Fiven Annual Report 2021 Board of Directors’ Report About Fiven Fiven is a global leader in silicon carbide (SiC), a material used in a variety of industrial applications. SiC is recognized for superior hardness, high thermal conductivity and chemical inertness, making it the preferred material for demanding applications: abrasive, metallurgy, filtration, technical ceramics and other uses. Fiven product brand “SIKA” is recognized as a premium brand with high quality and supply consistency. Fiven ASA is headquartered in Oslo, Norway, and is the parent company in the Fiven Group. The Group was established in 2019 in connection to the acquisition of the silicon carbide business from Compagnie de Saint-Gobain S.A, and the operational history can be traced back more than 100 years. Fiven has manufacturing entities in Arendal and Lillesand (Norway), Hody (Belgium), Barbacena (Brazil) and Puerto Ordaz (Venezuela). Fiven GmbH located in Cologne (Germany) is a management office. In February 2021 Fiven North America Inc. was established as a wholly owned subsidiary with a sales representation office operating in Pittsburgh (USA). There is also a sales representation office operating in Shanghai (China). The Market In 2021, the global economic recovery has advanced more strongly than anticipated a year ago. Meanwhile, the surge in demand for goods has caused high energy and raw material prices, and bottlenecks in production chains. As market conditions have started to change rapidly since Q2 2021, Fiven strived to serve its customers in a fast, challenging, and increasingly competitive market and achieved solid organic growth of 28% in gross sales YoY. More importantly, Fiven adopted a strict pricing adjustment discipline to offset the cost increase of raw materials. The global market for silicon carbide is diversified, and trends differ between regions and end markets. In Europe, the specialty market segment was positively impacted by the higher demand from manufacturing plants but limited by the decline in the market for diesel particular filters. Consequently, Fiven’s revenues from the specialty market in Europe rose by 5% YoY and by 75% if excluding diesel. In contrast, the recovery in the construction and the automotive markets strongly impacted the demand for metallurgy, refractory, and abrasive products. Thus, Fiven revenues from the standards products in Europe increased by 25% YoY. In North America, Fiven had a clear upturn in sales of specialty products driven by ongoing co-development projects. In Latin America, Fiven experienced a significant growth driven by robust recovery from all sectors of activities in Brazil and market share expansions outside of Brazil. The global competitive landscape varies from one region to another and is intensely competitive. Fiven has a strong market position in Europe and Latin America and faces robust local competition in North America, Europe, Latin America, and global competition from Asian silicon carbide producers. Fiven’s Strategy Fiven’s strategy remains in place: to grow profitably based on two pillars. 1. Accelerate growth in specialty products by targeting applications with high growth dynamics and focusing on innovation and co-development with key customers. 2. Selectively serving core markets, improving the cost competitiveness, and through providing a high level of service offerings. Organic growth will continue to be driven through R&D and should be achieved by the development of new products and applications. In the coming years, Fiven will step up efforts to meet increasing demands from the public to ensure that the Group remains on good terms with the citizens in the locations in which it operates. 18 Board of Directors’ Report
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