Interim Report Q4 2023People Green Innovation Technology

The Byggma Group experienced increase in revenues in Q4 2023. In Q4 revenues amounted to NOK 571.3 million in 2023, representing an increase of NOK 11.8 million (2.1 %) from Q4 2022. YTD the 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 decreased from NOK 529.4 million YTD 2022 to NOK 31.3 million YTD 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.

We are implementing two important measures to mitigate the financial effects of this market development. The first measure is increased marketing regarding our innovative products Huntonit Pro Wall, Forestia Premium Ceiling, Forestia Ergospon and Smart Veneer. This will generate increased revenue streams to offset the decrease in conventional revenue following the lower demand for our base products. The second measure is to reduce costs to compensate for lower gross profits due to lower sales.

This quarter I am happy about the development in the segment Lighting which has good improvement in sales and profitability and the logistic hub at Forestia which is now starting to generate increased sales. Despite the downturn in sales following the cooldown in the newbuild market, the group has maintained a healthy operating profit margin. This has been achieved through very stable operations in the factory and excellent quality in the procurement process.

I am delighted with the results achieved. We are lucky to have many skilled, competent, and motivated people who are performing at levels that far exceed my expectations. My heartfelt thanks to you all! Your dedication to the job is greatly appreciated.

Byggma is an original brand manufacturer. Our brands have been extensively adopted by the building materials industry over many years. This enhances predictability, recognition, and security, which are important drivers in customers preferring to purchase Byggma products.

Our overall position as one of the leading suppliers of building materials solutions has strengthened throughout the year. A situation that I find heartening to say the least, but also testifies to the fact that our jobs are secure. The invigorative trend we are seeing also confirms that we are doing things right in all areas of the company.

Every product has a life cycle. Byggma currently has many products that are well-established in the market. In order to ensure a stable product portfolio, we are constantly focused on product development and innovation. Product improvements and new launches have enabled us to achieve increased revenue and profitability in recent years. An achievement we have also repeated this year. Innovation and product development are high priorities in our strategy and will continue to be so in the future.

Forests sequestrate significant amounts of carbon and through wise management of this resource, we are responsibly creating worthy products that store carbon for many decades. In several instances, the contributions we make to carbon storage in our operations significantly outweigh the effect from the operations' carbon footprint.

At Byggma, we have a tradition of focusing our work on productivity and continuous improvement. Sustainability is in many ways a further development of this work. In terms of sustainability and through the involvement of our committed team of employees and partners, we will exploit resources efficiently, while also securing jobs and the future of a company that is a source of value creation for society in general.

I would like to take this opportunity to mention a couple of vital ESG projects that we have worked with in Q4 2023.