Release Date: January 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Why was there no significant release in net working capital in Q4 2024, given it was the weakest movement since 2018? A: Per Lyngstad, Chief Financial Officer: The strong sales and production towards the end of the year increased inventories, which affected net working capital. Despite this, the average net working capital decreased for the year, indicating normal fluctuations within expected ranges.
Q: What caused the increase in depreciation, and is it a permanent change? A: Per Lyngstad, Chief Financial Officer: The increase is due to higher investments and increased depreciation on leased assets, including storage. While depreciation related to leasing may decrease over time, increased investments will continue to raise depreciation levels.
Q: How has Borregaard managed to keep wood costs stable despite rising commodity prices? A: Per Sorlie, President, Chief Executive Officer: Borregaard sources wood from a mix of geographies and types, including wood chips and pulpwood. Logistics costs, which account for about 25% of wood costs, also play a significant role in maintaining stable costs.
Q: Will the sales prices for Borregaard's bioethanol in 2025 be similar to 2022 levels, and how will this affect EBITDA? A: Per Sorlie, President, Chief Executive Officer: While prices may align with 2022 levels, other factors like volume growth in Fine Chemical intermediates and bioethanol will positively impact EBITDA, making direct comparisons to 2022 challenging.
Q: Why is Borregaard guiding for only 1% volume growth in BioSolutions for 2025 despite strong growth in 2024? A: Per Sorlie, President, Chief Executive Officer: The focus remains on improving the product mix and increasing sales of specialties, which drive profitability more than overall volume growth. The 2025 guidance reflects a normalized supply level.
Q: How will the new investment impact LNG consumption? A: Knut-Harald Bakke, Director of Investor Relations: The investment will further reduce Borregaard's dependency on LNG, which has already decreased significantly since the energy crisis in 2022-2023. Increased electricity contracts will also contribute to reduced LNG consumption.
Q: What triggered the NOK30 million environmental provision in Q4, and are all environmental liabilities covered? A: Per Lyngstad, Chief Financial Officer: The provision addresses legacy issues from a former mercury-based chlor-alkali plant. While not all liabilities are fully covered, Borregaard has made provisions based on current estimates and continues to monitor environmental issues.
Q: What are the main drivers behind the increasing wood prices, and will this trend reverse in 2025? A: Per Sorlie, President, Chief Executive Officer: Factors include reduced wood supply due to the Russian invasion of Ukraine and sustainability pressures. While Borregaard can manage these costs, the trend's reversal depends on global demand and supply dynamics.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.