1 ST QUARTER 2020 S a r p s b o r g , 2 9 A p r i l 2 0 2 0 - PowerPoint PPT Presentation

1 ST QUARTER 2020 S a r p s b o r g , 2 9 A p r i l 2 0 2 0

Agenda • Per A Sørlie, President & CEO • New business segments • Highlights • The coronavirus situation • Business segments • Outlook • Per Bjarne Lyngstad, CFO • Financial performance 2

New business segments • Alignment with value chains in production and internal reporting structures • BioSolutions • All lignin-based products (biopolymers and biovanillin) organised under one management • Consists of the previous Performance Chemicals and the Ingredients part of Other Businesses • BioMaterials • Products utilising wood fibres as the main raw material • Includes the speciality cellulose and cellulose fibrils businesses • Fine Chemicals • Pharma intermediates (mainly used for diagnostics) and bioethanol (mainly for biofuel) • Corporate overhead and certain other costs allocated to the three new business segments • Previously reported under Other Businesses 3

Highlights – 1 st quarter 2020 • EBITDA 1 242 mNOK (255 mNOK) • Positive development for Specialities in BioSolutions • Unfavourable product mix in BioMaterials and Fine Chemicals • Higher distribution, maintenance and IT transition costs, gradual reduction in wood costs • Positive net currency impact on EBITDA 1 , negative impact on equity and NIBD 1 from weakened NOK • Marginal impact from the coronavirus situation 1 Alternative performance measure, see Appendix for definition 4

The coronavirus situation • Safety and health first • Emergency measures established and procedures implemented to limit the risk of infection throughout the organisation • No material impact in Q1 • Logistical and other practical challenges have been managed without significant adverse effects on deliveries and production • Production at LignoTech South Africa temporarily stopped • Supply of lignin raw material interrupted • Lignin production stopped until raw material supply is resumed 5

BioSolutions markets – Q1 2019 Average gross sales price 1 Sales volume 1 NOK NO K per mt mtds ds ‘000 mtds 2020 8 000 150 125 119 7 500 125 115 115 111 6 885 7 000 100 6 455 6 385 6 500 75 5 999 5 865 6 000 50 5 500 25 5 000 0 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q1 Q2 Q3 Q4 Sales price and sales volume include lignin-based biopolymers and biovanillin • Average price in sales currency 1% lower compared with Q1-19 • Continued strong competition and price pressure for biopolymers to concrete admixtures and certain low value Industrial applications • Favourable product mix within Specialities • Sales volume in line with Q1-19, Specialities and Construction volumes increased, lower Industrial volumes • Supply of raw material to LignoTech Ibérica discontinued in February, the supplier Sniace filed for liquidation • Positive FX effects 1 Includes 100% of sales volume from the J/V in South Africa. 6 1 Average sales price is calculated using actual FX rates, excluding hedging impact.

BioMaterials markets – Q1 2019 Average gross sales price 1 Sales volume NO NOK K per mt mt ‘000 mt 2020 13 000 50 42,4 40,0 38,6 37,6 12 000 40 11 382 34,5 10 982 10 724 11 000 10 561 30 10 417 10 000 20 9 000 10 8 000 0 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q1 Q2 Q3 Q4 Sales price and sales volume include speciality cellulose and cellulose fibrils • 3% lower average price in sales currency vs Q1’19 • Unfavourable product mix • High sales volume for speciality cellulose • Increased sales for cellulose fibrils, but still at a low level • Positive FX impact 1 Average sales price is calculated using actual FX rates, excluding hedging impact. 7

Fine Chemicals markets – Q1 2019 Fine Chemicals - sales revenues mNOK mN 2020 150 127 125 109 102 95 94 100 75 50 25 0 Q1 Q2 Q3 Q4 Sales revenues include pharma intermediates and bioethanol • Fine Chemicals • Higher sales revenues in bioethanol • Unfavourable product mix for pharma intermediates 8

Outlook • Coronavirus situation • Interrupted raw material supply to LignoTech South Africa • Some orders in certain biopolymers sectors, mainly Construction, cancelled or postponed • Demand expected to be higher than supply as long as LignoTech South Africa is out of operation • Possibility for lower growth in world economy and indirect consequences from affected suppliers, business partners or infrastructure • Focus on closely monitoring the situation and maintaining sufficient financial capacity to mitigate any potential effects • BioSolutions • Total sales volume for 2020 forecast to decrease by 5-15%, depending on raw material supply to LignoTech South Africa • Cost savings in Norway and Germany expected to continue as planned • The ongoing capacity expansion for biovanillin will be gradually realised in 2020 with full effect from H2-21 • BioMaterials • Average price in sales currency expected to increase 2% in 2020, mainly from improved product mix • Sales volume in Q2 expected to be lower vs Q2-19, with similar product mix • Wood costs in Q2 forecast to be 10-15 mNOK lower vs Q2-19 EU Horizon 2020 1 grant in cellulose fibrils will end in April 2020 • • Fine Chemicals • No major changes expected in the market conditions for pharma intermediates • For bioethanol, increased demand in disinfectants expected to more than compensate for effects of reduced deliveries to biofuel 1 The Exilva project has received funding from the Bio- Based Industries Joint Undertaking (BBI) under the European Union’s Horizo n 2020 research and innovation programme 9 under grant agreement No 709746

FIN AN CIAL PERFORMAN CE Q1 -2 0

Borregaard key figures – Q1 2019 EBITDA 1 % EBITDA margin 1 Operating revenues 2019 2019 mN mNOK mN mNOK 2020 30 2020 2020 23,1 21,1 1 500 300 25 20,4 20 14,8 286 283 1 372 15 1 250 250 1 340 17,6 255 1 250 1 239 1 234 10 242 5 1 000 200 0 183 Earnings per share NO NOK Q1 Q2 Q3 Q4 750 150 Cumulative 6 4,17 3,79 500 100 4 2,48 250 50 2 1,26 1,02 0 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 • Revenues 10% above Q1-19 • EBITDA 1 242 mNOK for the Group • Positive development for Specialities in BioSolutions • Unfavourable product mix in BioMaterials and Fine Chemicals • Higher distribution, maintenance and IT transition costs, gradual reduction in wood costs • Positive FX effects on EBITDA 1 • EPS at NOK 1.02 (NOK 1.26) 1 Alternative performance measure, see Appendix for definition 1 1

BioSolutions key figures – Q1 2019 mN mNOK Operating revenues 2020 800 • Revenues 6% above Q1-19 797 781 755 726 720 600 • Sales volume in line with Q1-19 400 • Average price in sales currency 1% lower 200 • Positive net FX impact 0 Q1 Q2 Q3 Q4 2019 mN mNOK 200 2020 • Favourable product mix within Specialities 192 150 170 168 EBITDA 1 156 • Cost reductions in Norway and Germany 131 100 • Higher distribution and other operating costs 50 • Positive net FX impact 0 Q1 Q2 Q3 Q4 2019 % 30 EBITDA margin 1 2020 24,6 22,3 25 21,7 18,0 20 21,3 15 • EBITDA margin 1 below Q1-19 10 5 0 Q1 Q2 Q3 Q4 1 Alternative performance measure, see Appendix for definition 1 2

BioMaterials key figures – Q1 2019 mN mNOK Operating revenues 2020 500 472 • Revenues 15% above Q1-19 400 454 430 416 394 300 • High sales volume 200 • Positive FX effects 100 0 Q1 Q2 Q3 Q4 • High sales volume, but unfavourable product mix 2019 mNOK mN 2020 100 • Higher fixed costs 94 80 EBITDA 1 • Wood costs reduced, but less than expected 60 64 40 • For cellulose fibrils, higher sales and cost reductions 46 45 20 31 compensated for reduced cost coverage 0 • Positive net FX impact Q1 Q2 Q3 Q4 2019 % 2020 EBITDA margin 1 25 21,9 20 13,6 15 11,4 • EBITDA margin 1 below Q1-19 7,5 10 10,1 5 0 Q1 Q2 Q3 Q4 1 Alternative performance measure, see Appendix for definition 1 3

Fine Chemicals key figures – Q1 mNOK mN 2019 Operating revenues 150 125 128 • Revenues 16% above Q1-19 100 110 104 96 96 75 • Higher sales in bioethanol 50 25 0 Q1 Q2 Q3 Q4 mN mNOK 2019 50 • Unfavourable product mix for pharma intermediates 40 42 EBITDA 1 30 36 • Bioethanol result improved vs Q1-19 27 20 26 21 • Insignificant net FX effects 10 0 Q1 Q2 Q3 Q4 2019 % 2020 EBITDA margin 1 38,2 37,5 40 28,1 30 20,2 • EBITDA margin 1 significantly below Q1-19 20 20,3 10 0 Q1 Q2 Q3 Q4 1 Alternative performance measure, see Appendix for definition 1 4