Intensified cost focus in demanding markets

Borregaard

Borregaard reported a profit increase in 2008. Profit for the chemicals business declined, primarily due to weaker market conditions in the second half of the year. Profitability was also squeezed by unfavourable exchange rates and high energy and raw material prices, which were only partially offset by higher selling prices. The energy business achieved a significant improvement in profit compared with 2007.

The new plant in Ålesund for the manufacture of omega-3 products was started up and the work on upgrading the Borregaard Kraftverk power plant continued. The lignin factory in Finland and the cellulose factory in Switzerland were closed down. Impairment charges and winding-up costs in connection with the factory closures, amounting to a total of NOK&NBSP; 561 million, were recognised in the financial statements.

Operating revenues	NOK 4.872 mill.
EBITA¹	NOK 431 mill.

Borregaard has one of the world's most advanced biorefineries and is a leading manufacturer of chemicals, materials and fuel based on renewable biomass.

The company also holds attractive positions in the ingredients, fine chemicals and energy markets, with production facilities and sales offices in 20 countries.

Chemicals

Lignin:

Additives for use in concrete and building materials, textile dyestuffs, ceramics, agricultural and fishery products, batteries and mining.

Speciality cellulose:

For products used in the construction and petroleum industries and in the manufacture of filters, food products, tablets, cosmetics and personal hygiene products, as well as paint, varnish, printer's ink, plastics and textiles. Bioethanol is used for instance in the pharmaceutical industry, paint, varnish, fuel and car care products.

Ingredients:

Vanillin products and omega-3 oils for use in food products and other selected niches.

Pharmaceutical products:

Intermediates for X-ray contrast media (diagnostic applications) and medicines.

Diphenols:

Intermediates for aroma chemicals, agricultural chemicals, photo chemicals and pharmaceutical
products and applications.

Borregaard LignoTech, the world's leading supplier of lignin-based binding and dispersing agents, reported lower profit than in 2007 due to lower sales volumes and higher costs, partly caused by changes in operating conditions and logistics following the outbreak of Legionnaire's disease in Sarpsborg in July. Sales of new products increased, boosting profit. Borregaard ChemCell is a leading European supplier of speciality cellulose for chemical applications. The improvement in profit compared with 2007 is ascribable to price rises and better profitability in the first half of 2008 for the plant in Switzerland. The bioethanol business continued to make a good contribution to profit.

Borregaard's Ingredients and Pharma business supplies advanced products that meet high quality and hygiene standards. Overall, the business reported poorer results than in 2007, largely due to higher costs.

Energy

Electric power:

Power production and financial trading in power contracts.

Borregaard Energy's activities consist of the production and supply of power and trading on the Nordic power market. The business reported higher profit in 2008, due to increased sales volume and higher market prices. Borregaard's own production volumes were higher and the contribution from financial power trading increased slightly.