer of wood-based vanillin; largest producer of C3

aminodiols for X-ray contrast media6

Note:1. Segment revenue as a % of total revenue 2012.2. Management belief determined by customer and peer group analysis 3. World leader in wood based lignosulfonates4. Among top 3 suppliers to customers that produce acetates, ethers and nitrocellulose based on company estimate5. Based on company estimate6. Based on volume of C3 aminodiols sold in 20127. USA/Canada: 17%, Rest of Americas 6%

Market driven organisation

• ~100 FTEs strong sales/technical service organisation

• Dedicated sales force for each business unit

• ~90% of sales handled through own organisation

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Robust financialperformance

Niche markets targeted

Strategy

Dual strategic focus drives performance

Selected specialised market segments with diversified

applications

World leader in innovation and productivity

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-Controlcentre

Norway is a high cost locationContinuous improvement, competence development and use of technology

Increased competence+ Use of technology and increased automation+ Organisational development _________________________________________

= Lower costs and improved production

Maintenance & environmentalcapex (mNOK) -

Sarpsborg

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Dual strategic focus secures high value creation

• Specialisation and innovation– Increased value added for

existing production volume– New products with higher

value

• Productivity improvements– Reduced work force– Stable fixed costs over time in

operations– Increased production volumes

Sales per employee in Norway(mNOK)

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Agenda

• Business model and strategy

• Innovation management

• Strategic priorities

Innovation Management

What is innovation?

Innovation is the process of generating and implementing new ideas and solutions

increasing the value added to our customers

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Innovation Management

Business driven innovation model

Idea database

Ideas from sales, technical application, R&D, production, external partners

Innovation Management Teams (IMT)

Inter disciplinary development work

Scale-up and commercialisation

IMT• Chaired by head of

business unit• Cross functional

team of line managers

• Gatekeepers at important milestones

Co-work with: • Universities • Research institutes • Consultants when required

Co-work with:• Customers when possible

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Plan, accomplish and document projects defined and prioritised by the Innovation

Management Teams (IMT)

• Development of new– Processes– Products– Applications

• Optimisation of existing – Processes– Products– Applications

Innovation Management

Scope and priorities

R&DProduction

Sales & marketing

· Annual R&D and innovation spending approx. 4% of turnover

· Short-term vs long-term projects 40/60

· ~15% of Borregaard’s revenues come from new products

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Innovation Management

R&D center in Norway – key figures and core competence

Organic chemistry 13

Wood chemistry 9 Biopolymer chemistry 6 Physical chemistry

3 Analytical chemistry 2Microbiology 4 Process technology

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Number of employees

80

Number of MSc

12

Number of PhD

28

Pilot/demo plant personnel

20

Average experience (years)

10

Female employees (%)

40

Average age

41

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• Flexible, experienced and competent• Unique and strong competence platform • Attractive working environment• Specialists and generalists• Benefitting from each others’ core competences

Several initiatives in place to drive long term growth and specialisation

• Increased sales of high-value lignin products

• Development of new cellulose specialities

• Further development of vanillin blends

• BALI – Strategic lignin raw material option

• Exilva - New Microfibrillar Cellulose product and Advanced

Texture Systems

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Agenda

• Business model and strategy

• Innovation management

• Strategic priorities

Borregaard portfolio - Strategic priorities

• Growth and specialisation within Performance Chemicals– Increased sales of high-value lignin products – Establish new lignin raw material sources– Develop BALI as a strategic lignin raw material option

• Develop the unique biorefinery assets in Sarpsborg– Leverage high value raw material base in Performance Chemicals– Continue specialisation of Specialty Cellulose, Bioethanol, Ingredients &

Fine Chemicals– Strong focus on innovation and productivity efforts

• Establish Exilva as a new business area– Based on core competence within wood chemistry and fine chemistry – Increased specialisation through high value added

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