Capital Markets Day. Agenda. KONGSBERG a world-class technology enterprise. Financial status. KONGSBERG at a glance.

Transcription

1 Capital Markets Day 27 WORLD CLASS through people, technology and dedication 1 Agenda KONGSBERG a world-class technology enterprise KONGSBERG at a glance Main objective Strategic challenges The road ahead Financial status KONGSBERG, 26 August 23 2

2 KONGSBERG a technology corporation Highlights: Sales USD 1.1 billion Employees 4 18 Operating in countries 23 International sales 72% Market positions: Positions nos. 1 3 in maritime applications World-class niche product supplier in defence applications KONGSBERG, 26 August 23 3 KONGSBERG two business areas Offshore & Merchant Marine Defence & Aerospace KONGSBERG, 26 August 23 4

3 KONGSBERG in Norway KONGSBERG, 26 August 23 5 The world of KONGSBERG Svalbard (Spitsbergen) Norway 1 Sweden Scotland Newfoundland (Canada) British Columbia (Canada) Poland Ireland Germany Washington (USA) Ontario (Canada) England The Netherlands Nova Scotia (Canada) France Hungary Italy Pennsylvania (USA) Connecticut (USA) Spain Greece Texas (USA) Louisiana (USA) The United Arab Emirates India Japan Dalian, China South Korea Shanghai, China Singapore Brazil South Africa Antarctica 6

4 Operating revenues Other 2% Offshore & Merchant Marine 53% Europe 26% Norway 28 % Other countries 2 % Defence & Aerospace 45% America 23% Asia 21% 7 KONGSBERG well qualified co-workers KONGSBERG has approx. 4 well qualified co-workers More than 7% are engineers, technicians or graduate engineers About 17 per cent of our employees work abroad Operators 11 % Engineers/ Technicians 46 % Asia 7 % America 5 % Europe 5 % Graduate engineers 26 % Norway 83 % Other staff 17 % 8

5 Share price and liquidity Share price performance from 1 Jan. 27 Liquidity trend from 1 January 27 Index 1) K OG c ompa r e d wi t h i nde x e s f r om 1 J a n. 2 7 Spread 14, % KOG spread and trading from 1 Jan. 27 Shares 25 18, 16, 14, 12, 1, 8, 12, % 1, % 8, % 6, % 4, % , %, % Jan-7 Feb-7Mar-7 Apr-7May-7 Jun-7 Jul-7 Aug-7Sep-7 Shares (1) KOG Index OSEBX OSE Ind. KOG Spread 3 per. Mov. Avg. (KOG Spread) Share price trend The price of the KONGSBERG share has increased by 63 % since the closing share price on 31 Dec. 26. Liquidity trend The trading volume and liquidity of the share remain low There are now approx. 5 1 shareholders in KONGSBERG 1) Comparison of KOG's share price relative to OSEBX and the industrial index. Price set at 1 at the close of 26 KONGSBERG, 26 August 23 9 Agenda KONGSBERG a world-class technology enterprise KONGSBERG at a glance Main objectives Strategic challenges The road ahead Financial status KONGSBERG, 26 August 23 1

6 KONGSBERG - Geared for growth KONGSBERG has the potential to become a major Norwegian corporation Necessary for ensuring competitiveness and profitability Goals Improved profitability - Continuous improvement towards a 1% overall EBITA margin - All units are required to show improvement each year - Incentive systems based on improvement Sales are to double in 3 to 5 years, based on the 25-level KONGSBERG aspires to create value for its shareholders - Our owners, i.e. the shareholders, are to benefit from the growth by virtue of dividends as well as through the general investment performance of the shares 11 KONGSBERG, 26 August 23 Our progress is continuing Operating revenues EBITA MNOK MNOK % % 8,5 % % ,5 % % 6,9 % 6, % 239 5% 195 4,1 % At Q2_6 At Q2_7 4% 15 3% 1 2% 5 1% 6% % At Q2_6At Q2_7 16% growth in volume from 25 to 26 Thus far this year, we have grown by 26.9% (including Q2) 22.8% growth in EBITA from 25 to 26 Thus far this year, we have grown by 8% (including Q2) KONGSBERG, 26 August 23 12

7 Well positioned for continued progress New orders 1 Backlog of orders Q2 26 Q Q2 26 Q Operating revenues 1 Not including CROWS Q2 26 Q2 27 KONGSBERG, 26 August Geared to grow in both business areas Offshore & Merchant Marine Offshore More focus on the oil and gas industry -Reinforce the areas in which we are already strong -Our strategy is to move into selected fields where we can attain leading positions at the international level -Examine at typical Norwegian technology enterprises in the offshore segment -As an industrial owner, KONGSBERG will be able to offer these companies more possibilities, not least on the international arena Merchant Marine Build further on the company s leading market position KONGSBERG, 26 August 23 14

8 Geared to grow in both business areas Defence & Aerospace Interesting possibilities in the relatively short term -Remote weapons systems (RWS): The CROWS contract bolsters our market position relative to new and existing competitors -The new Naval Strike Missile (NSM): The contract with Norway will open up export opportunities Interesting opportunities in the longer term -Acquisition of new fighter craft KONGSBERG is well positioned regardless of which aircraft is selected KONGSBERG is in close dialogue with the bidders in question KONGSBERG gives priority to permanent new industrial activities Stronger international presence -Positioning relative to the world's largest market, the USA Build-up in the USA in relation to the CROWS contract The acquisition of Gallium -Collaboration with the international defence industry opens further opportunities KONGSBERG, 26 August Agenda KONGSBERG a world-class technology enterprise KONGSBERG at a glance Main objectives Strategic challenges The road ahead Financial status KONGSBERG, 26 August 23 16

9 Strategic challenges Top level KONGSBERG aspires to double the Group's size within 3 to 5 years from the 25-level This will take place through organic growth and acquisitions The acquisitions will further reinforce and expand our current business areas Acquisitions since the last Capital Markets Day Sense Intellifield, now Kongsberg Intellifield Shipmedics Ltd., Poland KONGSBERG, 26 August Strategic challenges KONGSBERG is in position Strategic direction: Stronger international presence Some operations have been moved to lower cost countries Improved presence closer to customers Expansion and more employees in Singapore and South Korea Venture creation in India, Japan, Dalian (China), and Poland Strategic direction: Boost our share of the value creation Acquisitions for a broader range of products Fantoft, Sense Intellifield, Gallium, Shipmedics New combinations of proprietary products KONGSBERG, 26 August 23 18

10 Strategic challenges KONGSBERG is in position Strategic direction: We want to be closer to the end user Oil companies/operators Simulation, integrated operations Seismic companies Positioning and management of streamers Shipowners Emphasis on products and systems that provide added value for the user Strategic direction: Offset agreements Norway's purchase of fighter craft Three suppliers are currently competing KONGSBERG is in close dialogue with all parties Composite Building a new factory; a long-term perspective KONGSBERG, 26 August Strategic challenges KONGSBERG is in position Strategic direction: Success with proprietary defence products Protector RWS CROWS NSM Framework agreement valued at NOK 8 billion with the US Army Strengthens our market position in a growing market Production contract with the Armed Forces' Logistics Organisation JSM -More than a decade of development has resulted in a production contract -The next step is to export -Signed joint marketing agreement with Lockheed Martin for an aircraft version of the NSM called JSM KONGSBERG, 26 August 23 2

11 Agenda KONGSBERG a world-class technology enterprise KONGSBERG at a glance Main objectives Strategic challenges The road ahead Financial status KONGSBERG, 26 August The road ahead The road ahead Stronger emphasis on more resources for strategic development More extensive strategic processes Reorganisation to free up more executive time to focus on strategic development Continued focus on smooth operations The reorganisation will differentiate roles clearly Strong growth = demanding management tasks -Customer first -Training of new personnel -Sufficient resources/premises KONGSBERG, 26 August 23 22

12 New CEO Walter Qvam (54) Graduated in engineering in 1979 from what is now the Norwegian University of Science and Technology and studied further at INSEAD in Singapore (1985) Former head of DNV's oil and industrial activities in the Nordic countries Has been vice president and headed passenger and cargo operations for the Norwegian State Railways (NSB) Former Nordic head of Gemini Consulting and CEO of Capgemini in Norway. Executive positions in Capgemini at the international level in Stockholm and Utrecht Most recent position as a partner in Bene Agere, a Norwegian strategy and consultancy company established in 25. KONGSBERG, 26 August Prospects for the future Continued buoyant activity in KONGSBERG's maritime markets Efforts to address the offshore market will continue and the percentage of KONGSBERG's revenues generated on this market is expected to increase In the market for merchant vessels, shipyards are experiencing high capacity utilisation and, as a result, delivery times are long for newbuildings KONGSBERG expects a continued strong influx of new orders from these markets Defence & Aerospace has seen an increase in new orders in 27 The NSM production contract guarantees activities for the Missiles segment The strong influx of new orders for remote weapons systems is expected to continue and several new countries are expected to sign contracts The decline in the USD/NOK exchange rate can present a challenge in the long term. Most of KONGSBERG s currency transactions are hedged throughout 27 and 28. Further measures will be considered on an ongoing basis A strong influx of new orders and good results are also expected in the latter half of 27 KONGSBERG, 26 August 23 24

13 Agenda KONGSBERG a world-class technology enterprise KONGSBERG at a glance Main objectives Strategic challenges The road ahead Financial status KONGSBERG, 26 August General summary Q2 Operating revenue up 44.9 per cent Earnings before interest, taxes and amortisation (EBITA) up MNOK 94 Operating margin up from 6.5 per cent to 8.6 per cent Record influx of new orders leads to a backlog valued at approx. NOK 11 million (NOK 5.6 million) Defence & Aerospace Production contract NSM Operating margin up from 3.9% to 7.2% Continued high activity in remote weapons systems Offshore & Merchant Marine High activity in all areas Stable operating margin Major contract for advanced underwater systems to India 1th consecutive quarter of backlog growth KONGSBERG, 26 August 23 26

14 Financial status for Q2 27 Historical trends in operating revenues and EBITA MNOK Operating revenues MNOK EBITA At Q2 6 At Q At Q2 6 At Q2 7 KONGSBERG, 26 August New orders and the breakdown of the backlog of orders New orders Backlog and breakdown Q2 26 Q KDA KM KDA KM Q => KONGSBERG, 26 August 23 28

15 Historical trends in the distribution of volume Distribution of volume within Kongsberg Gruppen 1 % 8 % 6 % Per cent 4 % 2 % % Defence & Aerospace Maritime KONGSBERG, 26 August Volume trend Norway versus abroad Volume trend, Kongsberg Gruppen 1 % 9 % 8 % 7 % 6 % Per cent 5 % 4 % 3 % 2 % 1 % % Norge Utenfor Norge KONGSBERG, 26 August 23 3

16 Key figures 23 Trend in fixed cost ratio Trend - gross profit/full-time equivalents 22, ,5 21 2,5 2 19,5,8,75,7,65,6, A, A KONGSBERG, 26 August Key figures Net current assets/operating revenues - KM 3 % Net current assets/operating revenues 25 % 2 % 25 % 2 % 15 % 15 % 1 % 5 % % A 1 % 5 % Net current assets/operating revenues - KDA % A 25 % 2 % 15 % 1 % 5 % % -5 % A KONGSBERG, 26 August 23 32

17 Foreign currencies Hedging portfolio at 3 June 27 (value in NOK) Hedging portfolio => USD Prognosis USD Orders EUR Prognosis EUR Orders Foreign exchange policy 1% hedging of signed contracts Partial hedging of forecast foreign exchange earnings 3 years ahead. Objectives: Create predictability and ensure profitability for the existing product portfolio Allow time for operational and strategic initiatives in the event of lasting changes in exchange rates Orders: All orders signed in foreign currencies are hedged, eliminating currency risk Prognosis: Prior to signature, probable contracts are also hedged pursuant to the guidelines stipulated in the Foreign Exchange Policy Foreign currency position 7-75% of sales sensitive to exchange rates 3-35% of costs in foreign currencies About 4% net exposure, primarily USD Our competitiveness is influenced by: Changes in the exchange rate, NOK/EUR, against all foreign competitors Changes in the USD exchange rate, USD/EUR, against all competitors with their cost base in USD or currencies linked to USD Demonstrate great ability to adapt operations to downward trends in the USD KONGSBERG, 26 August WORLD CLASS through people, technology and dedication 34