Interim Report Q4 2023People Green Innovation Technology

Sales revenues in Q4 2023 increased from NOK 559.5 million in Q4 2022 to NOK 571.3 million in Q4 2023 corresponding to an increase of NOK 11.8 million (2.1 %). YTD sales revenues decreased from NOK 2,508.2 million in 2022 to NOK 2,222.9 million in 2023, corresponding to a decrease of NOK 285.2 million (11.4 %). Profit before tax increased from NOK -171.5 million in Q4 2022 to NOK 108.6 million in Q4 2023. YTD profit before tax decreased from NOK 529.4 million in 2022 to NOK 31.3 million in 2023. The change in profit is among other things a consequence of special items such as change in fair value of power contracts and write-down of assets.

The building industry has experienced a vast downturn. An important indicator for the development in market size is the number of sold and commissioned housing units compared to last year. In the last twelve months there are sold 13,286 housing units, corresponding to a decrease of 27 %. In the last twelve months there are commissioned 13,795 housing units, corresponding to a decrease of 39 %. This is the largest reduction we have seen in modern times. Factors as international noise, higher interest rates, and high inflation result in market participants to postpone the building of housing units. On the positive side, as the number of housing units being built is far below the need for new housing units, the theoretical order reserve increases vastly. This will lead to a large lift up in the building industry at a later point in time. We think that it is a sign of strength that Byggma is able to deliver healthy profitability in these challenging times.

Byggma has launched a new webpage for construction solutions to comply with fire and sound requirements, www.brannoglyd.no. The webpage shows construction solutions that are produced with products from Forestia AS with particle boards, Huntonit AS with wood fibre and MDF boards, Smartpanel AS with MDF boards and Masonite Beams with I-Joists (I-Beams).

The demand for aluminum windows is increasing and Uldal meets this by increasing its production capacity for this group of windows. This is among other things achieved by the investment in a clips machine. The project will also free manpower and facilitate a more efficient production.

As of 31 December2023, Byggma ASA and its related party Drangsland Kapital AS owns ca. 24.1 % of the share capital in Norske Skog ASA. Byggma aims to be a long-term owner in Norske Skog ASA. There are several synergy effects between Norske Skog and Byggma regarding process equipment, raw materials, logistics, product development and environment.

In 2022 Forestia invested NOK 40.0 million in a 4,000 m² distribution hub in Braskereidfoss. Parallelly, the merger between AS Byggform and Forestia AS was completed as of 1 January 2023 and Byggform’s inventory has been transferred to the hub. We believe it is value enhancing for Forestia and its customers that both former Byggform and Forestia products can be ordered simultaneously. Consequently, chipboard, OSB- and plywood boards can be delivered together. The sales of OSB and plywood are now increasing, confirming that this solution is appreciated by our customers.

Our product launches Forestia Premium Ceiling, Smart Veneer, Forestia Ergospon and Huntonit Pro Wall are still experiencing increasing sales in the market. These decorative interior products add more value for the customer and hence have high unit prices. The increasing sales of these products are consequently increasing the profitability of the group.

The Group is constantly identifying new valuable sustainability projects that reduce emissions to both air and water, which simultaneously are economically profitable for Byggma. See more in the Sustainability section in this report.

With effect from 31 December 2022 the department for I-Beams at Huntonit in Vennesla was transferred from Huntonit AS to Masonite Beams AS. With this I-Beams from Masonite Beams AS Vennesla branch and Grubhei branch belong to the same legal entity and appear more clearly toward the customers in Norway.

Forestia has for a period been in dialogue with Innovasjon Norge to receive grants to support the building of a plant for reception and cleaning of wood waste to be reused in new woodchip boards. On 8 April 2023, Forestia was informed by the Minister of Finance, Trygve Slagsvold Vedum, and Minister of Trade and Industry, Jan Christian Vestre, that the Board of Directors of Innovasjon Norge had resolved to grant Forestia NOK 80 million for this project. This project will be value enhancing for Forestia. It will also make the woodchip boards from Forestia even more circular because the wood waste will be material recycled into new boards and sequestrate CO₂ instead of energy recovered and release CO₂ into the atmosphere through combustion. This will be a better usage of the wood waste in accordance with the multi-step cascading principle for biomass. It will also reduce sourcing risk as it makes Forestia less dependent on raw materials from the sawmills. Forestia is working with vendors to secure good, stable, and long-term supply agreements for the project.

In the first half of 2023 an automated feeding station, profile saw and automated packing station has been installed in the production line for Huntonit Pro Wall. The new line has significantly higher speed and provides higher quality on click lock and profile. Furthermore, the automation gives the possibility for a much higher production volume with less manpower.