Interim Report Q3 2024People Green Innovation Technology

"If we can make it now, we can make it anytime" - an adapted application of Frank Sinatra's stanza from “Theme From New York, New York”. The building materials market continues to experience historically low activity, which is reflected in our financial results. Despite this, Byggma has managed to achieve a surplus during a period of the lowest construction activity since World War II. There are signs that the market has reached its bottom. This demonstrates our robustness and highlights the dedication of all Byggma employees, who understand their responsibilities, roll up their sleeves, and work extra hard when needed. We should be proud of this achievement!

Increased commitment to sustainability in Byggma

Byggma has demonstrated an increased commitment to sustainability in the third quarter of 2024. The company has enhanced its investment in sustainability initiatives and appointed a dedicated Sustainability Director. This focus on sustainability is increasingly emphasized by Byggma's stakeholders, including employees, customers, and the public sector. This positive development aligns with Byggma's product portfolio, which predominantly features products made from renewable materials, particularly wood. This strategic focus allows Byggma to strengthen its competitiveness in the market.

According to Byggma's climate statement, the company sequesters significantly more carbon in its products than is released through its operations. Byggma aims to maximize the use of certified wood. In 2023, 93.6% of the timber used was certified and sourced from sustainable forestry, and this percentage continues to rise.

It is crucial that we increase the use of wood-based building materials and reduce reliance on non-renewable alternatives. This approach ensures that carbon is sequestered in the wood for many years. Conversely, if harvested forests are left to rot, burned, or destroyed by natural disasters, the carbon is released into the atmosphere. According to SBB, there is now 33% more forest in Norway than there was 15 years ago, which is a concerning trend. As new trees grow, they absorb CO2, with half of their dry weight consisting of pure carbon. However, unused standing forests that are ripe for felling can hinder the growth of new forests and impede this natural carbon capture process.

The Building Technical Regulation (TEK17) leads to suboptimal environmental choices. Home builders and contractors preparing climate accounts in accordance with TEK17 must adhere to the principle of immediate oxidation for bio-based building products. This principle assumes that the carbon in the wood is released into the atmosphere upon cutting, rather than being sequestered in the wood-based building material. This assumption does not reflect reality, resulting in wood-based building materials being unfairly disadvantaged. Consequently, stakeholders may opt for non-renewable building materials over renewable ones. Unfortunately, this adherence to TEK17 often takes precedence over making climate-friendly decisions, bordering on greenwashing. It is imperative that authorities intervene and update the construction techniques regulation to reflect more accurate environmental impacts.

The way forward. We cannot control the market, but we can control our own priorities and actions, and thereby do better than the market and increase our market shares. While in the Nordics now significantly fewer homes are built than is needed if a theoretical order backlog in the form of even more homes having to be built in the coming time to catch up the backlog. In recent months, sold residential units have exceeded started residential units, and this tends to be a leading indicator that construction activity will pick up in the future. It still is several signs that the bottom in the market has been reached, but how quickly the market normalizes is difficult to predict. While the market takes its time to recover, we are doing what we can to improve us and make our businesses ready for the rise in demand that is likely to occur come.

We have many good machines and equipment at Byggma, but it is the people who are the most important the resource. Without you, Byggma would not have had the position we have today. Thank you for your efforts so far in 2024. I look forward to continuing and working with you in the future!