ToppledermøteNHO Østfold

11.06.2014

Per A. Sørlie President & CEO

Agenda

• Business model and strategy

• Innovation management

• Strategic priorities

High value added through full raw materials utilisation

Borregaard’s biochemicals are sustainable and environmentally friendly substitutes to petrochemicals

Sustainable biorefinery business model with strong value creation

Borregaard is a global leader in biochemicals

3

Specialty cellulose

Lignin Vanillin Bioethanol

Construction materialsCosmeticsFood TabletsPaint/ varnishFiltersTextiles

Concrete additivesAnimal feedAgrochemicalsBatteriesBriquettingSoil Conditioner

FoodPerfumesPharmaceuticals

Pharmaceutical industryBio Fuel Paint/ varnishCar care

Integrated production system serving diverse markets

Sustainable biorefinery business model with strong value creation

Borregaard operates the world’s most advanced biorefinery

Description

Integration models· Own

integrated· Partner

integrated · Independent

Revenue by end-market (2012)

4

Global niche player with market leading positions

Global niche player with a market driven organisation

Sales distribution (2012)

Other Businesses(16%1)

Specialty Cellulose(41%1)

Performance Chemicals (43%1)

Technology leader and largest supplier of lignin-

based products with global market access2,3

Leading global specialty cellulose supplier4,

significant producer of 2nd generation bioethanol5

Only producer of wood-based vanillin; largest producer of C3

aminodiols for X-ray contrast media6

Note:1. Segment revenue as a % of total revenue 2012.2. Management belief determined by customer and peer group analysis 3. World leader in wood based lignosulfonates4. Among top 3 suppliers to customers that produce acetates, ethers and nitrocellulose based on company estimate5. Based on company estimate6. Based on volume of C3 aminodiols sold in 20127. USA/Canada: 17%, Rest of Americas 6%

Market driven organisation

• ~100 FTEs strong sales/technical service organisation

• Dedicated sales force for each business unit

• ~90% of sales handled through own organisation

5

7

Robust financialperformance

Niche markets targeted

Strategy

Dual strategic focus drives performance

Selected specialised market segments with diversified

applications

World leader in innovation and productivity

6

-Controlcentre

Norway is a high cost locationContinuous improvement, competence development and use of technology

Increased competence+ Use of technology and increased automation+ Organisational development _________________________________________

= Lower costs and improved production

Maintenance & environmentalcapex (mNOK) -

Sarpsborg

7

Dual strategic focus secures high value creation

• Specialisation and innovation– Increased value added for

existing production volume– New products with higher

value

• Productivity improvements– Reduced work force– Stable fixed costs over time in

operations– Increased production volumes

Sales per employee in Norway(mNOK)

8

Agenda

• Business model and strategy

• Innovation management

• Strategic priorities

Innovation Management

What is innovation?

Innovation is the process of generating and implementing new ideas and solutions

increasing the value added to our customers

10

Innovation Management

Business driven innovation model

Idea database

Ideas from sales, technical application, R&D, production, external partners

Innovation Management Teams (IMT)

Inter disciplinary development work

Scale-up and commercialisation

IMT• Chaired by head of

business unit• Cross functional

team of line managers

• Gatekeepers at important milestones

Co-work with: • Universities • Research institutes • Consultants when required

Co-work with:• Customers when possible

11

Plan, accomplish and document projects defined and prioritised by the Innovation

Management Teams (IMT)

• Development of new– Processes– Products– Applications

• Optimisation of existing – Processes– Products– Applications

Innovation Management

Scope and priorities

R&DProduction

Sales & marketing

· Annual R&D and innovation spending approx. 4% of turnover

· Short-term vs long-term projects 40/60

· ~15% of Borregaard’s revenues come from new products

12

Innovation Management

R&D center in Norway – key figures and core competence

Organic chemistry 13

Wood chemistry 9 Biopolymer chemistry 6 Physical chemistry

3 Analytical chemistry 2Microbiology 4 Process technology

3

Number of employees

80

Number of MSc

12

Number of PhD

28

Pilot/demo plant personnel

20

Average experience (years)

10

Female employees (%)

40

Average age

41

13

• Flexible, experienced and competent• Unique and strong competence platform • Attractive working environment• Specialists and generalists• Benefitting from each others’ core competences

Several initiatives in place to drive long term growth and specialisation

• Increased sales of high-value lignin products

• Development of new cellulose specialities

• Further development of vanillin blends

• BALI – Strategic lignin raw material option

• Exilva - New Microfibrillar Cellulose product and Advanced

Texture Systems

14

Agenda

• Business model and strategy

• Innovation management

• Strategic priorities

Borregaard portfolio - Strategic priorities

• Growth and specialisation within Performance Chemicals– Increased sales of high-value lignin products – Establish new lignin raw material sources– Develop BALI as a strategic lignin raw material option

• Develop the unique biorefinery assets in Sarpsborg– Leverage high value raw material base in Performance Chemicals– Continue specialisation of Specialty Cellulose, Bioethanol, Ingredients &

Fine Chemicals– Strong focus on innovation and productivity efforts

• Establish Exilva as a new business area– Based on core competence within wood chemistry and fine chemistry – Increased specialisation through high value added

16