Letter to the stakeholders

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Well positioned to capture growth opportunities from the green transition

2023 was a year marked by the consequences of wars and macroeconomic uncertainty following the measures to curb the effects of inflation and rising interest rates. This led to challenging markets and a substantial decline in the activity in many industries. For BEWI, the downturn in the building and construction industry led to lower volumes and a reduced financial result. However, while effectively managing the slow markets in the short-term, we are even more confident about the long-term commercial opportunities arising from the green transition. We are well positioned to capture these opportunities with our solutions.

Our strategy

In BEWI, we are protecting people and goods for a better everyday. That is our vision, and we do this by providing efficient and sustainable solutions, insulating buildings, protecting food to reduce waste, and other benefits to end customers and the society at large.

Our three strategic priorities are closely linked, and instrumental in achieving our financial and sustainability targets.

Innovation serves as the cornerstone of future growth, driving us to search for solutions today that are relevant tomorrow. It is about how we work to continuously improve in all aspects of our business. It enables us to fulfil our responsibility to stakeholders by offering intelligent solutions and creating value for them.

Transitioning to a circular economy is imperative for meeting the targets outlined in the Paris Agreement.

Strong market fundamentals, combined with BEWI’s innovative solutions and integrated business model, make us confident in our ability to deliver profitable growth going forward.

While enhancing the energy efficiency of buildings and transitioning to renewable energy sources are crucial steps, they only address half of the challenge. Achieving net-zero emissions requires us to rethink how we produce and consume goods. This necessitates designing products with less materials and more recycled materials, while embracing reuse and recycling practices. In BEWI, innovation plays a central role in driving these changes, as well as our circular business model and close collaborations with customers, suppliers, and partners.

Profitable growth comes from our ability to adapt to markets, secure operational excellence, capitalise on investments and acquisitions, and make good strategic decisions for our stakeholders. Strong market fundamentals, combined with BEWI’s innovative solutions and integrated business model, make us confident in our ability to deliver profitable growth going forward.

Our people

BEWI’s most important asset is our 3 200 colleagues. Our people, driven by dedication and determination, use their skills and experience to challenge us every day. The BEWI culture is a special blend of challenging the conventional, never giving up, and working together as a team. We strive to create a safe, diverse, and inclusive workplace for our colleagues. This is instrumental to achieve successful progress on improving product ranges and practices, as well as cost structures and market positions, to reach both the financial and sustainability targets.

Over the past years, the reporting of BEWI’s safety performance has improved, enabling us to also tailor the efforts to further increase knowledge and awareness in the organisation. Safety is at the top of the agenda, every day and hour in our operations, with an ultimate target of an accident-free environment.

Furthermore, we have significantly strengthened the work to attract and retain highly skilled personnel, by, among others, establishing BEWI Business School, including professional leadership – and growth programmes.

Our results

For 2023, BEWI reported net sales of 1 105 million euro, an increase of 5 per cent from the previous year, driven by the acquisitions completed in 2022. We posted an adjusted EBITDA of 109 million euro, representing a decline of 19 per cent, explained by a substantial decrease in volumes and prices following the downturn in the building and construction industry the past years. The volumes were down between 20 and 50 per cent, representing large variations across regions, and the market price for EPS was significantly lower in 2023 compared to 2022.

Still, we are pleased with how we have been able to adapt to the shifting markets throughout the year, while at the same time successfully integrating new entities. Entering 2023, the insulation segment had an EBITDA margin of 7 per cent, negatively impacted by acquired companies. The segment closed the year with a margin of 10 per cent, despite a significant volume loss. The improvement was made possible by tremendous efforts by the organisation to implement better price management procedures and enhance the operational efficiency.

Another important KPI, is our collection and recycling of used materials. In 2023, we collected approximately 27 000 tonnes of used EPS for recycling, more than any other insulation company in Europe. Furthermore, Circular’s internal sales increased to more than 20 per cent in 2023, up from only 1 per cent in 2023, demonstrating both increased customer demand for recycled materials and a strong focus in the downstream units.

FINANCIAL TARGETS

Set to continue growth journey next five years

Our efforts & opportunities

Reflecting on the performance the past year, we are pleased with how we have delivered on our key priorities:

We have strengthened the circular capabilities and advanced on important innovation projects, enabling us to offer customers efficient solutions with reduced CO2 footprint
We have successfully integrated newly acquired entities, including extracted synergies, improved profitability and broadened product offering
We have adapted to challenging markets, by reducing cost and capacity, enabling an increased EBITDA margin for insulation despite lower volumes
We have completed several important growth projects, including the new fish box facility at Jøsnøya, and the new production line for raw materials in Etten-Leur
We have strengthened our balance sheet and exited the year with a solid cash position

And we have further developed an already strong pipeline of strategic growth opportunities

Our opportunities

When presenting the results for the fourth quarter of 2023, we stated our intention to double revenues the next three to five years. We expect the exposure to insulation and other energy efficient solutions will continue to increase, based on strong market fundamentals.

Buildings are the single largest energy consumer in Europe, with around 40 per cent of the total consumption.

To meet climate reduction targets, it is therefore crucial to prioritise energy efficiency, highlighting the pressing need to improve insulation both in existing – and new buildings. This is supported by the recently adopted revision of the Energy Performance of Buildings Directive, aiming at progressively reduce emissions and energy consumption and make the EU building sector climate neutral by 2050.

BEWI’s broad and competitive product offering make us strongly positioned to meet a growing demand for insulation – and other energy efficient solutions. We expect all segments to benefit from this: RAW and Circular delivering sustainable raw materials, the insulation segment offering a range of insulation solutions, and the packaging segment’s components to systems providing efficient heating, ventilation, and air conditioning of buildings.

Following the cost and capacity adjustments made in 2023, we have a leaner organisation with good margins even at low volumes. We do not need to invest to increase production volumes, and we see a great potential for further margin improvements when the markets recover.

We have a clear growth strategy and a growing pipeline of M&A opportunities.

The strategic focus revolves around strengthening market positions, expanding product offerings, and enhancing circular capabilities.

Finally, our vertically integrated and circular business model, makes us well positioned to capture growth from the opportunities arising from the green transition. Backed by a strong organisation and a solid financial platform, we will further strengthen our market positions going forward, resulting in robust results and value for our stakeholders.

We are proud of how the organisation has performed during a challenging year, and we would like to thank each of our employees for their dedicated efforts. We would also take the opportunity to thank all partners, customers, and shareholders for their trust and support.

We are proud of how the organisation has performed during a challenging year, and we would like to thank each of our employees for their dedicated efforts.