Interim Report Q1 2024People Green Innovation Technology

The construction materials market continues to be marked by historically low levels of activity, which is mirrored in our financial results. Despite this, Byggma has achieved profitability during a period of minimal construction activity not seen since the housing and banking crisis of the 1980s and 1990s. This is a testament to the robustness of our operations and the dedication of all Byggma employees who have conscientiously fulfilled their duties, demonstrated initiative, and collectively exerted extra effort when necessary. This is an accomplishment we can all take pride in.

CO₂-compensation. The CO₂ compensation mechanism is designed to reimburse electricity-intensive industries that are exposed to international competition for the incremental costs incurred due to the EU's emissions trading system. The objective of this scheme is to mitigate the risk of carbon leakage, which occurs when companies transfer investments or production to countries with laxer climate policies, leading to heightened emissions.

On 23 February 2024, the Ministry of Climate and the Environment reversed the Norwegian Environment Agency's decision, which had initially denied Huntonit AS's application for CO₂ compensation. Consequently, it was established that Huntonit is eligible for the scheme for the period 2021-2030, continuing the precedent set from 2013-2020. Byggma has invested considerable resources over the past two years in this matter. Prior to this decision, Huntonit faced significant uncertainty regarding the company's and its employees' future, resulting in deferred investments and incurring direct costs related to consultancy fees and extensive efforts in liaising with public authorities.

It is regrettable that the public sector, encompassing both central and local authorities, imposes considerable costs and uncertainty upon the industry with respect to operational conditions. It is equally disheartening that the trade union at Huntonit felt compelled to resort to the threat of political action to prompt the ministry's review of the situation. Nonetheless, I would like to seize this moment to commend everyone involved in advocating our case, including the employees of Byggma and Huntonit, Norsk Industri, and other partners for their unwavering efforts and dedication.

The path ahead is one of strategic focus and proactive measures. While we cannot dictate market trends, we can certainly steer our own priorities and actions to outperform the market and expand our market share. The current construction slowdown in the Nordic region is resulting in a theoretical backlog of orders, as the number of homes built lags behind the necessary figures. This accumulating demand suggests a future surge in construction activity to address the shortfall. In anticipation of the market's eventual recovery, we are committed to refining our operations and preparing our businesses for the expected upturn in demand.

At Byggma, we are fortunate to have state-of-the-art machinery and equipment, yet it is our people who constitute our most valuable asset. It is through your contributions that Byggma has secured its esteemed position in the industry. I extend my gratitude for your dedication so far in 2024 and eagerly anticipate our continued collaboration in the times ahead.