Borregaard's Strategic Reset: Impairment, Cost Cuts, and Record Output
Q2 2026: A quarter of recalibration as the specialty chemicals group writes down Alginor, launches a NOK 150m efficiency drive, and posts record BioMaterials production.
BRG.OL · Earnings Call · 2026-07-16
A Quarter of Strategic Reset
Borregaard's second-quarter 2026 report reads less like a routine earnings update and more like a deliberate strategic reset. The headline numbers — EBITDA of NOK 515 million, broadly flat year-on-year — mask a series of deliberate moves to reshape the portfolio and cost base. The most striking is the full impairment of the company's investment in Alginor, a move that reduced Borregaard's ownership from 42% to 10% and triggered a NOK 337 million write-down. As CFO Per Bjarne Lyngstad put it, “we now consider the shareholding in Alginor and convertible loans to the company to have no recoverable value.” — Per Bjarne Lyngstad, CFO · 2026-07-16 This is a clean break, removing any future funding obligations and clarifying the portfolio. Alongside the impairment, management unveiled a NOK 150 million annual cost-saving program. CEO Tom Erik Foss-Jacobsen explained the rationale: “the global uncertainty continues to impact cost of energy, key chemicals, as well as our markets and currencies. Given a more demanding operating environment, we are implementing a cost improvement program targeting annual cost savings of NOK 150 million.” — Tom Erik Foss-Jacobsen, CEO · 2026-07-16 The program includes a hiring freeze and sharper prioritization, with full effect expected by 2028. This is not a reaction to weakness — BioMaterials achieved record production, and cash flow was robust — but a pre-emptive move to protect margins in a world where energy and chemical costs are rising, partly due to the Middle East conflict.Resilience Under Pressure
The quarter demonstrated the resilience of the diversified model, yet the pressures are visible. BioSolutions saw higher volumes but a less favorable mix and higher energy costs; BioMaterials delivered record output and a 9% volume increase, but prices were down 4% in local currency. Fine Chemicals was the bright spot, with operating revenues up 18% and EBITDA up 42%. The cost headwind was quantified by the CFO: “The net cost impact on raw materials, energy, and logistics was negative by about NOK 40 million compared with the same quarter last year.” — Per Bjarne Lyngstad, CFO · 2026-07-16 Wood costs fell 15%, but that was more than offset by energy and chemicals, with sulfur and caustic expected to rise further. The company's hedging gains helped, but the stronger Norwegian krone weighed on export prices. Despite these headwinds, the underlying demand story remains intact. As the CEO noted, “the main message remains that we see variability in timing and mix rather than a structural change in the underlying demand.” — Tom Erik Foss-Jacobsen, CEO · 2026-07-16 This is consistent with the global keyword trajectory, where themes like improvement program and higher energy are common across reporters, yet Borregaard's execution — record production and strong cash flow — sets it apart.The strong cash flow was due to a significant reduction in net working capital, in addition to the cash effect from a solid EBITDA.