th quarter 2019 - ml-eu.globenewswire.com
TRANSCRIPT
O s l o , 5 F e b r u a r y 2 0 2 0
4 T H Q U A R T E R 2 0 1 9
Agenda
• Per A Sørlie, President & CEO
• Highlights
• Proposed dividend
• Business areas
• Strategic projects update
• Sustainability
• Outlook
• Per Bjarne Lyngstad, CFO
• Financial performance
2
Highlights – 4th quarter 2019
• EBITA adj.1 73 mNOK (94 mNOK)
• 35 mNOK impact from operational incidents at the Sarpsborg site, mainly affecting Speciality Cellulose
• Favourable product mix, but reduced sales volume and higher costs and depreciation in Performance Chemicals
• Continued strong improvement in Ingredients
• Positive net currency impact
• Strong cash flow from operations1
1 Alternative performance measure, see Appendix for definition 3
Highlights – full year 2019
4
• EBITA adj.1 589 mNOK (580 mNOK)
• Favourable product mix, but higher costs and increased depreciation in Performance Chemicals
• Improved product mix, higher wood costs and operational incidents in Speciality Cellulose
• Positive development for bioethanol
• Increased sales prices for wood based vanillin
• Positive net currency impact
1 Alternative performance measure, see Appendix for definition
Dividend proposal for 2019
• Borregaard’s dividend policy • To pay regular and progressive dividends
reflecting the expected long-term earnings and cash flows of the Group
• Annual dividend is targeted between 30% and 50% of net profit
• A dividend of NOK 2.30 per share is proposed by the Board of Directors • 55% of net earnings
• Total dividend payment of 229 mNOK
5
Performance Chemicals markets – Q4
5 444
5 022 4 9435 125
5 608
5 227 5 168
5 489
4 000
4 500
5 000
5 500
6 000
6 500
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19
NOK per mtds Average gross sales price1
107
122 122116114
125119
111
0
25
50
75
100
125
150
Q1 Q2 Q3 Q4
‘000 mtds Sales volume1 2018
2019
1 Average sales price and sales volume reflect 100% of sales and volume from the J/V in South Africa. 1 Average sales price is calculated using actual FX rates, excluding hedging impact.
6
• Average price in sales currency was in line with Q4-18
• Favourable product mix
• Sales to concrete admixtures declined, more than compensated by growth in other construction applications
• Sales volume declined by 4% vs Q4-18
• Lower Industrial volumes, Specialities and Construction in line with Q4-18
• Raw material supply from Flambeau ceased late in Q3-19
• Positive FX effects
Performance Chemicals markets – full year
5 5005 331 5 229 5 124
5 366
3 000
3 500
4 000
4 500
5 000
5 500
6 000
6 500
2015 2016 2017 2018 2019
NOK per mtds Gross average sales price1
213 214 210 212 209
121 150 157 170 175
7679 82 85 85
410443 449 467 469
0
100
200
300
400
500
2015 2016 2017 2018 2019
‘000 mtds Sales volume1
Construction Industrial Specialities
1 Average sales price and sales volume reflect 100% of sales and volume from the J/V in South Africa. 1 Average sales price is calculated using actual FX rates, excluding hedging impact.
7
• Average price in sales currency slightly below 2018
• Continued strong competition in concrete admixtures and certain low value Industrial applications
• Favourable product mix
• Sales to concrete admixtures declined, more than compensated by growth in other construction applications
• Sales volume increased marginally
• Growth for Industrial products, stable volume for Specialities and a slight decline in Construction
• Florida sales volume in accordance with the ramp-up plan, but profitability below expectations
Speciality Cellulose markets – Q4
10 10510 179
10 473 10 48510 645
10 439
10 908
10 357
9 500
10 000
10 500
11 000
11 500
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19
NOK per mt Average gross sales price1
40,0 39,1
33,2
37,734,5
42,4
37,6 38,6
0
10
20
30
40
50
Q1 Q2 Q3 Q4
‘000 mt Sales volume 2018
2019
8
• 7% lower average price in sales currency• Lower price for cellulose products which were declassified after operational incidents
• Slightly higher sales volume and a significant reduction in inventory
• Higher bioethanol sales volume
• Positive FX impact
1 Average sales price is calculated using actual FX rates, excluding hedging impact.
Speciality Cellulose markets – full year
9 546
9 986
10 57510 301
10 580
7 000
8 000
9 000
10 000
11 000
12 000
2015 2016 2017 2018 2019
NOK per mt Gross average sales price1
153,6 152,3 150,7 150,0 153,1
57%
64%
72%
62%
73%
0%
20%
40%
60%
80%
0
50
100
150
200
2015 2016 2017 2018 2019
‘000 mtds Sales volume Highly specialised
1 Average sales price is calculated using actual FX rates, excluding hedging impact. 9
• Cellulose prices were slightly below 2018 mainly as a result of sales of declassified cellulose
• Improved product mix, sales of highly specialised grades increased to 73% (62%)
• Bioethanol had higher sales and production volume, improved product mix and lower production costs
• Positive FX effects
Ingredients & Fine Chemicals markets – Q4 & full year
116104
113
138139146
139
160
0
25
50
75
100
125
150
175
Q1 Q2 Q3 Q4
mNOK Ingredients - sales revenues 2018
2019
73
54 55
65
80
50
6961
0
25
50
75
100
Q1 Q2 Q3 Q4
mNOK Fine Chemicals - sales revenues 2018
2019
1 0
• Ingredients
• Strong demand and higher sales for wood based vanillin
• Sales revenues increased by 24% in 2019 due to higher sales prices for wood based vanillin
• Fine Chemicals
• Sales volume in line with Q4-18, but with a weaker product mix
• Sales revenues increased by 5% in 2019
Completed and ongoing strategic projects• Specialisation, diversification and growth within Performance Chemicals
• Florida plant (1st phase) started up mid 2018
• Upgrade and increased specialisation in Sarpsborg from Q3-2019
• Extension of joint venture agreement in South Africa to 2032
• Develop the unique biorefinery asset in Sarpsborg
• High-end bioethanol expansion started up in Q1-18
• Ice Bear capacity expansion completed end 2018
• Wood based vanillin capacity expansion, completion 1H-21
• Establish Cellulose Fibrils as a new business area
• Commercial-scale production facility completed in Q4-16
• Exilva market introduction ongoing
1 1……
➢ Expansion investments of 1.7 billion NOK in 2015-2019➢ All investments projects completed on time and within budget➢ Going forward, focus will primarily be on market execution
Cellulose Fibrils – the SenseFi project discontinued
• Advanced texture system for food
• Market potential not considered sufficient to move the project from demonstration phase to commercial operation
• Write-downs and costs of 11 mNOK as Other expenses1 in Q4-19
• EBITA adj1 impact of -9 mNOK in 2019
1 Alternative performance measure, see Appendix for definition 1 2
Cellulose Fibrils – Exilva status
• Additive for industrial applications• Improves flow, stability, flexibility and strength in
industrial formulations and materials
• Market introduction ongoing• ≈50 regular customers• Volumes still relatively small
• Strong pipeline growth• >1800 prospective customers received samples
and/or in lab/trial phase• More than 500 new prospects last six months• Long lead times
• Horizon 2020 grant ends in April 2020
1 3Exilva has received funding from the Bio-Based Industries Joint Undertaking (BBI) under the European Union’s Horizon 2020 research and innovation programme under grant agreement No 709746.
1 4
Sustainability - Integral part of market offering
P R O C E S S E S P R O D U C T SR A W M A T E R I A L S
Natural, renewable, sustainable raw materials
Efficient and sustainable production and value chain
Sustainable biochemicals
1 4
Sustainable and certified wood
• Documentation
• PEFC1) and FSC1) standards
• Lignin raw materials from certified forests
1) PEFC: Programme for the Endorsement of Forest Certification, FSC: Forest Stewardship Council2) Life Cycle Analysis3) Environment, Health and Safety
Reduced emissions improve LCA2)
• Target based CO2-reductions
• Energy conservations
• New/Green energy sources
• Reduced emissions to water and air
• “Greener” logistical solutions
Products add sustainable value to customers
• Climate: LCA2) shows favourable GHG footprint
• Biobased: Natural raw materials preferred
• EHS3): Non-toxic, harmless products
Sustainability
Science Based Targets for GHG emissions approved by CDP1
• Targeted reductions in greenhouse gas emissions:• 53% by 2030
• 100% by 2050 • Base year = 2009
• Targets are in line with the ambitions in the Paris Agreement and the Norwegian Climate law
Borregaard maintained a CDP ‘A’ rating in 2019
• Highlighted as a global leader in corporate climate action
• Achieved a place on the CDP Climate Change ‘A List’ • 8,400 companies reported to CDP in 2019• 179 (2.1%) were awarded an ‘A’ rating
1 51 CDP: global non-profit organisation that drives companies and governments to reduce their greenhouse gas emissions, safeguard water resources and protect forests
Outlook
• Performance Chemicals• Continued strong competition and further price pressure for lignin products to concrete admixtures and certain low
value Industrial applications expected to be partly compensated by diversification and specialisation in 2020• Sales volume forecast to increase by 0-5%
• 40 mNOK cost savings from the upgrade in Norway will be gradually realised through 2020, full effect from 2021
• 20 mNOK cost savings from restructuring of the German lignin operation will have full effect in 2020
• Speciality Cellulose• Average price in sales currency expected to increase by 2% from 2019• Wood cost in H1-20 will be 25-30 mNOK lower than in H1-19
• Sales volume in Q1-20 is expected to be higher vs Q1-19, with similar product mix
• Other Businesses• The current price level for wood based vanillin is expected to continue
• Capacity expansion in Ingredients will be gradually realised in 2020 with full effect from H2-21• No major changes in the market conditions for Fine Chemicals
• Sales are gradually increasing for Cellulose Fibrils, but lead time for sales prospects are long
• The remaining EU Horizon 2020 grant will end in April 2020
1 6
F I N A N C I A L P E R F O R M A N C E Q 4 - 1 9
Borregaard key figures – Q4
1 8
1 2
17
1 1
99
1 1
50
1 2
19
1 2
50
1 3
40
1 2
39
1 2
34
0
250
500
750
1 000
1 250
1 500
Q1 Q2 Q3 Q4
mNOK Operating revenues 2018
2019
17
7
16
4
14
5
94
15
7
17
9
18
0
73
0
50
100
150
200
Q1 Q2 Q3 Q4
mNOK EBITA adj.1 2018
2019
• Revenues 1% above Q4-18• EBITA adj.1 73 mNOK for the Group
• Other Businesses improved, Performance Chemicals and Speciality Cellulose had weaker results vs Q4-18
• 35 mNOK impact from operational incidents at the Sarpsborg site
• Positive FX effects
• EPS at NOK 0.38 (NOK 0.80)• 11 mNOK as Other expenses1 (SenseFi project) and 22 mNOK increase in Net financial expenses
14,5 13,7
12,6 7,712,6 13,4
14,5
5,90
5
10
15
20
Q1 Q2 Q3 Q4
% EBITA adj. margin1 20182019
1,37
2,69
3,964,76
1,262,48
3,79 4,17
0
2
4
6
Q1 Q2 Q3 Q4
NOK Earnings per shareCumulative
1 Alternative performance measure, see Appendix for definition
Borregaard key figures – full year
1 9
4 1
64
4 4
92
4 6
18
4 7
85
5 0
63
0
1 000
2 000
3 000
4 000
5 000
2015 2016 2017 2018 2019
mNOK Operating revenues
49
7
74
7
74
9
58
0
58
9
11,9
16,6 16,2
12,1 11,6
0
4
8
12
16
0
200
400
600
800
2015 2016 2017 2018 2019
%mNOK EBITA adj.1 & margin1
• Revenues up 6% vs 2018• Slightly improved EBITA adj.1
• Other Businesses improved significantly, Performance Chemicals and Speciality Cellulose had weaker results
• Positive FX impact
• Impact on EBITA adj.1 from implementation of IFRS 16 Leases was +10 mNOK
• EPS for 2019 ended at NOK 4.17 (4.76)• Increased net financial expenses and -27 mNOK in Other income and expenses1
15,6
21,7
19,1
12,7
10,9
3,86
5,55 5,66
4,764,17
0
2
4
6
8
10
0
5
10
15
20
2015 2016 2017 2018 2019
NOK% ROCE1 and earning per share
ROCE %
EPS
1 Alternative performance measure, see Appendix for definition
Performance Chemicals key figures – Q4
2 0
55
5
57
1
55
9
55
260
0
61
8
56
4
54
8
0
100
200
300
400
500
600
Q1 Q2 Q3 Q4
mNOK 2018
2019
11
5
10
2
55
42
87 1
07
67
36
0
25
50
75
100
125
Q1 Q2 Q3 Q4
mNOK 2018
2019
• Revenues 1% below Q4-18
• Sales volume 4% lower
• Average price in sales currency in line with Q4-18
• Positive net FX impact
• Full year growth 4%
20,717,9
9,8
7,614,517,3
11,9
6,60
5
10
15
20
25
Q1 Q2 Q3 Q4
% 20182019
• Favourable product mix, but lower sales volume
• Higher operating costs
• Higher depreciation
• Positive net FX impact
• Full year EBITA adj.1 297 mNOK (314 mNOK)
• EBITA adj. margin1 declined vs Q4-18
• Full year EBITA adj. margin1 12.7 (14.0)
Op
erat
ing
reve
nu
esEB
ITA
ad
j.1EB
ITA
ad
j. m
argi
n1
1 Alternative performance measure, see Appendix for definition
Speciality Cellulose key figures – Q4
2 1
43
4
42
7
38
1 42
7
39
2 48
2
42
5
42
6
0
100
200
300
400
500
Q1 Q2 Q3 Q4
mNOK 2018
2019
64 67 7
6
50
35
48
82
23
0
20
40
60
80
Q1 Q2 Q3 Q4
mNOK 2018
2019
• Revenues in line with Q4-18
• Slightly higher sales volume
• 7% lower sales prices, mainly from declassified cellulose products
• Positive FX effects
• Full year growth 3%
14,7 15,7
19,9
11,7
8,9 10,0
19,3
5,40
5
10
15
20
25
Q1 Q2 Q3 Q4
% 20182019
• Lower sales prices and production output due to the operational incidents at the Sarpsborg site
• Higher sales volume and improved result for bioethanol
• Positive net FX impact
• Full year EBITA adj.1 188 mNOK (257mNOK)
• EBITA adj. margin1 below Q4-18
• Full year EBITA adj. margin1 10.9 (15.4)
Op
erat
ing
reve
nu
esEB
ITA
ad
j.1EB
ITA
ad
j. m
argi
n1
1 Alternative performance measure, see Appendix for definition
Other Businesses key figures – Q4
2 2
23
9
21
2
22
3 25
327
4
25
6
26
6
27
7
0
50
100
150
200
250
300
Q1 Q2 Q3 Q4
mNOK 2018
2019
-2
-5
14
2
35
24 3
1
14
-10
0
10
20
30
40
Q1 Q2 Q3 Q4
mNOK 2018
2019
• Revenues 9% above Q4-18
• Higher sales and strong demand for wood based vanillin
• Full year growth 16%
• Ingredients: Continued strong result
• Fine Chemicals: Weaker product mix and result vs Q4-18
• Cellulose Fibrils: Reduced cost coverage2 not fully compensated by higher sales and improved productivity
• Corporate costs were in line with Q4-18
• Positive net FX effects for Other Businesses
• Full year EBITA adj.1 104 mNOK (9 mNOK)
Op
erat
ing
reve
nu
esEB
ITA
ad
j.1
1 Alternative performance measure, see Appendix for definition2 The Exilva project has received funding from the Bio-Based Industries Joint Undertaking (BBI) under the European Union’s Horizon 2020 research
and innovation programme under grant agreement No 709746.
Currency impact
3
-6 -7
-1
-8
-13
-23
-32-35
-25
-15
-5
5
Q1 Q2 Q3 Q4
mNOK Hedging effects2 on EBITA adj.1 2018
2019
97,898,9
100,7
102,7
104,3 104,7
106,9
109,8
96
98
100
102
104
106
108
110
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19
Borregaard’s currency basket3
1Alternative performance measure, see Appendix for definition. 2See appendix for currency hedging strategy, future hedges and hedging effects by segment.3Currency basket based on Borregaard’s net exposure in 2018 (=100): USD 65% (approx. 190 mUSD), EUR 34% (approx. 84 mEUR), Other 1% (GBP, BRL, JPY, SEK, ZAR).
2 3
• Net FX EBITA adj.1 impact +15 mNOK vs Q4-18
• Includes change in hedging effects and based on estimated FX exposure
• Net FX EBITA adj.1 impact YTD +95 mNOK
• Net FX EBITA adj.1 impact in 2020 estimated to be +30 mNOK vs 2019
• Assuming rates as of 4 February (USD 9.23 and EUR 10.19) on expected FX exposure
• Net FX EBITA adj.1 impact in Q1 estimated to be +5 mNOK vs Q1-19
• Significant FX exposure, but delayed impact of FX rate fluctuations due to hedging policy
Cash flow, investments and NIBD
2 4
81
127
176
249
353
0
50
100
150
200
250
300
350
Q4'18 Q1'19 Q2'19 Q3'19 Q4'19
mNOK Cash flow from operations1
Cash flow from operations EBITDA adj.
189
7654 58
182
24
47 92
43
31
213
123
146
101
213
0
50
100
150
200
250
Q4'18 Q1'19 Q2'19 Q3'19 Q4'19
mNOK Investments
Replacement Expansion Depr. ex IFRS16
• Cash flow from operations1 increased significantly vs Q4-18 and previous quarters in 2019
• Significant reduction in net working capital in Q4
• Investments in line with Q4-18 and slightly below forecast
• Expansion investments mainly related to completion of lignin operation upgrade in Norway
• Limited carry-over to 2020
• NIBD1 declined by 87 mNOK in Q4
1 576
1 489
183
171
13
213
67
1 100
1 200
1 300
1 400
1 500
1 600
mNOK NIBD1 changeIncrease
Decrease
1 Alternative performance measure, see Appendix for definition
Investment forecast 2020-2021
2 5
370350-400 350-400
0
100
200
300
400
500
2019 2020 2021
mNOK Replacement investments - forecast1)
Actual Low Uncertainty Depreciation ex IFRS16
213 170-230
50-150
0
100
200
300
2019 2020 2021
mNOK Expansion investments - forecast1)
Actual Low Uncertainty
• Replacement investments
• Targeted at depreciation level
• Upgrade of caustic soda production facility cannot be handled within target
• Expansion investments
• Capacity expansion for wood based vanillin the main project (130 mNOK, H2-19 to mid 2021)
• A few smaller expansion projects are ongoing or planned
• New projects may lead to additional investments
1 Uncertainty is related to final investment decisions, timing of investment payments, execution time and risk and unexpected events e.g.
Q&A
• Per A Sørlie, President & CEO
• Per Bjarne Lyngstad, CFO
2 6
Borregaard – key figures
2 8
Amounts in NOK million Q4-2019 Q4-2018 Change YTD-2019 YTD-2018 Change
Operating revenues 1 234 1 219 1 % 5 063 4 785 6 %
EBITDA adj. 1 183 183 0 % 1 007 903 12 %
EBITA adj. 1 73 94 -22 % 589 580 2 %
Amortisation intangible assets -1 -1 -4 -4
Other income and expenses1-11 0 -27 0
Operating profit 61 93 -34 % 558 576 -3 %
Financial items, net -31 -9 -91 -14
Profit before taxes 30 84 -64 % 467 562 -17 %
Income tax expenses -12 -19 -116 -137
Profit for the period 18 65 -72 % 351 425 -17 %
Profit attributable to non-controlling interests -20 -15 -66 -51
Profit attributable to owners of the parent 38 80 417 476
Cash flow from operating activ ities (IFRS) 288 70 697 558
Earnings per share 0,38 0,80 -53 % 4,17 4,76 -12 %
EBITDA adj. Margin 114,8 % 15,0 % 19,9 % 18,9 %
EBITA adj. Margin 15,9 % 7,7 % 11,6 % 12,1 %
1 Alternative performance measure, see Appendix for definition
Effects of IFRS 16 Leases – Ytd December 2019
0 4 . 0 2 . 2 0 2 0 2 91 Alternative performance measure, see Appendix for definition
INCOME STATEMENT (mNOK) OTHER KEY FIGURES AND RATIOS
IAS 17 IFRS 16 Change IAS 17 IFRS 16 Change
EBITDA adj.1 935 1 007 72 EBITDA adj. margin1 18,5 % 19,9 % 1,4%-p
Depreciation -356 -418 -62 EBITA adj. margin1 11,5 % 11,6 % 0,1%-p
EBITA adj.1 579 589 10
Operating profit 548 558 10 Capital employed1 5 323 5 601 278
Net financial items -74 -91 -17 Return on capital employed1 10,9 % 10,5 % -0,6%-p
Profit before tax 474 467 -7
Earnings per share 4,24 4,17 -0,07 Net interest-bearing debt1 1 489 1 876 387
Leverage ratio1 1,59 1,86 -0,27
BALANCE SHEET (mNOK)
Total assets 6 364 6 744 380 Equity ratio1 54,5 % 51,4 % -3,1%-p
Equity 3 471 3 464 -7
IAS 17: Operating leases off-balance sheet as a single expense. Finance leases on balance sheet
IFRS 16: Operating leases recognise assets and liabilities on balance sheet. Operating leases to report depreciation and interest separately.
Green background: Reported figures in 2019
Operating revenues and EBITA adj.1 per segment
3 0
Amounts in NOK million Amounts in NOK million
Operating revenues Q4-2019 Q4-2018 Change EBITA adj. 1 Q4-2019 Q4-2018 Change
Borregaard 1 234 1 219 1 % Borregaard 73 94 -22 %
Performance Chemicals 548 552 -1 % Performance Chemicals 36 42 -14 %
Speciality Cellulose 426 427 0 % Speciality Cellulose 23 50 -54 %
Other Businesses 277 253 9 % Other Businesses 14 2
Eliminations -17 -13
Amounts in NOK million Amounts in NOK million
Operating revenues YTD-2019 YTD-2018 Change EBITA adj. 1 YTD-2019 YTD-2018 Change
Borregaard 5 063 4 785 6 % Borregaard 589 580 2 %
Performance Chemicals 2 330 2 237 4 % Performance Chemicals 297 314 -5 %
Speciality Cellulose 1 725 1 669 3 % Speciality Cellulose 188 257 -27 %
Other Businesses 1 073 927 16 % Other Businesses 104 9
Eliminations -65 -48
1 Alternative performance measure, see Appendix for definition
Cash flow
3 1
Amounts in NOK million Q4-2019 Q4-2018 YTD-2019 YTD-2018
Amounts in NOK million
Profit before taxes 30 84 467 562
Amortisation, depreciation and impairment charges 121 90 432 327
Change in net working capital, etc 171 -102 -85 -194
Dividend (share of profit) from JV 2 0 5 6
Taxes paid -36 -2 -122 -143
Cash flow from operating activ ities 288 70 697 558
Investments property, plant and equipment and intangible assets * -213 -213 -583 -762
Other capital transactions 8 2 29 13
Cash flow from Investing activ ities -205 -211 -554 -749
Dividends 0 0 -224 -199
Proceeds from exercise of options/shares to employees 1 1 35 23
Buy-back of shares -4 0 -60 -32
Gain/(loss) on hedges for net investments in subsidiaries 5 -40 -26 -22
Net paid to/from shareholders 2 -39 -275 -230
Proceeds from interest-bearing liabilities 52 39 1 750 1 292
Repayment from interest-bearing liabilities -143 -24 -1 621 -960
Change in interest-bearing receivables/other liabilities -1 14 -3 -2
Change in net interest-bearing liablities -92 29 126 330
Cash flow from financing activ ities -90 -10 -149 100
Change in cash and cash equivalents -7 -151 -6 -91
Cash and cash equivalents at beginning of period 92 231 86 180
Change in cash and cash equivalents -7 -151 -6 -91
Currency effects cash and cash equivalents -4 6 1 -3
Cash and cash equivalents at the end of the period 81 86 81 86
* Investment by category
Replacement Investments 182 189 370 346
Expansion investments131 24 213 416
1 Alternative performance measure, see Appendix for definition
Balance sheet
3 2
Amounts in NOK million 31.12.2019 30.9.2019 31.12.2018
Assets:
Intangible assets 93 90 100
Property, plant and equipment 4 232 4 164 3 623
Other assets 251 226 230
Investment in joint venture 99 96 100
Non-current assets 4 675 4 576 4 053
Inventories 931 955 856
Receivables 991 1 051 956
Cash and cash deposits 147 127 86
Current assets 2 069 2 133 1 898
Total assets 6 744 6 709 5 951
Equity and liabilities:
Group equity 3 306 3 145 3 123
Non-controlling interests 158 178 198
Equity 3 464 3 323 3 321
Provisions and other liabilities 294 308 271
Interest-bearing liabilities 1 399 1 554 1 115
Non-current liabilities 1 693 1 862 1 386
Interest-bearing liabilities 628 548 272
Other current liabilities 959 976 972
Current liabilities 1 587 1 524 1 244
Equity and liabilities 6 744 6 709 5 951
Equity ratio1 (%): 51,4 % 49,5 % 55,8 %
1 Alternative performance measure, see Appendix for definition
Net financial items & net interest-bearing debt1
3 31 Alternative performance measure, see Appendix for definition
Amounts in NOK million
Net financial items Q4-2019 Q4-2018 YTD-2019 YTD-2018
Net interest expenses -19 -12 -69 -32
Currency gain/loss -3 0 -12 -3
Other financial items, net -9 3 -10 21
Net financial items -31 -9 -91 -14
Amounts in NOK million
Net interest-bearing debt 1 (NIBD) 31.12.2019 30.9.2019 31.12.2018
Non-current interest-bearing liabilities 1 399 1 554 1 115
Current interest-bearing liabilities including overdraft of cashpool 628 548 272
Non-current interest-bearing receivables (included in "Other Assets") -4 -4 -4
Cash and cash deposits -147 -127 -86
Net interest-bearing debt 1 (NIBD) 1 876 1 971 1 297
Impact of IFRS 16 Leases 387 395
Net interest-bearing debt 1 excluding impact of IFRS 16 Leases 1 489 1 576
Currency hedging strategy
3 4
USDmillion
USD rate
EURmillion
EUR rate
Q1-2020 36 8.36 24 9.56
Q2-2020 35 8.36 23 9.85
Q3-2020 35 8.20 23 9.83
Q4-2020 35 8.25 23 10.06
2020 141 8.29 93 9.82
2021 142 8.38 94 10.17
2022 100 8.77 64 10.47
2023 8 9.26 5 10.81
NOK million Q4-19 Q4-18 YTD-19 YTD-18
Performance Chemicals -8 -1 -19 1
Speciality Cellulose -16 -1 -38 -3
Other Businesses -8 1 -19 -9
Borregaard -32 -1 -76 -11
Purpose is to delay effects of currency fluctuations and secure competitiveness
• Hedging based on expected EBITA adj. impact1
• Base hedge: 75%/50% on a rolling basis for 6/9 months for major currencies
• Extended hedge: 75%/50% of the next 24/36 months if USD and EUR are above defined levelsEUR; effective rate above 8.50USD; gradually at effective rates between 7.50 and 8.50
• Contracts2: 100% hedged
• Balance sheet exposure hedged 100%
• Net investments in subsidiaries hedged up to 90% of book value in major currencies
Contracted FX hedges with EBITA adj. impact (as of 04.02.20) Hedging effects by segment
1 Hedging done mainly in the Norwegian company2 Strict definition of contracts applied for 100% hedging (mutually binding agreement in which price, currency, volume and time are defined)
Credit facilities, solidity and debt
• Long-term credit facilities• 1,500 mNOK revolving credit facilities, maturity 2021• 400 mNOK 5-year bond issue, maturity 2023
• 40 mEUR 10-year loan, maturity 2024
• 60 mUSD term loan for LT Florida, tenor 8.5 years from completion
• Short-term credit facilities • 225 mNOK overdraft facilities
• 400 mNOK commercial paper
• Solidity (covenants)• Equity ratio1 51.4% (> 25%)• Leverage ratio1 LTM 1.59 (< 3.25)
3 148
1 085
485 81
1 659
0
250
500
750
1 000
1 250
1 500
1 750
2 000
2 250
2 500
2 750
3 000
3 250
3 500
Long-term debt Other NIBD Cash & cashequivalents
Undrawnfacilities
Total available
Debt and undrawn facilities31.12.2019
NIBD1 1,489 mNOK
3 51 Alternative performance measure, see Appendix for definition
Alternative performance measures
In the discussion of the reported operating results, financial position and cash flows, Borregaard refers to certain measures which are not defined by generally accepted accounting principles (GAAP) such as IFRS. Borregaard management makes regular use of these non-GAAP measures and is of the opinion that this information, along with comparable GAAP measures, is useful to investors who wish to evaluate the company’s operating performance, ability to repay debt and capability to pursue new business opportunities. Such non-GAAP measures should not be viewed in isolation or as an alternative to the equivalent GAAP measure.
• Cash flow from operations: Cash flow from operating activities (IFRS) + tax paid +/- net financial items +/- dividend (share of profit) from JV.
• EBITA adjusted (EBITA adj.): Operating profit before amortisation and other income and expenses.
• EBITA adj. margin: EBITA adj. divided by operating revenues
• EBITDA adjusted (EBITDA adj.): Operating profit before depreciation, amortisation and other income and expenses.
• Equity ratio: Equity (including non-controlling interests) divided by equity and liabilities.
• Expansion investments: Investments made in order to expand production capacity, produce new products or to improve the performance of existing products. Such investments include business acquisitions, pilot plants, capitalised R&D costs and new distribution set-ups.
• Other income and expenses: Non-recurring items or items related to other periods or to a discontinued business or activity. These items are not viewed as reliable indicators of future earnings based on the business areas’ normal operations. These items will be included in the Group's operating profit.
• Leverage ratio: Net interest-bearing debt divided by last twelve months’ (LTM) EBITDA adj., excluding the impact on EBITDA of IFRS 16 Leases.
• Net interest-bearing debt (NIBD): Interest-bearing liabilities, excluding the impact of IFRS 16 Leases, minus interest-bearing assets (see slide 26).
• Return on capital employed (ROCE): Last twelve months’ (LTM) EBITA adj., excluding the impact of IFRS 16 Leases, divided by average capital employed based on the ending balance of the last five quarters. Capital employed is defined by Borregaard as the total of net working capital, intangible assets, property, plant and equipment (excluding the impact of IFRS 16 Leases) and investment in joint venture minus net pension liabilities.
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Important notice
This presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (’relevant persons’). Any person who is not a relevant person should not act or rely on this presentation or any of its contents.
This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the Borregaard Group. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions.
This presentation includes and is based, inter alia, on forward-looking information and contains statements regarding the future in connection with the Borregaard Group’s growth initiatives, profit figures, outlook, strategies and objectives. All forward-looking information and statements in this presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for the Borregaard Group and its lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as “expects”, “believes”, “estimates” or similar expressions.
Important factors may lead to actual profits, results and developments deviating substantially from what has been expressed or implied in such statements. Although Borregaard believes that its expectations and the presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the presentation.
Borregaard is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the presentation, and neither Borregaard nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.
This presentation was prepared for the interim results presentation for the fourth quarter of 2019, held on 5 February 2020. Information contained herein will not be updated. The slides should also be read and considered in connection with the information given orally during the presentation.
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