Borgestad ASA (“Borgestad”, “the Group” or “the Company”) published on October 30, 2026, the Company’s quarterly presentation for the third quarter of 2026. Höganäs Borgestad returned to revenue growth in the quarter, and on a lower cost base this lifted the segment’s EBIT margin to 15.9%, in what the Company describes as the strongest underlying quarter in Höganäs Borgestad’s history. After the end of the quarter, the Bjuv sale-leaseback was completed, which enabled an extraordinary dividend of NOK 1.50 per share. The following are some key financial metrics that we have chosen to highlight in connection with the report:
- Revenue of NOK 374.1m (353.5) in Q3-26, corresponding to a YoY increase of 5.8%, approximately 5% above our estimate of NOK 355m
- EBITDA of NOK 72.1m (64.7), corresponding to an EBITDA margin of 19.3% (18.3%) and a YoY increase of 11.5%, in line with our estimate of NOK 73m
- Refractory EBIT of NOK 56.3m (49.6), corresponding to an EBIT margin of 15.9% (14.9%), lifting the adjusted LTM EBIT margin to 7.5% (6.2%)
- Refractory order book of NOK 106m (145) as of September 30, 2026
- Rental income at Agora Bytom of NOK 20.0m (20.1), corresponding to an increase of 8.4% YoY measured in EUR, while EBITDA increased to NOK 10.8m (10.3) at a margin of 54% (51%)
- Completion of the Bjuv sale-leaseback on October 14, after the end of the quarter, with an estimated accounting gain of SEK 112.6m to be recognized in Q4-26
- Extraordinary dividend of NOK 1.50 per share, corresponding to a yield of approximately 8.7% based on the latest closing price of NOK 17.2
Summary
Borgestad delivered a strong Q3-26 report, and after the end of the quarter it completed the Bjuv sale-leaseback, which has already translated into an extraordinary dividend to shareholders. Operationally, Höganäs Borgestad returned to revenue growth on a lower cost base. Revenue of NOK 374.1m came in approximately 5% above our estimate of NOK 355m. Group EBITDA of NOK 72.1m, up 11.5% YoY, was in line with our estimate of NOK 73m, as lower personnel and other expenses offset a higher share of materials and subcontracting. In the refractory segment, revenue growth of 6.3% converted into EBITDA growth of 13.4%, and the EBIT margin of 15.9% lifted the adjusted LTM EBIT margin to 7.5% (6.2%). The Company states that Höganäs Borgestad is on track for its mid-term target of at least 10%, and management emphasized during the presentation that the target is based on current market conditions and is largely within the Company’s own control. One concrete lever is the discontinuation of a loss-making Swedish subsidiary, which has burdened LTM EBIT by approximately SEK 12m; excluding it, the adjusted LTM EBIT margin amounts to approximately 9.1%. Refractory EBITDA of NOK 96.3m after nine months is already essentially at our full-year estimate of NOK 97.6m.
The softer datapoint in the report is the refractory order book of NOK 106m (145). The order book is followed by many investors and can be read as an indication of lower visibility into the seasonally weaker winter quarters, but in our view it does not necessarily reflect the underlying trend. Management describes the market improvement as broad-based across all three countries and most customer segments, and pointed out during the presentation that the order book only captures signed orders, while a large part of the business is expected but not yet contracted. In the Real Estate segment, Agora Bytom grew rental income by 8.4% YoY in EUR, although a weaker EUR masked the growth in NOK, and EBITDA increased to NOK 10.8m at a margin of 54% (51%).
After the end of the quarter, on October 14, the Bjuv sale-leaseback was completed. The transaction releases approximately SEK 139m in three instalments over two years, of which 60% was received at completion. Beyond the capital release, the completion starts a transition in Höganäs Borgestad’s production. The leaseback secures continued production in Bjuv for up to five years, rent-free for the first two, while the leased area is reduced by approximately one third. This allows the Company to decide on and implement its long-term production setup on operational rather than time-driven grounds. In our view, a footprint adapted to actual volumes adds a margin driver toward the 10% target that is not reflected in our estimates.
The transaction has, furthermore, already translated into a return to shareholders. The Board has resolved an extraordinary dividend of NOK 1.50 per share, approximately NOK 52m in total. This corresponds to a yield of approximately 8.7% based on the latest closing price of NOK 17.2 and to three times the ordinary dividend of NOK 0.50 per share for 2025, and brings total dividends since May 2025 to NOK 2.80 per share, approximately NOK 100m. In Analyst Group’s view, this reflects a shareholder-oriented capital allocation, where value realized at asset level reaches shareholders just over two weeks after completion, in line with the Company’s communicated intention to distribute the majority of the proceeds upward through the structure. Management furthermore stated that Borgestad expects to continue distributing excess cash to shareholders if current performance continues. Net interest-bearing debt stood at 2.5x (2.9x) adjusted LTM EBITDA before the proceeds, and approximately SEK 56m of the purchase price is still to be received in 2027 and 2028, so the distribution leaves the Group’s financial flexibility intact. As neither the transaction nor the dividend is included in our estimates, Analyst Group considers the development to represent upside to our published assumptions, which in our view motivates a higher valuation of Borgestad’s shares.
Borgestad’s Q3-26 outcome versus Analyst Group’s estimates and the comparable quarter (Q3-25A)
Revenue Above Our Estimate, While the Order Book Points to Lower Near-Term Visibility
Revenue and other income amounted to NOK 374.1m (353.5), an increase of 5.8% YoY and approximately 5% above our estimate of NOK 355m. Refractory revenue rose by 6.3% YoY to NOK 354.1m (333.3), the segment’s first quarter of growth this year, which the Company attributes to stronger market activity and internal improvement initiatives. Management describes the improvement as broad-based across all three countries and most customer segments, while noting that customers remain highly cost-sensitive and that the market is characterized by significant price pressure, which makes it cautious about the pace of the recovery. With refractory revenue of NOK 825.8m (815.6) after nine months, the segment is tracking ahead of our full-year estimate of NOK 1,034m.
The order book amounted to NOK 106m as of September 30, 2026, compared with NOK 145m a year earlier, a decrease of approximately 27% YoY, despite a higher order book entering the quarter. Many investors follow the order book as an indication of near-term activity, and the decline signals lower visibility into the fourth and first quarters than a year ago. In our view, however, it does not necessarily reflect the underlying trend. Management stated during the presentation that the order book only captures signed orders and that a large part of the business is expected without yet being contracted, and the Company has over the past year pointed to a trend toward later order placements among customers. The historical link to subsequent revenue has also been weak: the order book as of September 30, 2025 was 47% higher YoY, yet refractory revenue in Q4-25 and Q1-26 was broadly flat and 2.5% lower YoY, respectively. The current level is also above the NOK 99m reported as of September 30, 2024. We therefore read the figure as an indication rather than a forecast, and see utilization during the low season as the variable to follow. The Company is addressing this through commercial initiatives in all three countries, although with sales cycles of at least 6 to 12 months, and often several years, the effect is expected mainly in 2027 and 2028.
Profitability in Line With Our Estimate, Carried by the Strong Refractory Quarter
Group EBITDA amounted to NOK 72.1m (64.7), a margin of 19.3% (18.3%), and EBIT to NOK 60.7m (54.0), a margin of 16.2% (15.3%), broadly in line with our estimates of NOK 73.1m and NOK 62.5m. The composition differed from our assumptions. Costs for materials, supplies and subcontracting rose by 12.2% YoY, lowering the gross margin to 52.3% (55.0%), which we assume reflects project mix during the seasonal peak as well as the significant price pressure management describes in the market. Personnel expenses, by contrast, fell by 3.0% and other expenses by 11.5% despite the higher activity level, which in our view shows that the cost reductions are holding as volumes return. Profit before tax amounted to NOK 48.1m (47.0), held back by currency losses of NOK 5.7m within net financial items, while net profit amounted to NOK 39.5m (43.3) as the tax charge increased to NOK 8.7m (3.7).
Refractory EBITDA rose by 13.4% to NOK 64.2m (56.6) and EBIT to NOK 56.3m (49.6), corresponding to an EBIT margin of 15.9% (14.9%), the strongest underlying quarter in Höganäs Borgestad’s history according to the Company. The adjusted LTM EBIT margin reached 7.5%, up from 7.0% at mid-year and 6.2% for full-year 2025. The margin gains earlier in the year rested primarily on cost reductions and internal efficiency measures, whereas Q3 combined revenue growth with a lower cost base. Management stated that the mid-term target of 10% is based on current market conditions, with further internal improvements, including more consistent project execution, as the main levers. One concrete step is the discontinuation of a loss-making Swedish subsidiary during Q4-26, which has burdened LTM EBIT by approximately SEK 12m and is expected to have a meaningful positive effect on profitability from 2027. Excluding this subsidiary, the adjusted LTM EBIT margin amounts to approximately 9.1%, which illustrates how much of the distance to the target is addressed by this measure alone. With refractory EBITDA of NOK 96.3m after nine months, a marginally positive fourth quarter, excluding any non-recurring costs related to the discontinuation, would be sufficient to exceed our full-year estimate of NOK 97.6m.
Agora Bytom: Growth in EUR and a Higher Margin
The real estate segment, consisting of Agora Bytom, reported rental income of NOK 20.0m (20.1) in Q3-26, a decrease of 0.7% YoY in NOK. Measured in EUR, rental income increased by 8.4% YoY, with the difference reflecting the depreciation of the EUR against the NOK. EBITDA increased to NOK 10.8m (10.3) despite a negative currency effect of 5.2%, corresponding to a margin of 54% (51%) supported by higher occupancy, while EBIT amounted to NOK 7.5m (6.8). Tenant turnover increased by 1.5% YoY in the quarter and by 1.2% on an LTM basis, and footfall of 4.7 million visitors LTM was in line with the prior year.
Occupancy based on signed leases amounted to 96.8% as of September 30, 2026, a decrease of 0.6 percentage points from the record level as of June 30, on a leasable area of 34,200 sqm. The Company expects occupancy to stabilize at a high level, with the focus shifting toward renegotiating or replacing lower-rent leases. It is also assessing the conversion of approximately 800 sqm of lower-rent space into office premises, which management estimates would add approximately EUR 0.1m in annual rental income if completed. In Analyst Group’s view, the 8.4% EUR growth in rental income shows that higher occupancy, an expanded leasable area and rising rent levels are now translating into income growth, which supports the gradual move toward signed rent levels that underpins our Real Estate forecast. With several tenant openings during H2-26 contributing to a stable occupancy base, we expect the full contribution to be visible in 2027. The Polish macroeconomic backdrop softened somewhat during the quarter: inflation rose to 4.1% in September from 2.5% in June and consumer confidence declined to -10.8 from -9.9, while the reference rate was held at 3.75%. The bank loan of EUR 28.2m matures in December 2028, with 70% of the outstanding amount hedged at a fixed rate of 3.17% plus a margin of 2.8%, which limits the exposure to rising eurozone interest rates.
Cash Flow and Financial Position
Cash flow from operating activities before working capital changes amounted to NOK 59.4m (57.7) in Q3-26. Working capital increased by NOK 43.5m during the seasonal peak, resulting in a net operating cash flow of NOK 16.0m (29.3). For the first nine months, net operating cash flow amounted to NOK 11.3m (-63.4), an improvement of approximately NOK 75m YoY. This reflects both the earnings recovery and the working capital discipline the Company has prioritized, with working capital of NOK 281.2m (352.1) approximately 20% lower than a year earlier, mainly through lower trade receivables and inventory within Höganäs Borgestad. The Company targets further improvements in 2027 through initiatives already identified.
At the end of the quarter, net interest-bearing debt amounted to NOK 348.2m (363.5), corresponding to NIBD/adjusted EBITDA LTM of 2.5x (2.9x), with available liquidity of NOK 137.8m (145.3) and an equity ratio of 53.5% (51.2%). Interest-bearing debt decreased by NOK 42.9m YoY to NOK 453.8m, mainly due to currency effects and lower overdraft utilization. The balance sheet as of September 30 does not yet reflect the first instalment from the Bjuv transaction, received at completion on October 14, or the extraordinary dividend payable in November. Both will be reflected in the Q4-26 figures.
Bjuv Sale-Leaseback Completed After Quarter-End: Production Transition and Extraordinary Dividend
On October 14, 2026, after the end of the quarter, the sale-leaseback of the Bjuv properties was completed. At a property valuation of SEK 145m, the purchase price amounted to approximately SEK 139m after adjustment for stamp duty. Of this, 60%, approximately SEK 83m, was received at completion, and the remainder falls due in two equal instalments 12 and 24 months after completion. SEK 10m was used to reduce interest-bearing debt. Given Borgestad’s 69.7% ownership of Höganäs Borgestad, approximately 70% of the proceeds are attributable to Borgestad’s shareholders. The estimated accounting gain of SEK 112.6m, above the approximately SEK 102m indicated at signing, will be recognized in Q4-26 as a non-recurring item.
With the transaction completed, Höganäs Borgestad will now determine the long-term setup for its production, having previously assessed several alternatives. The leaseback gives the Company room to do so. Production continues at the existing facilities for up to five years, with no rent for the first 24 months, while the leased area is reduced from 52,484 sqm to 35,234 sqm within two years. Thereafter, rent of SEK 200 per sqm applies, approximately SEK 7.0m per year, and the lease can be terminated at six months’ notice. In Analyst Group’s view, this allows the long-term solution to be chosen and implemented on operational rather than time-driven grounds, which limits the execution risk of restructuring a production site.
The Company has not quantified the cost effect, and the choice of setup, and any investment it requires, remains to be communicated. Management emphasized that the production in Bjuv, consisting of specialized, tailored bricks and monolithics, is vital to the business, and that efficiency, logistics and retaining key competence will be the main criteria when choosing between the alternatives. Our assessment is that the effect on profitability is positive. The Bjuv site has been considerably larger than production requires, with only part of the approximately 50,000 sqm footprint in operational use and volumes well below theoretical capacity. A setup adapted to actual volumes is therefore expected, in our view, to lower maintenance and property-related costs and improve operational flows, in line with what the Company has communicated. As this effect is not included in our estimates, we see it as an additional driver toward the 10% EBIT target alongside the internal improvement initiatives, with a market recovery as further support.
The completion has also translated directly into a return to shareholders. Under the authorization from the annual general meeting in May 2026, the Board has resolved to distribute NOK 1.50 per share based on the annual accounts for 2025, in the form of a repayment of paid-in equity for Norwegian tax purposes. The distribution amounts to approximately NOK 52m, corresponding to a yield of approximately 8.7% based on the latest closing price of NOK 17.2. It is three times the ordinary dividend of NOK 0.50 per share paid earlier this year and brings total distributions based on the 2025 accounts to NOK 2.00 per share, while total dividends since May 2025 amount to NOK 2.80 per share, or approximately NOK 100m. The shares trade ex-dividend from November 3, with payment on November 6, 2026.
In Analyst Group’s view, the dividend is a clear expression of the Company’s capital allocation, where value realized at asset level is passed on to shareholders rather than retained in the structure. By our estimate, the distribution broadly corresponds to Borgestad’s share of the first instalment after the debt reduction, and it was announced just over two weeks after completion, in line with what the Company communicated ahead of the transaction. Management furthermore stated that Borgestad expects to continue distributing excess cash through dividends if current performance continues, and reiterated that proceeds from an eventual sale of Agora Bytom are planned to be distributed to shareholders, with any future investments financed separately through capital raises. A sale of Agora Bytom is, however, not considered timely at present given higher eurozone interest rates. With approximately SEK 56m still to be received in 2027 and 2028, the transaction continues to strengthen the Group’s financial flexibility beyond the dividend now announced.
In the outlook, the Board expects improved underlying results, stronger cash flow and continued margin development in both segments over time, while noting that progress may vary between quarters. Within refractory, the Group will furthermore actively evaluate selective acquisitions in the fragmented market. Going forward, we will primarily follow utilization during the winter quarters, the effect of the discontinued subsidiary and the decision on Höganäs Borgestad’s long-term production setup, as well as the development of realized rent at Agora Bytom.
We will return with an updated equity research report on Borgestad.