Aktieselskabet Schouw : Interim report for Q1 2024Published 30.04.2024

Interim report for Q1 2024

Company announcement no. 26 30 April 2024

Aktieselskabet Schouw & Co. · Chr. Filtenborgs Plads 1 · 8000 Aarhus C · Denmark · Comp. reg. no. 63965812

Contents Report Financials

CONTENTS

2	Interim report for Q1 2024

Management's report			Interim report
4	A word from our CEO			40 Statements of income and comprehensive income
4	Quarterly highlights	Our businesses	41	Cash flow statement
5	Financial highlights	42	Balance sheet · Assets and liabilities
6	Interim report - First quarter 2024			43 Statement of changes in equity
9	Outlook	13	Portfolio company financial highlights - Q1	44	Notes
11	Management's statement	14	BioMar
		19	GPV
		23	HydraSpecma
		27	Borg Automotive
		31	Fibertex Personal Care
		35	Fibertex Nonwovens

1. A word from our CEO >

1. Quarterly highlights >
2. Financial highlights >
3. Interim report - First quarter 2024 >

1. Outlook >

1. Management's statement >

MANAGEMENT'S REPORT

Contents Report Financials

Management's report

4	InterimQX 2024reportinterimfor Q1report2024

A word from our CEO

A solid start to 2024

Schouw & Co. and in particular BioMar, our fish feed business and the largest company in our portfolio, were both off to a good start to 2024.

Both earnings and cash flows from operations were notably higher than in the same quarter of last year, while revenue declined due to lower prices of raw materials and components. This translated into a significant EBITDA margin increase.

In view of the good start to the year, we are cautiously optimistic and upgrade our EBITDA guidance. However, the global uncertainty with geopolitical con- flicts, supply chain tension and challenged economies continues to affect our businesses in terms of activity levels and prospects.

At Schouw & Co., we remain focused on enhancing operating income and generating cash flows from operations in all our portfolio companies, which are also facing reduced capital expenditure requirements compared to the past few years.

Jens Bjerg Sørensen, President and CEO

Quarterly highlights

7.9 652

DKKbn revenue	DKKm EBITDA
- 9% reduction	- 28% increase

171	6.18
DKKm cash flows from opera-	DKK earnings per share
tions - DKK 266m increase	- 45% increase

13.5%

ROIC excluding goodwill

- 2.2 pp increase

+60

DKKm upgrade of

full-year EBITDA guidance

Contents Report	Financials	Management's report
	Group summary (DKKm)	YTD 2024	YTD 2023	FY 2023
		REVENUE AND INCOME
		Revenue	7,882	8,678	37,210
		Operating profit before depreciation/amortisation (EBITDA)	652	511	2,849
		Depreciation, amortisation and impairment	277	267	1,121
highlights		EBIT		374	244	1,727
	Profit/loss after tax in associates and joint ventures	5	0	8
	Net financial items	-146	-81	-369
		Profit before tax	233	163	1,367
		Profit for the period	146	109	991
		CASH FLOWS
		Cash flows from operating activities	171	-96	1,777
		Cash flows from investing activities	-173	-580	-1,521
		Of which investment in property, plant and equipment	-180	-214	-819
		Cash flows from financing activities	163	665	-367
		Cash flows for the period	160	-11	-111
		INVESTED CAPITAL AND FINANCING
		Invested capital (ex. goodwill)	15,696	15,595	15,648
		Total assets	27,901	29,020	27,896
		Working capital	7,415	7,408	7,225
		Net interest-bearing debt (NIBD)	6,423	6,550	6,339
		Share of equity attributable to shareholders of Schouw & Co.	10,688	10,354	10,656
		Non-controlling interests	895	889	900
		Total equity	11,583	11,243	11,556
Financial		FINANCIAL KEY FIGURES
	EBITDA margin (%)	8.3	5.9	7.7
	EBIT margin (%)	4.7	2.8	4.6
		EBT margin (%)	3.0	1.9	3.7
		Return on equity (%)	9.3	8.4	8.9
		Equity ratio (%)	41.5	38.7	41.4
		ROIC excluding goodwill (%)	13.5	11.4	12.8
		ROIC including goodwill (%)	11.4	9.5	10.7
		NIBD/EBITDA ratio	2.1	2.5	2.2
		Average no. of employees	15,095	15,314	15,488
		PER SHARE DATA
		Earnings per share (of DKK 10)	6.18	4.27	39.78
		Diluted earnings per share (of DKK 10)	6.17	4.26	39.76
		Net asset value per share (of DKK 10)	457.80	440.13	454.17
		Share price, end of period (per share DKK 10)	532.00	575.00	553.00
		Price/Net asset value	1.16	1.31	1.22
		Market capitalisation, end of period	12,421	13,527	12,975

5	Interim report for Q1 2024

Revenue, first quarter

DKKbn

			8.7	7.9
		6.3
4.8	4.9
2020	2021	2022	2023	2024

EBITDA, first quarter

DKKm

			511	652
434	479	364
2020	2021	2022	2023	2024

EBIT, first quarter

DKKm

				374
229	269		244
	149
2020	2021	2022	2023	2024

Return on invested capital, first quarter

ROIC excluding goodwill

12.5	15.8			13.5
	12.1	11.4
2020	2021	2022	2023	2024

Contents Report Financials

Management's report

6	Interim report for Q1 2024

Interim report - First quarter 2024

Strong EBITDA and improved cash flows

As expected, consolidated revenue for Q1 2024 was down on the year before, driven by a combination of lower prices and a drop in volume sales. EBITDA, on the other hand, increased strongly with BioMar as the main contributor, and cash flows from operations improved as well.

Financial review

Given the performance for Q1 2024, the Schouw & Co. Group has had a very good start to the year, the main contributor being BioMar, which is also the Group's largest business.

Going into 2024, the Group's full- year guidance was affected by the many changes to the global economy and severe geopolitical tensions, all of which are causing uncertainty in several of the international markets of importance to Schouw & Co. sales. Several of these changes did in fact materialise in the past quarter, but within the expected ranges, enabling the Group's businesses to act

appropriately and with a long-term perspective.

Consolidated revenue for Q1 2024 fell by 9% to DKK 7,882 million, which was expected. The decline was generally driven by a combination of lower prices and reduced volume sales. The revenue setback was attributable to BioMar and GPV and, to a lesser extent, Fibertex Personal Care and HydraSpecma, while Borg Automotive and Fibertex Nonwovens both grew revenue in the first quarter.

Consolidated EBITDA for Q1 2024 was up by 28% to DKK 652 million, with BioMar as the predominant con-

tributor to the increase. In addition, Borg Automotive and Fibertex Non- wovens both reported year-on-year growth in earnings, while the other businesses reported EBITDA down on Q1 2023.

Associates and joint ventures, which are recognised at a share of profit or loss after tax, contributed a DKK 5 million profit for Q1 2024 compared with a breakeven result in Q1 2023.

The Group's net financial expenses increased from DKK 81 million in

Q1 2023 to DKK 146 million in Q1

2024. The amount breaks down into an increase in net interest expenses

from DKK 67 million in Q1 2023 to DKK 116 million in Q1 2024, while foreign exchange adjustments etc. amounted to an expense of DKK 30 million in Q1 2024 compared with an expense of DKK 14 million in Q1 2023. Net financial expenses were in line with expectations, disregarding the negative effect of foreign exchange adjustments etc., which had not been factored into the previous guidance.

The consolidated profit before tax increased to DKK 233 million for Q1 2024 from DKK 163 million in Q1 2023. The profit before tax for the first quarter resulted in corporate

Quarter
(DKKm)	Q1 2024	Q1 2023	Change
Revenue	7,882	8,678	-796	-9%
EBITDA	652	511	141	28%
EBIT	374	244	131	54%
Income from associates etc.	5	0	5	n/a
Profit before tax	233	163	70	43%
Cash flows from operating
activities	171	-96	266	n/a

Year to date	YTD	YTD
(DKKm)	2024	2023	Change
Revenue	7,882	8,678	-796	-9%
EBITDA	652	511	141	28%
EBIT	374	244	131	54%
Income from associates etc.	5	0	5	n/a
Profit before tax	233	163	70	43%
Cash flows from operating
activities	171	-96	266	n/a
Working capital	7,415	7,408	7	0%
Net interest-bearing debt	6,423	6,550	-127	-2%
ROIC excluding goodwill	13.5%	11.4%	2.2pp
ROIC including goodwill	11.4%	9.5%	1.9pp

Contents Report Financials

Management's report

7	Interim report for Q1 2024

income tax of DKK 87 million against DKK 53 million in Q1 2023.

Liquidity and capital resources The Schouw & Co. Group's operations produced a DKK 171 million cash inflow in Q1 2024, compared with a DKK 96 million outflow in Q1 2023. The highly satisfactory improvement was mainly attributable to GPV and to a lesser extent to BioMar, but Borg Automotive and Fibertex Nonwovens also contributed.

The investment spend in Q1 2024 totalled DKK 173 million, of which purchases of property, plant and equipment accounted for the main part. While GPV accounted for a slightly larger share, these purchases were relatively evenly distributed on all portfolio companies. By comparison, investments in Q1 2023 totalled DKK 580 million, including HydraSpecma's acquisition of Ymer Technology's wind division.

The Group's working capital increased by DKK 191 million in Q1 2024 from DKK 7,225 million at 31 December 2023. Year on year, the Group's overall working capital grew only slightly from DKK 7,408 million

at 31 March 2023 to DKK 7,415 million at 31 March 2024. However, the moderate overall increase covers major changes among the underlying companies, with BioMar and to a lesser extent Borg Automotive and HydraSpecma having increased their working capital, while GPV and the two Fibertex businesses reduced their working capital tie-up.

The net interest-bearing debt increased by DKK 84 million during the first quarter to stand at DKK 6,423 million at 31 March 2024. Year on year, however, the net interest-bearing debt declined by DKK 127 million from DKK 6,550 million at 31 March 2023, and due to the earnings improvement, the Group improved its financial gearing (NIBD/EBITDA ratio) from 2.5 to 2.1.

Group developments

During the past couple of years, the companies of the Schouw & Co. Group have worked intensively to align their businesses to a world of ever more volatile market conditions. Being able to react quickly to different conditions requires significant adaptability and commitment. The Group's industrial and geographic

diversification makes this a complex task, but at the same time, it spreads risk and leads to good development opportunities.

Thanks to the Group's financial strength, the portfolio companies are able to build good positions with access to production capacity and supplies. Profitable growth and development based on a long-term perspective and a 'best owner' philosophy are high priorities at Schouw

• Co., as illustrated by recent years' investments in production capacity combined with major strategic acquisitions.

The following is a brief review of individual company performances in the first quarter of 2024:

BioMar reported volume sales down 8% from the record-high sales of

Q1 2023, and in combination with lower prices of a number of raw materials, this caused revenue to drop by 12% relative to Q1 2023. On the other hand, EBITDA surged to a level which was exceptional for a first quarter. Earnings were driven mainly by a strong performance in the Salmon Division and the effects of commercial excellence measures

Contents Report Financials

Management's report

8	Interim report for Q1 2024

in combination with positive effects of a special nature of some DKK 65 million.

GPV reported revenue down 13% on the year before. This was due to a number of factors, all of which had been factored into the previous guidance, including lower demand from customers, due in part to inventory adjustments. The lower level of activity impacted EBITDA, which fell proportionately corresponding to the drop in revenue, which was within the expected range.

HydraSpecma reported a moderate decline in revenue in Q1 2024 that was driven mainly by the postponement of orders in the Renewables Division and a slowdown in the markets for Construction Equipment, Material Handling and Agriculture that was not offset by the higher level of activity in the Marine and Defence Divisions. EBITDA fell slightly compared with Q1 2023, when earnings were, however, adversely affected by costs incurred for the acquisition of Ymer Technology's wind division.

Borg Automotive reported a 5% revenue improvement that was driven by increased sales of remanufac-

tured products, while at the same time sales of new goods for resale were in line with expectations. As expected, EBITDA improved strongly on Q1 2023, when earnings were impacted by non-recurring costs for the implementation of a new ERP system and organisational adjustments and by higher cost prices of goods for resale.

Fibertex Personal Care reported revenue down by 9%. The decline was driven by lower selling prices caused by lower prices of raw materials as well as growing competition in Asia, where volume sales of nonwovens also dropped, while sales in Europe improved. Despite the increase in overall volume sales, EBITDA dropped, as was expected, driven mainly by lower margins in the fiercely competitive Asian market.

Fibertex Nonwovens reported revenue up by 2%. The revenue improvement was mainly driven by an increase in volumes sold which more than offset the effects of reduced selling prices and adverse foreign exchange developments. EBITDA improved in line with expec- tations. However, the US operations remained a drag on earnings, due

in part to the as yet still outstanding full phase-in of the new production capacity.

Events after the balance sheet date

Other than as set out elsewhere in this interim report, Schouw & Co. is not aware of events occurring after 31 March 2024 which are expected to have an effect on the Group's financial position or outlook.

Accounting policies

The interim report is presented in accordance with IAS 34 "Interim financial reporting" as adopted by the EU and Danish disclosure requirements for the consolidated and parent company financial statements of listed companies.

See the 2023 Annual Report for a full description of the accounting poli- cies. In addition, Schouw & Co. will be implementing the standards and interpretations which are effective from 2024.

Judgments and estimates

The preparation of interim financial statements requires management to make accounting judgments and estimates that affect recog-

nised assets, liabilities, income and expenses. Actual results may differ from these judgments and estimates.

Special risks

The overall risk factors the Schouw & Co. Group is facing are discussed in the 2023 Annual Report. The current assessment of special risks is largely unchanged from the assessment applied in the preparation of the 2023 Annual Report.

Roundings and presentation The amounts appearing in this interim report have generally been rounded to the nearest million using standard rounding principles. Accordingly, some additions may not add up.

Schouw & Co. shares

Schouw & Co. shares depreciated by 4% during the first quarter to DKK 532 at 31 March 2024 from DKK 553 at 31 December 2023.

Contents Report	Financials	Management's report	9	Interim report for Q1 2024

Outlook

Revenue guidance lowered, EBITDA up

While the many changes to the global economy and major geopolitical tensions are causing uncertainty, Schouw & Co.'s portfolio companies are solidly positioned in the international competition. Full-year revenue guidance is lowered, while EBITDA guidance is upgraded.

Outlook for 2024

Right from the beginning of the year, it was clear that the 2024 outlook would be anything but stable. The global economy is undergoing drastic change, which - combined with major geopolitical tensions - is causing uncertainty in several of the international markets of importance to Schouw & Co. sales. The companies of the Schouw & Co. Group stand prepared for potentially sudden and frequent changes to practical market terms and have the commitment as well as the ability to react quickly to changing circumstances.

Overall, Schouw & Co. expects to

maintain the high level of activity witnessed in 2023, assuming that business activity will be subdued in the first half of the year, in part due to value chain adjustments, while the level of activity in the second half could well improve on sound underlying demand.

The following is a brief review of the revenue and EBITDA forecasts for the individual companies in 2024:

BioMar lowers its full-year revenue guidance based on updated forecasts for raw materials prices and foreign exchange rates combined with the most recent prospects for

volume sales. With full-year earnings likely to be supported by the implemented commercial excellence initiatives and the positive special effects witnessed in the first quarter having worked their way through to the bottom line, the company upgrades its full-year EBITDA guidance.

GPV still expects the level of activity to soften in the first half of 2024 compared with last year but expects business activity to recover in the second half, although the actual strength of demand remains to be seen. Against this background, GPV maintains its full-year revenue and EBITDA guidance.

Contents Report	Financials	Management's report	10	Interim report for Q1 2024

HydraSpecma is still seeing considerable uncertainty among its customers regarding future demand, causing customers to frequently change their forecasts. HydraSpecma expects to maintain a high level of activity in 2024 but also to see certain shifts between customer segments. Overall, HydraSpecma maintains its full-year revenue and EBITDA guidance.

Borg Automotive is seeing sound demand for remanufactured products and expects that the ramped-up efforts to drive sales of goods for resale will contribute to improving earnings. Against this background, Borg Automotive maintains its full- year revenue and EBITDA guidance.

Fibertex Personal Care continues to expect average prices of raw materials to be lower in 2024 than in 2023 as well as reduced volume sales and tough price competition in Asia. Against this background, Fibertex Personal Care maintains its full-yearrevenue and EBITDA guidance.

Fibertex Nonwovens still expects to increase its volume sales relative to 2023. It plans to do so through the ramped-upproduction capacity in

the USA, enabling the company to accommodate the North American market. In addition, demand for materials is expected to pick up for the European main segments. Against this background, Fibertex Nonovens maintains its full-year revenue and EBITDA guidance.

Schouw & Co. Group's overall guidance

Schouw & Co. generates a substantial part of its revenue by converting raw materials or by processing procured components. As a result, changes in prices of materials and foreign exchange rates may have a significant impact on revenue, even though underlying activity may be unchanged. Similarly, changes in revenue resulting from changes in prices of materials will not necessarily trickle down to earnings.

Based on updated forecasts for raw materials prices, combined with the most recent prospects for BioMar's volume sales during the rest of the year, the Group slightly lowers its 2024 revenue guidance range. Over- all, the Schouw & Co. Group now projects full-year 2024 consolidated revenue in the DKK 34.8-37.3 billion range against the previous range of DKK 35.3-37.8 billion.

Schouw & Co. provides consolidated earnings guidance at EBITDA level based on an aggregation of individual portfolio company forecasts, but actual portfolio company EBITDA results may deviate from these individual forecasts. Accordingly, the actual guidance is expressed through consolidated EBITDA, which for 2024 is now expected to be in the range of DKK 2,740-3,040 million, an increase from the previous range of DKK 2,680-2,980 million.

Total depreciation, amortisation and impairment charges are still estimated at approximately DKK 1,150 million for 2024. As a result, the Group guides for consolidated 2024 EBIT in the range of DKK 1,590- 1,890 million.

Associates and joint ventures, which are predominantly part of the BioMar business, are now expected to contribute a combined share of profit after tax of approximately DKK 60 million for 2024, compared with the previous estimate of approximately DKK 70 million.

The Group's debt normally increases during the first half of the year, peaking around mid-year and subsequently decreasing during the

second half. Accordingly, under stable interest rate conditions, interest expenses will typically peak in the first half of the year.

In 2024, net financial items are still expected to be an expense of approximately DKK 425 million before foreign exchange or other adjustments. However, as the first quarter of 2024 was adversely affected by foreign exchange and other adjustments of DKK 30 million that had not been factored into the original guidance, the Group's net financial items for 2024 are now expected to be an expense of approximately DKK 455 million after the foreign exchange adjustments realised in Q1 2024 but before any foreign exchange or other adjustments during the remaining part of the year.

Revenue	2024 guidance	Prev. 2024	2023
(DKKm)	after Q1	guidance	actual
BioMar	17,000-18,000	17,500-18,500	17,878
GPV	9,100-9,700	9,100-9,700	10,450
HydraSpecma	2,900-3,200	2,900-3,200	2,972
Borg Automotive	1,900-2,100	1,900-2,100	1,876
Fibertex Personal Care	1,600-1,800	1,600-1,800	1,891
Fibertex Nonwovens	2,300-2,500	2,300-2,500	2,158
Other/eliminations	0	0	-15
Total revenue	34,800-37,300	35,300-37,800	37,210
Profit for the year	2024 guidance	Prev. 2024	2023
(DKKm)	after Q1	guidance	actual
BioMar	1,270-1,350	1,210-1,290	1,250
GPV	700-760	700-760	743
HydraSpecma	300-340	300-340	323
Borg Automotive	170-200	170-200	153
Fibertex Personal Care	160-200	160-200	262
Fibertex Nonwovens	200-240	200-240	169
Other	-60-50	-60-50	-52
EBITDA	2,740-3,040	2,680-2,980	2,849
PPA depreciation/amortisation	-160	-160	-155
Other depreciation/amortisation	-990	-990	-966
EBIT	1,590-1,890	1,530-1,830	1,727
Associates and JVs	60	70	8
Net financial items	-455	-425	-369
Total profit before tax	1,195-1,495	1,175-1,475	1,367