Efficiency Fueling Refractory Margin Recovery
Borgestad ASA (“Borgestad”, “the Group” or “the Company“) is an industrial investment company built around two market-leading assets. The first is a 69.7% stake in Höganäs Borgestad, the Nordic leader in refractory solutions, which includes high-temperature products and installation services that steel, ferroalloy and cement producers rely on, and the only independent Nordic operator spanning the full chain from production to service. The second is full ownership of Agora Bytom, a leading shopping centre in Polish Silesia generating a stable, high-margin income that anchors the Group through the cycle. With refractory earnings recovering from a cyclical trough, the cost program at full effect and maintenance demand gradually returning, the Company is positioned for continued margin uplift, while the property underpins the downside. On a SOTP basis, Analyst Group derives a justified value of NOK 21.1 per share (20.7) in a Base scenario.
- Profitability Well Above Our Estimates in Q2-26
Borgestad delivered Q2-26 revenue of NOK 310.3m, down 1.8% YoY, while Group EBITDA of NOK 51.9m clearly exceeded both our estimate of NOK 34.7m and the adjusted NOK 36.9m in Q2-25. The beat is attributable to Höganäs Borgestad, where the cost program and improved project execution lifted the refractory EBIT margin to 12.7% (adj. 7.5%), the strongest second quarter since 2021, and the adjusted LTM EBIT margin to 7.0%, tracking toward the mid-term target of at least 10%. With the order backlog up 12.6% YoY entering the seasonally decisive Q3, the report confirms that profitability recovers ahead of volumes.
- Refractory Recovery as the Primary Value Driver
Höganäs Borgestad is the only independent Nordic refractory operator covering the full chain from production through installation and service, with world-leading niche competence within ferroalloys. Demand is returning in layers: daily maintenance has remained stable through the downturn, deferred operational maintenance is now being prioritized, while larger upgrade projects remain postponed and represent the remaining recovery potential. As this pent-up demand converts on a lowered cost base, held fixed through the seasonal low to meet the Q3 peak, segment EBITDA is estimated to compound at approx. 18% per year through 2028, toward the mid-term EBIT margin target of at least 10%. Selective bolt-on acquisitions add a further lever toward a consolidation-ready Nordic platform.
- Revised Estimates: Lower Top Line, Higher Profitability
Following the Q2-26 report, we lower our revenue assumptions somewhat for 2026, reflecting that larger upgrade projects remain deferred and that quarterly improvements are not expected to be linear, while we raise our gross margin and EBITDA assumptions as the cost program and internal initiatives have proven more effective than anticipated, resulting in a net positive revision of our justified value. The key variables ahead are the conversion of the backlog into Q3 volumes, rental levels at Agora Bytom as new tenants open from 2027, and the Supreme Administrative Court’s decision on Bjuv.
