Borgestad ASA (“Borgestad”, “the Group” or “the Company”) published on August 14, 2026, the Company’s quarterly report for the second quarter of 2026. The quarter was characterized by a marked profitability improvement, where the full effect of the 2025 cost program and ongoing internal improvement initiatives within Höganäs Borgestad met a broadly stable top line, lifting the Group’s earnings well above both the adjusted level last year and our estimates. The following are some key financial metrics that we have chosen to highlight in connection with the report:
- Revenue of NOK 310.3m (316.2) in Q2-26, corresponding to a YoY decrease of approximately 1.8%, around 2% below our estimate of NOK 315.9m
- EBITDA of NOK 51.9m (adj. 36.9), corresponding to an EBITDA margin of 16.7% (adj. 11.7%), clearly above our estimate of NOK 34.7m
- Refractory EBIT of NOK 36.8m (adj. 22.1), corresponding to an EBIT margin of 12.7% (adj. 7.5%), the strongest second-quarter margin in the Company’s disclosed history back to 2021
- Order backlog of NOK 296.4m as of June 30, 2026, an increase of 12.6% YoY, reversing the 7.8% YoY decline as of Q1-26
- Occupancy at Agora Bytom of 97.4% based on signed leases, the highest level to date, while rental income decreased by 5.3% YoY to NOK 19.9m amid ongoing tenant transitions
- Net interest-bearing debt of NOK 374.6m (391.6), corresponding to NIBD/EBITDA LTM of 3.0x (3.4x), after total capital returns of NOK 24.5m in H1-26
Summary
Borgestad delivered a Q2-26 report that, in our view, provides a clear quantitative confirmation of the operating leverage at the core of our investment thesis, namely that a largely fixed service cost base allows profitability to recover faster than volumes. Revenue of NOK 310.3m came in marginally below our estimate of NOK 315.9m, while the Group’s EBITDA and EBIT results of NOK 51.9m and NOK 42.4m, respectively, clearly exceeded both our estimates of NOK 34.7m and NOK 27.0m and the adjusted levels of NOK 36.9m and NOK 27.8m reported in Q2-25. The beat is attributable to Höganäs Borgestad, where the cost measures implemented in 2025, with an estimated full-year effect of approximately NOK 10m, reached full effect and were complemented by ongoing improvement initiatives, resulting in a refractory EBIT margin of 12.7% against adjusted 7.5% in the comparable quarter. Given that Q1-26 marked both the seasonal and the cyclical trough, the Q2 outcome illustrates how strongly earnings respond once activity stabilizes on a lower cost base.
The report also strengthens the forward-looking demand picture. The order backlog of NOK 296.4m was up 12.6% YoY, a reversal from the 7.8% YoY decline as of Q1-26, and the Company points to early signs of improving activity following an extended period in which customers limited maintenance to business-critical requirements. As we have previously emphasized, the order backlog does not necessarily correlate closely with revenue in any individual quarter, but should rather be viewed as an indicator, and on that basis the upwards swing supports our assumption of a stabilization year in 2026 followed by further recovery in 2027 driven by pent-up maintenance demand.
In the Real Estate segment, rental income declined temporarily during a quarter of active tenant transition, while record occupancy of 97.4%, an expanded leasable area and new tenants opening during H2-26 build the base for the rental growth embedded in our forecast, with full effect from 2027.
The Group’s EBITDA of NOK 48.6m in H1-26 came in approximately NOK 17m above our forecast for the period, and with the profitability momentum now entering the seasonally decisive third quarter, which has historically accounted for approximately 31% of annual refractory revenue, Analyst Group sees potential for upward revisions of our full-year 2026 estimates, which we intend to revisit in connection with our updated equity research report.
Borgestad’s Q2-26 outcome versus Analyst Group’s estimates and the adjusted comparable quarter (adj. Q2-25A)
Revenue Slightly Below Our Estimate, While the Order Backlog Returned to Growth
Revenue and other income amounted to NOK 310.3m (316.2) in Q2-26, corresponding to a YoY decrease of 1.8% and approximately 2% below our estimate of NOK 315.9m. The refractory segment reported revenue of NOK 290.4m (296.4), a decrease of 2.0% YoY, where it should be noted that the quarter contained one additional working day compared with Q2-25, implying that the underlying decline was somewhat larger than reported. Höganäs Borgestad continues to describe the Nordic refractory market as challenging, with reduced industrial activity affecting several customer segments, and the outcome is therefore consistent with the stabilization year we model for 2026, where full-year refractory revenue is estimated at NOK 1,044m, broadly flat versus 2025. For the first half of 2026, Group revenue amounted to NOK 511.9m (522.6), a decrease of 2.1% YoY, while refractory revenue on an LTM basis amounted to NOK 1,033m.
The more important datapoint for the forward trajectory is, in our view, the order backlog of NOK 296.4m as of June 30, 2026, an increase of 12.6% YoY from NOK 263.2m. At the time of our initiation analysis, the backlog stood 7.8% below the prior year as of Q1-26, and the increase to double-digit growth within one quarter constitutes, in Analyst Group’s view, a tangible signal that deferred maintenance demand is beginning to return. As highlighted in our initiation analysis, the order backlog does not necessarily correlate closely with reported revenue in any given quarter, and should primarily be read as a directional indicator rather than a precise forecasting variable. With that caveat, contract durations in the refractory market lengthen in upcycles and shorten in downturns, which makes the backlog the most relevant demand signal available ahead of the seasonally decisive Q3, and the development supports the recovery from 2027 that carries our estimates.
Profitability Materially Above Our Estimate as the Cost Programme Reaches Full Effect
Group EBITDA amounted to NOK 51.9m (adj. 36.9) in Q2-26, corresponding to an EBITDA margin of 16.7% (adj. 11.7%), and Group EBIT to NOK 42.4m (adj. 27.8), corresponding to an EBIT margin of 13.7% (adj. 8.8%). The outcome was approximately 50% above our EBITDA estimate of NOK 34.7m and 57% above our EBIT estimate of NOK 27.0m, making profitability the clear positive surprise of the report. Profit before tax amounted to NOK 35.9m (adj. 20.9), with net financial items broadly stable YoY.
The beat is broad-based across the cost lines. The gross margin amounted to 56.0% (adj. 53.6%), clearly above our estimate of approximately 50%, where costs for materials, supplies and subcontracting decreased by 6.9% YoY against a revenue decline of 1.8%, assumed to reflect a favorable project mix, lower subcontracting utilization and improved project execution. Salary and personnel expenses decreased by 4.2% versus the adjusted comparable quarter to NOK 94.7m, in line with the full effect of the 2025 cost-saving program, while other expenses decreased by 19.4% to NOK 27.2m. In the refractory segment, EBIT amounted to NOK 36.8m (adj. 22.1) at a margin of 12.7% (adj. 7.5%), the strongest second-quarter margin in the Company’s disclosed history back to 2021, and the adjusted LTM EBIT margin advanced to 7.0%, from 6.2% at year-end 2025 and 5.0% in the corresponding LTM period last year, tracking toward the communicated mid-term target of at least 10%. Analyst Group notes that the margin expansion has so far been achieved without volume support, which underlines the operational leverage in the service-led model. With market conditions still subdued, we expect the near-term improvement to continue to be driven by the factors within the Company’s own control, such as cost discipline, project execution and internal efficiency initiatives, of which the quarter served as evidence, while a durable move toward the 10% target ultimately requires the top line to turn, making the backlog development described above the key variable to monitor.
Refractory: Höganäs Borgestad’s net revenue and EBITDA quarterly
Agora Bytom: A Transition Quarter, With Record Occupancy Building the Bridge to 2027
The real estate segment, consisting of Agora Bytom, reported rental income of NOK 19.9m (21.0) in Q2-26, a decrease of 5.3% YoY, and an EBITDA of NOK 10.9m (12.1), corresponding to a margin of approximately 55% (58%). The decline reflects temporary reductions in rental income associated with the onboarding of new tenants and non-recurring costs of approximately NOK 0.4m in H1-26, while H1 EBIT was additionally burdened by an impairment of NOK 3.2m related to tenant relocations, recognized in Q1. Tenant turnover declined by 1.4% YoY in the quarter but increased by 2.3% on an LTM basis, and footfall decreased by 2.7%, a development the Company partly attributes to refurbishment activity and adjustments to the commercial mix.
Beneath the transition effects, the structural indicators moved in the right direction. Occupancy based on signed leases reached 97.4%, an increase of 1.0 percentage points during the quarter and the highest level to date, while the leasable area expanded to 34,210 sqm through the conversion of gallery space, with newly signed tenants scheduled to open during H2-26. The valuation inputs disclosed in the report furthermore show an estimated rent level of EUR 15.30 per sqm, based on signed leases at EUR 16.41, compared with approximately EUR 15.0 at the time of our initiation analysis, providing early evidence of the repricing runway toward signed rent levels that drives our Real Estate forecast of approximately 5% annual revenue growth through 2029. With the remaining tenant transitions expected to be concluded during the latter part of the year, we expect the improved occupancy and rent levels to be reflected in reported rental income with full effect from 2027. Management identified no impairment indicators for Agora Bytom in the quarter, and the book value of NOK 694.5m (MEUR 62.7) declined from year-end solely as a result of NOK translation effects.
Cash Flow and Financial Position
Cash flow from operating activities before working capital changes amounted to NOK 27.3m (6.7) in H1-26, an approximate fourfold improvement YoY that mirrors the earnings recovery. Working capital increased seasonally by NOK 31.9m ahead of the Q3 activity peak, resulting in a net operating cash flow of NOK -4.6m (-92.7), where the YoY improvement of NOK 88m also reflects the working capital normalization the Company has prioritized. During H1-26, Borgestad distributed NOK 17.5m in dividends to parent-company shareholders and NOK 3.9m to minority interests, and repurchased 180,000 own shares for NOK 3.1m, with total capital returns of NOK 24.5m, consistent with the communicated principle of returning surplus liquidity while keeping the holding company effectively free of interest-bearing debt.
At the end of the quarter, net interest-bearing debt amounted to NOK 374.6m (391.6), corresponding to NIBD/EBITDA LTM of 3.0x (3.4x), with available liquidity of NOK 144.8m (126.9) and an equity ratio of 51.0% (49.4%). The equity reduction versus year-end 2025 is primarily explained by negative currency translation differences from a stronger NOK, alongside the distributions, rather than by operating performance.
Bjuv Sale-Leaseback and Strategic Outlook: the Nearest Catalyst Remains Intact
The conditional sale-leaseback of the Bjuv properties, the nearest catalyst in our investment case, remains pending. Following the Administrative Court of Appeal’s ruling in Borgestad’s favor in December 2025, the complainant appealed to the Supreme Administrative Court in January 2026, which requires leave to appeal, and the Company states that feedback is expected within reasonable time, with an indicated processing time of approximately six months. The long stop date has been extended to December 31, 2026, where the Nordea debt of NOK 39.8m is to be repaid upon completion given a favorable outcome. The Company has previously communicated that it does not consider it probable that leave will be granted, in which case the favorable ruling stands and the transaction can proceed toward completion. As the transaction is deliberately excluded from our Base scenario, a completion would represent clean upside relative to our current assumptions through two channels: a capital return, where the majority of net proceeds are intended to be distributed upward through the structure, and a structural margin lever, as production is consolidated into a smaller, more purpose-built facility. In the outlook, the board furthermore reiterates that Borgestad will continue to evaluate strategic opportunities, including transformational M&A initiatives and potential liquidity events, alongside consolidation opportunities within the fragmented refractory sector, which is consistent with the long-term value realization framework.
The key variables to monitor going forward are the conversion of the backlog into Q3 volumes, the rent per square meter development at Agora Bytom as newly signed tenants open, and the Supreme Administrative Court’s decision regarding the Bjuv transaction.
We will return with an updated equity research report on Borgestad.