Borregaard ASA (BRG) Earnings Call Transcript & Summary

Good morning, and a warm welcome to this Capital Markets Day for Borregaard. My name is Per Sørlie, I'm the CEO of the company. I joined Borregaard back in 1990 as CFO. And later, I took over there as Executive Vice President for Fine Chemicals and Biovanillin and CEO from 1999. My background is financial, I have a degree in business administration. I'll give you some background on what we think will be the key takeaways from today's Capital Markets Day. Borregaard started its specialization journey in 1991 when we developed and said that we will change the company into a specialty chemicals company. So this journey has gone on for a long time, but we believe that, that is still the right way forward and the best opportunity for Borregaard to continue on this specialization journey. And I'll take you through the arguments why we think that is the case. Later on, we will also give an update on our biggest business areas; BioSolutions and BioMaterials. But more importantly, we will take a deep dive into our Innovation portfolio, both in these business areas, but also in Borregaard in general. And when we do that, I would remind you that Borregaard is not about 1 or 2 large innovation opportunities. Borregaard is literally about hundreds of small different innovation opportunities. And what makes Borregaard interesting and attractive is the cumulative effect of all these small opportunities. So what you will see today is just our selection of these opportunities. And that also mitigates the risk -- market risk in the company that we have such a diversified portfolio, both in terms of products and in terms of innovation. There are very few M&A opportunities inside the core business areas in Borregaard. At the same time, we have a solid financial position. We have good growth prospects in our core businesses. So we can take a long-term view on new business development. And we will also go through our thinking around bio-based start-ups and investments in bio-based start-ups and why we can be patient and why we can take a long-term view on these kind of investments. And then we will talk -- round off with some financial perspectives on the good growth prospects that we see in our core businesses and how that can develop the company further. You will also meet quite a broad selection of people from the Borregaard team today. So you will get an opportunity to meet more people than you normally do at investor sessions. We will have 2 parts in the presentation today. And after each part, we will have a Q&A session, and we are happy to have SEB analyst, Magnus Rasmussen; and Marcus Gavelli from Pareto Securities Research moderating the Q&A sessions. So at the end of each part, we will come back and have a session. Then I will go and talk about the specialization journey and how we think about that going forward. When we meet investors for the first time, we sort of split the investor measures into 3 parts. First, we talk about the business model and how we create a lot of value by utilizing all the components in the biomass, that is mostly our starting material. And secondly, we talk about the specialization strategy that was introduced more than 30 years ago. And that strategy is quite timeless. So we need to be more specific on what's right to do at the moment to bring the company forward in a specialized direction. So that's why we also introduced the strategic priorities. They change over time as we tick them off and implement them, and then, we come up with new priorities to move the specialization journey forward. And I'll come back to some of the specifics on this later on. Then I'll just talk about the specialization or take a step back and talk about the previous Capital Markets Day, we had was in 2022, 2 years ago. And then we -- I'll give you an update on what happened then. We said that we would continue our specialization and value growth going forward from 2022 to 2024. And we have seen in this period that we had a continuously high innovation rate. The innovation rate is defined as the share of revenues coming from products launched in the last 5 years, and that's continuously been above 15%, and that's also the case for the period after the last Capital Markets Day. And we also benefit from geographic market penetration. We are rolling out existing high-value products into other markets. Then we said that we are particularly interested in leveraging the high value of the raw material we have in BioSolutions for making biopolymers and biovanillin. And we are happy to report that in that business, the highly specialized section of the products sold are now approximately 25%. And that 25% of the volume represents roughly 60% of revenues and contribution margin. So that is a good proof that specialization really pays off, and there is a lot more to be done in specialization. And also, we are doing a few other things. I have to -- I don't get it up on the screen here, so I'm sorry, I have to look at the screen. The product mix in Specialty Cellulose, we also wanted to develop. And the -- we have now -- the market for specialty cellulose is 1.6 million tonnes, and we are right now selling all our volume into that market. It doesn't mean that it can't be improved further because there are lots of different applications in -- among the 1.6 million tonnes, but all our sales are now into a specialized market. We also said that we will develop the Exilva product, the cellulose fibrils, and we are moving that forward. It's in progress. We are happy with the progress, but it's still not a factor that's moving the needle on Borregaard's development. So we still have to work on -- continue to work on this project. Also, the -- we said last time that we would target investments to increase specialization. And we have announced during these last 2 years, several investments, particularly in BioSolutions, where we are increasing the capacity for the battery products. We are launching new technologies to make new products that are hardly specialized, and we are working on to expand the capacity at the biorefinery in Sarpsborg, which is particularly important because they have a unique raw material base. Also, sustainability is a key value driver for us. So what we can say is that everything we do now in innovation is based on sustainability and increased specialization. And we have also made investments to improve our CO2 footprint and sustainability position. We have announced electrification projects, particularly of the spray dryers, which have been -- are implemented as we speak, and we'll take down our CO2 emissions. And we have also announced that we will invest in an upgrade of our electricity system so that we can electrify further parts of the production system. And we have also made investments in bio-based start-ups, and we have -- our whole product portfolio is really driven by sustainability now at the moment. Then I will take a step back here and talk about the specialization strategy. Specialization strategy is all about being a global niche player. And what do we mean by specialization? Well, specialization is very much focused on barriers to entry. And Borregaard works a lot with barriers to entry in a strategy, and it's about putting in place legal barriers that makes it difficult for competition to copy what we do. And there are several ways to do this, but Borregaard is extremely fortunate in that we have access to unique raw material. We have a technology, the sulfide pulping technology, that is quite rare. And we have combinations of the sulfide pulping technology and the raw material, softwood, that is quite unique in the world today. So that gives us a natural barrier to entry that is much better than a patent for instance. But we -- of course, we also use intellectual property, we use a proprietary technology, and we have a competence that is quite unique. So there is a mix of things that creates the barriers to entry. And moreover, we also have a lot of competence about the value in use of our products, so having specialized people in sales and marketing and having a global coverage gives us a unique position to offer solutions to the marketplace rather than physical products. So we try to have people that can go in and explain to the customer how they should get maximum benefit from our offering. So that's also part of the specialization strategy. And finally, also to have a diversified product portfolio that will take risk out of our integrated production system. We have core products, operations, which means that we want to run full speed at all times. And then we need to move the product at all times, and the enabler for that is to have a lot of options in the marketplace. So that's also a very important part of it. When you run a specialized strategy, you can focus on 2 things rather than 1 thing. If you're a commodity company, the low-cost provider will always win. If you are a specialized company, you can also work on the top line, the margins and you can build barriers to entry with product development. So we try to do both. We work on innovation. And we have different models for innovation, and we will come back to that later in the presentation and talk about how we work on innovation. And we, of course, also work on continuous improvement so that we can get more productive. So it's a combination of the 2 that is the benefit of being specialized. And competence is our key driver today. That's what is the differentiating factor, and we call that a golden triangle. We have 3 competencies that we focus on: sales and marketing; R&D; innovation and manufacturing. Those are the 3 competencies that we work on, and we have the benefit of being a small company. We don't want to copy the large companies, chemical companies out there. We have the advantage of being located in one place so that we can work faster together and smarter together between these 3 competencies if we do work in the right work processes. And we'll come also back to that later on how we do that in innovation, for instance. Then we have a couple of things that have been added over time. Of course, sustainability has become a factor in the specialization strategy. So today, Borregaard is very much involved and driven by sustainability. And we also have what we call the Borregaard Way, which is the culture and the values in the company. And I'll talk about how this supports the specialization strategy. When we launched the specialization strategy all the way back in the '90s, we said that every organization, whether you like it or not, develops a culture. So why don't we try to influence our own culture in a direction that supports what we want to achieve, namely, to specialize the company? And we felt there were 2 elements missing. We were always change-oriented. Borregaard is 135 years, and you don't become 135 years if you're unable to change. So we always have proven that we can change and develop the company over time. So what we felt we were lacking was market orientation and that we were innovative. So we started in the mid-'90s to develop what we call the B2B academy, business-to-business academy. And we didn't train just the salespeople and the sales and marketing organization, we trained all the managers in the company to change their mindset and make them more market-oriented. So this is a key driver for us to be market-oriented. And we also introduced this concept of value in use of our products that we truly want to sell our products at the price, should be set at the value for the customer and not our cost plus pricing. So value in use is a key concept in this. And today, roughly 10% of Borregaard's salespeople work in sales and marketing, which is a high percentage of the company's employees. And we have a position that is quite rare in Norwegian business at least. It's called technical application manager, and that's a person that helps the salespeople in their communication with the customers, and they go into the customer's factory and show the customer how they should get the maximum benefit out of our offering. Hence, you offer a solution rather than just a physical product. So that's a key thing that we have worked a lot on in market orienting the company. The second part, obviously, is innovation, and we changed the composition of our competence in R&D over time. We have -- we introduced the innovation rate, which is defined as the share of sales, share of revenues coming from products launched in the last 5 years. And we -- because it's more important to what you get -- it's not that important, how much you spend on R&D, it's more important what you get out of it. So you should measure the output rather than the input. Everybody knows what they spend on R&D, but not everybody knows how much they actually get in return for those spendings. Today, 10% of our employees roughly work in R&D in the Sarpsborg facility, actually, 15% of the employees work in R&D related. And that's quite a significant share, which has an influence on the culture in the company. So this is an important part in supporting the specialization strategy over time. Then we have the core values, and this has been with us for a long time. But sustainability was added some 15 years ago. If you go back 25 years, we coined the phrase, everything that can be made from oil can be made from the biomass in wood. We started using that phrase 15 years ago. And the reason is the third bullet on the sustainability, where we say that, because we added, you can make -- everything you can make from oil you can make from the biomass in wood, but you can't make money from everything. And that's important. So we had a long discussion. We said that in our selection of what we should do with our innovation process, we shouldn't select products that are made from oil, but it's very difficult to make money on it, if you make it from biomass because it's more costlier, because we are dependent on regulations or subsidies or whatever. So that -- then we pulled back and said, it's not important that you can make everything, that you can make oil from biomass. What we are? We are a for-profit organization. So we have to have that, financially sustainable is important, not just environmentally sustainable. So then we added that. So sustainability is key, but we are selective in what we spend our time and money on. And having said that, it doesn't mean that we don't benefit from political regulations or subsidies. As a matter of fact, right now, we are making good profits on our advanced bioethanol. But then you should keep in mind that Borregaard developed and introduced advanced bioethanol in 1938. So that was a long time before the politicians talked about biofuel. So that can happen. Then we talk about the long-term perspective, which is related to this as well because when we make decisions, we usually have a 20-, 30-year perspective on -- and as a matter of fact, we have followed the same strategy for more than 30 years, which I think is a sign of strength. If you need to change your strategy all the time, you have a problem, fundamentally a problem in your business. But we make long-term decisions, and you can't really trust political regulations and subsidies when you make long-term decisions. So this is related back to the same criteria that we had on the sustainability. Integrity is also key for Borregaard. Borregaard is a multicultural society. We have -- we are not a large company. We have around 1,200 employees, but we have 30 different nationalities in Borregaard. So it's an extremely multicultural business, and it's important that -- and we are a listed company. So it's really important that everybody in the organization understands how Borregaard wants to run its business, what are the ethical guidelines, what is called the conduct. So that's an important part of the core values as well. I said that sustainability has become important. Borregaard started very early on to develop science-based targets. And we also started to do life cycle analysis, so we can document the CO2 footprint of each product that we have. We started doing that more than 15 years ago. In 2018, we had our first science-based targets developed and approved by the Science Based Targets Initiative. We corrected them or tightened them in 2023. So now we have targets that are aligned with the 1.5-degree target in the Paris Agreement. And this is the roadmap to Net Zero for Borregaard. We have taken down the emissions by 1/3 from 2009 to 2020. They will go down another 42% from 2020 to 2030 and then down to Net Zero in 2050. This -- every green box here is an activity, it's an investment project that will reduce the CO2 emissions, and these have been revised and approved by the Science Based Targets Initiative. We have 2 red boxes here, and they are actually related to the Russian invasion in Ukraine. Then we had to make an exception. We had to actually start and go back and use a little bit more light fuel oil because we had to free up LNG for the European market. So -- but this has now been normalized, and we are back now. The first green box after the 2 red boxes is actually the electrification of the spray dryers, where we spray dry the lignosulfonates, the lignin-based biopolymers, and that is implemented now as we speak. So that will take down the CO2 emissions quite significantly. Does the specialization strategy work? There's a lot of discussion in the public domain at the moment, a debate about that Norway in particular, but the Western economies in general have too little productivity development. And productivity development is often seen as producing the same thing with lower costs. But remember what I said about specialty strategy, then you can both produce products with more value with the same resources, and you can produce these same products with less costs. And it's a combination of the 2 that makes things really interesting. So we think that a good KPI to see how this develops is to look at the value created by our business. And we have also developed that KPI to the value created by each employee because then we can compare ourselves with smaller and larger businesses. And as you can see here, during the last 6 years, the annual growth rate has been around 10% in value, increased value creation per full-time employee in Borregaard. If you go -- looking at this in a 15-year perspective, the value created by 1 Borregaard employee has trebled over 15 years. So how does this play out in reporting? Well, it means that this is the last 1/3 of the specialization journey. This is the IPO -- since we were IPO-ed in 2012, which is the last 1/3 of the specialization journey that started in 1991. In this last third, we have been consistently above 15% on average on our return on capital employed. We have taken up the EBITDA margin from 19% to 25%. We have trebled the earnings per share from NOK 2.76 to NOK 8.73, and we have nearly quadrupled the regular dividend from NOK 1 to NOK 3.75. And maybe more important, the annual growth rate in the share price has been 24%, assuming reinvestment of dividend. So obviously, the specialization journey works. And it has -- if I took a 30-year stretch on this, it would have been the same, actually. Then how should we continue this? And Borregaard has -- we think that there is a lot more to be done. We think that the specialization journey is just in its starting point, and we have 800 products. So I mean, why don't we have 300 products. So there is a lot to be done in optimizing the portfolio. We have a unique raw material base, particularly at the biorefinery in Norway, which constitutes 70% of our business. There, we have the combination of calcium sulfite pulping technology and 100% softwood, which is actually the only facility in the world with that combination. And that's a unique starting material for making new products, and we have the competent base to develop those kind of products. And if you look at most important, we think that there is a significant potential for upgrade of the portfolios in both the specialty cellulose area, but more importantly, in the biopolymers area inside by solution. There's a lot to be done there. And remember what I said, there was only 25% of the portfolio in biopolymers that is right now highly specialized. And we can also do -- we are -- as you will see later on, we are in markets with quite high growth rates. So there is a lot of pull from the market. And we think that there is also significant potential for geographic market penetration. And I'll talk a little bit about that also later on today. And more importantly, what I said earlier about the innovation, it's the -- increased specialization is done through the cumulative effect of a number of innovation projects. That's the important part of it. The unique biomass facility we have -- the biorefinery we have in Norway can be expanded, and we will, in due course, expand it by up to 10%. And that will raise the barriers to entry for other people as well. We reduced emissions from this facility, and we can expand somewhat the capacity. And we think that there is an increasing market pool because there are other companies like Borregaard that have science-based targets they need to deliver. The clock is ticking for 2030. There is also different types of regulations coming in, not only related to sustainability but also related to other issues like safety. So that's why we will continue with the same strategic priorities that we had 2 years ago. It's a combination of increased specialization and value growth. Value growth is defined as when we sell more into the high specialties, we sell less into the lower range. And if the less is sold into a lower range, the value on that should go up. If you offer less product to our market, the value should go up. So it's a combination of increased specialization and value growth and sustainability as a value driver. So that completes my introduction and presentation. I will now introduce our next speaker, Tom Erik Foss-Jacobsen, who is the Executive Vice President of BioSolutions. Tom Erik holds a master's degree in international marketing and strategy as well as a bachelor's degree in civil engineering. So we have a little bit of both worlds. He joined Borregaard back in 1996 and worked in various positions in sales and marketing, but then he served as the Executive Vice President for Specialty Cellulose and the Bioethanol businesses from 2007 until 2019, when he assumed his current role in Biosolutions. So please, Tom Erik.

Well, good morning, everyone. In today's presentation, I will highlight the major shifts and the many opportunities we are seeing within Borregaard's Biopolymers business as well as outline our key strategic priorities within that area. I'm also very pleased to be joined by 2 of my colleagues, Anders and Guro, from BioSolutions, who will provide some deeper insights into some of the exciting business opportunities we are actively pursuing. This will immediately follow my presentation. Let's start by looking at the global lignin supply, where our estimates for 2023 is between 900,000 and 950,000 tonnes. With production in Borregaard's 5 facilities in Norway, the U.S., Germany and the Czech Republic, we hold a market share of between 35% to 40% by volume. However, in terms of value, we estimate Borregaard's market share to be between 60% and 70%. The second largest player is Domsjo in Sweden. Following the Russian invasion of Ukraine, the lignin from Russia has found new ways into the market, primarily in the Middle East, China and India. While the history of this industry has been that of plant closures and reduced supply, we believe that the lignin raw material sources Borregaard now has are sustainable and highly suitable for further specialization and value growth. Overall, there have been only slight changes in lignin supply the recent years. Other lignin producers generally supply the lower end markets, primarily within construction. Our main competition today comes from advanced petrochemical-based products, not from the other lignin producers. The BioSolutions business is highly diversified. We are offering over 600 products to more than 2,700 customers. Over time, we have seen significant specialization and value growth in our portfolio. Looking back to our stock listing, since 2012, sales into specialties have grown strongly. The Specialties segment includes our high-value agriculture portfolio, battery additives, oilfield chemicals and the biovanillin. Although specialties accounts for only 25% of our volume, it represents, as our CEO said earlier here, nearly 60% our gross sales as of the last 12 months, 2024. This also highlights the potential for further specialization within our existing lignin raw material supply. From 2012, our gross sales are also nearly tripled in the Industrial segment, a segment consisting of hundreds of products being sold into a wide variety of industrial applications. During this period, we have also optimized our portfolio by reducing exposure to low-value markets, such as construction, while we have been able to retain customers willing to pay premium prices for our products. As a result, we have also significantly reduced the cyclicality of this business. Sustainability and regulatory trends are creating new opportunities for Borregaard. It's driving significant growth and also fueling our innovation efforts. Globally, we see a heightened focus on greenhouse gas reduction initiatives with more companies than ever seeking green alternatives to fossil-based solutions. At the same time, we are witnessing implementation of restrictions and bans on substances like formaldehyde, microplastics, single-use plastics and antibiotics. Some industries are also moving towards product authorizations with an increased focus on safety. For instance, within animal feed, where Borregaard's lignin has just been reauthorized. In the following presentations, we will showcase several compelling examples of these trends. Borregaard holds a well-documented competitive advantage in sustainability, supported by life cycle assessments and environmental product declarations for all our key products. In many of our core applications, we have established greenhouse gas footprint benchmarks compared to fossil-based alternatives. Recently, we've also developed an innovative digital solution that tracks Borregaard's Scope 3 impact on our customer's greenhouse gas emissions. Although this is still work in progress, we have already received highly positive feedback from key customers. Looking ahead, we will intensify our efforts with targeted market communication, tailored to specific regions, applications and customer needs. Our focus will be on critical factors like greenhouse gas footprint, circularity and certification standards. Looking to Asia. Asia represents highly attractive growth opportunities. And it is the fastest-growing region with around 60% of the world's population. We are seeing strong growth across several key application areas, in countries such as India, Vietnam, Indonesia and China. Sustainability is also becoming increasingly important in this region. It's making it for us one of our top priorities to expand our market presence in this region. We are now increasing our local footprint and presence in several Asian countries. We have strengthened our technical and commercial resources, and we are also expanding our R&D capabilities in India, adding personnel and specialized competence to drive further specialization. We see significant growth potential within high-end applications like agriculture and in the industrial sectors across this region. Let me now summarize our key strategic priorities for the BioSolutions business for the 2025 to '27 period. We do see significant potential for further specialization and value growth, driven by strong market growth in our key applications and the new opportunities arising from increasing sustainability and regulatory trends. Our strategic priorities are to accelerate market penetration in Asia, advance our efforts in agriculture and capitalize on the growth in electrification. We will intensify our focus on replacing advanced petrochemical alternatives, helping customers to avoid substances of concern and contributing to safer animal feed. There is still substantial potential to upgrade our product portfolio. We see numerous opportunities for new green technologies. And we have already announced an investment in the demonstration plant, which you'll hear more about shortly. We also have plans for increased capacity and further specialization in our operations, and in general, significant room for further optimization and value growth. As our CEO says, and said here today, our specialization journey is far from over. We're just getting started. Now I'm proud to introduce 2 of my good colleagues in BioSolutions: Anders Sjöde and Guro Fredheim. Anders has a master's degree in chemical engineering and a PhD in chemistry. Since he joined Borregaard in 2008, Anders has held various roles, including Chief Technology Officer for Business Development, and he was a project manager for the construction of LignoTech Florida. Today, he is Vice President, Sales within Biopolymers, bringing broad experience across innovation, project management and commercial operations. Guro holds a master's degree in biotechnology and a PhD in biopolymer chemistry. Since joining Borregaard back in 2002, starting as a researcher, Guro has 22 years of experience in global innovation projects and management. She today serves as Chief Technology Officer for biopolymers, overseeing the innovation portfolio, our sustainability initiatives and intellectual property. Anders and Guro will now take us a bit deeper into the wonderful world of biopolymers and share some of the many interesting opportunities driven by sustainability and regulatory. And as you will see, this is really a business with numerous highly valuable niches, where some big and interesting shifts are taking place. Please, Anders.

Good morning, everyone, and thank you for the introduction Tom Erik. As stated, I will go deeper into some of the exciting examples we have, where we see that Borregaard has generated a competitive edge by being at the forefront of sustainability as well as regulatory trends. The first opportunity is one of the most exciting innovation projects that we have had recently. It's what we call a new green technology. It's a technology that fundamentally enhances the properties of our lignin-based biopolymers while fully preserving our green credentials. In 2023, Borregaard made a decision to go from the R&D stage to commercialization by committing NOK 100 million to an investment in a demonstration plant. These demonstration plants have been split up in 2 phases. The first phase is set for completion now in the third quarter of 2024. And the second phase is set for completion in the mid of 2025. The good thing with this investment is that already by the first part being completed, we're able to commercialize the technology, although with some constraints when it comes to production. The breakthrough technology transforms our lignin-based biopolymers allowing them to compete directly with advanced fossil-based alternatives, for example, polyacrylates. And yet, we maintain a green credentials, supported by EPDs and LCAs. With this investment, we are positioned very well to enter into new markets such as home care, coatings, industrial cleaners, for example. But additionally, it expands our offerings to existing sectors like the agriculture, leather tanning and oilfield chemicals. To describe this technology, it's best understood by dividing into 3 areas. We have the product properties, the product features and the application potential. Starting with the product properties, this technology introduced several significant improvements. First, it enhances the color of the product, resulting in a brighter nuance, which allows us to enter market has previously been prohibited for us to enter due to the combination of color and performance. Secondly, it improved the dispersion power notably, increasing our ability to compete with advanced fossil-based chemicals. A new property, the prevention of film formation on surfaces has shown to be particularly valuable in the home care market. Moreover, being an anionic water-soluble polymer, the product aligns perfectly with the growing industry shift towards water-based systems, especially in the coating industry. Next, we have the product features, which is highlighted by the reason why a customer will choose our products in favor of something else. The cornerstone of this new technology is sustainability. The sustainability is underscored by circular certification, bio-based content and environmental credentials, represented by EPDs and LCAs. Our new technology also offers tailor-made solutions to meet specific customer needs, meaning that we can change the properties depending on what the customer needs in order to meet the different criteria in the different application areas we try to serve. Another key property is the product's compatibility with most of the chemicals our customers use. That means that it's possible to use it as a drop-in solution, enabling us to faster commercialize the technology. Lastly, the product offers impressive multifunctionality, serving as a dispersant, anti-filming agent and binder simultaneously. These enhanced properties unlocks a wide range of application possibilities, spanning markets such as home cares, coatings, anti-scalants, cleaners, oil and gas, leather tanning and agricultural. To illustrate this further, I would go into 2 examples of areas which we find particularly interesting for this new technology, the first area being the home care market. This is a new and exciting opportunity for Borregaard's bio-based lignin polymers. This market is particularly attractive because it's heavily influenced by our decisions on a day-to-day basis as consumers. It's driven to a large extent by a trend towards sustainable solutions. And those sustainable solutions are typically certified by third parties such as the Nordic Swan and Ecolabel. And these are used -- these certifications are used on the packaging as a marketing tool for our customers to sell to the end consumers. And when we can prove them by being science-based, proving that we have a sustainable alternative, it offers a great opportunity for our customers to even further strengthen their market position. A prime example within the home care industry is dishwasher tablets. Borregaard's product, LignoBrite, offers a sustainable alternative to synthetic ingredients such as polyacrylates. Unlike many industrial uses of our biopolymers, which require very small doses, maybe a fraction of percent, up to 2%, the dishwasher tablets have a range of 5% to 8%, which is in perfect comparison to competition. And with that, we can show that we offer the same performance as a polyacrylate at the same dosage and yet being a sustainable option. On the right-hand side of this slide, you can see a test cycle for a dishwashing that measures deposits on glass. The first glass that looks really dirty is what happens if you put a glass into a dish washing machine and you run it through a large amount of cycles. You see deposits on the glass forming, typically from calcium components in the water. To prevent that, you add a detergent and an anti-film-forming agent. Normally, that is polyacrylates, but as you can see under both the 2 pictures to the far right-hand side, you can use LignoBrite as well as a polyacrylate and achieve the same results. The picture on the bottom shows an actual dishwasher tablet, including LignoBrite. In the past, brown was often associated with something that was unclean, dirty and unattractive within the home care market. But driven by the recent sustainability trends, brown is now seen as something that is positive. It's natural. It comes from the forest, and we can clearly say that brown is the new green that drives the trend towards a sustainable society. In this way, LignoBrite provides a sustainable, high-performance alternative to polyacrylates in dishwasher tablets. Another area that has previously been off limits for us have been the coating sector. The combination of performance and the dark color of our lignin has previously prohibited us from entering this market. With the new green technology and the investments we're doing there, it opens up opportunities for us to enter this market. We act as a dispersing agent for pigments, and the coating manufacturers now have the opportunity to replace traditional dispersing agents typically derived from fossil-based components by a bio-based sustainable alternative. Our product offers improved dispersion power, enhanced scrub resistance and superior hiding power, making it possible to use a bio-based dispersant instead of a fossil-based one. This represents a breakthrough in a market where environmental considerations are being more and more important as time goes on. The product is set to launch in 2024 with the first commercial sales expected by 2025. Now we're going to shift focus a bit, from a new innovation and a new technology to a well-established market. These markets are driven by sustainability and regulatory pressures, and I'd like to share Borregaard's view on the animal feed market. Borregaard has been engaged for a long period in several key application areas within the animal feed market such as pelleting aids, feed or emulsion stabilization, bypass protein protection and acidifiers. Globally, the demand for animal-based food is projected to grow with about 2% to 3% annually, however, with large variations depending on the region you're in. If you look at Europe, we see a clear decreased demand for animal-based food driven by the vegan trend, the knowledge about the impact it has on sustainability and our carbon footprint. However, with the growing population in Asia and Africa, we see that offsets the decline in Europe, and at the same time, offers a nice growth opportunity. The fact that we see population growth and increasing GDP drives the growth of animal-based food. The animal feed market is highly regulated with strict requirements for certification and compliance with industry standards. This plays a substantial demand on producers, both in animal feed and the related ingredients and additives such as Borregaard's products. Our products add significant value to our customers by improving both product quality and productivity. A key advantage is that our products are bio-based, contain no animal ingredients, non-GMO and aligned with sustainability trends. Additionally, we offer a broad range of products tailored to meet the diverse needs of our customers globally. Taking a little bit of a deeper dive into 2 key application areas that have been impacted by regulatory changes or will be in the near future. The first one is pelleting aids, which is used to improve pellet consistency and durability, enhance production and reduce energy demand when you produce animal feed pellets. Feed additives, including lignin, are subject to regulatory oversight. And historically, lignin has been grandfathered into these regulations. However, in 2011, the European Union decided that all feed additives that are to be used should be reauthorized. So for the last 13 years, Borregaard has worked vigorously together with our customers, industry experts to prove and document the safety of lignin to be used in animal feed. And we're very happy to state that in February of 2024, Borregaard, as the sole producer, successfully secured reauthorization for lignin to be used within the European Union in animal feed. This milestone really strengthens our market position and our offering to the customers in the European Union. And we also expect this should continue to be rolled out elsewhere around the world. Typically, the European leads the legislation on this, and other countries and regions normally follow after. Another area, which is also a compelling opportunity based on the regulatory changes, is the bypass protein production. As most of us know, when we consume milk, it comes from the cow, and the cow has to eat something. And what determines the amount of milk produced is the protein content in the animal feed. However, the protein is normally degraded in the cow stomach, the rumen. And when the protein is degraded, the milk yield decreases. To avoid that, you can modify the protein, so it's protected. That's called a bypass protection. Borregaard offers several technologies that's possible to use to produce bypass protein that is protected in the rumen. Traditionally, formaldehyde has been used to protect protein in animal feed; however, in quarter 3 of 2023, it was totally banned to use formaldehyde in animal feed within the European Union. This offered a nice opportunity for Borregaard to expand our business within bypass protein protection, and we were able to grow throughout the last year based on those changes in regulation. If we look forward, we can see that also the dairy consumption in the world is going up. Generally, people consume more milk products as protein sources. With that, we also see that the requirements is expected to be rolled out globally banning formaldehyde to be used in animal feed and opening up new opportunities for our technology in different parts of the world. We also have new innovations within the animal feed within -- for Borregaard. One of the last things we have done is we have introduced a new feed binder for the aquaculture industry. Normally, the aquaculture industry uses binders to keep the pellets whole and intact while being submerged in water. So for example, feed -- farm shrimps are primarily fed with pellets and 90% of those pellets use a binder. Today, those binders are fossil-based. They're based on a urea formaldehyde containing component. And as previously mentioned, the use of formaldehyde is expected to face increasing regulatory restrictions, creating a unique opportunity for sustainable formaldehyde-free alternative. And Borregaard have a new product that have demonstrated strong performance, both in internal test as well as within customer tests. To protect our innovation, we have filed a patent that is currently pending. Our current focus is on scaling up the production process and doing extended customer qualifications. The product was officially launched in 2024 with the first large-scale commercial sales expected by 2025. With that, I will conclude my part, and I welcome our CTO, Guro, up on stage, who will dive deeper into the remarkable properties of lignin.

Thank you very much, Anders. Good morning, everyone. As Anders said, I will give you an introduction to the wonders of lignin-based biopolymers. And I will use the same model as Anders used previously. In this model, I will explain our product's properties, our product's features as well as how these are linked to the various end applications. Lignin-based biopolymers have a wide range of properties, the key ones being binding, disbursing and complexing, which has value to a wide range of industrial applications. They can also be used for crystal growth control, which is important in several of our end applications like in lead batteries, which I will talk more about. Additionally, lignin has properties like UV absorbing, corrosion inhibiting as well as antioxidant effects. The products have the following features and benefits. They can be tailor-made for the end application, and Borregaard has been developing lignin-based products for close to 100 years, giving a portfolio of approximately 600 different products tailored for the end application. And I would like to highlight the robustness of the product, often being more robust under stress than a specific petrochemical polymer. Compatibility is important, product being able to perform under stressed conditions, being its salt, but also being able to be combined with other components in a formulation. Moving over to the other side of the model. We have the sustainability features being bio-based with a documented low CO2 footprint based on our LCA approach. And based on this, we can provide our customers with EPDs, enabling our customers to potentially reduce their Scope 3 emissions. And finally, lignin-based biopolymers are also appreciated for their multifunctional role, being able to bind in one step of the process and then further down in the processing line being able to disperse. And these properties and features have led to a wide range of applications, including agriculture, batteries, home care, as you heard about, as well as industrial applications, including dye stuff, pigments and leather tanning and further construction and animal feed being key applications. And our products give the customer to decide product performance, but also energy savings, better utilization of raw materials, less waste, improved handling and so on. Agriculture is a key sector within solutions. Our products serve important sectors such as plant nutrition, crop protection, seed coating and animal feed. These main sectors further break down into several sub-applications including micronutrients, soil conditioners and biostimulants, pesticides and adjuvants. The properties and features of our products, as presented earlier, have made lignin-based biopolymers indispensable to our customers, driving their continued use in these applications. And now I'd like to delve deeper into plant nutrition and soil conditioners and biological pest control. These are application areas where we see significant growth potential and where our products can offer enhanced value. In the plant nutrition sector, the annual market growth rate is projected to be strong with forecast indicating a rise of approximately 12%. Borregaard's product contribute to sustainable plant nutrition. But what does that mean? Our products help plans optimize the use of nutrients already added in the soil or added during fertilization, resulting in higher healthier plants and higher yields. And in this field, Borregaard has extensive experience and long-time expertise, supported by global R&D capabilities. And we are continuously innovating, developing new products like biostimulants and expanding into new geographic markets. And soil conditioners and biostimulants are used to enhance crop yields. Our product offer key benefits such as excellent solubility, compatibility with other formulants and strong agronomic performance. They improved the nutrient use efficiency, soil fertility and helped plants become more resilient to challenging conditions like drought or soil salinity. In the area of crop protection, we see new and valuable opportunities in biological pest control. The biocontrol market is projected to experience significant growth with an annual growth rate of around 12%. And sustainability is a key driver in this market. There is a strong demand for more sustainable crop protection solutions aimed at reducing the use of harmful pesticides. The EU, for example, proposed ambitious targets to reduce the overall use and risk of harmful chemical pesticides by 2030. Within biopesticides, pest control is derived from a natural source, but as with traditional crop protection, formulation aids are essential. And at Borregaard, we leverage our expertise and R&D capabilities from traditional crop protection and apply it into biological pest control. And our products offer both viability and efficacy, and we are currently introducing a range of new products to customers globally. And we will now move into a totally different end market. Lead batteries are one of the oldest and most widely used battery technologies. And despite the rapid emerge on new battery chemistries, lead batteries remain highly relevant, providing close to 45% of the world's rechargeable power. And benefits versus other battery technologies include superior cost benefits, high degree of safety and reliability. It also offers a sustainable technology with a recycling rate of 99%. And with the sustainability driver for electrification and need for energy storage, lead batteries are well suited for stationary energy storage systems, for example, linked to solar and energy parks. And Borregaard has made a NOK 70 million expansion investment to meet the future demand in this market. And Borregaard's lignin-based expanders are indispensable for the performance of lead batteries and have become the industry standard through more than 50 years of use. And our products function by controlling the crystal growth in the electrode in the battery and increases life, capacity and cold temperature performance of the battery. Over the last decades, Borregaard has accumulated significant internal technical and commercial competence on lead batteries with a dedicated R&D team and test laboratory to support our global sales and innovation initiatives. And we are working closely with customers to align our innovation efforts with the need of the industry. And to ensure that our products meet the performance demands of the next-generation lead batteries, for example, for energy storage and auxiliary function in electric vehicles. We would also like to present an opportunity within emerging technologies, lithium-ion batteries. While lead batteries historically have been the most important battery technology, the relatively low energy density makes them less suitable for use in applications where size and weight are important, for instance, in electric vehicles. Here, lithium-ion batteries dominate. And with mass adoption of electric vehicles, lithium-ion batteries is currently the fastest-growing battery technology with an estimated yearly growth of close to 30% towards 2030. And with the overall massive increase in demand for batteries fueled by global shift toward electrification and renewable energy, Borregaard also sees the opportunity to explore lithium-ion batteries. And we are doing so by leveraging our existing experience and expertise within lead batteries. And recently, we commissioned a lithium-ion battery lab in our R&D center in Wisconsin, U.S., enabling us to develop and test new products in-house. And we have launched a new product functioning as a dispersant, which offers improved battery properties as well as cost reduction during manufacturing of lithium-ion batteries. And our product is further valued for the sustainability profile and being nontoxic. And to protect our innovation, we have filed patents, which are currently pending. And finally, we also have ongoing qualification trials with key global players. Thank you for your attention.

So this concludes our presentations for Part 1, and we will now continue with Q&A. And I should remind you that if you watch this live webcast, you can submit questions to our moderators that will be handling the Q&A session. So Tom Erik will now join me for these Q&A sessions related to the presentations now in the first half. After the Q&A, we will take a break, and we will start Part 2 at 11:00 a.m. sharp. So please, Magnus and Marcus, you can now start moderating Q&A.

Thank you. I would also highlight that the audience has the opportunity to raise their hand and be given a microphone to ask a question. But I guess we can kick off. In terms of your specialization strategy, is it more about shifting volumes from less specialized to more specialized products or developing new specialized products? So the 800 products today, is that 1,000 products in 2030? Or is it 600 because you have excluded the less specialized ones?

Well, a couple of aspects to that. I mean, the market will decide how many products there will be because we usually use the pricing mechanism to it. We don't tell customers you don't get material any longer. We let them decide for themselves through the pricing mechanism. But ideally, this is a choice between adding more volume or working with the existing volume. And what we are saying is that it's -- there's more opportunity working within the existing capacity in the short to medium term. Lifting a ton from the lower end of the mix up to the higher end of the mix can increase the contribution margin per kilo by as much as 4 to 10 times. If you add more volume, that will have to be -- if you have done your job right in the first place, that will have to be sold into the least attractive markets. So in our opinion, in our experience, it's hard to drive volume and increase specialization at the same time. It's much easier for the organization to focus on one task at a time, and specialization is by far the most interesting part.

Okay. I could follow up on that one, I guess. Elaborate some on how you think about the volume versus -- which is price dynamic? But considering the recent downturn in the construction market, obviously, going away from lower-value markets, how do you think about that market going forward? And have you focused more on finding those high-value products and segments within the construction market? Or do you think of, okay, maybe this is a cyclical market, we'd like to reduce exposure to in totality?

No. I would say that the -- like I said, we -- the customers make their own choices. And the interesting -- and this is this term value growth is important in this connection because as we leave or offer less volume to a certain market because if we work within a given volume, we want to grow the high end. You have to take it from somewhere, so you leave the low end. And you leave the low end by giving the customers a choice. And what we see is that some customers want to stay with lignin as an attractive product, and they are willing to pay more for it. And that's what we refer to as value growth. I mean it's like if gold is scarce, the value of gold goes up. And the same thing here, if the lignin is scarce, the value of lignin goes up, for instance. So this is part of the strategy. And the key thing here, of course, to understand the market, if you give a customer this choice in the short term, he may opt to take the high price, but he may go, look for something else in the meantime. So the difficult thing here is, of course, to assess the long-term effect of these changes. But we feel that we have been in this market for so long, and we feel that that's certainly a viable strategy.

You showed an example, which is quite typical for Borregaard, I guess, with the dishwasher tablets and LignoBrite as an alternative to the oil-based polyacrylates. You said that you have the same performance, but are more sustainable, how do you work on pricing strategy here? Have you seen any changing customers' willingness to pay for more sustainable products over the last couple of years? And also, how are you on costs relative to oil-based competitors?

I think definitely, we see a change in customers' mindsets about sustainability compared to some years back. We also see that there's a stronger drive for replacements like this. We definitely see this product as part of our specialties, high-value products. We are -- we have launched product. We're now going into the commercial stage, but the pricing and value is based on the value we're offering into that market, and it's definitely in the -- typically what we define as our higher-end applications.

And relative to the alternative for the customer, are you able to charge a higher price for the sustainable alternative? Or is it more comparable, and then, they choose you because it's more sustainable?

We're offering the product based on the same assessment.

I think it goes back to what I said in my presentation about the -- it has to be profitable. And this is a good example of a product where even if you price it around the same price level that the existing petrochemical product is sold at, it's still a very attractive proposition for Borregaard because we come in with a product with exactly the same performance or better. And if we sell it at that price, it's very profitable for us. So that's part of the selection criteria for why do you want to develop this product rather than another product. And cost performance is good in this case.

I think we have a question from our audience.

Sindre Sørbye from Arctic. Just want to ask more directly about the assessment of the total addressable market for the -- both dishwasher tablets and Li-ion battery application. I mean, 5% to 8% volume content in dishwasher tablet sounds like many, 100,000 tonnes. But can you say anything about your assessment of the potential, not your internal targets?

Yes, of course, if you do that simple calculation, the potential is big. And the 5% to 8% dosage is also higher than typically the dosage we use with lignin. We are working with some players in that industry. And I think this will be interesting niche as we have many other interesting niches, both when you look at the lithium potential, which is an opportunity, still early days, but we have launched products. We are in testing with big international players in the battery industry. So you might see that this could be as big as our existing lead acid business. But I think, as Per said, we wanted to show you some of many. And I think we have -- I think if you believe in Borregaard, you believe in that broad diversified portfolio where there are so many opportunities. I think both of these, we mentioned here, could really be important part of our portfolio going forward.

Just a follow-up. When do you think I will be able to buy a dishwasher -- packet of dishwasher tablets with lignin in my local store?

It will be available in the market sometime next year depending a bit on where you are, maybe not in Norway immediately.

Yes. I think it's an interesting story how we develop this product because we did not go to the large players in the industry. We went to the players that are early movers on green solutions and are, let's say, second and third tier companies. The reason for that is partly related to IP. We have taken our patents on these products for this particular application. And now these patents are approved, we can open up and roll out this product to all players in the industry. So that's a deliberate step -- a step process by step-by-step process in order to protect our interest. And that tells you -- so it will not be sold in Norway as far as I know next year, but it will be sold in fairly close by Norway in some countries.

Fabian from Carnegie. 25% of volumes in BioSolutions are now highly specialized. And I think in theory, you can say that the specialization potential is unlimited or up to 100%. But in your budget, in your thinking, what's the potential in 5 and 10 years?

I think in the last Capital Markets Day, 2022, it was the first time when we showed the graph showing the value. We've been talking about volume percentage. And I think the 60% is, of course, the most interesting, the value. 60% of the value comes from here. We with all our innovation projects and the increased market presence in some of the fast-growing markets I present here today, that share will increase over time. And -- but I also think it's important to see that there's much of our work going on in the other graphs. So the value growth also happens within industrial and in construction, where we will find also niches and valuable business where customers pay premium prices for our products. So yes, specialization will continue to increase, for sure. We will also increase the value on the overall portfolio.

Do you see a step change in the degree of specialization, and let's say, improvement in industrials and so on as well from now over the next 3, 4 years? Or is it going to be more extrapolation of the trend we've seen over the last 5 years?

I think it's typical to see that we are constantly. It's a continuous process. We don't work with the step changes that really are extreme. But I think some of these industries, I mean, if we have real breakthroughs. As I said, we are working with significant players. It could add additional very interesting value to our business.

And then just finally, on margins for this new initiatives you're seeing. Is there any differences compared to the existing portfolio you're seeing? Or is it just higher value of same, let's say, of percentage margin?

This is in the high end of the portfolio. And Typically, we say that it's -- you said, Per, 4 to 10x higher margins, is that range?

Yes, in absolute numbers, but also in percentage is usually higher.

Yes. So the examples here are definitely in that range.

Okay. I have a question regarding the Asia expansion, I guess you can call it. First, could you comment some on where you see the most attractive applications? And then also comment on your existing establishment, what would a successful expansion require from you in terms of further investments and R&D?

Yes. I think there's 2 things. I think it's -- we have -- 10% of Borregaard employees are working in sales and marketing. So it means more than 100 people are out every day. 90% of these people are working with biopolymers products. And what we see is that growth now -- I mean, China has been an engine in Asia for many years. It's still, of course, is a very large interest market, but we also see that the growth is happening outside China now. So we are putting more feet on the ground, sales, techno-commercial skilled people coming, sometimes recruited from these industries where we are focusing in these countries; Vietnam, India, Indonesia. And also, the R&D capabilities, talking about here, is important also to support these commercial people on the ground with providing and ensuring the best solutions for these customers. They have significant growth in these countries and its significant growth in some of the applications that we really focus on. We mentioned agriculture. Electrification is growing fast in that region. But also in other area, industrial applications, many interesting niches growing fast, and we're focusing more with more resources on those.

And you said that you saw a great willingness to pay for greener products in larger part of Asia compared to Western markets. That's right?

Compared to earlier, I think we clearly see now that sustainability is much more a topic also in the Asian region across these countries.

The -- in terms of the Asian opportunities, would you say that it's more about pushing products, which are already further in terms of application in Europe? Or is it more about growing in the newer product niches and lithium batteries and these sort of things?

No, I think it's both. Of course, agriculture is big in Asia as well as -- I mean, we have a strong foothold globally, in Europe, in North America, South America and Asia. But the growth is, of course, very interesting in these countries in Asia. But then, if you look at the batteries, that's, of course, a different sector where you see that they are also dominant in developing these technologies. So that could be a little bit different with new innovations as well.

You saw the example here of shrimp feed. That's tailor-made for the Asian market, for sure. So -- and we are building up R&D resources now in -- as we speak in India. We have had a construction lab in India for a long time. Now we are expanding that to be an ag-chem laboratory as well to support people locally.

I believe you have about 1/4 of your sales to Asia today. Correct me if I'm wrong. Is that share higher in the lignin business than the rest of the business?

Well, it's -- I don't have the exact number by heart...

No, it's right. It's in the low 20s, in the low 20s.

It's in this -- within the same range. But if you look -- I mean looking at market development recently, first half -- you know our results, Asia is a strong part of that, solid growth in agri and electrification.

Martin from ABG. On Slide 32, if you flip to that slide, you show the end products of lignin. Could you give an indication of the price levels for the different end segments or maybe the price differences?

Which one was that? The above slide or...

Yes. That one.

For the different application areas.

Your average price has risen from say NOK 600 to NOK 1,100. So what is now the price differences between these application areas?

One way to approach your question is that what I said about specialties is that in there we find our high-value agriproducts, battery additives, oilfield chemicals and biovanillin. And that's where you typically have the 4 to 10 times.

Yes. And the new home care product will go in there as well, yes.

And home care will go in there as well, yes. Whereas construction is a separate -- we split that out anyway when we -- so that's 1 or 3 categories, special construction and the industrial section is literally 100 different products, but it's -- a lot of them are binders or dispersing agents, and they are priced at lower levels. And we specify those prices every time we report, as you know. So they are huge categories in construction and industrial, whereas all these others here are -- with the exception of animal feed, all the others here are going into the high-end specialties.

Yes. And what is also interesting to see is that if you look at the construction value versus volume since stock listing, we have taken out 2/3 of the volume while more or less keeping the same value. So that means we've been able to retain those customers willing to pay the price.

Yes. The revenue is unchanged even though we have taken out 2/3 of the volume over the last 10 years. So that is just a reflection that within each of these categories, there is a lot of segments as well. You have to use the price mechanism to let people make decisions for themselves. I'm sorry, we can't go more -- into more detail.

Yes. And just a follow-up. Just what is the price difference between the customer repays max and minimum price in this segment?

Max and minimum, jeez, I mean that's -- it's more than 10 times for sure. But having said that, the starting material is, in many cases, the same. And I usually use this example saying that if you sell something for $1 a kilo, the raw material cost is usually $0.40. So the contribution is $0.60. If you modify that molecule and make a more advanced product out of it, you have to add a lot of cost. So then you can sell it for $10 a kilo and the variable cost is $4 a kilo. So you have to add $3.40 in order to upgrade the product to become more valuable. So it's not same, same. Starting material is the same, but the production process is quite different and has different costs. But that's the beauty of it. We have the raw material. If you can just develop the markets, we can upgrade that raw material to have a much higher value as a finished product.

I have one last question on the lead battery segment. You said you are the industry standard. Could you comment some on the competitive dynamics in -- within lead batteries? And also, is this strategy more sales towards getting more customers, more of the bigger players? Or is it more so growing with your existing customers and getting that added value?

I think from what I've heard before how we see this is that the main competition would be non-news. I mean we are in most lead acid batteries around the world. And that market is growing with 2% to 3% per year. So we are -- when we look forward on the lead acid battery, at least that's the kind of growth of that business. But as Guro presented, we see some interesting dynamics also with energy storage that can -- as that grows, and we are the industry standard, we expect also to be taking share of that growth in that segment within lead-acid batteries.

It's a question we often get, and the question is, so are your products generally lower in performance than the competition? Or are they better in performance than competition? And the boring answer is that it's, yes, in both cases. And the battery example is an example of the latter, where our product is superior to any alternative that is existing in the market. So it's usually such that every car battery in Norway or anywhere else in Europe for that matter has a drop of lignin biopolymer from Borregaard in the battery because its outstanding compared to what else is offered. A similar example is in water-based pesticides. If you want to replace solvents, petrochemical solvents in -- and make a green pesticide, there is no really alternative to using a biopolymer from Borregaard. So there are a few examples. These are examples of whether it's much better performing than the second best performing. But then you have other areas where our product may be less costlier than the petrochemical, but on the cost performance basis it's still attractive to the customer. So you have -- it's all over the place. You have to look at each individual product and each individual market segment. But the battery -- lead batteries is a unique example because it's very hard to find something that is comparable.

I think that if there are no further questions from the audience, I think that concludes the Q&A session -- the first Q&A session, and we will have half an hour break, and then, we will be back at 11:00.

Yes. We'll restart at 11:00 a.m. sharp. Thank you. [Break]

So welcome back from the break, and we are now ready to start Part 2, and I will introduce our next speaker, Gisle Løhre Johansen. He's the Executive Vice President for Specialty Cellulose and Fine Chemicals. He joined Borregaard all the way back in 1991, and he has had several positions in our system. He has been the Site Director for the biorefinery factories in Sarpsborg, and he has been the Senior Vice President for Business Development, R&D, and Executive Vice President for the Fine Chemicals area. Currently, he is the EVP for Specialty Cellulose and Fine Chemicals since 2019. And he has a master's degree in organic chemistry. Please, Gisle, floor is yours.

Thank you, Per, for your introduction. Good morning, dear audience and dear listeners and viewers. So now we're going to turn to cellulose, the reason why Borregaard was established 135 years ago. And as we have seen earlier today, it's been quite a journey since then. But the journey for cellulose has also been fairly exciting because we started out producing paper, and then, we moved through cellulose for textiles, up to the position we are today, where 100% of our volume is going into the Specialty Cellulose segment. This segment is about 1.6 million tonnes. That means that Borregaard has about 10% of this volume. The beauty about Borregaard's process and raw material and technology is that we can move more or less freely between all those segments represented in the graph here depending on market demand and attractiveness, which may shift with different economic cycles. And the 2 dominant segments here is acetate segment and the ether segment, accounting nearly 70%, and then, there is a lot of niches. So we are now continuing our journey. Now we are 100% specialized. Now it's all about what to do with those 160,000 tonnes of capacity because there, there are still a lot of opportunities. We are not only represented in all these -- almost all these segments, but we also have close cooperation and contact with the major customers in these segments, built up over time. So when we move forward, we single out some special segments here. It's the acetate segment, where purity is the main driver. And the growth is still healthy. It's the Ether segment where viscosity is important and where Borregaard with its calcium sulfite process based on long fiber have certain advantages. It's tire cord for high-speed tires, and it's the high purity casings and sponges segment. So in the Ether segment, which I will come back to, we target not the whole segment, as we did a few years ago, now we are specializing further, and we target the regulated segment. That's the pharma, that's the food, that's the cosmetics applications for ethers. And as we will come back to our Ice Bear technology that we launched nearly 10 years ago gives us opportunities to go into high-purity segments of both the casings, the ethers and the acetate segment. Since more or less same date 1 year ago, GP quite surprisingly announced the shutdown of their facility in Foley. That was 100,000 tonnes according to our estimates of high-purity cellulose removed from the market with a single stroke. In addition, RYAM carried through with something they have said for a while that they would look at options for their mill in Temiscaming in Canada. So they announced an idling of that plant for an undefined time forward. That removed another 30,000 tonnes of specialty sellers from the market. The Foley plant is long fiber craft, while the Temiscaming plant is long fiber. So this has, of course, triggered a lot of expectations in the bodies following us that there should be a shortage due to this. It is, to some extent, countered by the fact that there are other raw materials than wood that can be used for some of these specialty segments. And that is cotton linter pulp that is made from a byproduct from cotton. And it's a large production of that in China. Chinese economy is not going very well, so availability of that raw material is quite good at quite competitive prices. And our customers also have the possibility to blend them -- this product with other types of cellulose, fluff pulp. So it's not as straightforward as it may look. So I will now dig a bit more into cellulose ethers, where, as I say, our targeted growth now is to move volumes from according to customers' willingness to pay from somewhat more commoditized industrial applications of ethers into the more high-value segments. As I said, food, pharma, personal care, there are some main points here. One is that, for ethers, ether cellulose, it's either cotton linter pulp or it's softwood long fiber. So the competitive arena is a bit smaller and ideal for our process. On top of that, there is more this tougher demands on quality assurance, quality control and precision in their production. And all of these factors we like very well in Borregaard. We have a long experience working on pharmaceutical -- on products for the pharmaceutical industry in our Fine Chemicals business. We have highly educated organization in the production. We have our central control room. We are rigged for precision and for creating product safety for the customer, which is, of course, much more critical when you are in these regulated segments. So we will not leave attractive industrial segments. There are segments also in the more cyclic -- some of the more cyclic segments that are very attractive, like paints, like car catalysts, where our ability to modify viscosity is very important, either very low viscosity or very high viscosity. But our ambition is over time to gradually reduce our exposure to the cyclic low-value grades in construction. We launched the Ice Bear technology almost 10 years ago. Ice Bear is about creating enhanced purity in the cellulose, not only limited to acetate, but also to ethers and in the casing segment. And the closure of Foley really played this technology, right -- the closure of Foley played a lot of good things into our hands because the Foley plant was renowned for its high purity cellulose. And with the Ice Bear technology, we were able to capture volumes in the ether segment and in the high viscosity or the high purity casing segment fairly fast. Of course, there is also qualification testing with the customer, but it was both in our customers and our interest to move fast here. And that's why we are very proud to show a very good growth in the Ice Bear -- the volumes based on the Ice Bear technology. We have seen an increase in volume of nearly 70% this year according to our estimates for the rest of the year, and we will continue to grow this segment. So we estimate that the closure of Foley have given us the opportunity to capture between 15,000 and 20,000 tonnes of high-value grades, which we mainly use our Ice Bear technology to produce. Ice Bear will also be important to moving forward because if you want to enter the high-end acetate segment, you need high purity, and that's what Ice Bear is about. So we will continue to develop product segments, both in ethers, in acetate and in high-purity casings based on this technology. So with that, I will leave the floor to my good colleague, Ali Moosavifar, who just -- excuse me for one moment, who has a master's degree in chemical engineering and a PhD in forest products. Ali joined way back in 2008. I was actually the boss of that department at that time, and I'm glad to see another R&D guy move over to commercial, as we often move people in Borregaard. So with that, Ali has 16 years of experience in product development, management and market introduction. He is now serving as a Technical Service and Sustainability Manager in our market organization in Specialty Cellulose and is managing the Ice Bear and Acetate portfolio, but this also meant managing our sustainability initiatives. This is more and more sought after by our customer. So, Ali, the floor is yours.

Thank you, Gisle. Good morning, everyone. Back in 2012, we launched Project Ice Bear as a market-driven initiative. The aim was to diversify and increase the value of our product portfolio by targeting niche applications in markets we were already familiar with. We understood the market dynamics, customer needs, product requirements. One key challenge was increasing the purity of our products to meet the demand of high-value, niche applications. And already by 2015, 3 years after, we delivered the first commercial volume within our existing market, marking a significant milestone. One major opportunity is to use our product Ice Bear in niche application within bioplastics. Our product Ice Bear can be modified by our customers to create cellulose acetate, which can then be used as bioplastic. The pie chart that you see here shows the market of cellulose acetate where cigarette filter end use is, by far, the largest application. Historically, our regular cellulose grade has been used as raw material for cigarette filter end use. But with implementation of Ice Bear technology, we've now successfully entered more demanding niche application within the well-established cellulose acetate market. And these applications, the niche applications increasingly favor cellulose acetate-based plastic over fossil-based plastics. For example, exclusive spectacle frame, often made with cellulose acetate due to its smooth skin feel and ease of shaping during production. Another example is protective film in displays, a sector where the purity of cellulose is critical. Additionally, we are working closely with key customers to develop biodegradable, compostable plastic for applications such as cosmetics and food packaging, where the biodegradability of traditional plastic is of concern. Well, now you might be asking why not replace all fossil-based plastic by cellulose acetate-based bioplastic. Well, there are a few challenges. Cellulose acetate-based plastic comes at a significant higher cost compared to fossil-based alternative, which can be a barrier for broader adoption. And fossil-based plastic can easily be modified to meet the specific requirement of various end users, whereas replacing it with cellulose acetate based bioplastic can sometimes be more complex. However, despite these challenges, the market for plastic is enormous, and capturing even a small portion of this market would represent a significant opportunity for us. Our customers who produce plastics from our Ice Bear have already seen a significant increase in demand for biodegradable plastics, especially with tightening regulation around microplastic. Currently, we have secured contract over 10,000 tonnes in bioplastic application for 2024. Looking ahead, we see long-term potential of up to 50,000 tonne into bioplastic application. Thank you.

Thank you, Ali. Now we will go even deeper into organic growth, innovation and bio-based investments. Our next speaker is Kristin Misund, Senior Vice President of R&D and Business Development. Kristin has been with Borregaard since 1993, and she was previously the R&D Director for 15 years, also heading the corporate R&D center in Norway. And she is a PhD in Organic Chemistry. Kristin, the floor is yours.

Thank you, Per. As Per pointed out in his presentation, innovation, our market-driven innovation is indeed a part of Borregaard's culture. It is a cornerstone for value growth and profitability. We consider innovation a competitive necessity and a prerequisite for long-term performance. The main KPI for our innovation work is the percentage of the revenue that is connected to new products and new applications. And this KPI has been on that level plus 15% for quite many years. However, this does not tell the full story about the outcome of innovation in Borregaard. Innovation also delivers improved competitive positioning, higher customer satisfaction, decrease costs and improve ESG profile. We have organized the innovation in what we call innovation management team. The innovation strategy is owned and organized by IMT. Each business unit is set up with its own IMT, a small interdisciplinary team of line managers from sales, R&D and production that is headed by the head of the business unit. So Tom Erik is heading IMT in Biopolymers and Gisle in Speciality Cellulose. Innovation is thereby anchored in the strategy owned by top management and also managed in a formal and structured process. The purpose of the innovation is clear, effort is aligned with intended business outcome. And the project grouped, they are true cross-functional groups combining technological competence from typically R&D and production and market insight capabilities. And these groups, they are responsible for developing a product that fits the market requirements and is produced by a cost efficient, robust and environmentally sound process. A product that fits the market requirements and is produced by a cost-efficient, robust and sustainable process sounds easy. It normally takes quite some effort. Approximately 100 employees in Borregaard, some 10% of the total workforce is -- or has innovation as their main objective. And this requires an investment of approximately 3% of our revenues. We do have research centers in Norway, by far the biggest one. One in the U.S., close to our factory there, and one that is in Mumbai in India. The 2 latter ones are serving biopolymers. In Norway, we serve all the different business units. One of the many advantages with Borregaard is that it is both big and small. It's big enough to put resources and priorities behind what the projects that we believe in. And it's small enough, and that's also important to be flexible and also small enough, too, although not easy all the time, align resources and priorities in order to act as one Borregaard, internally and externally. Let's continue with a kind of a schematic overview of our business unit's innovation portfolios. But first, remember, innovation in Borregaard has to do with production process, products and application. And products, processes and application are very closely interlinked in the sense that you tailor a product for a certain application by inventing a new process or further improving an existing process. The strategy of the business units has formed the innovation portfolio differently, both in scope and also in volume. In biopolymers, innovation revolves a lot around applications. Both lignin and cellulose fibrils can be utilized in an impressive amount of applications, and it is important at least to a certain level to understand our customers' processes, products and even applications in order to tailor solutions, sell on performance and by that drive specialization. Hence, lignin and cellulose fibril's effort -- innovation effort revolves a lot around applications. The list that you see here is by no means exhaustive, and that's one of the challenging and also rewarding parcel working with lignin. But you will recognize some of the most important applications here. Some of them you will recognize from Anders and Guro's presentations. Another important part of our innovation portfolio is more process oriented. That goes for biovanillin, bioethanol, fine chemical and, not the least, cellulose. The collaboration between sales, R&D and production, which we call the golden triangle is even closer here. And the values are, to a large extent, produced or created through processing improvements, capacity-wise, quality-wise with respect to sustainability. The speciality -- in Speciality Cellulose, we also work a lot, as Ali has exemplified, with tailoring production processes to new niches in acetate and in ether and then designing processes with the lowest possible cost and the best possible ESG profile. In business development, we have 2 different mandates when it comes to innovation. We work internally with a few more exploratory projects, more disruptive technologies, which have the potential long term to complement today's biorefinery, today's business units. Investing in organic growth through innovation is and will continue to be the main driver for value growth. However, this strategy was a few years ago supplemented by investments in bio-based startups. We do search for, and we have found possibility to leverage on our competence to grow the business long term through investments. Martin Lersch will present the strategy and the status of the bio-based investments. Martin holds a PhD in organic chemistry. He joined Borregaard, also he as a researcher, back in 2006. And he currently serves as CTO, Chief Technology Officer, in Business Development. Please, Martin.

Thank you, Kristin, and good morning, everyone. Back in 2021, we got this mandate to look for investment opportunities in bio-based industries and especially start-ups. And today, this process is handled by us, a small team in business development, where we have a structured deal flow process where we scout for new companies. We evaluate them on a technical and a commercial level. And in some cases, we also do a deep dive, a full due diligence. More than 500 companies have been screened so far. And our first deep dive that resulted in an investment was in the Norwegian company, Alginor based on the West Coast of Norway. This is a blue biorefinery. And their raw material is found below the sea surface. They work with seaweed, and their ambition is to bring Alginor to the market that is formaldehyde-free. In earlier presentations today, we have heard about how formaldehyde-free can create market pull, and we believe that this is also the case for Alginor. I will get back to Alginor in more detail on the later slides. As a corporate venture capital investor, our investments are strategically motivated. And our investment thesis is perhaps best summarized by what we're looking for, what is it that constitutes a good fit or a good match for Borregaard. The most important is that it has to be 100% bio-based. So we're looking for technologies or companies that convert bio-based raw materials into chemicals and materials. Since sustainability is core for Borregaard, of course, these startups also need to be fully aligned with regards to ESG. Bio-based drop-in solutions, however, are not our main target. We're looking for higher value and the potential for specialization. What can really make the company stand out in our search is if we see a potential to leverage our own competence and know-how. Of course, revenue and time to market is important, ideally, the technology should have come out of the lab and into a pilot or a demonstration phase, so closer to the market. We primarily look in the Nordics and Scandinavia, but as you will see also from the examples, if there is a good fit, we can also look further. As a corporate venture capital investor, what we bring beyond capital is often why the start-ups want us as an investor. And here is the list of some of the things. Borregaard as an established company with more than 130 years of market presence, together with an extensive network of customers and partners globally, we can provide warm leads and we can open doors. Many of my colleagues have a tremendous know-how on applications, on markets, of course, also on R&D, production. But what sometimes also goes under the radar is the experience we have in Borregaard from internal startups. So taking an idea through the lab, into pilot and demo scale and, in some cases, also into full commercial operation. When we share experiences in this field with startups, we see that this resonates very well also with the experience that founders have in start-ups. Despite being an established by refinery, Borregaard has a very strong culture of continuous improvement. And we believe that this is something that is as important also for a start-up as it is for us established industrial player. Founders typically have thousands of questions. If it is related to sustainability, we believe that they have certainly come to the right place as we have a strong track record there. But also just looking at our entire industrial experience, we see that even just by sharing insights that this can be of great help for start-ups. Last but not least, we have access to pilot and demo facilities that can also be rented out to relevant companies. And they also play actually a part in our scouting efforts. In fact, Alginor is a company that we came to know in our bar refinery demo plant before we had invested in them. It's important for me still to also emphasize that despite this long list of things that we can do, of course, the extent of our offering is scaled to the stake that we have in the respective companies. So some more details on the technicalities of the investments. Alginor was our first investment and is also by far the largest investment. We have a 35% stake following more than NOK 400 million invested there. And our involvement in the company is also reflected in the fact that we have 2 board positions, we serve on the Nomination Committee, there was project collaboration ongoing, and we also have a joint funding application in the works. Kaffe Bueno is a Danish company, located in Copenhagen. They work with coffee, waste and spent coffee grounds as the raw material. This is our most recent investment, and we currently have a 12% stake there. But there is an option on the table for us to increase this to 34% for a fixed price by January 2026. I serve on the board of Kaffe Bueno. And also with them, we have technical discussions and there is also joint funding applications in the works. Common for both Alginor and Kaffe Bueno is that we have the European Innovation Council as a co-investor. When they provide equity, they have as a requirement that there is an industrial lead investor doing full technical due diligence. We took that role. And as you can see, the result was that we were very happy with what we found, and we decided to move on with the investments. Also for Lignovations, we took the role as a lead investor. But this is a much smaller investment. This was a seed round. Ligovations is based in Austria. They work with technical lignins and I'll get more into those details. But this is a good example of how -- if something is sort of close to the core of Borregaard, we can look beyond Scandinavia. Lignin, of course, is important for Borregaard, and this company works exclusively with lignins, but there is an important difference, which has to do with the solubility. So where Borregaard works with water soluble lignins, Lignovations work with non water-soluble lignins. We have a 12% ownership there. And our -- even though our involvement with the company is limited, of course, also there, we have technical discussions, and we also serve on the advisory board of the company. Lastly, we have OCEANIUM, based in Scotland. There are, to some extent, similar with Alginor, but there is also some differences that I will get more into. They work with farmed macro algae as opposed to wild harvested kelp that Alginor use. And as you can see, our ownership there is quite small. Alginor used their wild harvested kelp, as I said, whereas OCEANIUM, they source their raw material from external suppliers, and they're not limited to a single species. They actually work with different species of kelp. But there is also other things, which is different between those companies that actually motivated us to invest in companies that perhaps otherwise could be seen as competitors actually. And that is that Alginor, they have chosen alginate, a high-purity specialty grade of alginate as their #1 product that they want to bring to the market. OCEANIUM chose a different approach. And based on that, we saw that there could maybe be some complementarity here as well. Kaffe Bueno, as I mentioned, they use copy waste, spend coffee grounds as their raw material. And then, of course, we have Borregaard [indiscernible] where we have our softwood, the Norway spruce. And common for all of these biorefineries is that they need to take the biomass and subject it to a biorefinery process, which typically encompasses a kind of chemical pretreatment, followed by a fractionation. And what you obtain then is the different components of the biomass that can then be subjected to further processing. On the bottom part, we have lignovations. And as I mentioned, they stores lignins. And in fact, they stores their technical lignins from other biorefineries, but with the important difference from what we do in Borregaard outside of Norway, where they stores the nonwater soluble lignins. Of course, as you know, in Borregaard, we -- from our partners, stores the lignosulfonates which are water soluble. All of these then can be subjected to processing. And of course, our main focus is business to business on the commercial side. On the bottom part of the slide, I have tried to illustrate the composition of the different biomasses. We have the wood. We have the macroalgae, the seaweed, we have the Kaffe fractions and also a lignin powder. And in colors, we have somewhat simplified the main constituents of these raw materials. So in blue, we have the fibers, but also the polysaccharides and the sugars. In red, we have the lignin, the polyphenols, and in yellow, the lipids, the fats, the oils. And in some cases, there is also some proteins. And what I hope this can sort of explain is why we keep on talking about leveraging competence. As Gisle mentioned, Borregaard has been all about cellulose for 135 years. So it's reasonable to say that we have learned a trick or 2 about how to work with cellulose that can be quite interesting for Alginor and OCEANIUM and of course, also Kaffe Bueno. This summer actually marked the 90-year anniversary for the very first commercial lignin shipment, and this happened from our plant in Wisconsin in the U.S. And likewise, then, of course, for lignovations, which is a totally a newcomer into the commercial lignin field. We believe that some of that experience can also be valuable for them. These companies do not necessarily fit into any of the existing business units in Borregaard. Nevertheless, we believe that by leveraging our competence, trying to increase the likelihood of their success that we thereby can also provide growth opportunities for Borregaard. Thank you.

Thank you, Martin. Our final speaker today is our CFO, Per Bjarne Lyngstad. He's actually the longest serving team member you will meet today because he joined Borregaard in 1988. And he was appointed CFO 10 years later in 1998. He has served in different finance and administrative positions, both in the U.S. and Norway prior to becoming CFO. He has a graduate program in economics and business administration. So Per Bjarne, the floor is yours.

Thank you, Per, and good morning, everyone. Borregaard has delivered a significant improvement in performance and top line growth during the last 5 years. Operating revenues have on average increased by 9% per year. EBITDA has increased by 15% annually and we have seen strong improvement in the EBITDA margin. Return on capital employed has the 3 last years, been well above our 15% pretax target and earnings per share has more than doubled in the period. These results are achieved despite the period with uncertainty in the world. First, the COVID-19 pandemic and then Russia's invasion in Ukraine. And even later, the situation in -- between Israel and Palestine have impacted supply chains, the cost of energy and raw materials significantly. Price increases and continued specialization, a resilient business model and a diversified market strategy and a weaker Norwegian kroner were the main reasons for the strong development in the performance. Since 2019, all 3 business segments have improved considerably. Despite the huge loss in raw material supply in South Africa and Spain in 2020, BioSolutions has improved significantly and especially with a loss of volume from 2020 to 2021. Specialization, diversification optimization and price increases, currency effect and the impact from expansion investments were the main reasons for the improvement. Altogether, these factors have contributed to a 40% increase in EBITDA in this period. Cost increases and lately, a weaker market for synthetic vanillin products and Biovanillin in 2023 had a negative impact. Biomaterials has more than doubled EBITDA during this period. 2022 and even more so, 2023, have been strong years for the Specialty Cellulose business. Increased sales prices, positive currency effects more than offset increased energy and raw material costs. and lower sales to construction products. The sale of Cellulose Fibrils has increased year by year. However, the sales volume is still behind our targets. Fine Chemicals and the bioethanol business in particular, have had a fantastic development over the last 2 years, driven by increased sales prices and higher sales volume to biofuel. The result for Fine Chemical Intermediates has also improved in the period. Total operating expenses in Borregaard has increased by about 7% per year from 2019 to 2023. We've seen a slightly lower growth rate into the first part of 2024. However, the share of key cost items has in total been quite stable for each cost element, and no single cost item represents a large share of the total cost. The share of major input costs like wood and energy are in the low teens with some variations from year to year. If we look at cost increases from 2019 to where we expect to be this year, wood is clearly the cost item that has had the highest cost increase. There are several reasons for this increase. Higher energy prices have led to wood going into heat energy production and a weak Norwegian kroner has led to increased exports of both pulpwood and logs for sawmills. Lately, reduced building activity has limited supply of chips from sawmills in Norway and Sweden. Energy costs peaked in 2022 with Russia's invasion in Ukraine, but has gradually come down to a more reasonable level, in the second half of last year and so far this year. As of now, about 15% of Borregaard's energy consumption is exposed to spot prices. Energy prices have also impacted the price of caustic soda, which is an important input factor in Borregaard. 2/3 of Borregaard consumption is covered by captive production. The rest is sourced externally. The general inflation in Norway and many other countries have been higher over the last years, affecting wages and salaries and many other cost elements. In addition, a more specialized workforce, and a tight labor market have impacted the payroll negatively. Borregaard has a solid capital structure with financial ratios well within what are required of an investment-grade company. The equity ratio was 54% at the end of the second quarter of 2024. And the leverage ratio, which is net interest-bearing debt over EBITDA was 1.23, well within the targeted range of 1.0 to 2.25. We also have substantial undrawn credit facilities and sufficient overdraft facilities, maturity ranges from 2025 to 2032. The issue rating of A- stable from scope rating confirms Borregaard solid financial position. The free cash flow before expansion investments has over time been strong. However, with significant variation between years, mainly due to changes in net working capital. There are 3 completed and ongoing investments, which have or will contribute to a reduction in CO2 emissions and also to energy savings at the Sarpsborg biorefinery. So far, these investments are expected to give higher reduction in CO2 emissions and larger energy savings compared with what we initially thought. The investment spending for these projects have so far been below our initial transition plan forecast. Additional projects to reduce CO2 emissions in line with the target approved by the science-based target initiative and to reduce COD affluence, ARPU increase, the electric boiler capacity for heat energy production to produce more biofuel from residuals, process improvements and to implement wastewater incineration technology and innovative heat recovery. All these projects are expected to be initiated in the period 2025 to 2027. But not all of them will be completed by the end of 2027. We had an 8% reduction in CO2 emissions in 2023, which means that the impact from the energy crisis in 2022 when we had to use more fossil-based energy has partially been mitigated throughout 2023, and also that the impact from further specialization have been mitigated. As these investments kick in, we will see a stepwise reduction of CO2 emissions and COD affluence. Borregaard's free cash flow before expansion investments will over time be spent on projects to increase specialization and capacity. On acquisitions, if you see any opportunities on bio-based start-ups, and complementary value-adding businesses and, of course, to shareholders. In the period 2019 to 2023, about 50% of the free cash flow was allocated to shareholders as proposed dividend and net buybacks of treasury shares. About 30% has been spent on expansion investments to increase specialization and increase capacity. And 8% has been spent on bio-based start-ups mainly on the 35% holding in Alginor. Capital allocation priorities in the years to come will be set in line with our financial targets and dividend policy, which means that we target a return on capital employed above 15% pretax over a business cycle. That leverage ratio shall stay well within the targeted level of 1.0 to 2.25. And we intend to continue to pay regular and progressive dividends to the shareholders. These priorities set limits for how much Borregaard can invest in bio-based start-ups where it may take years before we see any cash dividend. As I said, Borregaard's dividend policy is to pay regular and progressive dividends, reflecting Borregaard's expected long-term earnings, free cash flow and expansion investments. The annual dividend is targeted between 30% and 50% of net profit for the preceding fiscal year. The actual dividend has been progressive over time, reflecting improved profitability and cash flow. The annual growth rate has been 13%. And the dividend for 2023 was close to 4x higher than in 2012, the year Borregaard was listed. We paid an extraordinary dividend, both for 2016 and for 2021, based on strong earnings cash flow, leverage ratio and outlook. We have 2 ongoing expansion investments in BioSolutions that we have announced. A specialization investment where the main target is batteries, which Guro talked about earlier today. The project is also targeting applications like oilfield chemicals, agrochemicals, pigments and dyes. The investment is NOK 70 million and will be operational in the fourth quarter this year. The second investment is to build a commercial scale demonstration plan for the new green technology that Anders talked about earlier today. The investment is NOK 100 million, and the first step will be operational in the third quarter this year. Over the last 8 years, we have done several larger and medium-sized expansion investments. In total, we now see a quite substantial impact on our financial performance from these investments. In BioSolutions, the upgrade of the biopolymers facility in Norway, the Florida expansion and the capacity increase for biovanillin are contributing to the strong performance. In Biomaterials and Fine Chemicals, the Ice Bear project, the capacity increase for water-free bioethanol and debottlenecking of Fine Chemical Intermediates have contributed to the improved performance. The debottlenecking of the Sarpsborg biorefinery is expected to be the major expansion investment in the period from 2025 to 2027. We are planning for a 2-step capacity increase and expect a decision for the first step in the fourth quarter this year. The total capacity increase is expected to be between 5% and 10% for specialty cellulose, lignin-based biopolymers and bioethanol. The production output is expected to increase gradually from the second half of 2026. In addition to the increased capacity, we expect to reduce costs and volume of residuals through this project to achieve energy savings and reduce caustic soda consumption and to reduce COD affluence. We will revert with more information about the debottlenecking project when this decision for the first step is taken. Several smaller and medium-sized expansion investments are also planned for the next 3 years. We will continue the specialization of lignin-based biopolymers including an upgrade and further specialization of the facility in Wisconsin U.S. For Biomaterials, additional projects to the debottlenecking are ramp-up of Ice Bear production and further improvement of quality. In Fine Chemicals, removing capacity restraints in bioethanol and Fine Chemicals intermediates are priorities. We plan to continue to support existing investments in bio-based startups, and we'll seek new opportunities in line with the selection criteria that Martin presented in the previous presentation. One of Borregaard's financial objectives is to keep replacement investment at the depreciation level, excluding depreciation from leasing. In 2025 to 2027, targeted CO2 and COD reductions and general cost increases explain replacement investments about above target level. However, the environmental investments will support the planned specialization and value growth investments. Increased specialization and debottlenecking at the Sarpsborg site are the main expansion investments in the 2025 to 2027 period. More than half of the expected expansion spending is related to the debottlenecking project in Sarpsborg. Borregaard has a pipeline of early-stage ideas that might materialize in investments. Such projects are not included in the forecast and may lead to additional expansion investments, provided Borregaard's results and cash flow allow for it. Future investments in bio-based start-ups are a part of this pipeline and are not included in the forecast with the exceptions of Borregaard share of Alginor's capital raise in 2024, which is including in the spending for 2024. There are, of course, uncertainties in these estimates related to final decision, lead time for equipment, execution time, payment schedules among others. We believe that Borregaard is well positioned for growth, maybe even accelerated growth in the years to come. The presentations today have been aimed at giving you examples of areas and projects, which will generate this growth. As several speakers have talked about, Borregaard has a broad innovation portfolio. And the examples given today are not necessarily the ones that will probably become a success in the future. Other innovation projects might end up becoming even larger successes. In the period from now to 2027, we believe growth will be driven by the specialization projects like investments in Agri, home care, batteries, and the Asia strategy in biosolutions and Ice Bear in biomaterials. Growth will come from the debottlenecking in the Sarpsborg with an internal rate of return target well above 15% pretax from environmental investments, mitigating cost risk, regulatory tailwinds in feed, strengthened sustainability profile and from a significant and delayed currency impact on hedging losses which will be reduced over the next years if we assume constant currency rates. The currency impact alone may improve the top line and EBITDA by several hundred million NOKs depending on the actual development of the Norwegian kroner. Beyond 2027, we believe growth will continue to be driven by further specializations in biosolutions and targeting regulated markets in biomaterials. From volume expansions in Florida, where we have an option to increase by 50,000 tonnes or alternatively to build a plant based on Borregaard's BALI technology and from scaling up bio-based start-ups like Alginor and Kaffe Bueno and from a potential Cellulose Fibrils expansion. I will then leave the stage for Per to briefly sum up today's presentation. Thank you.

Okay. So that takes me back to the key takeaways that I started with this morning. And just to summarize, short and sweet, we think that continuing the specialization journey is still the best way forward. The potential -- the profit potential from increasing -- improving the product mix is far bigger than adding volume on the margin. We have given you a deep dive and the broader understanding of the innovation portfolio today. But as Per Bjarne pointed out, I just want to remind you that this is just a selection. The beauty is in the number of innovation opportunities, and it's in the cumulative effect of these opportunities, which if you think about it, reduces the risk. We are not a company where it's either a big bang or nothing. It's a company with hundreds of opportunities and usually a high percentage of those opportunities will deliver some improvement in the business. And this also mitigates the risk, the market risk of the business. We are in so many markets that we usually go with the flow. We go with the GDP development globally, but we can add on top of that the conversion from petrochemicals into more greener chemicals that adds to our growth rates. Also, the bio-based start-ups, Per Bjarne was explaining again that the bio-based start-ups will be handled within our financial objectives. So the leverage ratio that is targeted for the business and so forth will be -- everything will happen within those targeted numbers. But hopefully, in the longer term. This will add interesting businesses to Borregaard. So as always, we are not extremely quantitative, but I hope that you will get a feeling for how we are driving the company and why the performance has improved over time. So this concludes our presentation for the day. I will now ask that members of the top management team to come back up on the stage so that we can have the second Q&A session. So Magnus and Marcus will once again moderate this session. And I will remind the webcast participants that they can submit questions during this Q&A if they haven't already done so. And for those physically present here, when we are -- we have finished the Q&A session, you are invited all to join us for lunch at [indiscernible] Restaurant here in the Oslo Concert Hall. So please come up on stage, and I will hand it over to Magnus and Marcus.

Thank you for the presentations. If we can start with the question on biomaterials. So margins have been a bit lower in 2024, but it seems you're making progress on Ice Bear and GP has closed some capacity. Are you more or less confident on long-term margins now than you were 1 year ago when you delivered higher margins [indiscernible] other developments.

I would say that we were fairly confident on long-term margins also a year ago. So I would say it's the same. Of course, you must remember that a big part of results is also influenced by fluctuating raw material prices and maybe that bigger surprise this year is a steep increase in wood cost.

And we've seen you, to some extent, at Q2 and also one of our key competitors sending out a message that prices will be increased? Will we see prices and margins or margins recovering next year?

Well, as I commented, there is some adjustments in the capacity for long fiber. But it's still to be seen how our customers in the market sees the market balance.

Yes. I think you have to change it in the short term and the long term. I mean longer term, we said also 2 years ago that for sure in the longer term, there will be a very tight market for specialty cellulose and we still have that opinion. And obviously, these changes on the supply side has led to a higher capacity utilization and the tighter market. So -- but this will materialize in the negotiations for next year. This year, prices have been flat or even down, mostly because during the -- and following the COVID period, we had some very high steep increases in pricing, close to 40% over the matter of 18 months. And it is only fear that when costs normalize, that some of these costs are returned to the customers which doesn't necessarily mean that margins come down, but the prices are adjusted in line with normalizing costs.

I have a question regarding the Ice Bear capacity increase. You said there's a potential of 50,000 tonnes within that segment. Could you provide somewhat of a time line of where do you see your scaling up to that level? And also, would that require any capacity investments of sort.

Yes, I can start, and then probably Tom Erik can join me on that. Of course, if we increase capacity by 50,000 tonnes, that will require additional investments also.

I believe this is really was...

Was it to Ice Bear. Yes, sorry.

No, okay. The Ice Bear, this -- we're not talking about significant investments to ramp up the Ice Bear production. We have put in place the Ice Bear technology a long time ago. When you ramp up production, you have to fine-tune some of the process and so forth, but that doesn't mean that you have to make investments -- significant investments. pAnd again, it's back to -- we always let the customers decide. So this is down to the pricing mechanism. If you -- we have to fight for your space in the -- within the total capacity of Borregaard's specialty cellulose production.

And also, I guess this is more a broader question regarding your -- what you see within your customers because we saw somewhat of a recovery in chemical utilization to the start of 2024. What do you see now when you talk to you more industrial-based construction-based clients, do you see any more comfort in the market recovery? Or is it still somewhat restrictive.

I would say that all our guidance is not based on a recovery in the marketplace. As far as we see, there's still a slow market to some extent and particularly, I'd say, in Europe. But -- so our results have not been driven by an uptake in the marketplace, and that's not factored in. So if that -- if there is a strong recovery, that will come on top of whatever has happened so far.

Question on the debottlenecking project. You say 5% to 10% increase seems like it's across the different product groups on the Sarpsborg facility. Can you just briefly elaborate on what that means at a group level because there are other plants as well?

Now it means -- well, today, our capacity or what we are producing in speciality cellulose has been between 150,000 tonnes and 155,000 tonnes. So 10% means more than 15,000 tonnes. I don't think we will reach fully the 10%, but that's what we are talking about, maybe 10,000 tonnes when we have finalized both steps. And it means about the same volume in the lignin-based biopolymers and same percentage increase in the bioethanol production, which has been slightly above 20 million liters over the last years.

Yes. And just let me remind you that, I mean, this is not same, same. I mean, the raw material for biopolymers in Norway, for instance, is unique. So we are adding the most valuable raw material here. And this is a classic debottlenecking that gives you sort of 3 wins at the same time because you add capacity in bioethanol, in biopolymers and specialty cellulose at the same time.

And how confident are you that you will be able to deploy this extra volume as, let's say, more specialized types of products fairly quickly after they are -- after it's ready?

No. I think that this is not a volume of a size that is difficult to handle. So -- but whether it will be absorbed immediately or whether there will be some development work to put it into the market, it depends on the uptake of the demand situation that we just touched upon.

I think we have question in the audience.

Andres Castanos from Berenberg. My question is about the guidance for CapEx in 2025. You're guiding now NOK 1,000 million instead of NOK 750 million previously. I wanted to understand how much of this increase is due to the -- an increase in the cost of the replacement CapEx and how much reflects the debottlenecking and increasing volumes that we are talking about.

The main reason for the increase next year is that we have spent less money and will spend less, especially this year. So I think that's the major part. But we see also that the general cost increases are affecting both the cost of investments and also lead times. So that's a part of it. But the major part is that things -- it takes longer time to do the investments than we thought 2 years ago when we did the previous forecast. So it's more of a delay. It doesn't mean that the total spend will go up, maybe with the exceptions of the general cost increases that we see.

That makes sense and also ties in well with the '24 guidance. Another question on the balance between ethers and cellulose acetates, I wonder if you can change the balance between the 2 significantly going forward because the end market growth of the 2 different products is different. And yes. In other words, can you grow ethers out of your acetate capacity at some point? Is that possible?

Yes. We have, I would say, total flexibility between the different grades. So if it's the opportunity is linked or biased one way or another, we will follow those opportunities without any problem.

Yes. Borregaard has worked for a long time to decouple the links between the different businesses and the integrated operation in the biorefinery. The end game is that each business area should optimize freely its own business without having an impact on other businesses. So -- and this is now more or less the situation. So especially Cellulose can freely optimize their business, and they have the technology to go flexible between the different grades. And this will not have a negative impact necessarily downstream on the other businesses.

I guess I can take one question on the Fine Chemicals as it haven't got that attention yet. You mentioned some capacity restraints in that segment. Would you first comment on what that is? And secondly, how do you think about growth in that segment going forward? Do you think you will take any more R&D focus in that segment? Or is it more so if governments will come with regulations that actually forced to bioethanol.

I mean we are in a continuous process now debottlenecking the ethanol operation. So we have added some volume now each year, the last few years, and we still see some more potential there. When it comes to the Fine Chemical, Intermediates business that is more staying in the markets we are already present. So I don't see us in a way, launching a brand-new product from that sector. We have very dedicated plants that are tailor-made to do a few specific products, and that will be it. Although also there, we see some potential to debottleneck a couple of those projects, given that the market conditions are right, but not huge projects really.

Yes. Well, let me just remind you that in Kristin's presentation, where she said that in these business areas, it's primarily about process improvements. So through process improvements, we have increased the production capacity for bioethanol, and there will be still some more steps to be performed there.

You have delivered 18%, more than 18% return on capital employed for the past couple of years. 2024 looks quite good as well. We have a 15% target. It seems throughout the day here that you are aiming for further improvements. So why not raise the target to 20%?

Yes, we could have done that, of course. We didn't do it because we have been with the 15% for at least 20 years and not depending so much though on interest rates and what's around us. So I think we'll stick with that. But of course, our aim is to be above 15% like it has been. And let's hope it will stay at 18%, 19%, maybe 20% level. But that's hard for us to promise because there are so many external factors impacting us also.

I think we have a question somewhere.

I'm [indiscernible] with [ ProFound]. I just had a question about the bio-based start-ups. And I appreciate you're saying long term. But could you try to be more specific about -- I mean, is it 2030 or '35 or '28 or just be a little bit more specific? And could you also shed some light on -- I mean, obviously, investing in these companies is interesting. But I guess there are also some business to -- specialty -- I mean I assume you're going to refine the products further. So how much do we expect to be kind of in-house [indiscernible] and how much would be outside? I mean, where do you see the most potential? Is it further developing what these companies are producing? Or is it investing in these companies?

No, I think the buyback start-ups, Martin went through it that usually, we would like to come in at least when it's roughly 5 years or something to market. And in the Alginor case to be specific on that, they established their business in 2014. We came in, in 2021. So obviously, there were 300 other shareholders by the time we got in. So you can't call all the shots. But that's -- they're reducing the risk part of it, that they have been at it for 7 years, then we evaluated where they were, and we made the investments. And it was like roughly 5 years, to market type of thing. They are going into market roughly 1 year from now. But that's not to the pharmaceutical grade market. It's -- that's the next step. So it is in the 20 -- closer to 2030 frame before they are fully fledged with pharma grade. So these are longer term. So obviously, what's delivering for Borregaard in the next 2, 3, 4, 5 years will be the internal existing part of Borregaard. This is more a long-term thing. And you can say that, as was mentioned earlier, that Borregaard has also done several developments in-house. And you can say that going into Alginor and similar to Kaffe Bueno, it's like you are spreading, you're taking 1/3 of those businesses rather than taking 100% that we have done on some of the internal developments. So you are taking some bets and you have to accept that there are other owners and you can't call all the shots, but they are for the future really. So the -- internally, the end game and whether that's 20, 30, 40, 50 years from now I can't tell. But I mean the end game is that we can more or less make only high-end specialties. We have the raw material. We have the technology. We can put in the capacity for that. So there's a long potential role to go. And the question was asked here before the break that I've been waiting for this to big step change for '30s, but it hasn't really happened yet. It's like -- it's gradually development over time. So most likely, it will happen gradually over time. but there is a huge potential still to be tapped in the -- so end game is that we will be a fully fledged specialty chemicals company with only high-priced specialties. And there is still a lomg way to go to get there.

If I can follow up on the strategy behind these start-ups. I mean what's your long-term ambition in terms of ownership stakes? I mean, do you -- are you here to invest in these companies and then help them along and then sell them? Or are you here to be a very long-term shareholder and sort of they become a part of Borregaard?

Well, I mean, -- like I said, we can't pull all the shots, if we own 35%. By definition, we have what you refer to as negative control in these companies. And looking at the ownership composition in those companies. We think it's -- the ownership is such that Borregaard is obviously the lead investor and the investor with industrial interests that are close to these companies, markets and products. So obviously, we are a long-term investor, how we will call the shots eventually. It depends on there are other owners as well. But we have no intention to develop and sell these companies. We think these companies are complementary to what we already do. They are very similar in business models and we understand the markets. We understand the products and the processes. So we think that these are very close to our existing business.

I have a question regarding the leverage ratio. You obviously prefer to be at the low end of your target. If this continues and if you see even better operating cash flow going into 2025, could you see yourself up the investment target? Do you have available projects that you could rather go into? Or maybe is dividends the preferred way to solve that capital allocation problem.

I think for the time being, with the uncertainty we have in the world, we are, of course, more comfortable with keeping it at the low end. Also you have Norway with its currency that fluctuates a lot that we are also -- I think it's better to be at the low end. What will happen in some years, it's harder to predict. If things stabilize more, we could have a slightly higher leverage ratio. But I don't foresee that significantly changing over the next 2 to 3 years unless uncertainty goes away and it doesn't look like it will.

I can assure you that we are a for-profit company. So we will try to maximize profits at all times. But you also have to think in a longer perspective, like in -- from 2015 to 2019, we did make a lot of expansion investments that took down the return on capital employed. But it didn't hurt our margins during the same period, but it took some time to get leverage on these new investments. So you have to have room for maneuvering if you want to do some expansions. But at all times, of course, we will drive this specialization journey and try to improve the margins.

Yes, I think you mentioned R&D development spend of 3% of revenues. I think that was for last year. It seems to be quite well in line with your expansion investments beyond debottlenecking project. Is that sort of a sensible level to think about long term?

Well, I -- if you are a specialty chemicals company, the benchmark is usually 3% to 5%. Borregaard has been up to 5%. We are now down to 3%. We are carefully following that, and we are discussing that. And at the moment, we don't see that there is a huge need to step up the R&D exercises, but that could happen. But like I said before, it's the output that is more interesting than the input. So as long as we can manage to get -- generate the leads and the innovations that we think can fuel the growth, it's -- whether it's 3% or 4% is not that important.

I think we have a question from the audience?

Yes, just about Specialty Cellulose. It's was interesting to hear that you are increasing your focus on the ethers for food and pharma. So -- but if I'm correct, I think you had a couple of business line a few years ago. There was [indiscernible] and something else. I don't know whether they were completely discontinued. But what's the -- I can appreciate from an end market perspective that food and pharma seems very attractive. But is it any, let's say, in the market or from a regulatory perspective that has changed in the meantime? Because I mean putting cellulose into what you eat, for instance, obviously, have some regulatory challenges. So how do you cope with that?

I would say that -- I mean, there is a certain growth in that segment. So the volume will be bigger and bigger year-on-year. The other we see a more even stronger trend but established Western producers of ethers. They are targeting these segments. They see that the future, the commodity ethers will probably go to China. So it's their defensive or offensive as you would want to see it strategy to target this segment. And this has become stronger since we talked about ethers such as CMD 2 years ago, which fits well with us because all these customers are good customers with excellent collaboration today. The second is we see that the alternative, as I explained for some ether qualities is the cotton interest pulp, mainly produced in China from -- as a byproduct from cotton. And there are 2 issues sustainability linked to this type of production is more question now than 2 years ago. And the second is that these crops are genetically modified. So GMO is also a very strong point here, which we just can confirm that this is confirmed by our customers. So it's a very logic thing to do if you are -- your main ether customers are based in the Western Hemisphere to target these segments.

But is your raw material more suited as this calcium softwood compared to others?

The nice thing about the ether segment as far as we know today, is that -- it's all about viscosity. And the only way you can get the right viscosity in most of these segments. It's for using softwood as a raw material and the sulfide process, which is [indiscernible] wood in a nutshell.

I think we have another question from the audience.

Andres Castanos. I wanted to ask about the challenges to access the opportunity in the U.S. markets following the closure of Foley plant. Are the challenges about getting the volumes overseas or are they about the relative competitive position of the cotton linters capacity, the lockout cotton linters capacity, the price competitiveness versus importing the material. How long do you think it will take you to take the opportunity?

As I said, I think we already have ceased large share of that opportunity. We estimate that we will benefit of between 15,000 tonnes, 20,000 tonnes of high-value products to both existing and new customers based on that closure. That's our estimate. And there are some limitations based on geography. There are some segments that we are not interested in because of pricing. And there is also a few products that we are not technically able to do. I hate to say it, but there is very few -- some very few products that we cannot do, but that's a very small segment. So the figure I gave you is really what we believe in the next foreseeable future, 15,000 tonnes to 20,000 tonnes. And to some extent, we already captured that volume this year, which is reflected on our main part of the growth in Ice Bear is due to the fact -- or the closure of the Foley plant.

Yes. I think it's important to understand that the specialty cellulose market is 1.6 million tonnes. And there are 5 -- 4 players really that are primarily focused on this market, but they don't necessarily compete head on with each other because they have different technologies. And the GP facility was a craft sulfate facility. So it had a different technology from Borregaard. So they were suited for certain markets that are not necessarily attractive to us, but there were some overlaps and 15,000 tonnes to 20,000 tonnes is a significant share of our business. And again, going back to my principle that it's the customers will have to understand or decide, and we will evaluate that is attractive for us to take that business or not. So obviously, some of that business is not attractive for us and some of the business may require some qualification time because they are [indiscernible] but it could still be very interesting because if most customers want to have more than one supplier. And now they may not have -- they may have to change to a supplier with different technology now if they want a second supplier, but that is not an immediate thing. But what Gisle is referring to is the volume that's available can be picked up by Borregaard tomorrow at an attractive price.

And a follow-up. So if some American capacity has closed, are you aware of any other capacity that is becoming available to the market? Or do you expect the prices to be reflective of this shortage of supply? And what is your outlook in pricing going forward for '25, '26?

Well, there are some rumors, but nothing I would refer to in this forum. So we don't have exact information on that.

Batteries [indiscernible] are high in the specialty cellulose segment. So it usually takes many years to enter and to get up to the capacity level. And it's not only about technology and capacity and the competence is also about handling the efferent treatment of a specialty cellulose mill. So there are multiple challenges to enter.

I think that concludes today's presentations. So thank you so much to everyone who presented and also those who showed up in the audience and contributed with questions.

Thank you very much.