Kongsberg Gruppen Asa

No, then I think everyone is on.

Can one on the call give the sound that you can hear and see us? Can you hear and see us? Great, then we got the technical test now.

Then I have Geir Høy, head of the company, and Mette Rølgen, director of the board. We meet when the office call is taken up. so then you are informed about that. We start with just a short intro from Geir and Mette before the word is free. It would be nice if you use the record banner function in PIBS when you are going to ask questions.

Yes, okay. Hello everyone. I hope it's nice to see you, but I don't see you, but I see at least some of you here. Thank you for taking this time. We have been working for six months and a quarter. We are satisfied with the quarter overall. It is a strong quarter. Growth in all areas, both in the top line and the bottom line. A lot is happening in all areas. We have seen the increase on the defence side for a while now. decided and committed that they will have a significant investment in the future. There is also a lot going on within Ocean Space for us. A very good quarter for Kongsberg i Skavli on the underwater side and its historic side. Not so high ordering, but it is very varying from quarter to quarter, depending on whether we get or, to be more specific, our underlying costs, which we call systems. There are not many of them in this quarter, but there is a very good demand for KD's capabilities, so we are quite comfortable with the pipeline that we also see in that segment. I am very pleased with the approach to the KM. There are some minor contractions out there on the shipwrecks. What we register is that there is a lot of seaborg that has fallen somewhat in relation to last year, while a good part of the ships that are still contracted are ships that have a high spec and that hit the maritimes quite well. So we have some orders now this quarter, especially on shuttle tanks and on So offshore is very good these days. And there is clearly capacity to take orders on that side as well. And it is orders and ships that fit Kongsberg Maritim quite well, where we can provide integrated solutions with larger parts of our portfolio. So very pleased with that. And then there is some downfall in What should I say, the turnover, the growth is not as big as we have been around the 20th century, earlier quarters here. Now it's about 7% and there is some impact there in relation to the storage of the washing machine and the stove, and that we have moved the digital growth plate over to the farm. So it's not completely one-to-one, so it's okay to have it. But as I said, In medium to long term, we are quite comfortable with the market we see. And there is still good activity in the aftermarket as well. We are down from the top, from 58% to 52% in the quarter. So good activity, some more activity on the project side in the aftermarket. And that's exciting, but a little less on the spares in the quarter. This will swing, we know that. But the marina is also solid on the point. So a very active quarter. A lot is happening in Europe. We have also announced that we have established an office in Kiev, and we have done so to have more hype and running dialogue with Ukrainian authorities together with Norwegian authorities. We have entered industrial partnership, where we will assist the Ukrainian industry to produce more missiles for the NASEMS system. And that is, as you have probably experienced, an extreme need for it. hundreds of drones and missiles that come in over Ukraine and they have to get up the production pace in Ukraine and get up, what shall I say, the end to defend against what we see now. So it is now, I hope to say, to enter these agreements and then it is to get started with the production over there. It will be very important and it is in good dialogue with Norwegian authorities. So yes, That's what the numbers say.

The numbers are still strong, and as you can see, there is still growth. 20% on the top line in the quarter. If we go a little deeper into the exchange rate, and maybe especially on it, which is a 7% growth in the quarter, then there are these changes that occur between the post-market and the new market. The highest growth is on the new market, But we also see an underlying growth in the aftermarket that is expected to continue. And just to clarify, when KM has taken on a new business, it has also gone through some structural changes in KM, which means that we report in the first quarter, we report the digital business with around 150 million in revenue in the aftermarket, which is not in the aftermarket the reporting in the second quarter, so there is a change between the first and second quarter that does not appear in the report in this way. But underlying growth, 7%, we have been at around 20%, but we still see both growth in the new sales and aftermarket in a few hours. Kongsberg and Fenton Airspace, 38%, it is driven by misuse, and air supply. We see that missile capacity at Kongsberg is in a ramp-up phase, and we are completely in line with the plan and are very pleased with the ramp-up in missile capacity at Kongsberg. Kongsberg Discovery has been on high margins in the last three quarters, now over 18% of the TV margin. We see that the project mix has been very good. We also invest in capacity development in Conspire Discovery, so we do not expect that we will be at this margin level in the future, but that the potential in the long-term picture is for significantly good margins also at Conspire Discovery. Yes, I think that was perhaps the main points around the financial side.

Should we open up for questions? Thank you for this question.

I hope you can hear me. I have a question on Maritime. Offshore LNG has been an important driver. for order intake the last year plus. But when we look at numbers from Clarkson, for example, it looks like the contracts have stopped quite well in the two segments, and the deliveries at least flattened out in 2025 and 2026 compared to what we have seen in 2024. Can you say something about what you expect from growth in those segments from 2025 to 2026-2027? And possibly which other segments that can contribute to growth if the cold stops a little?

Yes, it is probably not correct. The forecast for the clearing is quite clear on that. And then it's a bit like we tried to say during the presentation earlier today, that for us, we expect that it will be a good opportunity for Kongsberg Maritime to sell more integrated cakes in spite of all the orders that come, because there is a different kind of tonality. The main thing is that the downfall is on Silborn. which is more commercial and has less scope, and there is bigger, tougher competition. So I think that we still believe that the offshore market will be good, which gives us the opportunity to sell a larger package from Komsomar Maritime. in the last years we have had now on the sustainability tanks, and we see it on the PSVs, which are significantly larger packs than we sold back in 2013-2014. So that is a lot to give us a comfort, so that we can maintain a certain volume in the year. And we also see in the year actually now in the second quarter, that we are up to 1.18 in work to build. And then I think maybe that now it is, now it is sitting a bit on the edge again, with a lot happening around both tariffs and it is a disappointing situation, I would say, in relation to where IMO will land in October. But I have, or we have, quite good faith, if you look at the graph we showed during the presentation, It will still be a good level, and especially in 2006-2007, I think we will see a significant new building market, which will hit KOMSOM Maritime quite well. That is at least what we believe in, and that is what we tried to show, even though it is a rather marked decline for Klarten, we believe that we will maintain a solid position in terms of what will be built in the future. Maybe one market that is also important to keep an eye on is the naval market. The naval market. And what we know about standardized vehicles, which is also an important investment for Kongsberg in total, both within Udda, but also KM and KD. So it will be very important where Norway lands on the standardised territory. We have an ambition to be a strategic partner for defenders and Norwegian authorities, and hopefully we will get an answer to that, if not too soon. So there are many opportunities for KMT, even though there is less contractuality in the tonnage, there are many opportunities for KMT what should I say, get a larger volume into the markets that we see will probably be controlled in the future. Long answer.

Yes, how to put it there, but I think a little like that, we have a very, we have a record order backlog on the maritime at 26.2 billion, and we have a very long range, so it is clear that we have secured within the new building, good capacity utilization in the coming years. And a lot of what is contracted now, it's like it's lagging when it comes to us. It takes about a year and a half before we get the order, so it's clear that we get a lag in the market.

There are several questions. Ole Petter. Thank you.

I have a question on net financials. They have risen to 70 million in the quarter. Can you give a split on what is in them, and how we should think about the development in the future? Is it desirable to sit on a net and cash position of around 8-10 million in the future, or how should we think about the development of that in the future?

The development of the cash position, was that what you said? It was a bit of a fight.

Yes, so how do you think about the structural progress? Is it a net cash position you want to be in?

I have seen in the first half of the year that we get a positive interest rate situation, and then we are of course hit by leasing, IFRS 15 and 16, which also affects our results in relation to that we get interest payments, among other things, that are in net cash, that go beyond a year. Then we have to calculate interest payments on interest that is beyond a year, so that gets a financial effect. The cash can be expected to be relatively stable, but it is a bit difficult to predict the big year trends and how it affects research payments. And perhaps the most important thing is Income from Associates, which will follow the same trend that we have seen on the results from POSAT and PATRA. And then there is a special PATRA that erases the picture a lot, with a lot of the results that come at the end of the year. I don't know if that gave you any insight, but it's at least part of the challenge there, but it is clear that we have seen a very positive effect of the good cash position in the first half of the year.

Other questions?

Did you have more questions, Petter?

I would like to touch on Discovery, so that you can touch a little on what was the most positive driver for the good margin we saw in the quarter. Yes, which is actually a normal level of progress. Where will it be put in each quarter?

If you can ask that question in advance. Yes, what we saw in the first half year last year was that we had some extra development costs on development projects. And then we see that the project execution in the first half year this year has been particularly good. We have seen a good development both on uncrewed platforms with good projects that we have delivered on, and at the same time we have delivered well on CTEX in the first six months. So it is very dependent on which projects we deliver on at a given time, and that we do not get unexpected delays. We have started, especially on uncrewed platforms, we work with forecast production We expect the order entry to be good, but it is clear that when the orders arrive, they have a lot to say about how we can make income. So where we can book new orders at a speed of prognosis, we will be able to take a larger share of income in that quarter. So it is very dependent, it is a bit like in the defence industry, it is very dependent on which miles and orders we book in each quarter. But there is certainly good project mix and execution in the last three quarters.

And also, I would say, we see that the pipeline is really solid, I would say. And especially on the defense side, or related to the defense part of KD, there is the execution process, how long it takes, and also these prognosis factors that we and find the right balance in terms of how much we produce per prognosis.

But we know that the cost level will rise in connection with the fact that we are moving to new locations and have to move over production in several stages. And that happens in the course of 2026, so we know that we are investing in capacity for increased growth in the future as well. And that will contribute.

some increased costs over a period. Thank you. More questions? It seems like everything was pretty clear.

I think it's okay to just mention Magnus?

Another question for Martin. You have been a bit in on it. You have reported about 7% growth. It is possible to adjust a bit because of the changes, but it will not be a violent adjustment. It has grown by 20-30% in the last few years. Is this natural swings and we should not think that there is stagnation in growth? Is this something that has been a bit special in Q1 because of the tariff, and do you think it will rise again when it hopefully becomes a bit more ready for it, or how do you see it?

I think what we're looking at is that growing 20% in 10 years is not going to do it. We have a certain goal, that is to double the business, and there is a natural growth rate in those 10 years. So it has been a very good market in recent years. There is more uncertainty now, but it has not hit us in full force, because we still have a book to build on over 1.2 in the first half year. So I think there is more uncertainty, but we have still delivered a better order intake, and we see in our prognosis still growth within the various segments of the maritime. But that there will be natural swings and that we cannot grow 20% in the quarter is to be expected.

I was just going to mention that in the presentation today, but I think both the initiatives with Thales will be exciting to follow up on, on what it gives market success for us and our tactical radio communication. the purchase process of Sonatec. It is incredibly exciting. We see great interest in the USA around both what Sonatec and what Kongsberg Discovery has of technology and capacities. So to conclude that, it will be very exciting. I think we can both get better market access towards US Navy, which of course is important, And also the possibility to have the culture and technology through summer tech.

So that will be very exciting for the future. Okay.

If there are no more questions, I just want to thank you for coming. I wish you all a good summer. We will probably talk again very soon.