Aker ASA (AKER) Earnings Call Transcript & Summary

Good morning, and welcome to the presentation of Aker's Second Quarter and Half Year Results 2026. My name is Fredrik Berge, and I'm Head of Investor Relations. I'm joined by Aker's President and CEO, Oyvind Eriksen, who will take you through the key highlights and recent developments in the portfolio. Our CFO, Svein Oskar Stoknes, will then take you through the financial results in more detail. After the presentation, we will have a Q&A session. And with that, I hand it over to Oyvind Eriksen.

Good morning, and thank you for attending this presentation in the middle of the summer. Today, we're summing up the second quarter and half year 2026, which has been nothing less than consequential for Aker. A portfolio of investments with core assets at the intersection of energy and artificial intelligence has served our shareholders well. Aker's total shareholder return was 10% in the quarter and more than 53% in the first half of the year, outperforming the Oslo Stock Exchange Benchmark Index by a mile. Aker's net asset value made a step-change, too, at almost NOK 40 billion in the first half to NOK 106 billion in total after payment of NOK 2.2 billion in cash dividends. The performance was driven primarily by continued extraordinary growth at Nscale, a landmark divestment of Cognite and great results reported by Aker BP. The Cognite transaction is expected to generate NOK 14.7 billion in cash proceeds to Aker. This will bring Aker's total liquidity to more than NOK 20 billion. This significantly increases our investment capacity to pursue new and attractive industrial opportunities. This morning, we announced another portfolio adjustment by taking Aker BioMarine private. I will revisit Nscale, Cognite, Aker BP and Aker BioMarine in a moment. But let me first elaborate briefly on the recent value creation. Building Industries is much closer to a decade-long marathon than the quarterly sprint. That's why it's so important to view the results year-to-date in a broader context. The value proposition to Aker's shareholders is partly about growth in net asset value and partly about an attractive cash dividend. I have already mentioned the second quarter and half year results. Here, you see the broader and more relevant context for the Aker share price, net asset value and dividend distribution. Since the relisting of Aker in 2004, Aker has delivered a total of NOK 130 billion in value creation. Net asset value has increased by NOK 98 billion, and Aker has paid a total of NOK 32 billion in cash dividends. At the same time, the share price has increased almost 19 fold. That combination of value growth and cash distributions remains at the core of the Aker investment proposition. The results we are reporting today are part of a much longer track record of value creation. The way we build great companies is also something that makes Aker unique. Our method of work is a fine balance between long-term industrial innovation and entrepreneurial spirit. And our toolbox consists of [ stone-on-stone ] organic growth, coupled with partnerships and transactions. This slide summarizes some of our partnerships and mergers and acquisitions. As already mentioned, the combination has made great shareholder returns over time and the results reported today are not -- no exception. The story of Aker BP is still one of the clearest examples of what Aker can build through long-term industrial ownership. In June, the partnership with BP marked its 10-year anniversary. 10 years ago, we combined the [ norske oljeselskap ] and BP Norway to establish Aker BP. Since then, production has grown from 62,000 barrels of oil equivalent per day to close to 400,000 today, with further growth expected when Yggdrasil reaches full production. Together, we have built one of the most efficient offshore oil and gas companies in the world. with operating costs in 2025 of USD [ 7.3 ] per barrel and CO2 emissions of 2.8 kilograms per barrel. Over the same period, Aker has received NOK 22.7 billion dividends from Aker BP, and the company has delivered an average annual shareholder return of approximately 25%. This is value creation by a mile. The tenth anniversary also comes at a time when energy security has moved much higher on the agenda. Fatih Birol recently wrote that the global energy map is being redrawn in real-time and that trust has become one of the most important commodities in energy. His point is simple. After the shocks from Russia's invasion of Ukraine and the disruptions around the Strait of Hormuz, energy trade is no longer judged only by price. Predictability matters, reliability matters, trust matters. That's directly relevant for Aker BP. In a world where customers and countries place a high value on secure supply, Norway's position becomes stronger. So does Aker BP's. The Norwegian continental shelf remains resource-rich, cost competitive with low emissions and is supported by one of the strongest supplier industries in the world. For Aker, Aker BP is therefore not only a 10-year success story, it remains one of our most important industrial positions going forward. Now on to Nscale, our most recent rocket ship. It's 1 year since Aker made its first investment in the company and 2 years since Nscale was established. Since then, Aker has become Nscale's largest shareholder with an ownership interest that is now comparable to our stake in Aker BP. Even more important for our shareholder value is how Nscale has developed. The company has become one of the fastest growing we have ever seen through collaboration with giants like Microsoft, NVIDIA, Dell and other AI innovators. Continued success for Nscale depends partly on executing projects already secured and partly on having the right strategy going forward. The best way to ensure successful project execution and operation is to build a world-class team and work with key suppliers through an alliance-based model. This is a method of work we know well from Aker BP, where aligned incentives shared expertise and disciplined execution have been central to performance. The boxes are being ticked at Nscale. The company's strategy is based on building an AI platform company running on Nscale's infrastructure. Compute services remain at the core of that strategy. Demand for computing continues to accelerate as AI proliferates into every enterprise and workload, and inference is overtaking training of models. Every application deployed, every user onboarded and every query answered represents incremental and recurring demand for compute infrastructure. Diversification is a natural next step for Nscale across its customer base, geographical footprint and product offering. The ambition is to capture a larger share of customers' AI spending by expanding beyond infrastructure into higher-value services and software. Nscale aims to be the preferred platform for building and deploying AI workflows. Over time, success will be measured not only by computing capacity delivered but by the value created for customers. The second most frequently asked question I have received over the past year concerns potential listing of Nscale. That question should be answered by Nscale itself, not by Aker. My additional reply is, however, that exposure to end scale is already available through investing in Aker. The top frequently asked question I have received for years has been about a U.S. listing of Cognite. Finally, I can answer the question clearly. Never, at least not by us. A few weeks ago, we sold Cognite to Schneider Electric. The strategic rationale for acquiring Cognite is straightforward. Schneider Electric wants to position itself at the center of the next phase of industrial intelligence. Cognite provides the foundation. Its cloud-native platform combines a unified industrial data model with agentic AI capabilities. This enables customers to operationalize AI directly within plant operations. asset management and engineering workflows. By bringing Cognite into Schneider Electric and its industrial software subsidiary AVEVA, they are uniting the world's most comprehensive energy and automation infrastructure with the AI and software capabilities required to make the system think, adapt and act. The combination makes Cognite a part of what is regarded as the highest-growth segment of industrial software. The Conine transaction has been applauded by customers, partners and shareholders. It's nevertheless true that Aker neither plan nor prefer to sell Cognite at this stage. Our conviction regarding the company's additional potential was simply too strong to initiate a sale. The original plan was to continue building. We decided, however, to respect the fact that fellow shareholders understandably had a different investment mandate and horizon when offers from global technology giants like Schneider Electric came on the table. Strategic pragmatism is sometimes also a prerequisite for successful partnerships. Cognite was established in 2017 at a time when neither industrial AI nor data ops were established categories. What started as an effort to solve industrial data challenges become one of the world's leading industrial AI and data companies. Aker has invested approximately NOK 750 million in Cognite. The transaction values Kong net at NOK 30.8 billion and is expected to result in a NOK 14.7 billion cash proceeds to Aker. This is equivalent to approximately 20x invested capital in last 10 years. The transaction represents a valuation of 24x annual recurring revenue, making it the largest transaction of its kind in Norway and among the largest in Europe within industrial software. The financial outcome is significant. Just as important, Cognite has given Aker front-row seat to one of the most consequential technological developments over time. The terms reflect both the quality of the company and the position Cognite onnet has established in industrial AI. For Aker, the transaction realizes substantial value while strengthening our balance sheet and increasing our financial flexibility. For Cognite, the transaction provides access to global scale, broader distribution and one of the strongest industrial software platforms in the world. This morning, we announced an offer to take Aker BioMarine private. We have spent considerable time evaluating alternatives for the company. Interest has been strong, but none of the alternatives we reviewed reflected what we believe the business can become over time. The market backdrop is attractive. Demand for omega-3 continues to grow while supply remains constrained. At the same time, Aker BioMarine has built a position that is difficult to replicate. The company has around a 90% market share within global [ fill ] oil, supported by a sustainably managed supply chain. We believe the company is entering an important phase of development. The best way to support that development is through active ownership, patient capital and long-term perspective. That's a role Aker has played many times before. It's a role we know very well. Through a statutory merger, minority shareholders of NOK 105 per share, this represents NOK 9.2 billion in equity value, of which Aker Capital already owns 77.7%. The offer is structured as 80% in Aker shares plus NOK 21 per share in cash or an optional all cash alternative. Over time, Aker BioMarine has created positive value for shareholders. with an accumulated return of approximately 30% since listing in 2020. Still, we believe the company's next phase will require a form of ownership that is less constrained by short-term market expectations and better aligned with long-term industrial development. It has been an active first half of the year in Aker. We have realized significant value through the sale of Cognite. Nscale continues to scale at extraordinary speed. Aker BP marks 10 years of value creation and remains exceptionally well positioned. And this morning, we announced an offer to take Aker BioMarine private. Taken together, these developments leave Aker in a strong position. The balance sheet is strong with close to zero net debt following the Cognite transaction. The portfolio is more focused, and our capacity to invest has increased materially. The opportunity set looks very different today compared to just a few years ago. New industries have emerged, existing industries are being reshaped, technological developments that once felt distant have become central to capital allocation and industrial strategy. That creates opportunities. Our job is not to pursue all of them. Our job is to identify the few where Aker can make a real difference and come a bit behind them for the long term. Thank you to our employees, partners and shareholders for your continued trust and support. I wish you all and myself, a restful summer. But before that, I hand it over to Svein Stoknes, who will take you through the numbers in a greater level of detail.

Thank you, Oyvind, and good morning. To begin, I will provide a brief overview of the key numbers for our listed and unlisted equity investments along with cash and other assets, followed by a more detailed discussion of our financial results. At the end of the second quarter, Aker's listed equity investments were valued at NOK 66 billion. This represented 54% of total assets, equivalent to NOK 887 per share. During the quarter, listed investments declined in value by approximately NOK 11 billion. The main driver was Aker BP, which fell by NOK 7.7 billion or 16% after dividend. This reflected the decline in the Brent oil price, which was down almost 29% over the period. In the second quarter, dividends from listed investments amounted to NOK 2.8 billion. The largest contribution came from Aker Solutions with NOK 1.7 billion. This included both the ordinary dividend and an extraordinary dividend related to proceeds from the sale of its SLB shareholding. Aker BP contributed NOK 812 million in dividends, followed by Solstad Maritime with NOK 192 million, Akastor with NOK 151 million and Solstad Offshore with NOK 25 million. Next, turning to Aker's unlisted equity investments. At the end of the quarter, these investments were valued at NOK 53 billion. This represented 44% of Aker's total assets equivalent to NOK 712 per share. The value increased by NOK 8 billion compared with the previous quarter. The main driver was the announced sale of Cognite to Schneider Electric. The transaction valued Aker's ownership interest in Cognite at NOK 14.7 billion, including the settlement of the NOK 0.6 billion convertible loans. This was NOK 7.4 billion above the previous value or equivalent to an uplift of NOK 100 per share. In total, Aker expects to receive approximately NOK 14.7 billion in cash proceeds from the transaction. As in the previous quarter, the reported value of Aker's ownership stake of 22.7% in Nscale is based on the post-money Series C valuation of Nscale of USD 14.6 billion. Moving now to cash and other assets. At the end of the quarter, this asset category accounted for 2% of Aker's total assets equivalent to NOK 33 per share. Cash inflows during the quarter amounted to NOK 3 billion. This was primarily driven by NOK 2.9 billion in dividends received from Aker Solutions. Aker BP, Solstad Maritime, Akastor and Solstad Offshore. Cash outflows also amounted to NOK 3 billion. This included dividends paid of NOK 2.2 billion, net debt repayments of NOK 234 million and interest-bearing loans to portfolio companies of NOK 151 million. In addition, cash outlays related to operating expenses and net interest amounted to NOK 321 million for the quarter. As a result, the cash balance at quarter end was NOK 0.7 billion. With that, let's turn to the second quarter financials for Aker ASA and holding companies. Starting with the balance sheet, in line with our accounting principles, investments are recognized at the lower of historical cost and market value. At the end of the quarter, the book value of Aker's investments was NOK 55.3 billion. This was an increase of NOK 463 million compared with the previous quarter. The increase primarily reflects the assumed conversion to equity of the outstanding Cognite convertible loan amounting to NOK 645 million. This will be settled as part of the transaction related to the sale of Aker shares in Cognite. The increase was partly offset by a negative value adjustment in Akastor after dividend of NOK 175 million. The book value of equity at quarter end was NOK 42.7 billion, up NOK 2.3 billion from the previous quarter. This increase was driven by profit before tax in the quarter. On a fair value adjusted basis, Aker's gross asset value was NOK 121.3 billion. After deducting liabilities, net asset value amounted to NOK 106.1 billion or NOK 1,429 per share. The value-adjusted equity ratio was 88%. Of total liabilities, NOK 14.8 billion is related to bond debt and bank loans. Aker maintained a strong financial position at quarter end with modest leverage and ample debt capacity. The loan-to-value ratio was 12%. The total liquidity buffer amounted to NOK 5.7 billion, including undrawn credit facilities and liquid funds. And the Cognite transaction is expected to generate an additional NOK 14.7 billion in cash, bringing Aker's total liquidity buffer to more than NOK 20 billion. Net interest-bearing debt increased to NOK 13.1 billion from NOK 12.7 billion in the previous quarter. The increase was primarily driven by a reduction in interest-bearing receivables. This followed the assumed conversion to equity of the Cognite convertible loan and as part of the announced sale of Aker shares in Cognite. Aker's weighted average debt maturity was 2.8 years at quarter end, including available options to extend credit facilities and loans, the effective maturity is approximately 5 years. Finally, turning to the income statement. Operating expenses for the second quarter amounted to NOK 128 million, reflecting the high activity level during the period. Dividend income totaled close to NOK 2.9 billion. The largest contributions came from Aker Solutions with NOK 1.7 billion and Aker BP with NOK 0.8 billion. Additional dividend income came from Solstad companies and Akastor. The net value change for the quarter was negative NOK 196 million. This was mainly driven by a value decrease in Akastor, which amounted to NOK 175 million after dividend. Net other financial items were negative NOK 250 million for the quarter. As a result, Aker's profit before tax for the quarter was NOK 2.3 billion. Thank you. That concludes today's presentation, and we will then move on to Q&A.

Thank you. So Oyvind, your first question. Aker delivered an exceptional NAV increase of NOK 40 billion in the first half of the year. And following the Cognite transaction, you mentioned that Aker's liquidity position will exceed NOK 20 billion. That's arguably very impressive. Could you share your reflections on this strong position and the potential use of proceeds?

It is the result of a long-term strategy and a lot of hard work not only for me, but even more for the team. It also illustrates how Aker operates in order to grow net asset value by building great companies like Aker BP and continue now with an extraordinary growth at Nscale. In parallel, we are boosting upstream cash flow to Aker partly through a predictable dividend and partly through transactions like the Cognite transaction. So everything materialized in the second quarter this year or the first half of this year, but it's the result and the consequence of a long-term strategy and effort.

Thank you. So continuing on Cognite, regarding the closing of the transaction, it's expected in Q4, is it subject to any specific hurdles or just normal regulatory approvals?

It's an extraordinarily clean deal and only subject to regulatory approvals required by law. So it's a matter of process, but not a transaction risk.

So the Aker share price trades at a discount to net asset value. However, the Cognite transaction might demonstrate that Aker's track record and ability to realize higher than reported NAV values for unlisted assets. What are your reflections and thoughts on this?