Kongsberg Gruppen ASA (KOG) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to Kongsberg's Capital Markets Day 2022, both those of you that are present here in Oslo as well as those of you following the webcast online. Today, you will receive presentations from a broad group of Kongsberg's executives, diving into our targets initiatives and efforts to supply our markets with reliable, efficient and sustainable solutions. The agenda is on the screen behind me, and we will accept questions after each of the sessions. We will also accept questions entered into the webcast, and those will be asked by me during the Q&A session. With that, it's showtime. And after a short introduction video, President and Chief Executive Officer, Geir Haoy, will enter the floor. [Presentation]

Yes. Good afternoon, everyone. Really good to see you all. Also, those of you following us on the webcast, good afternoon to you as well. On behalf of the executive team of Kongsberg present here today, welcome to the Capital Markets Day of 2022. It's a pleasure to see you all, at least those of you here, finally, meet in person again. It's been a while. Is something missing here? Yes, I'll probably come back there. Very good. Sustainable value creation, which is written on the top of my presentation today. These are 3 words that basically cover the essence that we're going to present to you here today. But let me start with the beginning. These snaps -- not this one. Everybody has read the disclaimer. Let me start today with the slide which provides a snapshot of Kongsberg. As most of you know, Kongsberg, we have a long and proud history from a starting point back in 1814, to the international and diversified company technology corporation that as you know today. Kongsberg has always had an innovative technology environment. Our first international breakthrough, big breakthrough came already back in 1888. I don't think anybody remembers that. But that was when the Krag-Jørgensen was selected as the standard rifle at the U.S. Army. Since then, a list of innovative breakthroughs have grown large, ranging from the revolutionary dynamic positioning. We have the autonomous vehicles, both on surface as well as under the sea floor. Digital twins, we have the fifth generation missile systems, remote weapon systems and surveillance systems from space and so on. Today, we have truly a global presence. We are in more than 40 countries. And we have also the satellite ground stations in both the poles. We have more than 11,000 employees in Kongsberg today. And I think they have really proven their value and dedication over the last 2 years when we had these difficulties caused by the COVID pandemic. Last year, our revenue was ending at NOK 27.5 billion, and that was despite the challenging conditions that I just mentioned. This is up more than 7% year-on-year. So for me, Kongsberg represents the future. We have a world leading domain knowledge. We have #1 products in the growing industries. And our history proves that we are determined to continue to grow, deliver and develop state-of-the-art technology. Yes. As the President and CEO of Kongsberg, I'm very pleased to say that we are delivering on our key strategic priorities, as you can see here. We have still a very strong balance sheet and have grown our top line and also our earnings despite the challenging conditions. Kongsberg Maritime has expanded their scope and continue to attract orders for vessels both in the new building market but also in the aftermarket. Kongsberg Defence & Aerospace has capitalized on its strong position in defense, and have secured also several contracts, giving us a very solid backlog. Kongsberg Digital has scaled up their software-as-a-service business and will continue to roll out the Digital Twin systems, and also Vessel Insight. And also at the same time, we have achieved a top rating in a leading ESG benchmark such as the Sustainalytics and also MSCI. And we continue to innovate and empower our customers to better manage their security and sustainability challenges with our technology. So all in all, I'm very pleased to deliver as we promised. And I can assure you that we are determined to do so also going forward. So Kongsberg is performing strong. However, at the same time, we operate in a global market where the environment is categorized with more uncertainties than we have seen for quite some time. The Russian invasion of Ukraine is just tragic and best be condemned and sanctioned. The war is increasingly affecting the global security, economy, and many other areas. And unfortunately, the impact is likely to grow. Energy prices were already increasing before invasion of Ukraine and have become even more challenging with the sanctions of the Russian oil and gas, which we believe, of course, is necessary despite the impact it will have on us and also our customers. There is also a global shortage of certain components caused by the production losses due to the COVID pandemic. While it actually appears that this gradually returned towards increasing production capacity in some areas, COVID has not gone away and is still impacting some countries like we see in China right now. So there is some dark clouds gathering that will surely test our ability to meet and adapt to the rapid changing conditions. But that, as said, coping with the situation is top of my agenda and I know also my management team. We are taking proactive measures in close collaboration with our suppliers, partners and also customers. So I just want to reassure you about this. Whatever the global landscape may look like in the future, Kongsberg, we are prepared and determined to deliver and maneuver in a changing world in order to protect Kongsberg and our stakeholders' interests. So I firmly believe that Kongsberg is well positioned for further growth and value creation. This is built on our status of being recognized as a trusted global technology powerhouse with deep domain knowledge in our industries. The rapidly changing business environment of the last 2 years has shown that we can navigate and prosper in shifting external landscape. We have dedicated employees at all levels, and we have a very strong culture of collaboration, determination, innovation, and also the adaptability. We continue to utilize our world-class product and service portfolio, and also our crossover technologies. This is to secure and also grow our position. I just mentioned 1 example, the last year, we have now been awarded offshore wind contracts for approximately NOK 2 billion, which I think demonstrates how we are able to utilize our technology in new and growing segments. Further, we have a high focus on building strong and trusted global partnership in all business areas. These partnerships give us access to new capabilities, new markets and extended opportunity pipeline. Over more than 50 years of partnership with Raytheon, I think, really demonstrates the value of a strong partnership. The development and success of NSM and ASMs would not have been possible without this partnership. There is 1 goal that we never lose sight of and that is to create sustainable long-term value, to us delivering on our financial targets and on the sustainability agenda and goals actually hand-in-hand. We aim to be the best in class when it comes to environmental, social and governance matters. Going forward, we believe our growth and value creation will be driven by 3 key trends and drivers. The decarbonization and the increasing importance of business and global collaboration in achieving sustainable development goals, an increasing demand for digitalization in all areas and industries, and increasing need for security and defense systems in a changing graphical environment. So with our business model, deep domain knowledge and technology platform, Kongsberg is well equipped to handle and also to take advantage of these trends. So our technology can solve the key climate and environmental issues in the ocean space domain. Our digital solutions empower customers to optimize their vessels and other assets. And our modern defense portfolio is perfect fit to many nations' security and also capacity needs. So looking at these trends, Kongsberg will definitely make a difference, and also be a key part of the solution going forward. We are investing a lot of resources to further position Kongsberg as a key part of the solution to the global security challenge. As you well know, Kongsberg has secured a number of recent important contracts, underlining our leading position within the F-35 program, the missile systems, air defense, remote weapon stations, and control and command systems for submarines, and also the satellite surveillance. We have today a highly modern defense portfolio consisting of world #1 product and systems with a proven track record. Many nations and customers, therefore, look to Kongsberg for future defense investment. And we experienced increased demand from many existing customers. I think security is high on the agenda for almost every nation these days. The tragic war in Ukraine was a turning point and an eye awakener for many nations. A nation's security and sovereignty cannot be taken for granted. So in general, I believe the new geopolitical situation in combination with a stronger and more unified NATO will drive more interest and willingness to invest going forward. So we are also very much part of the solution to the global climate and environmental challenges. Kongsberg's products and services aimed at solving the climate challenges can be found in space, under the sea, and on ships. We work with many customers and partners to deliver zero and low emission ships and to develop offshore wind and reduce the environmental impact of supply chain and logistics. Kongsberg Maritime with this expanded scope after the acquisition of Commercial Marine is the world leader in marine technology with an installed base of impressing 30,000 vessels. They serve the entire ocean space domain and provide all technology equipment service required to operate at sea in a secure and sustainable way. That's ranging from offshore research merchant, fishing, to subsea and advanced offshore operations linked to agriculture, oil and gas, and offshore wind power. The International Maritime Organization is challenging all shipping companies and also ship owners to find and develop and integrate new, more energy-efficient solutions to meet the strict emission reduction targets set for 2030 and 2050. The target is to reduce the carbon emission by 40% by 2030, and that is compared to the 2008 level, and also to cut at least 50% of the shipping industry total greenhouse gas emission by 2050. And I think technology -- actually, I'm sure technology is the key enabler for meeting these goals, creating a more sustainable and also a healthier ocean. We are at the technology forefront globally in this industry, and we expect to increase demand for environmentally friendly solutions on the road towards 2030 and 2050. Technology is a key enabler to meeting these goals. And I believe also digitalization will also be a key part in the green transition. But I will come back to that a little bit later when I go into the Kongsberg Digital presentation today. In addition to deliver on the financials and growth, I have an overall mandate to create a more sustainable world. We aim to be a trusted partner for customer industries and society in this transformation. We are addressing sustainability across several perspectives. We analyze, we minimize, and manage our ESG-related risk. We look for opportunities to create value and competitive advantage by integrating sustainability into our strategy and also into our business model. We trust and we promote climate science and strongly support the ambition of the Paris Agreement. So therefore, we have also committed to the Science Based Target initiatives, and we are now in the process of validating the preliminary target in that sense. So we are also aiming to reduce our emission from our own scope, Scope 1 and 2. And that is the target that we're going to reduce that by nearby 100% within 2030. Kongsberg has today a very low carbon footprint. So I think where we can really make an impact is through our business model, suppliers, and also our customers. Therefore, we also aim for that 2/3 of our suppliers should set their own scientific-based target within 2027, which is in line with the Paris Agreement. Not to forget, we enable our customers to reduce their emission and increase their positive impact on the environment with our technology. I would also like to mention that we work systematically to incorporate circular principles into our business model with particular emphasis on product design, raw material and material technology, waste management, and also end use of our products. This is also a new business opportunity. At the same time, we strengthen our capability to adapt across the maritime, defense and digital activities. So we are always looking at new opportunities for sustainable growth. And I just would like to share some core elements in our M&A thinking. So we aim to strengthen our core business by further utilizing our world-leading position and unique product portfolio. We are looking to improve our geographical footfall for defense business. Eirik and Pam will come back to that a little bit later. We're seeking to add complementary products and technology in order to expand scope in growing industries. And we want to continue to scale up our digital offerings with more applications and utilizing our software-as-a-service business model. Offshore wind represents a huge potential, and we want also to further explore that opportunity in a wider context than we do today, and also space is getting increasingly more important for us and we are exploring today how to strengthen our space business, both in the commercial side, but also on the defense side. And then we are also searching for selective adjacent and interesting opportunities. Yesterday, I visited Bodø for the opening of the remote tower center there and that kind of opportunities. But we are continuously looking for new opportunities and I believe that with this broad M&A approach, we will continue to many opportunities and paths to grow our business in the coming years. So why should you invest in Kongsberg. I'll try to put it simple. I firmly believe that we have a diverse, robust and resilient business, which is really unique. We are highly focused on building a strong performance culture with clear focus on the value creation. I think also that our expertise and know-how in our markets is world-leading and also quite unique. We have the technology our customers need to meet their security and sustainability demands. And not least, we also have a very robust order backlog, and, which you're going to hear more about today, a growing pipeline, which gives us quite a good visibility going forward. So in combination with our strong focus on people, technology and dedication, I think Kongsberg is a good place to deliver further growth. With that, thank you for the attention so far today. I will be back. But then it's a pleasure to introduce our always forward-looking and hard-working CFO, Gyrid Skalleberg Ingero. Gyrid, the floor is yours.

Thank you, Geir. And thank you for coming today, and thank you all for listening in. It's good to see so many back to listen to this fantastic company that we always love to talk about. And after the facts and figures, you will also be able to have a deep insight in some of our business areas. I look also forward to that. So by that, our Capital Markets Day is both to look forward, but it's also to have some reflections. Over the last 4 years, Kongsberg has become a successful growth story, and growth will continue. Looking at this development, Kongsberg has delivered a growth of more than NOK 14 billion, out of which 50% was acquired growth, and 50% is organic growth, representing a CAGR of 18% over the last 4 years and the first quarter. If you take out the acquired growth, then we have a CAGR of 10% so far. I just want to share some thoughts on the different business areas, starting with Maritime on the top here. This slide shows quarterly revenue development per quarter at the last 5 years with value reflected at the left axis as well as rolling 12 months annual revenue with value reflected on the right axis. You can see the uplift from NOK 2.1 billion to NOK 4.2 billion after the acquisition of Commercial Marine in the second quarter of 2019. With the acquisition, we expanded our delivery scope and established 2 new business divisions. With Propulsion & Engines and Deck Machinery in-house, Maritime had since 2019, consists of 5 divisions. I would first like to bring your attention to the global customer support, which now have 12 months rolling revenue of NOK 8.3 billion and are now 15% larger compared to the whole Kongsberg Maritime before the acquisition. It's the blue at the end here on the bottom of the graph. This has been and still are a solid and growing business for us. Kongsberg Maritime had, before the acquisition, 30% to 40% of its revenue from the aftermarket before the Commercial Maritime acquisition. Now more than 50% of the total revenue is generated from the aftermarket. Together with the cost efficiency program, this has been a key driver for the profitable growth that we have seen in Kongsberg Maritime. Looking at positive market development at the end of 2019, as you can see here from the second quarter and up to the end of 2019, we were, like others, hit by COVID in the second quarter of 2020, and investments were put on hold for a lot of shipowners. But from the fall of 2020, global customer support has increased their revenue by more than 50% on the top line. In defense, Air Defence System has been the main driver in the last 2 years, together with aerostructure, where we produce parts for F-35, and also land systems, where we produce weapon stations. Looking at Q1 this year, you can see the delay from remote weapon stations due to component shortage reflected in the land system revenue. But that said, the overall growth in defense has been amazing over the last 4 years from NOK 6.3 billion to NOK 10.1 billion now. From second quarter 2019, defense has delivered on growth with an amazing book-to-bill, adding up to now NOK 35 billion in the order backlog. Both maritime and defense has seasonality. We do not very often talk about that, but you can see it quite clear here when you see the quarters on top of each other. This is typically due to milestone deliveries towards the end of the year. Kongsberg Digital. Kongsberg Digital has had somewhat flattish revenue over the last 3 to 4 years if you look at the total revenue for Kongsberg Digital. But if you look at the development for the growth areas, KDI has had a good improvement. The most important financial KPIs that we follow on digital is the development in the recurring revenue. As you can see from the graph on the left-hand side, Digital has managed to increase its rolling 12-month recurring revenue with more than 50% since Q4 2019. Going forward, we expect the recurring revenue to continue to grow at an even faster pace. And this growth will be driven mainly by the 2 growth areas that we have, Vessel Insight and Digital Twin. As you can see on the graph on the right-hand side, we see a solid development in the main KPIs, both with regards to number of vessels in Vessel Insight, and number of Digital Twins in operation. Later today, we will present some more details into the prospects growth for these 2 areas going forward. When that said, we also expect a healthy contribution from our established business, in particular, from SiteCom that now is in a transition to be delivered as a SaaS business model. And we have already transferred some customers over to the SaaS business model and are in process to transfer several others in that area. Associated companies. In addition to our revenue and EBITDA, we also have several associated companies with Kongsberg Satellite Service and Patria being the main contributors. Despite this, they are not included in our long-term revenue and EBITDA targets. These companies are important contributors to our earnings per share. Both companies are well positioned in the core markets for further growth. The cash from dividend will, of course, be received the fiscal year after in terms of the graph that you see here. Both companies have shown solid development lately. If you look at KSAT, from 2016 up to today, they have doubled their revenue from NOK 600 million to NOK 1.2 billion. That figure you will not see on the slide. Patria has, over the last 2 years, managed to lift the profitability dramatically. And the outlook for both companies are strong. And Patria has also launched a 6x6 vehicle where they have won contracts both in Finland and also international. So very good outlook for both of those associated companies. So what about this year? On our Capital Markets Day in 2019, we presented our targets for the coming 3-year period. As you can see, we are trending towards our targets. We did not state a specific target for return on capital employed, but we promised that if we delivered on the other targets, this would improve considerably. The result as of Q1 2022, you can see here, implying a tripling of return on capital employed over the past 3 years. This is mainly driven by an improvement in our operating result, the EBIT. When presenting these targets 2.5 years ago, we had started the integration of Commercial Marine, and had already introduced a cost efficiency program. We also saw tendencies improving maritime markets and the future was quite bright at that time. Then in the beginning of 2020, COVID came, and suddenly, as an international company, everything was turned upside down. Maritime contracting stopped. We were uncertain about the effect on defense. And we had to adapt the organization to something that was hard to foresee the outcome of. Despite this, we stuck to our main strategies. We pushed the integration of Commercial Marine and continued to hunt for new opportunities, with 1 message to the organization, every day, every week, protect the cash. On the next slide, I will give you some details on the revenue and on the EBITDA development to give you some more insight in what we think about 2022. Our target for this year is to deliver more than NOK 30 billion in revenue in 2022. Last quarter, we reported rolling 12 months revenue of NOK 28.1 billion. Since 2019, there has been 3 major effects on the revenue. First being organic growth, mainly from defense. Secondly, we have full year effect of both the Rolls-Royce Commercial Marine as well as Kongsberg Aviation and Maintenance Service that we acquired both of them in 2019. In addition, in 2019 -- 2020, we divested our previous U.S. subsidiary, Hydroid, which contributed with approximately NOK 800 million in revenue. Despite this divestment, we stick to our long-term total target of NOK 30 million for 2022. For the remaining of 2022, we are pretty confident that we will reach our NOK 30 billion target by the end of the year. This is despite a few things that I would like to mention. In April this year, we exited from the sales and service agreement that we have with Bergen Engines. In addition, keep in mind that our historical figures also includes revenues from customers that will no longer be delivered due to sanction against Russia. These 2 issues together had sales for some NOK 1 billion in Kongsberg Maritime last year. So what about the EBITDA? We have had a solid development in EBITDA. And since 2019, we've grown both nominal EBITDA, and also the margins. Here you can see the drivers from the EBITDA, and you will not be able to calculate that when you see in the quarterly report, because here we've dived into the gross margin. Growth has been a main driver for the uplift on profit with some 60% from Defense and 40% from Maritime. Normally, we have 60% of the revenue from maritime. Then when it comes to profit, it's the opposite way, 60% from the defense in this period. In addition, we have had a high share of international sales in defense and an increasing share of aftermarket in maritime that have made a positive impact on the market for both those areas. The integration of Commercial Marine and the value capture program related to this have been very successful and we have managed to capture annual savings of NOK 640 million, out of which NOK 260 million already was in the 2019 figures. The positive effects are slightly offset by some increase in SG&A as well as investments in product and development to secure further growth. On our Q1 presentation, we reported a rolling 12 months EBITDA of NOK 4 billion with a margin of 14.3%, above the year target for this year. We still believe that we will be able to deliver on this year's target with 13% in maritime, obviously more challenging than 16% in defense. Both the revenue and the EBITDA can have some delays between the quarters due to challenges around logistics and components, but we still believe that the margin of 14% for this year are achievable for the Kongsberg Group as a whole. So this is probably the most interesting slide today. What will we now aim for in 2025? In our new targets for 2025, we will again hand for growth. We will add on NOK 10 billion more in organic growth in addition to our NOK 2.8 billion revenue target for Kongsberg Digital. Our current order backlog gives comfort for further growth, and we believe that the main drivers for this growth will consist of contribution from the aftermarket, the offshore wind deliveries, and the maritime robotics in maritime, missile deliveries, air defense and remote weapon stations. The revenue growth will come in a split, as you can see on the chart here, with NOK 33 billion as a target for maritime and NOK 17 billion as a target for defense, implying a CAGR of close to 9% in maritime and 14% in Kongsberg Defense compared to the year-end 2021 figures. In terms of the margins, we aim for an uplift again from 14% to 15% for the group, with, respectively, 17% for defense and 14% for maritime. And then someone might ask, looking at defense target of 17% is down from today's trending margins. But the mix in projects with about 90% international sales with favorable margin mix will change. But that said, in nominal value, the uplift in profit will be close to NOK 1 billion only for defense alone. For maritime, the ability to take out scale and streamline the international operations combined with a positive view on the new build market and upcoming services toward a green shift will contribute to a higher margin going forward, also for maritime. And 3 years ago, we introduced the capital allocation principles or priorities. They will stay unchanged. So I will comment on all of them one-by-one. So starting with our first priority to have a solid balance sheet and always have access to funding. This is important for our customers who need security for us being there to support, not only when delivering our system, but as long as the delivered system will be in operation. A solid balance sheet also puts us in a position to turn around quickly and capture opportunities. Also remember that with 81% of our 2021 revenue coming from customers outside Norway, we do need a strong balance sheet to carry temporary impacts on liquidity because of our foreign exchange hedging policy. Our net debt-to-EBIT target remains. However, we are making a technical adjustment to include the impact of IFRS 16. That was not included the last time as IFRS 16 was not yet implemented then. As you can see, we admit that we still are outside the range. However, as stated, when we introduced it, it's a long-term target. But as you can see, we are trending towards it and adjusting the Q1 number. With NOK 2.7 billion in dividend that we paid out last week, we are getting closer. As you can see, our capacity is still solid and currently indicates some NOK 10 billion headroom in additional debt capacity based on our financial policy objectives today. A healthy net working capital is also important for our balance sheet. Here there is a significant difference between Kongsberg Maritime and Kongsberg Defence. For the maritime business, the working capital will always be positive and to a large extent driven by project mix and volumes. However it's been previously and will continue to fluctuate going forward. Last Capital Markets Day, we stated a normal working capital towards 15%, and we said that we will aim to go down to 10% for maritime and keep it around 10%. But as you can see here, during the period, we have been below 10%, and we are currently trending at 9%. With continued strong discipline around capital, we are targeting today's level also going forward, but remember that fluctuations between quarters will occur. In short term, 1 exception could be. If we are able to collect safety stock on specific components, we are willing to increase the working capital temporarily to secure deliveries. For the defense business, it's quite different, where our significant negative working capital is driven by the payment structure negotiated in our sales contracts. However, this also depends on the product mix since some areas have more preferable payment terms than others. So it's completely impossible to predict the working capital in that area. Priority number two, in terms of capital allocation is investment for organic growth. To compete on the international arena, we need to keep our positions as front runners. To live up to the technology powerhouse that Geir has touched upon that we are today, investment in R&D is of high importance. On the defense side, the majority of the R&D is funded fully or partly by our customers. While we, on the civilian side, carry a lot of those investments ourselves. Typically, the latest years have been the Digital Twin, the Kognifai platform, and several initiatives to improve the innovative solutions in Kongsberg Maritime. At the moment, we invest close to 5% of our yearly revenue in R&D, where we, on average, have capitalized approximately 20% of that amount. On top of the customer-funded R&D, we also benefit from various civilian support teams. For example, now there's been a lot into sustainability from EU. With regards to R&D, we aim to develop world-class product and solutions, fulfilling our customers' demand, as you see on the cycle here, how we are working with that, both when it comes to efficiency, safety and sustainability. Further, it's important that the development is in such a way that the products and solutions are fit for scaling and efficient deployment. This has generated great success for us, also in competition with major international players, and will continue to be the basis of thinking. We need to be able to scale and then deploy it internationally. On top of the R&D, we also invest in life cycle management. Including life cycle management, we invest approximately 10% of the group revenue each year. And something happened last year. If you look at the graph down here, you can see the order backlog for missiles. Entering into this year, it was approximately NOK 3 billion. Entering out of last year, it was NOK 12 billion. We got a lot of large orders -- not a lot, but at least 2 large orders, both for Germany and Norway on missiles, and we expect that this will continue. So in terms of that, we have already started and planned out to build a new missile facility in Kongsberg. In addition, we are just finishing a facility for space. It will be finished this July. And 2 years ago, we were finished with the new facility for Air Defence System. So to be able to deliver on the backlog, and also to be able to ramp up new opportunities, we're now investing approximately NOK 1.5 billion over the next 2 years to be able to do that. Those facilities, especially for the missile division, that has been a bit around in the park at Kongsberg, will provide cost synergies and reduce unit costs due to streamlining and increased efficiency. So this is something we really look forward to. And then the third capital allocation priority, that's for you, and it goes with providing a solid remuneration to our shareholders. If we do not have relevant investment cases for further growth, we should not accumulate cash. And as you have experienced, NOK 2.7 billion was paid out last week. Since 2019, we have returned NOK 7.5 billion to our shareholders, a combination between dividends and buybacks. During the same period, we had a strong performance with a total shareholder return of 226% compared to Oslo Stock Exchange that had a shareholder return of 61%. So almost 4x that much. And just to remind you again about our dividend policy, it's to have a flat or increasing nominal dividend with special dividend and buybacks as a potential supplement. So that's something our Board considers every December and takes the decision in February each year. A lot of discussions on that. And then in a world with inflation, how does that effect on Kongsberg? We felt that we need to address that a bit. 75% of the total cost in Kongsberg is cost of goods sold today. So to keep an eye on the contracts and the sourcing is of high importance to keep control of the cost development in the group. But again, out of this, about 50% of the revenue or the cost in Kongsberg -- or the revenue in Kongsberg and also costs are short-term aftermarket sales. So price changes compensate for the inflation. Further, between 40% and 50% of the order backlog in Kongsberg Defense has escalation clauses to compensate for inflation, meaning that a high percentage of the running costs have already mechanisms for unexpected cost increase today. And then taxonomy, which everybody tries to learn something about, but it's hard to find revenue that actually qualifies for that. Sustainability is high on the agenda, and we are committed to meet the reporting requirements once it comes in force after the regulation has been incorporated into the ERE agreement. Most of our time we have spent on, like other companies, to identify the different activities. The taxonomy has been established on a methodology to incentivize public companies to make a positive contribution to reach the Paris Agreement goal. Activities described and prioritized by the taxonomy aim to make a step change on a sustainable direction where significant improvements are possible. As such, non-eligible activities are not synonymous with sustainable activities. Our work shows that current framework of the EU taxonomy priorities, other activities than Kongsberg business areas today. Based on the current adopted scope of the taxonomy, no activities have been found relevant for the defense at the moment, and the impact of the EU prioritizations toward economic activities outside Kongsberg leads to a very modest eligibility in our reporting. So as you can see here, we have NOK 28 billion in revenue. Out of those, less than NOK 1.5 billion is eligible, and none of those are aligned today in today's definition. So we're still hunting for those. But having said that, there's very much that we do in terms of that. So you see the 2 cases here. For instance, project for Golden Energy Offshore saves an estimated 1,000 tonnes of CO2 yearly and represents 20% reduction in fuel consumption. We also saved 7,300 tonnes of CO2 emission annually in a project for COSL Drilling Europe. However, as these projects fell outside the scope of activities described in the taxonomy, they should not be considered eligible. This calls for alternative reporting formats such as the Science Based Targets, which we have committed to. And that in order to the broader scope of our sustainable activities and how we can contribute to develop the industry towards a more sustainable future, and Geir has already touched up on that. So last, but not the least, our fourth priority, the active management portfolio. The active portfolio management includes both acquisitions, divestments, investments and joint venture. So over the last 10 years, we spent more than NOK 8 billion to more than 20 large and small acquisitions or investments in associates. A Geir has already told you what we are looking for. So with that, what do we want to do now? We want to secure growth, hunt for more growth, deliveries on our backlog and search for new growth opportunities, secure competitiveness by being efficient and take out scale. And last but not the least, shareholder value through capital prioritizations. Thank you all.

Okay. Then I would like Geir and Gyrid to stay on stage. And we open up for questions. So first -- and if you ask your question, please also present yourself with name. Any questions from the audience? We can start -- it's one question, maybe a warm-up question from the webcast. It goes to the CFO. Are there any plans in Kongsberg to invest in cryptocurrency projects?

No. No, no. That was easy.

Told you, it was a warmup. I have one question from the audience here.

Lukas Daul from Arctic Securities. Just regarding your comment on the cost inflation clauses? You said that 40% to 50% of the defense contracts have those clauses?

Yes.

So the rest is rest is sort of without these? Or are you sort of fully exposed to inflation on the remaining 50% to 60%?

Now you have -- that was out of the order backlog. So that will be delivered upfront. And then you have all the -- services contract, you have all the bread and butter that you are delivering now, that you also have the same possibility as you have in the maritime to escalate it with price changes. Maybe we can comment on it a bit -- yes, you have also with the suppliers.

But just to keep it simple, of your backlog that you have in defense right now, how much of that backlog is fully insured, if you want to use that word, against cost inflation and how much is open?

Between 40% to 50%, and then you have to negotiate for the rest if you see that you have a lot of inflation.

Okay. And what is your experience based on history regarding negotiating these terms following, let's say, cost increase?

Yes. We're taking this experience directly here.

First of all, I think it's correct what Gyrid stated that it's 40% to 50% that is protected. And then we have also signed up quite a huge supplier base that is tied into what we are doing. And in addition, I would say, history shows that we are able to also renegotiate where we have different uncertainties. So it's difficult to give a precise answer, but I feel quite comfortable in how we have handled this.

Maybe also add, I think, that there is a built-in inflation because these programs are going over several years. So there is a natural escalation there also, of course, but if it's abnormal inflation, we need to renegotiate, so that we do.

So instead of renegotiating 100%, you at least have to negotiate only half of it, if it just runs away.

Yes. Sveinung Alvestad from Arctic Asset Management. I guess it goes mostly to Gyrid and maybe the gentleman in front of me here. On KM, I mean, you said you were quite confident on the 13% target for this year. And even though there are logistical issues, I guess that should not be a problem for 2025. So in my opinion, the 40% target is may be a little modest in light of the strong development we have seen over the last few years. So are there any mix assumptions? Or if you can elaborate on the way to this 14% target?

I think we can always wish for more. And as you can see, as I also said that in terms of the 14% target, it's harder to get 13% in maritime than it is to get 16% in the defense area. But of course, what you can see is that to lift it up to 14% could be quite challenging we think. But otherwise, I'm always happy to have more margins, as you know. Egil can also comment on that.

It's to find this balance to be investing in future technology and products and to deliver from quarter-to-quarter. And we feel that, that might be a right balance as we see great opportunities also on long-term investments.

Okay. Then we have one final question from the webcast before we move further into program, from Haakon Amundsen, ABG. You seem to emphasize M&A more recently. You're also indicating investments in facilities. Should we expect significant increase in investments in the coming 3-year period?

No. Out of what we know, it's the NOK 1.5 billion that we just discussed now. And otherwise, we don't have any concrete plans, but we're always searching for new opportunities, as Geir said, in M&A. And in terms of facilities, we already have close to one and are starting on the third one now.

Thank you. Then it will be possible to ask questions later also during the program. So then we would like to continue. And after this short movie, you will get an introduction or a presentation on Kongsberg Digital.

[Presentation] Yes. I told you I will be back. And as you know, since Hege Skryseth has resigned, and she decided to join Equinor, she will not be presenting KDI today. But I have good assistance anyway. So I will just give you a short introduction to KDI, and then you will have more insight on 2 main growth areas in KDI, which is the Digital Energy and also the Digital Ocean. So I would also like to just use the opportunity to say thank you to Hege for her contribution and great work she has done for Kongsberg Digital in the last 5 years. We're going to miss Hege, but we expect that we get a lot of orders from Equinor going forward. As you saw in the movie, KDI vision is to enable the green shift by digitalizing the industry. What KDI is doing is enabling smarter, safer, and greener operations by transforming data into insights and also into actions and automation. As such, we support our customers as a digital partner to solve the increasing challenge and requirement when it comes to transparency, safety and efficient operations. With the best-in-class technology and game-changer mindset, KDI aims to fundamentally change how their customers work, and also then secure a better tomorrow for people, business and societies. Today, KDI's focus is on heavy asset industries, where the complexity is high and their impact and value are incremental. Increasing requirements for transparency and safety, not least emission, is driving the demand for KDI's products across these industries. KDI delivers IoT and Digital Twin solutions to customers in heavy asset industries and are today organized in 3 business areas, representing different customer segments. And KDI then focused on developing standard and highly scalable software, which is agnostic across different industries, different assets, and again, different customers. Across all the divisions, KDI delivers value from aggregating and contextualizing data to create value-adding applications layer on the top. This application will be both in-house in KDI and also third-party applications. Then what KDI is trying to do is to bring down the silos and secure a more efficient work day, securing and making all data and use cases available to users through an industrial work surface. And then KDI are built on decades of Kongsberg's history and one of the key competitive advantage is the strong domain knowledge in the industry KDI works with. And that's also the problems that the industries need to be solved. KDI now has more than 800 employees globally, and can show a strong and growing customer base across all the 3 divisions, which indicates that KDI is in a position to be a frontrunner in the digitalization of the world industries. I think Gyrid covered most of the figures for KDI, but we have also previously stated that we have high growth ambition for KDI. And I'm also happy to see that there is positive development in both operational, but also the financial KPIs over the last quarters. So for KDI, we have a 2025 target of NOK 2.8 billion in revenue with a share of recurring revenue of 95%. And the key driver for this development in the growth is the growth in number of Digital Twin and connected vessels. So this target implies approximately then 100 Digital Twins by 2025. And the reason why I'm saying approximately is that the revenue is to a large extent driven by the number of users per asset, and that will vary. Nevertheless, 100 Digital Twins accounts for approximately 4% of the world's oil and gas assets. So it's not a huge percentage. And then that also implies that the market potential is huge even before counting in other relevant verticals like batteries and hydrogen, offshore wind and chemicals. To realize the growth ambition for the Vessel Insight, we need to connect approximately 8,000 vessels, which then equals to 13% of the addressable fleet. And the KDI's existing customers already represent actually a fleet of almost 4,000 vessels. And then if you combine all the vessels having KM equipment installed, which is 30,000 vessels, we are already an established player and a brand in the market that we are addressing, which I think puts KDI in a very good position. So with that, I'm very pleased to give the word to Andreas Jagtoyen, which is the EVP for the Digital Ocean, and he will be followed by Shane McArdle, which is the Senior Vice President of Energy in KDI, and they will give you some more insights on these 2 main market drivers. Where is Andreas? Floor is yours.

I think you could just continue because I'm talking about your main domain, I think, the maritime. Yes. My name is Andreas. I'm happy to be here with you today. I'll give you some introduction to Digital Ocean, which is one of the 3 divisions. I think this slide is showing a little bit what we are trying to achieve in the market here. And what you see here is actually both Kognitwin, which is Shane's area on energy, and Vessel Insight, is actually relating to each other. We are using the same common technology for the edge, for instance, to bring data from the asset. And we also are collaborating because the energy companies, for instance, they use ships vessels as their midstream segment and thus, of course, to integrate value chains is very important for these large companies. And that's why it makes a lot of sense actually to address both of these segments at the same time. We also have a lot of common, let's say, components in here. As you said, Gyrid, we are all working on the edge and to mask the complexity there. The control systems and the heavy assets are all different. So we need to create technology that automates, let's say, the onboarding of the data, and then we need to mask the complexity in order to bring this into a common interface to the applications. So this is a big part of what we are doing. And this is not for everybody. And I think there is where the Kongsberg, let's say, culture and the domain knowledge really comes in. So I will give you a little bit more introduction to Ocean Digital. Vessel Insight was introduced briefly by Gyrid. It's where we actually connect the vessels to the cloud, to make it very simple. It's consisting of 2 different tier levels, which I will come back to. Then we have the maritime simulation, which is an area of 30 -- 40 years of experience developing simulators for training and education of seafarers, but also lately becoming more and more relevant for engineering, and also to plan operations in the maritime space. This is why we developed what we call K-Sim Connect, which is actually a platform of deploying simulators in the cloud, making it easy to do remote training, for instance, in order not to travel for a facility to train, but also to deploy simulators in the cloud to generate synthetic data for machine learning algorithms, for instance, in addition to data coming from the assets in real time. So simulators are really important for us going forward and for the industry in order to make, let's say, the digital transformation come through. We have, as Gyrid said, an ambition of securing 8,000 vessels in 2025 -- end of 2025 with NOK 1.2 billion in revenue, which is a quite steep growth. But if we believe in digitalization in shipping, this should be really realistic, also given the position that Kongsberg has in maritime. I will try to give a little bit of an introduction to how we see the transformation going. And I think this is not something that is switched on and then it works. Digitalization is a journey. It takes a lot of changes to both in the culture and of the operation of the vessels, but also how the different stakeholders to maritime are collaborating. So there is no shipping company in the world that can do this alone. They need to collaborate with their stakeholders, which is the charterers, the insurance companies, and all of the others. So where we currently are, we are at the beginning of this journey. I think all digitalization starts with data. This is what we have done now and are scaling rapidly. We have more than 500 applications available in the maritime space for feeding on this data and to create value from it. But the challenge is that a ship operator cannot use 500 applications to follow through a workflow in order to conduct a journey from A to B, for instance. So we really need to bring a lot of this functionality together into integrated work services, where all the stakeholders can find and get access to the data they need, but also to digitalize the workflows they are using. So we need to relate a lot more to the workflows in order to make a more efficient future for shipping. Yes. I will cover briefly on the status of Ocean and Vessel Insight in particular. We really see now the maturity increasing in the market. And the first and foremost proof point is that we are now able to convert, let's say, potential in the fleet from proof of concepts and test installations into fleet rollout. And I think that is the first sign of early maturity. There is really a pull in the market for the applications related to fuel and emission in particular, but also other areas. And we have a proof of the pudding. And I think Gyrid gave all my point here. We are really successful of securing new contracts now. So we have a very good pipeline coming up. I think we are addressing a market for north of 60,000 vessels. There are more than 100,000 sailing out there, but a lot of them are old and are going into, let's say, sunset. But there is a big market out there. And we perceive 20% of this market to be what we call the high-end segments, which are in early maturity stage or earlier, or more improved than the others, like bulkers and tankers. So we are now actually rolling out Vessel Insight for those main categories you see listed there, LNG, LPG, offshore and container, but we also have signed now fleet agreements on the tankers, which is one of the volume segments that are later to the game when it comes to maturity. We are addressing the market with 2 tier levels with the Connect, which is demanding a computer or an edge computer installation on board, where we can aggregate and sample data in real time into the cloud. And then we have the access level, which is then based on manual reported data, where the ship crew is keying in data every day, which is a normal operation on board. Of course, we are addressing the market primarily with the Connect solution. Then what are the markets asking for now when it comes to value proposition. I think value of data, the data cannot be locked in. The data is on the ship and it's available in the cloud, but it doesn't give any value. We cannot just sit every day and watch at a screen and report and so on, we need something to give advice based on the data. That's where applications come in and are really important for us. We have now around 40 applications available in our marketplace, which are linking to the data coming from the vessels. We are investing heavily in our own application development, and we have also taken over 2 very strong application teams from my colleague here, Egil in KM, where we are going to put this into a complete portfolio for digital applications. And we are proud also to be signing up now a lot more international application partners, for instance, a company called Alpha Ori, which is part of the Singapore tech environment. Singapore is really important for shipping as well. And also a Greek technology company called METIS, which is also very successful in the Greek market, which is also very important for shipping, as you would know. Then already said, we have now secured more than 700 new vessels as contracts this year, which is a rapid growth from around 1,000 end of last year. And I'm also happy to see that more than half of this is actually on the Connect tier, which is with an edge computer and automating sample of data. We have a fleet or a sales pipeline of more than 4,000 vessels, most of them into customers that we already are working with. And as we have seen, the maturity is coming now, and we see that more and more are actually converting from just a few vessels in the fleet to a complete fleet rollout. And also I would be happy to disclose some of the big contracts, but I cannot do that by name today, but we have signed 2 of the very biggest shipping companies in the world on Vessel Insight Connect the last quarter, which is something we are very proud of obviously. As many others, of course, we need to convert, let's say, order intake into revenue. And this is, of course, a challenge in the market, getting access to our scaling up the delivery organization, but that is our prime focus now. And we are really working hard together with our sister company, KM, to make this successful rollout with all the contracts that we are securing. Last slide, summary. Summing up, just, there are 3 ways of expanding our business on Vessel Insight, of course, securing more vessels and fleets. We can, of course, then also expand through our ecosystem with applications, selling more to each vessel. And then, of course, moving from the access tier up to the connect tier, which is, let's say, giving more value to the owner but also, of course, to us. With our K-Sim Connect solution, we are now able to do remote training of seafarers and the crew. Complexity of shipping is really increasing. And Kongsberg Maritime and others, they are selling a lot of advanced equipment. People are not able to handle it without training. And the new fuel types and everything coming into shipping now, they really demand a more, let's say, updated crew. And this is where we are targeting with our K-Sim Connect solution. And then, of course, we have to grow the organization as we grow the business. So this is a prime focus for us as well. Then I will hand it over to my dear colleague, Shane, to take you through the energy part. Thank you.

Good afternoon, everyone. Thanks, Andreas. So I'm going to take you through Digital Energy. What does the energy market mean for us? Basically, it consists of customers who operate, produce traditional hydrocarbon assets, but also includes renewable assets as well. And it includes the integrated value chain between those assets. We provide a suite of software tools and services that help them operate, maintain these assets in a safer, secure, more sustainable and profitable way. Today, we represent 31% of the business, and we have 2025 targets of NOK 1.1 billion in revenue. Supporting that number and sitting behind that number is about approximately 100 Twins. I think, Geir, you mentioned not all assets are made equal. We have both small and large, but on average about 100 assets would support that number. The industry right now is in a very turbulent and rapid change, but that's actually helping us. It's helping us to drive adoption with our solutions. So primarily, we have the energy transition. We have to do this. Society is demanding this, and it's creating a lot of external pressure for these oil and gas operators. They've made big and bold pledges to be net carbon neutral by 2050. But just around the corner, in 2030 alone, there are some significant targets that they have to hit. With the very unfortunate and unnecessary war in Ukraine, we are also seeing energy security being elevated up on the agenda as well. What does that mean? It means that right now, demand is going to exceed supply. We're facing an energy crunch right now. And you're all feeling it in your pocket, I would say, every single month with your energy prices being lifted. What do we have to do? We have to extract more hydrocarbon molecules from the existing infrastructure. That's what we have to do right now. In addition to the energy transition, which we have to support and drive and accelerate, we still have to invest into the existing infrastructure in order to meet that demand. It's not going away. Underpinning that is operational efficiency, operational excellence of our existing infrastructure. And then finally, we have a very new and young workforce coming into this industry. It's interesting, again. And digitalization is driving that, I would say, attraction of talent. But they're coming in with a very digital savvy background, and they're looking to enjoy the same level of digitalization that they have in their day-to-day lives and their work lives. So again, it's driving adoption of our technology and our solutions. Data and access to data really drives a lot of the decision-making in the day-to-day industrial asset. That then is connected to how we work, where we work, and how we actually execute that piece of work. If you think, I see a lot of iPads out here and smartphones, and you just think how the advent of the iPhone has changed how we all interact with our personal data. We have insights on our health, fitness tracking; we communicate with our family, friends; we work through these smart devices. It's fundamentally changed, through the lens of our smartphone, how we live our lives. We're building an industrial work surface that provides an end-to-end experience, which are industrial data. It provides insights into your assets, and it's also a place where you execute that piece of work. So if you don't connect digitalization, if you don't connect it to a business improvement or business output, it's not really valuable. You have to digitalize with purpose. You can't just have a data platform strategy or an AI strategy. It's meaningless. We're an industrial software company. And what that means is we codify our domain experience into our software products and then connect them to business processes. That means that we're developing industrial software that's very intuitive and very adaptable by our users, and we're scaling across a lot of our users. Right now, we're seeing as a SaaS offering that we can scale very quickly across a single asset here and bring value across many different areas. So the business processes are listed down there and I'm sure you can read it later on. And you bring immediate value, efficiency, collaborative ways of working, safety. And then once you want to scale up and across an organization, across your fleets of assets to be able to enable other business processes such as energy management, greenhouse gas emissions, it's very easy to do that with our technology. The energy value chain and integrating that energy value chain, it's not possible today. It's not done today. When you start integrating offshore wind, hydrogen, carbon capture into existing value chain of traditional hydrocarbons, it's not making things easier, it's making things even more complex. So in order to do that, the way we operate the plants today is going to be very different on how we operate the plants for the future. We're going to have to use digital technology to augment human decision making, and that's going to happen inside the Digital Twin. Moving from being automated to fully autonomous operations, it's not a single step process. It really isn't. It's a journey. And it's not just about a simple technology decision. We have to consider safe and dependable operations. We're still a very safety critical industry. We have to focus on business improvement efficiencies and value. Black box analytics, or wide-scale adoption of AI, it's not happening because it's unknown, it's unexplainable. And that's not something we can have in a safety secured industry. But our approach that we're focusing on the hybrid machine learning, a hybrid AI, this is something that lends trust and will scale across an organization. It's a mixture of physics-based models, which we trust to know, constraining pure data-driven models, which are extremely fast and extremely, I would say, quick to scale as well. We're constantly pushing the envelope to the right here. What we're focusing on, I mentioned already the business processes, workflows, enabling that. The more and more we can automate, the more and more waste we can take out and efficiency we can put back into these assets. Once you simplify that, the more you can simplify a business process, the easier it is to have wide-scale automation, and that's our north star here. So we're linking everything from our digitalization approach down onto the business and workflows that we can have impact around. We're constantly -- and Geir, you mentioned that we're constantly driving down the time to value. So how quickly can we deploy? Right now, we take advantage of a very scalable software and technology. It's SaaS. It's built in the cloud. It's web enabled. We have economies of scale in Kongsberg we could take a big advantage of. So we have centralized global capability sets, but also we can locally support our customers for where they are based. It's a big advantage. We're also continuously industrializing our software. So we're making it more system integration ready. So not just for us, to speed up deployments, but also for third parties to be able to do it as well. The strategic revenue for us is the recurring piece off the software. Today, we are actually deploying 2 assets that are 9x bigger, 9x more complex than assets we were doing 2 years ago, and we're doing it in a more condensed time frame than we were doing it 2 years ago. Much bigger, much more complex, and we're doing it faster. That's real testament to how mature our product is and how scalable our product is becoming. Across the board, we're adopting the platform piece, we're adopting across users and we're adopting our application sets as well. Today, the core part of our market is still served through the traditional hydrocarbon, which you can see down here. That's what we know, it's where we come out of. It's where we have a lot of trust and relationships, and we're doing very, very, very well here. Obviously, we're going to expand, we're going to carefully expand. We're not just going to take a shotgun effect here. We want to walk into and step into adjacent markets that make sense for us. So there are 3 areas that we're focusing on right now. Up here, it's process manufacturing chemicals. It's a very simple, right step for us. We can actually lift our technology as it is today and put it into this market without writing a single new line of code. So it's very scalable, hyperscalable in fact. Renewable energy. I'm a firm believer that the energy industry will solve this challenge. It won't be solved outside. You'd have outside pressure, regulations, carbon tax, et cetera. But the energy industry has the capacity, the capital, the wherewithal, the ability to be able to solve and build these projects. So we're moving in line and in pace with our integrated energy customers today. So as they build out these facilities, offshore wind, hydrogen, carbon capture, we're there to provide the digital infrastructure to support them. So we're moving very carefully with them and in line with them. And of course, traditional energy. Even before this very unfortunate war and very unnecessary war and tragic war, the amount of investment into traditional energy between now and 2030, in addition to renewable energy, was between USD 600 million to USD 800 million every year. So why we know this is going to tip. It eventually is going to tip in favor of a more renewable mix. Over the next 10 to 20 years, there's still continued investment here. There's an onus on us, a duty on us to actually bring down the carbon footprint of this existing infrastructure. We can't just let, oh, we'll wait until leveraging this offshore wind. We have to do that now. The World Economic Forum came out stating that 20% of all carbon footprint can be taken down through digitalization. That's a big impact on existing infrastructure that's going to live out for the next 10, 20, 30 years. This is a sum of the final slide. The future of the energy industry is integrated. What you're seeing here is actually, it's a concept of an energy hub off the West Coast of Ireland. I come not far from this location actually. So there are a number of actors here. So there are offshore hydrogen, offshore wind. We have LNG FRSU. But in order for this hub to be net carbon neutral, they rely on each other. They're fully integrated. If you want green hydrogen, you have to use offshore wind to actually produce the energy that actually the electrolysis systems are run on. If 1 element fails, every single piece of this hub is impacted. So if you don't have a Digital Twin to be able to operate and augment human intelligence up and across a very complex and integrated system like this, it just won't work. It just won't work. We're very well positioned to actually deliver on the future of what energy is going to look like. Thanks very much.

Thank you, Shane. And Andreas and Shane, can you stay on stage as we open up for questions for KDI. Are there any questions from the audience first? We have one question from the webcast that I really think goes to the CFO. So if the CFO can also get a microphone. The question comes from Hans-Erik Jacobsen, Nordea. With regards to KDI, when do you expect KDI to become profitable?

Tomorrow, on my wish list. No, we think about in the end of 2023, we have some plans. So if I should answer very correct, I would say, 2024.

Thank you. Any questions from the audience? If not, Andreas and Shane will stay here throughout the day as well. So it's possible to ask questions later. And then we'll take a short break, and we'll start up again at 2:15 sharp. [Break]

It's clearly Kongsberg Maritime. It's a nice place to work, and very fun for all those who are allowed to go out in the field and be a part of that. I'm only in the office. So maybe not that fun for me. Okay. The organization we have has been quite unchanged for the last approximately 3 years. I will give you a short intro on this on the first slide there. We have 4 product divisions. And I will underline, and I think also we've proven over the last years, how robust this organization is. And it is robust because there is a lot of products. We are operating in a lot of different markets. So even though something happened in one market, there is always opportunities. Each division sell their separate product, they sell their product as systems and integrated systems are building up concept systems of all the products of Kongsberg Maritime. Tech machinery and motion control the unit that is most forward-leaning when it comes to offshore wind, and are very, very involved in that. All these units is making money. If you take the total of new sales and aftermarket, they're all making money. Sensors and robotics, very unique, very -- we talk high tech software and things, here is physics. So it's really to stretch the limits, down to the physics of it. So it has a number of unique high-tech products. Fishery, the world leader on seabed mapping. Of course, [ Autonome ] robotics really, really a good asset for us. Propulsion and engines, including aftermarket, probably the largest part of our business. And the aftermarket of this business is, of course, very, very attractive as well, and is explaining much of the success of our global customer support that Geir is so happy with. And integrated solution is -- it's a very broad portfolio. They do the digitalization, automation, DP, ships design. They also have the electro automation systems. Global customer support and global sales and operations, these 3 organizations is taking care of all the 4 product divisions. So we do not have one sales organization in each 34 country, for each of these divisions. Global sales, 500 people globally, probably one of the most potent sales organizations in this industry, have a presence all over. Global operations for more than -- approximately 40% of our employees, global customer support is giving us the stability. I will like to introduce to you Tejbir Singh. He is Head of Strategy and Analytics for Kongsberg Maritime. If anyone can tell you about the market future for us, this is the guy. So please, Tejbir.

Thank you, Egil. Of course, no pressure at all. So here we go. Okay. So what I'm going to do is I'm going to start by taking you through a market view. Of course, we operate across a pretty wide range of markets. And I'll start out by pointing out that, obviously, the market is really dynamic, and then Geir took you through some of those sort of factors we're dealing with at the moment. There's a number of headwinds, but there are also a lot of tailwinds in some of the markets that we operate in. So on the one hand, we see that there's a geopolitical sort of impact right now. There is inflation. There's a COVID lockdown in China that impacts supply chains. The IMF has come out and cut their GDP growth forecast by 0.8% between January and April. And potentially, there will be other downward cuts. But on the other hand, we're also operating in an industry that is really looking for energy security and energy transition. Energy independence has become so much more important now. And so we are forecasting that in the coming period, we are likely to see a time where the offshore oil and gas and the wind growth coexists. And that's very good for us because we have a good exposure across both of these markets. Of course, on the oil and gas side, oil and gas companies are awash with cash with oil prices where they are. And this is going to make its way into existing and new fields. But also then governments are opening up new fields in offshore wind. Energy independence is a big driver. Sustainability is a big driver there. And that's a growth that we see coming for several decades to come. But at least midterm, both of these are going to coexist, which is a positive for us. Now on the cargo carrier side, of course, seaborne trade is very correlated with GDP. So GDP rates start falling then seaborne trade typically also starts getting impacted. But there's a support mechanism there at the moment because world trade is changing, and it's changing because of the geopolitical climate where goods that are energy, could be coal or food grain like wheat, if it's not coming from countries that are next door, then it's coming from countries further away. And so that's a support for ton miles. So while we expect that economic growth might slow down, that will take down the seaborne trade, but the ton-mile trade will fall less because the trading patterns are shifting, given everything that's happening with Russia and Ukraine. Now the cruise and passenger market, a very interesting one, decimated after a period of sustained growth for a long time because of COVID. And now they're just starting to taper up. Activity is picking up again. People are booking holidays. Of course, it's a discretionary spend. So that means that if the economic climate dips quite a bit, then we will likely see some negative impacts there. But right now, it is emerging from that COVID phase. And so that's a positive sign for us. And we'll see early signs of that in the services business already, new building probably a little bit further away. Naval. This is an area where defense spending is going up in Europe. And that's because, again, the geopolitical climate. So naval likely to stay resilient and robust. On the aquaculture side, record high salmon prices that are driving up results. Fisheries for them, fuel is a big cost. So there, I think, the economics will be dampened a little bit because of what we're seeing with fuel prices. So maybe ordering will slip a little bit on that side. So if we really look at some of these markets that we're operating in, you get a kind of sense that, yes, there are some macro indicators that are unfavorable given everything that's happening in the world. But then if we go down and drill down into some of our markets and many of these, if not all these markets, we have a position in, some of these are positioned for a sustained period of growth. We have other dynamics at play that we think will provide resilience for us going into the future. So let's take a slightly deeper dive then into our maritime markets. The graph you see here on the left-hand side showing commercial markets, so excluding naval, but commercial markets and how they have developed over the decades. And of course, the first thing you pick up is maritime markets are very cyclical and volatile. The big boom, and then that sort of came down in about 2015, '16, when oil and gas was down, but then the cargo side also dipped. So we had a few challenging years where we had to navigate a very different market dynamic from '16, '17. The market was just starting to pick up and then the pandemic came. So that slowed it down a bit again. But the resilience with which it came back in '21, in particular, on the back of container shipping was a big positive for us last year, right? So what we think is going to happen now looking into the future is at some point, container ordering will probably slow down. The economic indicators will indicate that new building prices are particularly high, the new building index is sitting at high as we haven't seen for a long time. That could have a dampening effect on the cargo side of the market, but then there's value to be had in many other pockets of this market. So overall, the midterm to long-term trajectory is still very strong, partly because we are looking at changing trading patterns. We're looking at energy independence and a green shift. And we're also looking at an aging fleet of vessels that were built over the last few decades in this big boom that will come up for renewal with greener, more efficient vessels, either they will be upgraded or there will be new vessels ordered that meet their environmental regulations coming. They'll be more future proof in terms of their fuel choices. So this is going to lead to a sustained period of growth in our core markets. Now if we look at the graph on the right side here, is a temperature chart that we typically use to show market sentiment. Now market sentiment here typically includes things such as its activity level utilization, charter rates and often then leads to new building as well, although in some cases, not necessarily immediately more so on the aftermarket. So the sentiment really if we were to look at this graph, say, about a year ago, you would have seen that crudes and oil and gas were really in the low territory of activity. Sentiment was really dampened. Right now, a year later, we're seeing that course container is extremely hot. LNG has done very well. The dynamics for growth with AUVs and USVs were well positioned. The strong wind has been doing well, but some of the laggards that were really struggling through the last few years, such as crudes and oil and gas, are just starting to pick up a little bit now. Sentiment is lifting. And we're seeing that on the aftermarket side, if not necessarily on new building just yet. So this dynamic really means that Maritime is a volatile market. And those of you who follow it closely are well aware of that. Some markets will go up and some will come down. And we have exposure across all of these. Unlike, say, 10 years ago, when a large part of the order intake came from oil and gas. Today, there is order intake across all of these areas, and that builds a natural resilience into the business because we target all of these areas. Some will ebb and flow, container probably slow down. We'll see the oil and gas pick up at some point. Wind is still resilient. So we'll see that dynamic play out. But for us, there's a resilience in being able to tackle the cyclicality, and converting it into an opportunity by addressing it in a diverse way, right? Now to elaborate that point on the market a little bit further, we've got here 2 graphs. Now the first one here on the left side is looking at the market outlook for our key commercial markets, so excludes naval and some small vessel types, in terms of number of vessels. And then we look at the graph on the right that covers the same market, but in terms of value. And what we've done for the value is just take today's portfolio and applied the typical scope of supply that we would have on these vessels on top of the number of vessels to come up with the market by value. Just to see is this the same or different to where the number of vessels are. So in this market, typically, if you look at the commercial markets, the volumes are dominated by the cargo carrier segment. So this is bulkers and tankers and container ships. And so typically 60% to 70% of the volumes will come out of this market. But when we apply our typical portfolio on top, the value-wise, this is about 35% to 40%. That's where it normally sits. And if I take another example, which is the offshore wind market, which typically in terms of number of vessels, is about 1% to 2%, and convert that to value, it goes up to 7%. And what that's really telling us is that our scope of supply is quite different. For some markets, we have a strong position with a few products. In other markets, we do products, we do integration. We have ship design, and we have a holistic value proposition that goes beyond a few strong products. And so that means that there's value to be found for us in markets that even though the volumes are very low, our scope of supply is strong. So there's a couple of examples here. On container shipping, typically, our scope of supply would cover 3% to 10% of the value of the vessel. Whereas on a wind vessel, it would be 20% to 30%, given the larger scope that we have. So that variance means that even though the number of vessel picture looks very dominated by cargo and tugs, you end up seeing that while we have strong products here, value can be found in some of these smaller areas that don't come out strongly on the number of vessels, but are great opportunities for us. And a further positive is many of these are set for many years, if not in the case of wind, decades of growth to come, as we move from fixed to floating and then the opportunity for us to make a further difference with more complex equipment increases. So there's value to be found in many parts of our market. And again, the key message for you here is that rather than relying on 1 part of the market for growth, there's a diversity. Again, it helps us manage that volatility and cyclicality in the market by being able to address a broad set of areas of the market with a strong value proposition. Then I'll also cover a little bit the trends that are impacting our markets. And of course, you heard a lot about these trends from the digital side already, very linked. So obviously, digitalization is a key part, that KDI mentioned to you earlier, smart data analytics, platforms, clouds, applications, connectivity, remote services that will -- really became so important, particularly in the pandemic when we couldn't have people traveling, advanced sensors with higher fidelity that support this growth in the future with digitalization by able to capture better data and process it on the sensor. Cleaner fuels. That's definitely going to be something that impacts the next decade or so, or if not decades to come. Because the IMO has announced a 50% greenhouse gas reduction target by 2050 as a target. And then leading up to that target, we're going to see a more diverse fuel pallet emerge in the maritime space, potentially different fuels for different applications will come up. Electrification and energy storage, a continuing trend, again, an area we play strongly with. Robotization. This is an area, again, we play in with the HUGIN platform, AUVs and USVs for seabed mapping for inspection, maintenance and repair operations, not in oil and gas alone but also in the emerging area of wind will be a great opportunity. Remote and autonomous. We have several key projects that we have taken now initially. This will start out typically with smaller vessels, where the CapEx, OpEx picture means that the manning cost is a big part of the OpEx. There's a business logic to going to remote on autonomy, before eventually making its way to larger vessels, start with smaller ones. Integration as vessels get more complex, different risk share arrangements. So there's a number of trends coming over the next decade, and we have the opportunity to make a difference across all of these. But one thing we're very conscious of as we go out and innovate, and we invest in our R&D and look at leading the market with so many of these areas is that we want to innovate with purpose. And that purpose is to have a very close awareness of what customers are looking for in our markets. Customers will typically ask for operational efficiency. So how can your innovation help us reduce CapEx or OpEx or increase profitability? They'll ask for safety, security and reliability in terms of can you reduce downtime and increase crew safety. And then increasingly, over the last few years, they're asking for sustainability. Now sustainability a decade ago, there was sort of some lip service to it. But now it is a very serious customer requirement, partly to meet requirements, of course, but also stakeholder expectations. So we're looking to innovate and there are a range of other sort of requirements in different segments, but these 3 come out repeatedly amongst all our markets. And we are looking to innovate, but innovate with purpose where we actually have our innovation meet some of these core customer requirements so we can actually have a win-win. We have a good value proposition. We have market-leading innovation, but it helps the customer, and the needs they are looking for, these 3 being the primary ones. Okay. Then I hand over back to Egil. Thank you.

I know a few people who can say more in a shorter time than you. Okay. We have delivered as promised. And to run an operation like this is a balance between a good operation and quarterly need of results. And at the same time, we need to invest for the future. So now I'm going to focus more on the future here. I think we have delivered so far. Here is examples of contract that is connected to new markets and new technologies from us. And later on, I will go even more into the future. Hurtigruten, a hybrid upgrade of 3 ships, extremely interesting project as the requirements to reduce emission with 30%, 40%, 50% over the time going forward. We also need to look at the existing fleet and what we do with this. And Hurtigruten here have been -- done a significant improvement with existing assets. We are reducing emission with between 25% to 30% on these ships by changing the hole, changing propulsion systems, others, most of all to change the energy systems, battery and digitalization. It's connected to vessel inside, and we have controlled every single detail of this. This will give us a significant improve of emission. And this is one of many examples. And if you see how many ships out there that need to be improved over the next year, a very interesting market for us. Awind, offshore wind vessels reach subsea, remote subsea support vessel, a new step. I'm going to say a few words later about autonomy and remote, very interesting. [indiscernible] fish farming, live fish. Each of these contracts I want to spend the time to go into every one of them, but average for the 3 first here is approximately NOK 400 million each. And as Geir pointed out earlier today, NOK 2 billion on offshore wind. 6 years ago when I started in Kongsberg, my time, the history was oil and gas very much. It went to zero. New build oil and gas is close to zero today. Now we are in oil and win and renewable. And we really have managed to do this change. And this market is coming up now so significant. So I'm very proud of, and I'm very happy to see how fast the world is changing from more traditional oil and gas, and into the renewable markets. We truly have an international global organization. More than 50% of our employees is outside of the Nordic. The Nordic is our home market, Norway, Finland, Sweden and even U.K. It is not to have an office, to start a new office in -- somewhere out there. In the main hubs like China, Singapore, U.S., Korea, we've been there for 20, 25, 30 years. In many of these countries, we are considered to be local companies. And you don't do that from one day to another. It takes 30 years to really be established, and to be one of them. And we have local employees. We speak the language. We understand the culture, and we are a part of those industries. Very important for us. And as COVID hit us, the value of being able to support your customer all over the world, it's extremely valuable. We had so many feedbacks from customers telling us that no one else are able to support us the way that Kongsberg can. It's been very valuable. Going forward, because we're all concerned about -- first, it was the containers and all the logistic challenges. And then it's components, and then it's capacity, access to brands and all this. For us, this is normal and it's always have a flip side. The containers shouldn't be very smart to understand that, that would be good for containership owners. And we saw the shipbuilding coming out of that. Yes, it's always some hassle that we have to deal with, with the logistics, but that is minor compared to the market opportunity that, that brings to our markets. And that is the case for all of this. There is, on one side, when the international activity is growing, it is adding some problem. But on the other side, it is giving us market opportunities. And we -- this organization is, as I told, very robust. We have sourcing centers all over the world, and especially both in Asia and in Europe. We are able to deal with these things. And look at the numbers here, we are ordering 13,000 -- we are sending out 13,000 orders for suppliers. And months, it's not the year. And we are signing up about 5,000 contracts with our customers. And this is -- you need a good professional organization. And how do we do this today? I heard this inflation, we used to take that as well. Yes, inflation is difficult because most of those all people are so young. They never heard about it because the prices on ship has been down, down, down for 15 years. We are doing repetitive projects now with prices up 15% to 20%. In a way, this is a good thing because we cannot continue to sell. So this had to happen sooner or later. And yes, if we do this wrong, we could end up in the middle here with the suppliers having inflation and customer not. But we are not born yesterday. We are dealing with this in a professional way. And we are very hands-on. We -- every single large contract we enter into now, we are in direct contract sourcing sales. In the moment we signed the contract, just occurring the main value of the supplies for the existing prices in this moment. So yes, and also components, we are long term. We have quite some stocks, and we -- typical for the mainstream of what we do to secure sell for 1 year to 1.5 year with volumes. And for this standard thing of what we are doing, it is really not that big issue. And then with 30,000 orders a month, there is always something. So we have quite a lot of people now to -- that have to work to make this flow go well. And we do this well, and it's not without problems, but it's not what keeps us awake in the night. Lately, last couple of weeks, Shanghai has been the main hurdle for us when everything closed down. But okay, now they opened up again. And a few weeks from now, it is probably back to something called normal. But then it will be something new. But this is what we do, and we do it very well. And we are very close to our customers. We are very close to suppliers. We have our own design quite far down in the components. So we are able to redesign and we deal with it. And it might be some project that is delayed, but we are more happy with the market and what opportunity this time is bringing to us. I might get some questions on this later. But it's challenging, but we are dealing with it. So I thanked [indiscernible]. I guess we all try to see that picture. It is going, and it is going to be executed. And there is ASKO, and we have reach and we have here the new kid on the block, Schenker [indiscernible] that also want to go into this concept. I tell my sales slow down. We don't need to sell it all the first year here. I would like to see this full operation before we enter into new contracts. But there is a push in this market, and there is a progress. And it's complex also because there is regulation. It's a lot of -- it's a full value game. It's not only to get the ship out to [indiscernible] that is not the main sort of challenge here. This is happening. We are leading. We are #1. It is a huge market there, but we need to take the time it takes. And we we'll try not to enter into too many contracts at once here. But it's a very clear area where we are #1 in the world, and where also the existing normal ships are benefiting from the technology that we are developing here. Geir told me that we need to say something about all these fantastic products that we have on -- out of Horten. I will give you a short update on HUGIN. I think the last time we have talked about it in this forum, that was what we had. It is getting bigger and bigger. It is -- what is the unique performance of this is it has to know exactly where it is. And from generation 1 until today, it's a huge improvement. Then it has to go deeper and deeper. This is going to 6,000 meters deep. Then you need to have a value in all the sensors you bring with you. And then you need to have power to operate it for a long time and a long range. And then you need a big brand because you cannot communicate with it when it's out there. So it need to do everything by itself. This last version, it is going to operate for 14 days without contact. And today, the maximum is 3 days. So it's not a 10% improvement. And it will know exactly where it is, exactly what it needs to do, and it will have unbelievable capacity on the sensor side. So if anyone wants to compete with us on this -- and we are on -- there is other vehicles out there. But there is no one close to this. So we are -- as usual, when you come to the high end, it's always us. When we are down in commodity, we might struggle from time-to-time. But when we are on the high end, it's always our products. And I just -- so you can know if you want to start this, everyone can do it. The only thing you need to do, you need a customer that you work with. Then you need to take this step-wise. And after 30 years, you will be where we are today. Okay. Offshore wind floating. I guess we all are very keen to see how that progress. We are very close on this. We very much believe in it. And it is representing a huge opportunity for us as a company in the marine operation, in the maintenance and in all our subsea activities. And we also believe that there might be other things that will be of interest for us. We -- this is one of the things that make me very optimistic long term. The other thing is energy in general, but these new requirements that is put on the ship owners, and all these ambitions globally. Just to mention it, for batteries and also power management that we have done organically over the last 4, 5 years, we reached a revenue of over NOK 1 billion. So when we focus something, it's NOK 1 billion here and NOK 2 billion, and NOK 3 billion there. So there's a lot of new stuff going on here. We make batteries also for marine application, and it is a fast-growing market. It is not only to be the -- for the propulsion system for [indiscernible], every single ship will have in the future some sort of batteries because you will have -- need more efficient electric system, or energy system. Then it is what is the future? How are we going to meet the future requirements? We are very happy. We are not an engine manufacturer. I think we could be if we wanted to, but we decided not to do that because there will be winners and losers, but we are in the flexible side of that. We do the energy management systems. We do hydrogen. We do sort of whatever is needed and whatever the future will ask for. This is complicated. I wouldn't bet my money on one of the solutions. It will be a number of different solutions for different missions. And I hope everyone know that hydrogen is not the energy. Hydrogen is an energy carrier. You need to find a green energy to start with, and then you can carry it with hydrogen. First, you start with batteries, so short distance. If you need more, you can go to hydrogen. If you need more than that, you might go to ammonia or biodiesel or something else. This -- the ambitions is not supported by technology today. But for us, it's an ocean of opportunities. So very interesting for us going forward. I see everyone look at the watch. I'm always spending too much time. I know. So this is my last one. If -- and I -- Tejbir, fantastic. But I always wonder what did you really say is the market good or is it not good? The market is good. For the long term, it's very good. It's for what is going to be required of ship improvement or upgrades and for new builds. It's a huge market opportunity. Then you go to the production of energy as offshore wind, fantastic. And then we have probably the best position in the world to be #1 in these big transitions. Short term, and those who -- and I guess all of you see our numbers, the sales is very good. The market is very good. When I took over after Geir, I thought it should be easy. It has not been easy. But lately, it's been a lot better because we have a market supporting us. So what is the medium time here? Because there is a dark clouds when it comes to the general finances of the world, and we need to cool it down. How will that impact us? We are very strong in energy both oil and gas, but also in the new energies and the renewables. LNG, because all the new energy need to be transported from one place to another. LNG is one of our largest markets. So I would say I'm very optimistic, also, on the shorter and medium term. The best way of predicting what is going on tomorrow is to see how it is today. So I must say, I've never seen a better future in this industry. I don't know what I see today. And I'm sorry, I spend too much time.

Thank you, Egil. We do accept a few -- or have time for a few questions from the audience as well. So if you have any questions, raise your hand to either Egil or Tejbir. If not, I suggest we'll save the best questions until the end, and you'll come up on stage later. And after a short movie, you will get the presentation from Kongsberg Defense & Aerospace. [Presentation]

Good movie. And I thought it had pretty good scenes there. And I'll have more if you want to see it. Thank you. And I appreciate to stand here and talk about Kongsberg Defence & Aerospace. And Egil, he put a good portrait on Kongsberg Maritime with a positive spin. And I think also, I can stand here to state that I think Kongsberg Defence & Aerospace is also in a positive situation also going forward. So hopefully, you will see that throughout the presentation. Last year -- or a couple of years ago at the Capital Market Day at that time, I said we will generate shareholder value through profitable growth. And I also stated that we are positioned for further growth through our current positions. And I think I can state that we have delivered on those ambitions. And hopefully, throughout this presentation, you will see and then get an understanding of our next ambitions level are. So this is just on facts about Kongsberg Defence & Aerospace. 3,500 employees, around NOK 10 billion at the moment in revenue per year, and we are growing in all areas. And I must say that we have now lived with corona for 2 years, and also with the Ukrainian war ongoing. And I must say that I'm really, really impressed by the organization, how we have managed through these challenges. Transportation problems, component issues difficult to deliver systems. But we have military customers, they're picking it up. So there's different ways of solving the situation. And I think we are pretty good in doing so. And so I would say for 2023 -- 2022, we have good visibility and control in all our deliveries in major programs. We are, as Gyrid said, experiencing some delays due to missing electronic components for our weapon stations. That causes some delays, but we are handling the situation and find new sourcing going forward. And -- but in general, this is a situation. We just had to be professional, and handle it. So we're constantly monitoring the situation when it comes to this component situation, raw material situation and make necessary adjustments if needed. This is a slide, maybe many of you have seen. And this is a slide I can spend 1 hour at least. But I try to make it short. We have 5 divisions in KDI, and also some daughter companies involving Patria, KSAT, KAMS and also KDA, the joint venture we have in the submarine program. I can go through everything here, even though I wanted. If we look at Integrated Defense Systems, that's a more of a system division, providing system solutions. So NASAMS is part of this division. And since 2020, we now have 14 countries that has bought NASAMS. Very important for us and you all see the need for this in different operations. On the Army side, we are providing digital solutions here with the vehicle as an example where we experience export contracts on orbit solutions. And we also signed the submarine contract between Norway and Germany, very important, where we deliver the complete combat system for the whole -- for the submarine. And we expect this program to include new customers going forward as well. You see a picture of F-35, very important for us. We have now delivered components, composite and titanium parts to more than 1,000 F-35. So quite significant numbers. We are at full rate speed in production, 180 ship sets as we call them, and that's going to be the speed going forward. And you can also notice that there are more and more customers buying into certified. Denmark, Finland, Germany, Switzerland, all into the same club of F-35. It's a helicopter there as well, MRO, maintenance repair overhaul. Basically, our comps operation. I would say that, that has exceeded our expectations in the sense that we have had a turnaround, and we are now seeing rapid growth in different areas when it comes to F-35, and also for the F-16 when Norway is selling that to other countries where they will make use of it. And we are growing also in the Land Systems when it comes to our remote repo stations. Now we are up to 28 countries which has remote repo stations. We have 100% of the U.S. market, 8% in the world market. Missile Systems with Naval Strike Missile and Joint Strike Missile. We are experienced a significant demand for missiles. You saw that last year with more than NOK 10 billion in order intake. And going forward, we see a good potential for missiles. Space and Surveillance, very important for us. We recently announced that we are investing in 3 satellites, all small-type satellites that we will utilize. And absorb customers to buy into the data we will transmit for those data -- for those satellites. So we -- these are the key takeaways. I hope that you will see when we are done with the presentation. And we start with the continued growth. We are in a growth situation. We started back in 2019, explaining the growth iteration based on the positions we have. It's going to continue. is going to continue, but we need to stay in there, further develop our product portfolio, et cetera. So expanding our product portfolio in addition to staying ahead of the curve on other products is very, very important for us. And obviously, we have strategic plans to further develop our market access around the world. And also sustainability is important for us. We have social and the governance part is -- has been for years, obviously, very important. But also the environmental is now more and more on the agenda for a defense customer. So we will see that how we handle supply chain, well, obviously, about circular economy and also requirements from customers. For instance, green propulsion will be a requirement in the future. I'm pretty sure of that, also for defense purpose. You saw this in 2019 and also 2019, this was our ambition, securing the NOK 100 billion pipeline. This is mostly then organic growth for the next 10 years as we stated it. And this -- since then, we have seen a record high order backlog. As I said, missile order intake is high, submarine is there. We are now 14 nations users, et cetera, could add on. So I would say that this is still -- this ambition is still solid. And given what we have achieved and how we see the market, it's time to adjust this. So we will come back to that at the end. But now I would like to invite Pamela Willgosh, Marketing and Sales Director for KDA, explaining some of the background here.

Thank you, Eirik. Good afternoon. Pam Willgosh is my name. I'll spend the next couple of minutes trying to give you some insight into what we're seeing in the defense segment and the sector and what we believe the implications will be for us in our business. So if you look at the first picture on the left side of the chart, lot of different titles we can put on top of that particular picture. Nationalization is an area where we're seeing within Europe, especially within the European continent. There's a lot of focus now on what are national capabilities, readiness levels, what is their ability to respond to the crisis that they're seeing very close to home, right? So that's become a very different focus than we've had the last number of decades. We've been looking at some numbers not that long ago that it indicated that the overall average increase of defense spending in Europe in the last 10 to 15 years is roughly 20% of an increase, average, for European nations. As compared to the U.S., which in that same time frame is over 250%. And China, over 500%. So Europe is absolutely, understandably so, then prioritizing other ways to invest. That changed almost overnight, 24th of February, right? So we've seen that Germany complete 180-degree turn from German policy prior to '24. We're seeing other nations committing to increasing spending. We're seeing focus again on their own stockpiles. What is it that they have at home if they need to respond to a threat? That is a very important question many nations are trying to answer at this point. So not only are they focused on their own nation, they're also focused on alliances, the EU, NATO, very happy to have bilateral multilateral connections with other countries around them. Better to stand stronger together in this type of situation. So what we've seen also within the EU is they've gone from being a regulatory agency to being a geopolitical actor, right? Big change for the EU and for the European Commission. Important for us, however, because, we are not a member of the EU, right? So we're watching very closely those alliances that are building up within Europe, and I'll come back to that why Europe is important for us because of those connections that are being established and strengthened. So a lot of things we could talk about as far as what's going on in the European region and globally as well. But if we move then to the next picture, NATO, very interesting, increases there, not only in the budgets, but I'll come back to, but membership. We have competed against Swedish industry and Finnish industry for a very long time. That's not new. But now it's very likely they'll be brought into the inner circle, right? So what does that mean for us? So very interesting and eager to see if there'll be any changes in the competitive landscape for us from an industrial perspective. Swedish and Finnish industry and defense industry very capable, very strong competitors. So it will be certainly interesting for us to see what happens when they come inside the realm of the NATO Alliance. Budgets. So again, going back to what we've seen in Europe, a very minimal increase in investments from the defense side. It's a report not too long ago that said, we have -- actually, this just came out we have now globally passed the $2 trillion mark in global defense spending, USD 2 trillion, and that was 2021. So that was prior to the 24th of February. So what they have said is if you were to accumulate all of the NATO nations and close allies and calculate what the investment is if they reach 2%, it's an additional $1 trillion that would be used in defense spending, if they're all able to do that. Not all nations are going to do that. But there's definitely an increase in investments and focus on defense. So very interesting for us to see what it is they're looking at procuring, what it is they want to buy. What you're seeing, and you've all seen this in the news, they're buying what exists, right? They want to have something that's tested, tried qualified. They have all the logistics, they have maintenance. They know how to train it. Those are the kinds of systems they want to buy. This is not the time that governments are saying, we want to start a very large research program at this point to address this situation. That's not the answer, which is interesting, when we come back to our product portfolio, which Eirik just showed you all. So I'll come back to that as well, how we're addressing the interest and the capabilities that we have, and that we've had for a very long time. But it's not just all sunshine and daisies every day. There are challenges, and they've been touched on by others already. With regard to transportation challenges, electronics component shortages, all that hitting us as well. And it just bolt on top of each other after we've gone through the pandemic from the corona situation, which is not yet finished. So we are addressing that. We have very professional suppliers in our supply chain, very appreciative of that, and we have very long-term relationships with them. So fortunately, we have a very professional team as well as [ Egil does ] in addressing and positioning ourselves as best as we can to address those continual challenges pop up from day to day. All right. So again, going back to what it is we're doing. These are systems you've all seen before, right? So when I said, what nations are after our systems that exist? They're tested, they're certified, someone else has chosen this capability, which is a very important reference for new nations, new customers. So when they have a need, like many European nations have now, these are very interesting capabilities for them. So in some cases, we're getting new requests from nations that have not been in our customer pipeline in the past. In other cases, there is programs that have been defined further out in time, and they're being pulled to the left. They want them faster. They want to make decisions. They made decisions earlier. Maybe you've seen that in Australia, not in Europe, but in Australian near Ally has pulled their decision for procuring NSM to the left by 2 years. right? So we're starting to see some of those effects. What is also the case, however, is none of these systems are signed, bought and delivered overnight. Eirik would be exhausted. If you signed 5,000 contracts in a month. That does not happen in our business. We have a longer time frame, right? So what the understanding though is that knowing that we have a longer time frame. I think the first submarine has delivered before you retire, but still, it's a long time, right? So they want to get in the pipeline, right? They're understanding that. We need these capabilities. We need to get our order in now or we're not going to get the systems we need. So it's a very interesting effect in our segment at this point as our European nations start to understand more and more of how they need to increase their readiness. So all of these systems are continually being advanced, upgraded and modified to address new threats, incorporate new technology and make sure they are still relevant, very interesting and top of their class. And to give you an example, I actually just really like this picture, so it doesn't really help you understand what we're doing here. It's a great picture, right? NASAMS, air defense system, It's been around for many years. What we need, however, to address the current situation, missiles that go longer, go farther and higher. So we're coordinating now with the Norwegian Ministry, with Raytheon and with Novo to develop an advanced capability that is indeed doing that, sending missiles farther and higher to address threats, which also means you have to update the radar, also have to update the control software to address that new capability. It's just one example of how we're always working to make sure our products and capabilities are staying relevant and staying ahead of the curve, as Eirik has mentioned. And it is a really cool picture. Okay. So in addition to that, so where Eirik indicated okay, $100 billion in the next 10 years, achievable goal, but we need to do more, right? So what are those strategic initiatives that we're addressing in addition to securing the pipeline, increasing the pipeline? What else are we doing to ensure that we're growing and are profitable, in our organization? Naval domain. I'm going to come back to that. I've got another chart to talk about more details there. However, that's a very, very important domain for us as a company. We've gone through the maritime pitch already. You see the technology and capabilities coming out of the maritime sector. We're looking at that from the defense side and looking at how we can pull through those technologies and build upon what we have. Space, I'll come back to that as well. Spend just a minute on global growth. Egil also mentioned this or indicated this is an important aspect of your strategy, which is thinking globally but being local, right? Having a local telephone number, being able to speak with the same accent, understanding what customers or a nation is worried about, what they're motivated by, what they're planning on doing internally in the nation is much easier to understand when you're in that nation. As an American, I can tell you I understand much more of Norway than what I ever would have understood if I stayed in the U.S. and try to look at Norway from afar because then very often, it ends up looking very close to Stockholm. But at any rate, it is very important for us to have that global presence but having people local for the exact reasons that Egil mentioned as well. U.S. is very important for us, a very important market. When you look at the defense spending they have, there's no question. It's important to be local in the U.S. Europe as well as we're seeing those connections growing stronger and stronger between the nations, we need to make sure that we're part of that market growth and that were also viewed as a valid competitor within the European space. Australia, also a very important market for us. We are established continuing to grow our footprint in Australia. I think what we've seen in the next 10 years is close to $30 billion in potential programs for us just in Australia alone. MRO. Eirik touched on that as well. We're looking at not only taking what we have coming out of the cans, but looking at other domains as well. Now that you've gotten the expertise, the competence start to understand the MRO business how can we apply that in the other domains, the land domain and the naval domain as well. So we'll come back to that in future market days. Okay. So back to naval domain. Vanguard, great image in the movie. I really made a copy of that movie. It was a good one. This is a concept where if you look at naval capabilities for goods destroyers, aircraft carriers, they're very expensive, very, very expensive. This concept is not trying to compete at that level. They're not in the upper-level classes. We're not trying to be a frigate. We're not trying to be a destroyer, but there's a whole number of requirements at a lower level that require cost-effective solutions for them. That's what Vanguard has geared towards. A standardized vessel concepts, concept that you can reconfigure to address whatever the mission need may be in the lower-level classes. Technology at this point is also starting to give us the opportunity to have a manned, unmanned teaming capability where you have a mothership like what is depicted in the chart that can then control autonomous vehicles that are also supporting the overall mission. So that, if you think back to the technologies that have been presented both from Kongsberg Maritime as well as KDI as well as the technology we have internally within KDI -- or KDA this is a very, very feasible operational concept for us and is gaining interest across our customer base. So that is one of the areas where we're pushing very strongly across the corporation, trying to leverage technologies and coordination across our business sectors to go into this particular segment. I was wondering how this is going to work. Space. You've seen and you've tracked, it was also mentioned earlier that we've invested in 3 small sats. The program is called N3 elect that there's a number in the program. Well, that went super fast in that. So this doesn't stop -- maybe it does stop -- in that what we're after is it could be 5x and 7x and 12x and 50x, right? There are, it's a start with getting small sets up into the constellation. We'll start to build up emission control capabilities, leverage. Wow. Is that a hint? What we have in our domain expertise from the defense sector and start to build that sovereign capability for Norway that we have full value chain capabilities for satellite operations, mission control, data processing and delivery, really wants me to talk about sustainability within NATO -- or within Norway. So that is a very, very exciting initiative for us, and we're really looking forward to being able to tell you more about what that program has resulted in. Planning on doing our launch with those 3 satellites within 2024 and continue to talk with other potential customers, given the fact that we will have maritime surveillance capabilities that are very interesting to not only Norway but to other nations as well. Look at what's happening in the Arctic when you start to consider climate, right? Less ice in the Arctic more shipping lanes, potentially opening within the near term. The Arctic region is going to be a very interesting region in the coming years. This with the satellite cable and the surveillance that we'll have will be a very valuable asset for many nations, not just Norway. So we'll come back to that again in the future. Sustainability and climate, anything related to that. Typically, most don't think of defense as being the driving segment that's going to define the future of sustainability. But I tell you what, they are a very, very fast follower. So what they are looking for is the ability to take advantage of capabilities investments coming out of the commercial sector that are leading them to the ability to pull in those technologies, right? So they probably won't be out there first, but they're going to be the first ones they're going to raise their hand and say, "We want that too. So we want to be one of those leading actors that are introducing those capabilities into our customer base that says, "this is how you can be more sustainable. This is how you can leverage those capabilities that are invested in and matured on the commercial side." So it's a great synergy again within the company. Targets, reducing emissions when you think of us as a company, we also have over 1,500 suppliers within Norway alone. When we start to influence their views of reducing their emissions, that is an exponentially enormous impact within our supply base just in Norway, some of the focus areas that we have. So there's a lot of things that we're addressing, a lot of things that we're investing in and to ensure not only that we are increasing our pipeline, but we're staying ahead of the curve and trying to take advantage of the new opportunities that are coming in. So with that, I'll let Eirik tell you a little bit more about the other initiatives that we have ongoing at the same time. So back to you.

Thank you. So we talk a lot about growth, and that is important for us. And we have been in that for some time. And we need to -- we have initiated and established an internal project to handle the growth, so that we secure that we do everything correct. We handle the risk, securing efficient operations and cost control. So we try to do everything we can in order to take these growth areas in a professional manner. At the same time, we did growth. We are also, so to speak, growing out of Norway. So that's where the footprint Pam talked about is coming in. But also in Norway, Norway is important for us. Norway is where we establish our products, where we can have a reference customer because when we sell outside of Norway. The first thing they ask us is the customer. So that's why Norway is the most important customer when it comes to -- as a reference. And we have established a site, well, a different -- establishing different sites. But we have 1 now in Rygge, Moss area, a very new area for us, but it's very attractive. So we are able to get competent people working in that area in -- together with also what we do in KONGSBERG and other places. So U.S. is important. We're going to grow there. Australia, we have established ourselves in Australia and also have a supply chain in Australia. And this is a requirement that we -- if we want to do business in Australia, and if you want to do business in U.S., for instance, you need to be there. It must be looked as a local company. So that's important. Gyrid talked about facilities. We are building up our production capacity, both for air defense, space, missiles. And for us, it's important to secure that we have an efficient operation when it comes to production. And so that we are prepared for what we see today, but also for further growth. And the last one, recruitment. It's, I would say, all about our people. In the next 5 years, we're going to recruit 2,000 more new persons to work for us. So competence is a key for us. We need high skill people, ranging from software to, I would say, specialized production technicians. So this is important going forward for us. So what do we see? You all heard the NOK 100 million -- billion number. We have NOK 35 billion in order backlog. If you look at some of the new initiatives you have stated, it's always difficult to be precise, but we estimate it to be NOK 50 billion. Within the naval domain, space for defense, other security areas we can enter also other new initiatives. So where we see then NOK 50 billion in addition to what we have. And to some extent, this is independent of Ukraine war. We had this strategy prior to Ukraine. So we need to see how this will also affecting our operations. So let's see how this will develop, but definitely, we see an increase in the different defense budgets around the world. So then just to conclude a little bit quick. This is what we see for the next 10 years that we are positioned to win programs valued at NOK 100 billion. And we believe this is very realistic. We see an increased demand for other products. And if we do the correct steps as we try to explain a little bit here, I think this is definitely achievable. So the demand for defense and security is increasing worldwide. But again, things will not just happen overnight. So that is important to remember. This is a long-term business. But definitely, we will grow -- continue to grow our business in the coming decade. So thank you.

Thank you, Eirik. Before we invite the rest of the presenters to the stage. I have one question from the webcast going to Gyrid, with, it's a question from [indiscernible]. Do you feel that you have a competitive disadvantage for new contracts as you -- as a Norwegian company are not in the European Union?

Well, I would say, both yes and no, but we are working very hard to be -- to get the market access. Always part of what we call the European Defense Fund. So we actually are part of the programs initiated in Europe as common programs. And we also see that so far, we have not been locked out of the competition in Europe. So it's -- it could be a potential threat, but we have not been locked out. We are winning contracts in Europe. But you also see that we, going forward, we might need to position ourselves or have a setup in the European country to become even more e-company, so to speak.

And then I would like to invite all the presenters up to stage. This, I could have done half a year ago because we weren't allowed to, but now we can actually stand together. Can I also have one other handheld microphones up here? Thank you. Okay. We'll start up with a few questions from the webcast, and questions can also be asked from the audience, of course. But with regards to margin profile on missiles, could you -- could we get some more information about margin profile on missiles versus rest of the activities? And what impact should we expect from new CapEx investments? So I guess the question goes to both KDA as well as the CFO?

Do I start?

Yes, you can.

First of all, we established this production facility because of the demand for our missile. We need to ramp up. It's a -- that's important. And by doing that, we get a top modern facility for production, so we will streamline it. At the same time, we -- I don't believe we will see the same margin level as we have for other products in our portfolio like air defense. So we will expect an increase, and we have put measures to secure that we are doing the correct [ tech ] to optimize the margins for our missile production, but I think it's difficult to state that we will get margins comparable to some of the other high-end or high-margin products we have.

I think it goes like they're trending at 20% margin now the defense area, and we have a goal of 17%. And in that missile is part of that answer because they have a lower margin in total. And we will have, like you saw on the order backlog also a higher portion of the missile orders coming forward. So I think -- but having that said, we are also putting a lot of efficiency programs in the metal production, so we're able to take out scale because when you have a brand-new factory, you should be able to produce on a lower cost than you have with the old system today or the facilities.

And we also have a question on the maritime side that goes also combined to our CFO. But with regards to sensors and robotics, can you elaborate a little bit around the growth prospects there? And what size it is today? And how large it potentially could be going forward?

I can start with the figures and you can say what they are going to do. If you look at the revenue on sensor robotics today, they are NOK 2.7 billion in total. And Kongsberg Maritime has 16.5 billion in revenue in total. So around 16-plus percent of the total the sensor of robotics today. And of course, they have a growth goal together for all the maritime business of 9% CAGR up to 2025, but we don't split up in the different areas. But of course, you have 16% of the total. So even if you grow with a very high percentage, it won't be that much in the total. And then you can say what they actually, which areas they are going to grow in. I think you touched up on it in the presentation.

Yes, of course, in the water robotics, it's a lot here, but they are general, if you -- they will grow more than the average of Kongsberg Maritime, I can say that. And if, for those of you who read the local newspaper, you might know that we are planning for a new -- quite significant building down there. that is also, of course, supported by that we believe in this growth. So...

Today, we have the operation on several different locations in Horten. So now we're co-locating them together in 1 facility down there. But that's something we rent, and we don't allow it won't increase the cost for rental for them. But we co-locating in a very cool actually, new building. So I think it will be very beneficial for all employees and, of course, also for the production that will be brand new.

And more efficient.

More efficient.

We started with 1 building, and then we ended in 2 and then...

And you Egil, kept program.

Yes, yes. So, but it's very positive for the employee standard, and we need to be attractive for employees also.

But I think you can also add, Egil, that you mentioned it during your presentation that the robotics part is growing. And when that is growing, that means also the sensor part will grow because that is the real cool thing that you really have the sensors and the payloads on this autonomous vehicles.

Yes.

And then I also think that we're going to see growth in the surface, unmanned surface because that is today, but that is definitely developing going forward.

Underwater mapping also it start to move on marine minerals, not that, that will be large for the first years, but there is a lot of opportunities around this business. It's a niche, but its niche is getting bigger and bigger.

Thank you. And then also for Kongsberg Digital, where, I guess the question goes to both Shane and Andreas. Both you have recently, or relatively new solutions that you have gone into the market with both Kognitwin and Vessel Insight. And how do you feel the customer dialogue has changed from when you introduced these systems and compare it to how it is today in 2022?

Yes. I think we have 2 very different markets, in some cases, from maturity. We see there -- at least in the energy sector, there's a rapid adoption of this technology. it's, I mentioned the 3 kind of key drivers that's driving the adoption of these solutions, the energy transition, energy security and a more digitalized workforce. And it's the spend, the digital spend is high, which is good. They do see that they have to take out these inefficiencies in the organization and they have to meet their targets that they've been setting up for digital for the energy transition. Again, digital underpins all of those targets and ambitions. So adoption is high. It's -- we see standards coming out now as well, which really means that this technology is being accepted and is going to be here to stay. So it's very, very good at the moment, I would say, for the energy industry.

I think I can second that also from [indiscernible] side. We see more and more pull in the market now versus a push that we had to do let's say, earlier COVID stage. We also see that there are new players coming in and asking for solutions that are crossing between different stakeholders like from the charter side. So we are really have a lot of requests and a lot of interest in the market at the moment. And for us now, it's more the focus on short term, what we can deliver. So it's a really good market out there.

Thank you. And then we open up also for questions from the audience here. If you have any final questions, please raise your hand.

[ Ingrid Meyer ] from Nordea. Thank you for a great presentation and informative and very impressive. Two questions. First is on, if you can elaborate a bit on the financial targets for '25 and the growth approximately 10%. Is that -- does that also include the acquired growth? Or is that all organic?

Only organic. Acquired on top. And you saw we have options or possibilities to lift a lot. So good at least. Geir had a wish list.

Excellent. And second, on your first quarter presentation, you highlighted a bit of supply chain issues. Do you see that easing now with China opening up again?

Then I will pass the answer over to Egil and Eirik on the components.

Internal, it is hassle. We have -- we are using more resources than what we used to do. But it's not that big issue really. We have some delays on a few projects. But as I said, we are dealing with it, and we are fixing it. And we expect also the time to help here. So it's a bit different theories on what is going to happen for the future, though, but it's not a main issue really.

Just to add, I think, Paul, what Egil said, and I think we spent time on finding new sourcing, et cetera, that is important and also, to some extent, redesign options. But we also can deal with it with buffering of components, for instance, so that we have a longer lead on what we are doing. But basically, we see some delays as was presented during first quarter for the weapon stations, but it's only delays related to that. And there's no cancellations or anything like that. So we will deal with it in a good manner.

And just to add on there is extremely difficult to predict because sometimes you get an extra logistic cost because you have some extra freight. Sometimes you didn't get your supply and sometimes you get delays because you lose 1 component. So it changes from month-to-month actually. And what was new in the first quarter was that you had both a close down in China and you have the war in Ukraine. So it's extremely hard to predict what will happen over the next months. And at least if it lasts for long, then in Ukraine, what will happen then with supply in the long run.

Yes. Sveinung from Arctic. Just to, mostly to Eirik about this $150 billion-plus pipeline. I think you said it was largely independent of the Ukrainian war?

Yes.

And how should we think about that? Because I mean, if I remember the figures correctly, it's approximately defense matches that are related to equipment. So when they increase with, let's say, 10%, wouldn't most of that increase go to equipment so that your relevant market would increase much more than 10%. Is that kind of logical understanding?

I understand what you're saying. That's going to be interesting to see because this is a wake-up call for especially Europe. So they have to now define the budgets in a little bit new setting, I think. One thing is that they don't have stock of different equipment. So that is one thing. At the same time, it's difficult for countries to speed up the process to buy quicker to be more, how should I put it, hurry up in the process. So that's one aspect of it. But in some aspects, you're right that when you increase investment budget, which should then could go into there and look at our portion of that to see what is addressable problem from our point of view when it comes to the products we have. So -- but it's difficult now to see where this will be actually. I don't know if you have anything to fill in there. I think that's the best we can say right now. Germany, they just approved the EUR 100 billion additional budget, but we don't know how they will handle it. We saw one thing, they ordered F-35s immediately because that was easy to buy. So you could see a trend that some countries are buying more of what they have or what is easy available and they can direct like for it.

But I think, Pam, you mentioned it that it's probably not going to be a lot of focus on new development. I mean, it's going to go for proven technologies, proven equipment, proven platforms. So I think that in that sense, it will point us as a supplier of niche equipment and not huge development programs.

Okay. Final follow-up. Gyrid, you talked about, I think, 14% CAGR for up to 2025. And I guess in defense, 2025 is short-term horizon, but would that estimate that could have been made, that's only rooted in the current backlog. So that could be a been made before the Ukrainian war, right?

If we could increase the production, then we could probably have even more. But at the moment, that's the limit.

Thank you. And then we have the final 2 questions from the webcast. You mentioned the lockdown in China or in Shanghai and the situation in China. But can you elaborate a little bit around how exposed you are to China? And what kind of specific impacts you have seen from the lockdown?

For -- on short term, a lot of logistics is in coming in or through China. So for the short term, I think very much of value creating in the rest of the world is depending on that everything is growing. So yes, very much. And in long term, it's always alternative sources. So it's not that we are depending on this if we would like to change or do something else. But as you have hundreds of programs going through, there will always be something that is involving China.

There is an impact on some projects, of course, which has been pushed forward. due to the lockdown naturally. So -- but that we see now is opening up again. Shanghai is open up again. You said within 14 days, you said?

Yes, yes, but it is a hasn't been fully locked on either. And we were -- we could some people into the office to work, but we couldn't bring them home again, so they have to live there. And we consider if that's really where value or not. But it is normal, more or less normal, I would say. We always have something somewhere in the world.

And then the final question from the webcast. Do you have any updates on the process for -- around KDI with regards to potential future partnerships or IPOs both with regards to the process and with regards to the resignation of Ms. Skryseth?

No. On the resignation or the replacement of Hege. We are working as fast as we can and the process is going well. I've been informed. So I hope we can bring good news for the successor of Hege pretty soon. we Will see. KDI should be an interesting place to take the head. So I'm confident that we will find the right person soon. When it comes to the process of IPO or partnership, I think the situation is like we said in the Q1. We are holding only -- every option open. I think it's important to remember that our key focus in KDI these days are to scale and to build the robust -- build on the robust position that we have in the market. I think Shane and Andreas have explained it quite well today how the maturity is increasing in these areas. So we are focusing on building the business and scaling the business, and then we will see the opportunities whether that will be IPO or partnership.

And since it's the last question, we can also say that KDI are IPO already, so it's all about the market now and finding a new CEO also. There are a lot of people in the room here now that I've been working a lot with the KDI and it's -- they are IPO-ready. When the time is right.

We have one more question here.

And there comes another question...

I was just wondering on the comment you made on the Swedish and the Finnish equipment suppliers joining sort of the NATO potentially. And that changing the competitive landscape for your defense business? How has that been until now? And what do you think is going to be the change in the future? I mean, are you being a preferred supplier if you are from a country that is a NATO member? Or what has been the situation until now? And what do you expect to happen?

So within NATO, many of the programs, you're required to be a NATO nation because of interoperability and the way data is exchange, things like this. There's definitely a group of nations and industries that are preferred in programs that are funded by NATO. The industries, like I mentioned, both Swedish industry and Finnish industry are very capable industries, we've met them in competitions outside of NATO-specific programs. So we know how competitive they are. So I think it will up our game as far as having them in our competitive space across the board, but there isn't maybe a set of isolated programs that are a little more not protected, but definitely have requirements related to NATO interoperability, NATO standards, which typically Swedish and Finnish industry don't necessarily comply, will absolutely add more competitors into our market space.

Just to add facing competition from Swedish companies.

All the time.

All the time. So this is not a new thing for us. So I won't put this as just changed. I think it's positive for our operation with partner as well. So -- but in general, we are facing the same competition that we have always done. There might be some net programs that sub, for instance, might enter and competing directly, but there's not many, too many NATO programs on its own. So...

What's also interesting is it could be there's a requirement that nations buy more NATO compliant equipment right? So that could actually open opportunities for us in both of those nations where they are required to buy NATO interoperable systems and capabilities.

Okay. And then if you look at the number behind you, I mean you look at NOK 150 billion of potential tender or pipeline work over 10 years. That's NOK 15 billion a year on average. That's what you had the last 2 years. In the KDI, right, and you talked about growing your revenue by NOK 10 billion over the next 3 years. So is that number too conservative? Or where is that incremental growth going to come from?

Well, these are established from the new initiatives we see. And you're right in your assessment of numbers as we see, we have achieved a lot within 3 years. So I wouldn't say conservative, but it's a realistic number. But obviously, we are looking for more as well.

Okay. I would just like to say thank you for being patient, and I hope that you have got some more insights in our business areas and our, let's say, plans for the next period. At least I have noticed that we are quite positive here we stand. We have a fantastic position in all our business areas. We are more solid than we have been ever before, I think. So the platform from where we're going to jump, I think, is very solid, and we are prepared to continue the growth in KONGSBERG and also deliver both top line and the earnings that, that will continue to grow. So thank you so much for joining us, and thank you to those of you on the webcast, and I look forward to see you next time. So thank you so much.