Kongsberg Gruppen Asa

incoming CEO of Kongsberg from April this year, as well as incoming Chief Financial Officer Martin Lindgren. We will start by giving you a short summary of the presentation that I guess many of you have already seen from this morning before we open for Q&A. You will find a Q&A button on your screen, so please type in your questions there and I will read them out for all the viewers. So with that, Eirik.

Thank you, and good to have a meeting with you all. I will give a short overview of some of the elements we discussed earlier today, if you haven't seen it. So I just want to highlight that as Kongsberg in the future. I would like to start with that Kongsberg has a strong home base and they're growing very much internationally. So about 80% of what we are doing today is outside of Norway. And you can see on this slide that we have organized ourselves with three strong divisions. The first one on the left side is defense systems, where you can see nations is part of that, the air defense system. And underneath that, that's the remote weapon stations. So that is part of that division. And then missiles and air detectors. with the JSM Joint Strike Missile and the Naval Strike Missile as the strike missile we are selling to approximately 15 nations at the moment. And also we are producing parts and composite titanium parts for F-35. And then we have the third division, Discovery, mainly producing Hugen, the autonomous underwater vehicle, and other sensors and robotics, especially operating in the commercial and also defense markets, while the two first divisions are operating in the defense markets. I will also highlight that Discovery also includes the space business. In addition to these three divisions, our business model is constructed so that we establish joint ventures, partnerships, and co-ownerships. That is a really important part of our strategy. So that brings us closer to key partners and providing access to a broader customer base. On the right-hand side, you will see our financials and that they are strong. These numbers, they include the 50-50 JVs as well. So in 2025, we have 33 billion Norwegian kroner in revenue, approximately 5 billion in EBIT, and the order backlog is 138 billion. I just also want to highlight for those knowing us in details, we don't include PATRA, but we have an ownership of 49.9 in these numbers. Next. So this is some of the historic numbers for Kongsberg, which tells quite a lot of the growth path we are on. And we expect this growth to continue. But if you look at the left side here, when it comes to revenue and EBIT margin, I would say that we have a solid margin level throughout the growth period. At the same time, you can see that the growth started back in 2018, before the war in Ukraine. So we experienced a demand for our system already at that time, and we were able to do investments based on that. So we actually were ready when the war broke out in Ukraine. And if you also, we have tripled our revenues in a decade. And on the right side, you can see that this is the order backlog. And compared to, if you look at the global defense procurement and compare it to our order intake, we outpaced the, outgrew the global defense procurement by three. So we are increasing more rapidly compared to that. This is a kind of Quick look at our portfolio, ranging from underwater, from undersea to space. And you see in the middle there, you can see NASEMs, you see NSM missile, and you see remote systems. Those are the main global one position we have taken. And I also like to highlight that when going forward, we see that the new frontiers in the battlefield are the deep sea and space. And we are very much focused on these segments as well as growing areas for us. And if you look at, I would say, the new Kongsberg, where we combine Kongsberg Defense and Aerospace and Kongsberg Discovery, this is a good match since discovery has very much deep knowledge and systems and solutions for underwater systems and now also including the space so to add those two elements together fits very much into the defense portfolio and makes us more focused on the defense market But we also like to highlight that technology is very much important for us going forward. If you take the next one. Kongsberg has always been a high-tech supplier with what I would say is the best and most advanced solutions. and we see that technology and speed of innovations are really important elements also for the defense sector that this innovation and the speed of innovation is taking place in the in the civilian techno in the civilian part of what we are doing and also worldwide so those are really important elements you see on the on the left side there what we call rapid innovation. I would say that we during the Ukraine war, there was a lack of counter-U.S. systems. We were able to deliver what we call a Typhoon counter-drone solution to Ukraine within three months after the idea was created to deliver it, only three months. And now we do the same for unmanned surface vessels. So these are examples of how we can do rapid innovation and field it quite quickly. We also experienced in Ukraine the need for high-volume production of cost-effective missiles and interceptors. So we did an acquisition of Zone 5, a US company, that gives us access to a fast-growing developer and producer of cost-effective missiles that can be produced and manufactured at high volumes. And this will complement our, both the strike missile portfolio and also the air defense missile portfolio with, I would say, high volume, but to lower cost solutions. On the right hand side, you see a typical dual use technology. This is the Hugen autonomous underwater vehicle, developed and produced by Discovery. which has a civilian use, but now will have also a applications usage towards the defense side. If you want the next one. And also, our products, as we have today, we need further development in these areas. So, for instance, for the food spectrum air defense, which is important for us, we see that we have to plug in long-range capabilities to watch anti-TBM systems. At the same time, also counter U.S. anti-drone solutions. And with the strike missile portfolio, we continue our development. We have one high-end solution that we are currently developing together with Germany and Norway, which is a supersonic strike missile, 3SM. And also this acquiring of zone 5 for high-volume manufacturing is a very important part of that strike missile portfolio. And also, underwater capabilities, which I said was one of the new important areas going forward, where we have autonomous underwater vehicles. And also, this area is also important for our critical infrastructure solutions. And on the right side, with the space capabilities, we call this space for depends, typically during use area. And Kogsberg covers the whole value chain, everything from taking down data to being a producer of small satellites and also to have the data. And that was a very short brief on some of the highlights earlier today, and probably answer questions.

Yes, we have quite a few questions from the viewers. I'll start with a few questions from . Around the contract you announced with Poland on counter UAS recently. The first one is regarding today's comment from the Kongsberg CFO during the presentation. When the CFO guided for KDA growth for 2026 in line with 2025, meaning around 32%, had she then taken into account the effect of the Polish order last week?

Yes, the simple answer is yes. Just a few comments on the Poland contract. This is, how should I put it, an important contract because it's position ourselves in an important area where protection against drones in the air is a critical defense activity, and that needs to be highlighted. We see that in Ukraine. And I think the magnitude of the contract in Poland establishes one solution that can be utilized in other countries going forward. But for now, for us, it's important to deliver on this contract and secure that we have a good solution in place.

Is it fair to assume, as we read in Polish media, that the full 16 billion worth of contract will be delivered within the end of 2027, or at least the main part of it?

What we say is that there is a quick delivery schedule here. We have initial deliveries this year, in 2026, and the main deliveries will be in 2027. So, and then a little bit into 2028 as well.

Thank you. On the anti-drone system again, how should we think about capacity constraints on these type of products? And how much of the order will be covered from the Polish plant? And how can you, can your supply chain keep up with this rapid delivery?

First of all, the initial deliveries will be done from facilities we have in Norway. to secure that we are able to deliver within quite a short timeframe. At the same time, we will establish an assembly line in Poland to secure that the next deliveries will be done from out from Poland facilities. And this is, we have a good situation with the suppliers in this area. And so I think we have a good setting to be able to deliver on the promises in this case.

And one more on the Poland contract. How should we think about margins on such a delivery? Our understanding is that these products generally have higher margins both segment level. Or should we expect some kind of first buyer discount for Poland in this case?

I think we should look at this as a normal project. There are some integration that needs to take place. We have established a consortium between a Polish company, PGCIT, and ourselves. That is very important as part of being a strategic partner in Poland. And there's a lot of equipment to be delivered. So I would say that this is a typical normal program for us.

Thank you. Why have the margins in the defense systems division been slightly weaker recently? And can we expect them to recover back to the 20, 21% area shown in the previous couple of years?

I think the simple answer here is that it's based on the product mix. That will vary, and I will not comment going forward, but this will very much depend on when the different programs and projects are run and executed, because this will be different how this is played out. And if you have, let's say, development contracts, they will have not so high margin level compared to pure delivery contracts so this is a mix that we a product mix that is relevant for why we are a little bit i would say up and down and it comes to margin there for different systems

Thank you. And then on the missiles and discovery divisions. Can those two divisions reach a sort of 20% level when it comes to margins eventually? Why or why not?

well i will not comment the the level of margin level because it's as i get as i said again it depends on the project mix and obviously we we are driving for a a good uh margin level uh i think we will continue the stable margin level we have already stated which is where we we want to be and we need to secure also that we do and necessary investments uh in in what we're doing to secure that we stay relevant to what our customers and also stay ahead of the competition. So this is always a mix in how we want to position ourselves going forward.

Thank you. Over to satellites. Can you expand on your LEO satellite business? It seems you are the largest producer in the EU, and how do you compete in the cost curve against companies such as SpaceX?

Maybe a little bit in different categories there, but I think this is a pure commercial production of small satellites that we are in a commercial civilian setting with. But we will utilize these satellites we are producing also for defense applications. And we are using that, and so we keep the cost level at the same level. And then we can add on applications for the defense setting.

Can we expect the order momentum to continue expanding beyond 2025? Is the 61 billion order intake sustainable into the next couple of years?

What I can say is that we see the growth in defense spending, for instance in Europe, to be on, is continue. And all countries in NATO are trajectory towards the 3.5% and finally five percent in 2035 so we see a growing demand for defense systems in general and we expect to continue our growth path going forward as well

Thank you. Then a question on standardized vessels or Vanguard more specifically. What you see as potential when it comes to this project and both in the short term and in the longer term?

I think the standardized vessel program with Vanguard, I can't say too much about it. It's a competition ongoing in Norway right now. What we are proposing is a very much solution based on standard chip platform, a standard design, where we put different military equipment on. And we see that this could be a potential for harmonizing this kind of platform, especially in some parts of Europe, moving forward.

Thank you. Your revenues have tripled over the past five years, yet your margins have stayed relatively stable at 15%. Why is that? And why are you not seeing more operating leverage in the business?

Well, I think we have been able throughout the growth period that we are in to secure that we stay with a stable margin level that is good. We continue to invest in what we are doing. And this is also a different product mix. And we are able to do the scaling and delivery of our production capacity. So I think without decreasing the model level. So I think that is also an important factor to bring into this equation.

And a few questions from Martin Granvik in Kepler. Does the delayed software rollout within the F-35 program affect the short-term joint strike missile potential?

No, we don't see that. It's important that we do the final integration, but the missile itself has been accepted and approved. So it's the last step where it's integrated into F-35 that needs to be completed. But we don't see that as negatively affect our potential build JSM.

And with regards to counter UAS and remote weapon stations again, how is the potential related to existing RWS protector systems without counter UAS? What would be a typical contract value for an add-on to this functionality?

I think what we see generally in the market is that when you have vehicle programs in the different countries, they normally also want at least for a portion of the vehicles to have the remote weapon stations part of that vehicle. And we just today as an example announced that we in Patria, So the six by six vehicle to, for instance, Germany, we also will get the contract for our weapon stations as part of that contract. So we got a 140 million euro contract today because of that. And we see that in different vehicle programs that the need for a continued need for our remote systems are still there.

Since 2023, you have achieved an impressive annual book bill above two. How do you view the potential over the next years? For example, is the identified pipeline front-loaded, or is it reasonable to expect the same trajectory?

I cannot go into all the details there, but we expect to continue the growth we are seeing, so I cannot comment on how this will play out. But since we see the depend spending is increasing in the different countries we are very much involved in, that is also an indication that we will continue to grow.

Then a question from Kjellbjørn Helland. The 3SM supersonic strike missile is planned to be fully developed around 2035. This appears to be a very long development timeline, especially given the rapid pace at which other advanced weapon systems and technologies are being developed today by you. Please elaborate around this.

First of all, I would say that 3SM is a very different category compared to more the rapid development cycles we have we have seen so it's extremely sophisticated and but we're also trying to narrow down the the development time to have it a little bit earlier. But I think the development is between Norway and Germany. It's a bilateral program with creating a unique capacity and to be the best in the market in 2035. So that's kind of the situation for 3SM. But I will also highlight that when acquiring zone 5, we are not getting the same capacity as the 3SM, but more equivalent to JSM, for instance, will be more in this low-cost segment that can be produced in a high volume. That will be very complementary to our current JSM and NSF.

Then a question from Ryan Chesak. How are you using AI in your business today? And how important will this be in the future? Do your 3000 software engineers already use AI coding tools like for example, cloud code? And what will these new AI coding tools mean for speed efficiency and time to market?

Yeah, we are using AI in certain applications today and also part of the solutions we are delivering. and going forward this will be more and more important for the defense applications and just imagine the amount of information you are receiving on how to deal with that and also looking into the underwater applications how to deal with that what we foresee is that what you see in in the the drone setting in ukraine in the air the same will take place undersea And this is an area where we see an advantage of using AI because of the automation between the different autonomous system there, just as an example. So this is and will be more and more important for us.

And then another question from Moniz Rasmussen, SEB. How much deliveries have you had to Ukraine in 2025, and how does that compare to 2024?

Well, I don't have the exact numbers there, but I will say that, well, Ukraine is really important for us. But if you compare it to the total revenue, it's about between, I think, 3% to 5% of our total revenue. So it's important, but not so significant when it comes to compare it to the total revenue of what we're doing.

And just to confirm, the recent country UAS contract with Poland signed last week is not in the backlog that you presented today?

Correct, that came in in January, so that will be added on for Q1 26.

Thank you. And then you have been the president of Kongsberg Defense and Aerospace for close to 10 years now. How would you say this area has changed under your management?

Well, it's, I would say it's the, when I started back in the 1990s, Kongsberg and the defense side was very much focused on Norway, on domestic applications and working with a Norwegian customer. throughout 2000 and after 2010 very much was focused to secure that what we did what we are doing in Norway will be also on the export market so we can see that we have expanded from maybe 10 percent export back in the 90s and now we have between 80 and 90 percent export on the on the international market. And that is a huge transformation of the company. And today, we are in a position, we used to be a niche defense supplier with certain extremely good products. To what we are today, we are what we can call a prime contractor. uh being a strategic partners to the governments and have a much larger impact on the decisions made in different countries when it comes to defense side so this is a huge transformation i've been part of been really interesting to see how this has developed and we can also see that because of the situation in in in in the world with the ukraine war you can see that the world needs a company like Kongsberg.

Thank you. Do you have any constraints when it comes to capacity? And with regards to the supply chain, how do you work with the supply chain to kind of prepare them for the ramp-up that we are in and that most likely will continue for a while?

This is a very important question and I would say that the supply chain is really critical for us and we are constantly working together with the suppliers to secure that they do everything that is necessary to deliver what we need for our assembly or everything. and we can give all our suppliers a good visibility so that they can do the necessary investments and are able to ramp up their production so that we can meet expectations to our customers. So I think that is one side of it. The other side is that to have a resilient supply chain That means you need more suppliers to deliver the same items, for instance. And that's why we are building up a, well, first of all, production sites in Europe, in North America, and also in Australia. And at the same time, build up local supply chains around these hubs. And we are doing that now, and that is very important for us to secure that we are not having for instance, one supplier that is not able to deliver, then you have multiple sources.

Thank you. It seems like that was the last question from the viewers tonight, so I would like to thank you all for attending and wish you all a good week.