Kongsberg Gruppen ASA (KOG) Earnings Call Transcript & Summary

So many of you have decided to take the trip here and spend the day with us. And to those of you watching us from the webcast, welcome to you as well. Today, you will hear presentations from a broad group of consumer management as well as some of our experts diving into some of our exciting technologies. During the lunch break, those of you present will be able to take a better chance to take a better look at our systems and some of our products that are on display out in the hall and outside this building. We have NASAMS system outside the building. We have remote weapon stations. We have a full-scale HUGIN AUV. We also have 2 maritime simulators up running, one located just across the hall here and one towards the opposite side of this building and offshore wind simulator. I would also urge you to visit our FutureFuel Energy Lab, which is open, down at the opposite side of the building, very exciting. You see the program behind me. You will get presentations from all the business areas before lunch. After lunch, we will have a moderated Q&A. Jette Fugelsnes Christensen has joined -- will join us today, and she is an expert on European politics and previously a member of Norwegian Parliament Committee on Defense and Foreign Affairs. I would urge you to save your questions to this session. Then some practical information. We have no planned emergency exercises today. So in case of the alarm going, please exit the building through your nearest merchants exits. The one nearest here is just behind the scene outside this room. Restrooms might be found just where you entered the building. There are also other restrooms down the hall and lunch will be served out in the hall. With that, I think it's show time and it's my pleasure to leave the floor for our President and Chief Executive Officer, Geir Haoy.

Thank you very much, Jan Erik. And good morning, everyone, and welcome to Kongsberg Capital Markets Day. It's been quite a few years since we have hosted an event like this here in our own premises in the city of Kongsberg and as Jan Erik said, we are very pleased to see so many of you joining us here today. I'd also like to extend a warm welcome to those of you joining us online. It is truly my privilege stand here today together with the Kongsberg management team to provide you with some updates on Kongsberg and also on our ambition for the future. In addition to myself, you will today hear from our CFO, Mette Toft Bjørgen and you will also hear from our business presidents, Eirik Lie, Kongsberg Defence & Aerospace; Lisa Edvardsen Haugan, Kongsberg Maritime; Martin Wien Fjell, Kongsberg Discovery; and Shane McArdle, Kongsberg Digital. So our story is one of dedication and determination. And this is a narrative that spans days, weeks and years of engineering, testing and fine-tuning complex technologies integrated into systems for critical tasks and operations. At Kongsberg, innovation isn't merely about creating. It's about cultivating sustainable solution that endure and perform consistently under any circumstances. So our goal is to deliver technology, today's critical challenges to create a better tomorrow. And we know that our technology will be a part of the solution. And that's why we never settle for entering less than excellence, driving to innovate and lead by example in everything we do. And that's why we go to work every day to protect people and planet. And I would also like to add for me personally as a father and also lately as a grandfather, the important task of leaving the planet in a better condition to the next generation is the most important driving force. Kongsberg is a different company today compared to when we hosted the last Capital Market Day back in 2022. The world has also undergone significant changes in the last couple of years. And our markets are experiencing an unprecedented surge in demand. This growth comprises both the need for enhanced national defense capability and the need to actively address global challenges related to the decarbonization and also the energy transition. And all this happened at the same time. Kongsberg is uniquely positioned to meet this demand. Our solutions are specifically designed to tackle these critical issues. We are uniquely positioned to meet the needs of our customers and to help them solve their challenges. We have never encountered such a strong demand for our entire portfolio. This moment presents an extraordinary opportunity for Kongsberg to lead the way in providing innovative and effective solution that not only enhance global security but also contribute to a more sustainable future. Today, you will receive a thorough overview of our business. But if I should ask you to remember 3 key takeaways. Number one, Kongsberg's offerings are directed towards solving 2 major trends of the day: security and sustainability. And during my more than 30 years in the company, I have never experienced such sustainable demand and solid outlook demand. So Kongsberg -- number two, Kongsberg has a deep domain knowledge and a comprehensive technology portfolio. We are expert in what we do and have skills and competence among the best in the world in all our areas. Number three, the demand we see from the 2 drivers I mentioned, these are not short-term fluctuations. It will take years for the nations to build their defense and security framework. At the same time, the world is aiming for net 0 in 2050. In my view, this means that we have entered the cycles that most likely will generate solid demand, not only today, not only the next years but most likely the next decades. Today, the world finds itself at the cross road, facing challenges to shape our geopolitical and environmental landscape. Conflict and challenges in Europe, in the Indo-Pacific and in the Middle East, coupled with the rising tension among global powers underscore the growing instability. The geopolitical situation creates demand not only for immediate action but also long term to ensure a secure and sustainable future. This growing commitment underscores the importance of strengthening collective defense capabilities in response to the security challenges in Europe. Europe is now in a new investment phase. By 2024, 18 NATO member countries are expected to meet or exceed the alliance target of spending at least 2% of their GDP on defense, which is a significant increase since 2014. This also includes Norway, which has proposed an historic defense spending increase over the next 12 years, and will meet the 2% GDP commitment already this year and also aiming for 3% towards the end of the 12-year period. Like Norway, the new European investment phase has also a long-term perspective. Kongsberg is already -- Kongsberg already play a crucial and [ expanding ] role in enhancing the security of NATO members and allies through our advanced technologies. As a leading technology company, we are uniquely positioned with our portfolio to address the current challenges and provide customers with technology they need, which also means that we have -- can expand our foundation for export opportunities even further. Sustainability and security are closely linked, one cannot exist without the other. As the world faces the escalating crisis of climate change, evidenced by extreme weather, ice melting and record-breaking temperatures, our expertise in advanced security and defense solution as well as technology to reduce the maritime and the ocean industries climate footprint is more relevant than ever. Thus, this is why complying with the Paris agreement is essential for our collective efforts to combat the climate change. That was a little bit early. Our innovation in energy and net 0 Maritime technology already served -- the -- serving 1/3 of the world fleet are well proven and then positioned to meet the ambitious goals set by the Paris agreement and the goals of reducing greenhouse gas emissions substantially by 2030 and net 0 by 2050, which is set by the International Maritime Organization. Kongsberg is dedicated to leading the charge while continuing to provide innovative solutions that ensure both. This will also be further highlighted during today's presentations. I think Kongsberg is a company that can rightfully call itself truly unique. Kongsberg possesses extensive domain knowledge, positioning us as a leading system integrator with expertise in both hardware and software. Our ability to seamlessly integrate our own technology with that of others, spans all parts of the company from design to operation, forming deflation of our strong technological competence. Our expertise and creativity have made us a master of dual technology extending from the ocean depths to the outer space from defense innovation to civilian application. Kongsberg [indiscernible] is based on our close collaboration with our demanding customer. And as a result, we have managed to be at the forefront, applying new technology. Today's much discussed technologies such as the artificial intelligence, machine learning, these are something that we have already been doing for many decades. Our strength is that we have always adopted modern technology to improve internal efficiency, but also performance of our system and solution. So throughout today, you will get the chance to learn more about several of our systems and applications. All our business areas will give you more insight into the technology world of Kongsberg. We'll see how we provide precise illustration based on sound in water, how we utilize artificial intelligence, how we continuously develop our systems to be even more efficient and offer greater capacity and how we empower ship owners to seamlessly navigate their energy transition journey towards 0 emission. Kongsberg operates globally with more than 13,500 skilled professional across 40 countries. Each team member contributes to our diverse markets, Defence, Security, Maritime Energy space and underwater ocean domain. In recent years, we have welcomed thousands of new members with specialized expertise. These new colleagues, alongside our more experienced staff, ensure that we continue to develop and innovate our technological competence. The skills and knowledge of our employees are instrumental in advancing our capabilities and maintaining our leadership in the industry. Our collaboration with our -- with the nations customers, partners and suppliers is also essential for Kongsberg. This collaborative approach drives our international growth and development, allowing us to meet the diverse needs of our stakeholders actively. Due to an unprecedented surge in demand and also a large aftermarket, Kongsberg is proactively enhancing its capability and also investing in production capacity. We have recently opened a new office in Kochi in India, and we will soon open a new office in [ Olson ] and production facilities in both Kongsberg and Adelaide in Australia. We are committed to expanding our global footprint across various locations, consistently investing and growing internationally. Our reach is global, supporting our customers wherever they operate. Kongsberg has demonstrated remarkable growth and resilient, tripling our revenue from 2018 until today. In my view, this is quite okay. This significant achievement is a testament to our firm strategy and commitment and solid execution. We have not relied on the market growth alone. We have succeeded due to our confidence in our people, technology and solutions. And we are also a forward-looking company by nature. Balancing the short-term operational excellence with the long-term planning is key. For the past years, our long-term visibility has grown substantially. Even though there will always be areas for both overperforming as well as underperforming in a broad portfolio like ours, [indiscernible] are, in general, very strong for our entire business. And the trends that we are facing are long term. As I mentioned earlier, I have never, during my career, experienced a more solid and long-term demand to what we see today. Yes, we will, as others see a shorter-term fluctuation in our operation. But looking at our total portfolio, we are uniquely positioned to address the current trends. To ensure that we have the right long-term focus, we have thoroughly reviewed our portfolio and concluded that 10 years from now, our ambition is to triple the revenue size of the company. And this means that our 2033 ambition is to deliver revenue of at least NOK 120 billion. Going from NOK 40 billion to NOK 120 billion in 10 years is ambition -- ambitious but as I mentioned, given our unique position and also our long-term outlook market, this -- we believe this is attributable. We experienced strong demand. We are well positioned and with my component colleagues and our unique technology, we are ready to respond directly to the major global trends on sustainability and security. And with that, it is my pleasure to introduce our CFO, Mette Toft Bjørgen, welcome you to the stage. Thank you very much.

Thank you, Geir, and welcome to Kongsberg, everyone. Also welcome to everyone online. Today, I will focus on the longer horizon, how we have come to where we are today and also how we plan to prioritize our resources to meet our longer-term ambitions going forward. But let me first take a look back. When we set our target in 2022 to be a NOK 40-plus billion revenue company in 2025, with a group-wide EBIT margin of 12%, we have met our targets well ahead of plan. Evaluating these targets today, you could argue that we were a bit conservative. But achievements like this does not come without strong and strict priorities of our resources and very solid project execution along the line. We've been through a period of currency fluctuations, high inflation and supply chain disruptions. But in Kongsberg, we're dedicated to deliver our projects on time, at cost and at high quality, and this shows also in our financial results. Over the last years, we managed to capitalize on our investments and initiatives across the company. Kongsberg ended Q1 2024 with a record high order backlog at NOK 90.2 billion. Our order backlog has increased within all business areas, which is a solid foundation for further growth. Kongsberg's unique positioning, as Geir has talked about, to the markets that are impacted by security and sustainability makes us confident that the growth will continue in the long term. Kongsberg Maritime has, for the past years, delivered strong performance. This is driven by the other markets, our ability to protect and increase our deliveries in already established positions as well as entries into new markets such as offshore wind. We are well positioned to take part of the maritime transition to net 0 with our integrated solution for energy efficiencies and decarbonization. Kongsberg Maritime is also developing solutions and technologies that can increase the life cycle for vessels and increase scope of our deliveries. We expect to capture further market shares in a growing market in the years to come, as Lisa will give you more details on later. For Kongsberg Defence & Aerospace, we have, for a while, experienced solid growth based on demand for our defense portfolio, in particular, for missiles and air defense systems. These 2 product areas constitute a majority of our order backlog and will be important also for future growth. We also see a major aftermarket potential. The NOK 410 million contract for upgrade and expansion of NASAMS to Spain is a good example of this. In the proposed long-term plan for Norwegian defense forces, naval defense capabilities are specifically important. This presents interesting market opportunities for several of our defense -- of our business areas, also besides Defence. The increased Defence and security spending, especially within NATO is a driver for the Defence industry, and Eirik will come back to the addressable market. Kongsberg Discovery has shown solid growth in the first year as a separate business area. With a comprehensive technology backbone, and a vision to discover the secrets of the oceans, this presents significant opportunities also for strong growth. Now digitalization is at the core and a denominator in all our business areas. It has been key to our success at Kongsberg, and Kongsberg Digital is focusing on utilizing the available data, generating simulated data to increase operational efficiency across several industries. Kongsberg Digital's competence on digitalization and advanced processes are keys for those success. As I have showed the historical growth has been strong, but just as important is that we have developed and -- we have delivered solid profitability and improvements over the period as well. The macro conditions during this period has been challenging. Inflation is an area of high focus at Kongsberg and thorough planning and excellent project execution have made this challenging development manageable. In addition, parts of our backlog, especially in the Defence area, have been protected by prenegotiated inflation classes. With such a high growth phase, it's also important to scale efficiently and keep strict cost control to secure the profitability. There have been major margin improvements within Kongsberg Maritime. Kongsberg Maritime has continued to release synergies from the acquisition that was done back in 2019. And these, in combination with strong project execution and dedicated improvement initiatives, are the basis for the margin development as we have seen. For Defence, we operate in a regulated market where the majority of the contracts are subject to profit caps. For several years, we've said that in Defence & Aerospace, we have enjoyed a favorable project mix with regards to profitability. This mix is, as you have seen over the last year, about to change. However, the change is still towards a historical high level. It's the excellent project execution, continuous hunt for synergies and cost efficiencies that form the basis for the strong margins. When we say that the mix is changing, we really mean that a larger part of the portfolio we are delivering on are made up by contracts that have profit caps. This includes development contracts such as the new supersonic missiles for Norway and Germany. At Kongsberg, we have delivered on our targets, but we will now not dwell on past success. We will look ahead and mobilize to deliver on our new ambitions. At Kongsberg, we have a strict and conscious prioritization of our resources. For us, capital allocation is an important key to secure profitable growth and realize our potential. Our capital allocation priorities remain stable and have been so over years. Firstly, our objective is to maintain a solid balance sheet. Customer confidence is our license to operate. This is especially the case on the defense side of the business with long-term contracts, delivering long-lasting capabilities and indeed being an important part of the customers' National Defence for decades. A solid balance sheet also grants us with access to debt capital markets at competitive terms, which is important to us for many reasons, and one of them being the working capital requirements in Kongsberg that can fluctuate considerably. Since April 2021, we have held an A- rating from Nordic Credit Rating. Going forward, our stated objective is to remain investment grade. Secondly, to continue the organic growth, we need to invest. We have a record high order backlog, and we expect strong market demand to continue in the next decade. Kongsberg will further invest in capacity and product development. This is financed through our own balance and together with our partners and customers. Currently, our largest capacity investment is the new missile factory that will be open in just a few weeks from now. Eirik will also come back to the new supersonic missile development. We're about to begin together with Norway and Germany. Now capacity does not only include people and production. Supply chain partners and the processes we utilize in the executions of our projects are important factors as well. To meet the growing demand, we expect to increase our combined investments in PPE, self-financed R&D and customer finance R&D up to 15% in the medium term. This is an increase from historical levels around 12% to 13%, and it also corresponds to the level that we've seen in 2023. The investments needs to be seen in a global perspective. It's important part of our business to have capacity and competence geographically close to our customers, both to meet local content requirement but also to secure adaptiveness as well as urgency from customers. We've experienced during supply chain disruptions that our global footprint is essential. Thirdly, our policy related to shareholder remuneration is stable and remains unchanged. Kongsberg aim is to provide our shareholders with a healthy shareholder remuneration, paying an ordinary dividend that is stable or growing from year-to-year. On top of the ordinary dividend, the Board of Directors will continue to assess additional shareholder remuneration on an annual basis through additional dividends and/or share buybacks. Such assessments will be based on a holistic view of the group's need for capital. This year, the Board chose to lift the floor for the ordinary dividend to NOK 7 per share. This is responding to the increased size and financial outlook for Kongsberg. Further on, Kongsberg is a technology-driven company with a world-leading portfolio. We seek to have an active portfolio management with focus on areas that will complement and grow our existing technology portfolio. We divest and acquire to support profitable growth with technology that bring us forward. We will always seek synergies between our existing operations and inorganic growth to nurse a complementary growing portfolio. We look for activities in markets adjacent to our existing business or markets, which can benefit from our technology, competence and footprint. Divestments should also be expected for noncore operations when we see that other parties may be better owners. Moving on to our ambitions. Kongsberg is a long-term company. We're subject to long-term market trends and drivers. Our current order backlog extends into the next decade, and we make investments today that will significantly increase our ability to deliver going forward. It makes sense for us to have long-term ambitions. We aim to triple our earnings from NOK 40 billion in 2023 to NOK 120 billion in 2033. We're also facing drivers that are going to make strong impact on the business, not only for the next couple of years, but for the next decades. The Maritime industry is in a major transition and our attention is on near-term changes as well as longer-term major shifts, such as the future choice of fuel, electrification and new industries such as offshore wind. We believe these shifts hit the market in the years to come. And within the next decade, we will see major changes in Kongsberg Maritime will be among the drivers for this change. When it comes to Kongsberg Defence & Aerospace, we expect increased spending across our markets. We will further develop and expand our portfolio, and Kongsberg Defence & Aerospace with a strong position around defence technology, together with good prospects in other areas such as the space industry, will make Kongsberg Defence & Aerospace even a more important player in the markets going forward. Kongsberg Discovery is exploring the unexplored. With a wide portfolio of products, especially within subsea operations, we are exposed to a market with huge potential. Martin will give further details about the technology and potential that lies within Kongsberg Discovery. And Kongsberg Digital has started on a solid growth path. This growth has come in areas that did not previously exist only a few years ago and is now starting to mature. There are huge potentials in between and across our business areas that we aim to utilize. This paves the way for our bold ambition of tripling the size of the company over the next decade. We manage a broad portfolio and will secure a profitable growth, focus on continuous improvements, and we aim to generate a portfolio of businesses delivering more than 15% EBIT margin on an overall level. This is achievable through scale, firm cost control and solid project execution. The world is aiming to be net 0 in 2050. This will require a total renewal of the maritime fleet, and our solutions are helping our customers reaching their ambitions and reducing their footprints. We're at the time where the world has realized that we have underpinned the importance of defence investments for decades. Both security and sustainability are at the core of our business. We offer solutions designed to solve many of the challenges we see today, and we have proven that we are able to adapt in a changing world, delivering on our customer needs and coming up with solutions that are there to protect the people and planet. To summarize, we have and will continue to deliver on our targets. And with that, I'll leave the floor to our business areas to tell us more and first up is Eirik. Thank you.

Thank you, Mette, and good morning to everyone. I think many of you knows Kongsberg very well. But for those who are new to Kongsberg, I give a little bit of introduction to Kongsberg Defence & Aerospace. Our core business is to develop and deliver advanced weapon systems and core command and control systems to be put on aircraft, vehicles and vessels. We also have a Space division and a growing service and aftermarket business. Personally, I've been in this business for more than 30 years. And I've been -- I've seen many CMD, Capital Market Days, throughout the years. But I must say that today, when standing here, what we see, experience today and what we expect going forward is very unique. The backdrop is serious. We are experiencing a dramatic shift in how countries prioritize defence capabilities. This creates challenges for us as a business, but also it leads -- or gives a way forward, how can we make a difference in order to protect our nations. So today, I want to share with you 3 key messages about Kongsberg Defence & Aerospace. We have invested in our production capabilities and can deliver on our record high order backlog. That's the first one. The second key message. Our key markets will continue to grow, and we are well positioned to take new orders -- in new orders and also take new markets here. And number three, we are investing and innovating in the next-generation technologies and capabilities. So the Kongsberg Defence & Aerospace can be in the forefront in the coming years. Well, first topic, how are we going to deliver on our record high order backlog? Take a look at this. This is the order backlog we see today. Two years ago, I presented in the Capital Market Day that we talked about, identified opportunities worth NOK 150 billion for KDA over a period of 10 years. Back then, our order backlog was about NOK 35 billion. Today, 24 months later, we have an order backlog of NOK 65 billion, and if we add in frame agreements like Aviation [indiscernible] Maintenance contract or CROWS weapon systems, remote weapon systems in U.S., we are close to NOK 100 billion in backlog. This also say something about how we're going forward. We are transforming our business. I used to say that we had 70% engineering, 30% production. Now it's opposite. Even though engineering is increasing about -- so we have now approximately 30% engineering and 70% production. And most of what you see in our order backlog as of today, they are results on processes started long before the Ukraine war. Some of them come perhaps in earlier, but the process has started many years ago. But at the same time, we -- I will say that Ukraine war was a wake-up call to everyone. And I will come back to that later. So when we saw this ramp-up and growth for us, we initiated an internal project, we call it [ big job ]. That was to identify risks in order for us to secure that we were able to deliver on our promises. And one of the key areas was to secure that we were able to upgrade and expand our facilities. And we have done that for many years now. So some of them has already been mentioned. The facilities at Arsenalet, where we have our production site here in Kongsberg. Back in 2010, approximately 35,000 square meter was our production capacity. We expanded for Air Defence, for space and now, we are opening the new missile factory later this month. And altogether, we have now approximately 100,000 square meters of production capacity only here at Kongsberg. When we acquired KAMS, earlier named as AIM, we are building up a rig. We continue to do that with what we call the medium depo maintenance center for F-35. We have established a site in [ MOS ] for engineering activities. So that's what we are doing currently in Norway. Outside of Norway, we are also doing a lot. Mette mentioned Australia, where we are building up a facility there. And we are also expanding or looking to expanding production capacity, both in U.S. and also more in Australia. But this growth is not only about facilities. Every year, we are hiring 500 more people. We need processes, that sounds boring, but it's important for us. When growing outside of Norway, 80% of what we're doing in outside Norway actually on the export market. We need processes to secure that our scaling is done in an efficient manner. And you all know about supply chain. Supply chain is critical. So what we are doing with the supply chain is to secure that we have a robust supply chain, meaning we need redundancy, multiple sources, being present in different countries to secure that we are always able to deliver. And also partnerships that has always been part of our business model. And that will continue, both the secure good business, future market access and also technology partnerships. That will continue and is very important for us. While we have a strong order backlog, which we are -- which we are ready to deliver on, I think we are well positioned to continue growing our business going forward. And I think in this context, I'd like to talk about 2 main drivers. The first driver, the world has changed, both in terms of geopolitics, but also in national security. The Western world faces a new normal as a security threat has become real. We can look at what's going on in Ukraine, in the Middle East and also challenges in the Pacific region. These are drivers of security challenges. As a consequence, security has become a significant market thread -- a significant market trend on par with sustainability. And this situation drives a significant increase in defense budget across the world. And we expect this growth to continue for many years. Furthermore, I think we also realized that during the pandemic and also trade wars, we need to also be local in the areas where we are because we see that there is a need for developing domestic capabilities, and there is also a need for more national control of supply chain. The second driver is a combination of industrial warfare. I think when you're reading the papers -- newspaper and listen to the television what's going on, it is an industrial warfare going on. So this, in combination with new conflicts that are different in nature from what we experienced and seen in the past. So I think that the Ukraine war is transforming the Defence industry. First of all, we see that the Western modern technology works. It's very important. But you also see the need for production ramp-up as quick as possible. We also see that we need a rapid supply chain management. And you also see this trend that things must go much faster. We need to innovate much faster, and it needs to be put on where it needs much quicker. And the second part of this development, as I talked about, related to changes on the battlefield. If you go back some years, we talked about counter-insurgency activities in case, desserts in Iraq, Afghanistan, completely changed now with what's going on in the fields of Ukraine. As future conflicts will lead to very different air, sea and space battlefields. This is driving demand for the products in our portfolio. So rising geopolitical uncertainty is driving defense spending higher. You see that in Europe, Asia, and they are catching up with U.S. Going back, I think it was Geir talking about the investment phases in Europe. The first investment phase, as we see it, was after [indiscernible], a small defense increase. The second phase was when Ukraine war started. We needed to do something, you needed to act. Now we are in the third phase where we see a growth in defence budgets more on a long-term basis. So I think back in 2014, 3 countries were at 2%. Now 2/3 is on 2%. And I also think that with the majority of European countries, they are continuing to increase the spending, and we see that in the budget. Use Norway as an example, reducing 2% this year, reaching 3% 12 years from now. If Norway is an example, that will pay the way. Well, while we see a higher growth in Europe and Asia. U.S. remains still the biggest market in the world and still very important to us in KDA. Look at this chart. That's quite interesting. It shows the growth in defence spending on the procurement side, combined with our revenue development. That's a black line. That shows that the KDA revenue is growing faster than the market. And I believe this is because -- and it's going to continue like that because of our strong order backlog. We see more and more that we are getting a strong position as a prime contractor. And also our product mix is very well positioned for the defence [ budget as we see ]. On top of this, we also are enhancing our product portfolio to match the need in the market. Kongsberg has always been a technology-focused company seeking #1 positions in our niches. And this is a position we will work towards going forward, and that drives our demand for investing and innovating. And I could talk a lot about technologies. What technologies are important to us. But if I should have 3 technologies that we are working on right now, one is autonomous systems. The second is artificial intelligence. And the third is real-time digitalization. Those 3 are an important part of our embedded or to be put and embedded in our systems. So we are expanding our product portfolio. And we utilize our strong position in the market to develop this further. But I'd like to highlight 5 priorities that are important for us. We have more, but if I should put something up here, these are the 5. We call it full spectrum Air Defence. You have all heard about NASAMS, very important, make a difference as a fundamental defence capability. With full spectrum Air Defence, we mean secure the whole area. And Kjetil will join me just in a minute, explain more about that. The 3SM Super Sonic Strike Missile will be ready for production in 2030, '35. Extremely long range, high speed, going to be best on the market at that time. Space for defence, it's going to be more and more interesting and relevant for us and for defence, surveillance, communication, targeting of weapon systems. If we look into the long-term plan for Norway, a huge part of the [indiscernible] situation is based on procuring standardized vessels. We have the Vanguard concept that is a match for this demand. And we also see this demand in many other countries in the world. And also the aftermarket and the maintenance repair and overall, they will be more and more complicated and sophisticated systems that require industry to take more and more of this maintenance and services. So I think I will call for Kjetil to come on stage. He's Head of Defence Systems Division, and he will go a little bit more deep into the NASAMS and Air Defence System full spectrum. So here, Kjetil.

Thank you, Eirik. Good morning to everyone here and joining us online. I'm here, as Eirik said, to talk a little bit about NASAMS and more into detail about what we're doing there and how the system is actually developing. So NASAMS is recognized as a world-class ground-based short- and medium-range air defence system. Today, it is a cornerstone for air defence in 13 nations, including the Ukraine, and will continue to grow in the future. Current users are also, as mentioned earlier, coming back and ordering upgrades and additional units. Since its inception in the 1990s, it has been under continuous development and represents today one of the most modern and capable air defence systems available. The system is developed in close cooperation with the Norwegian Armed Forces and the growing international user community. NASAMS is a collaboration between Norway and the United States and industrial partnership between Raytheon and Kongsberg. The system is combat proven and a total of more than 1,000 missiles have been fired over the years in live fire exercises and in combat. As current event shows, Air Defence is a crucial element for national protection and defence. NASAMS has proven its effectiveness on the battle field again and again. It is a true multi missile system. It can launch 3 different missiles from the same launcher against any target. The 3 missiles, as you see also up here on the slide, is the AIM-9X-2, which is an infrared missile. We have the AMRAAM missile, or AIM-120, which is an active RF or radio frequency missile. And then we also had a new AMRAAM Extended Range, increasing the engagement range and effectiveness of NASAMS in general. The systems missile mix significantly increases the challenge when adversary facing NASAMS as it is difficult to counter all the capabilities at the same time. The system can defeat a wide range of threats from cruise missiles and drones to aircraft and helicopters. It is a complete air defence system. Both AIM-9X and AMRAAM are what we call dual-use missiles. The exact same missile can be used on an aircraft or in NASAMS without any modification. The dual-use capability provides nations more flexibility and ability to optimize their munition stockpiles. It is based on an open architecture capable of easy integration and cooperation with other systems. The real-time networking capabilities on NASAMS provide significantly increased system capability and survivability. The NASAMS network is actually a force multiplier and sets NASAMS apart from other systems. You can say that the magic is in what you cannot see. The missile mix, combined with the real-time networking capabilities, provides the NASAMS users an array of tactical advantages in the field. NASAMS is continuously evolving and new capabilities are being introduced continuously. Defending an asset, a base or a city against threats requires a layered defence. This is where NASAMS excels. So when we have an important asset and we add NASAMS, we get an inner dome, which is [indiscernible] short-range air defence part of it. We get an outer or an additional dome, which provides the medium-range capability that really protects the area or the asset. Moving forward, the flexibility of the system is being exploited to introduce new capabilities, such as long-range air defence, including anti tactical ballistic missile defence or TBM Defence and further Counter UAS and very short-range air defence capabilities. In addition, we are also looking at additional sensors and effectors such as lasers and other novel factors, including high-power microwave and guns. The NASAMS architecture and design inherently supports this growth without increasing manpower demands, which is essential to reduce life cycle costs. NASAMS is, as Eirik said, on a path towards full spectrum air defence. Thank you.

Thank you, Kjetil. I think just 2 comments to that. This full spectrum air defence, then we have that, that this is going to be the only affordable air defence system that holds the whole thing in the world. That's one important point. The other point is Kjetil mentioned digital solution. For KDA, the digital platform developed for NASAMS had further developed exactly the same as we use for Combat Systems in submarines, in vehicles, in ships, but also in commercial like remote tower solution we have for airfield. So it's a very important solution for us. So I think with those words, I think I leave the floor to Lisa. Thank you.

Yes. It's a true pleasure to be here today and being able to present Kongsberg Maritime. So who is Kongsberg Maritime. We are a company who has built a really solid position as a major supplier of maritime equipment and systems. We are actually on board more than 34,000 vessels sailing across the entire globe today. And that actually counts for 1/3 of the sailing IMO registered fleet. This has given us a deep domain knowledge around marine operations. And when you are combining that with our innovation capabilities, we have been a strong partner for our customers in the past, and we plan to be it also in the coming decades. In order to deliver on our commitments, we have grown to become a company of more than 6,700 employees, highly competent and dedicated. We have also, last year, passed a revenue of more than NOK 20 billion. We delivered [ 13.2% ] EBIT. And I must also say we have had a good start of 2024. And in order to deliver on all of this, we are present on all continents and in 34 countries. And that's why we believe that we deserve the title as the ocean space experts. So if we were to look into the market and how the market outlook looks like for new building in the years to come, I will say that when it comes to a number of vessels, we do expect a growth, perhaps not the same prominent growth as we saw from 2005 and onwards, but still a really solid growth. And if we were to look at the more short-term outlook for our markets and our segment, I would like to pay attention to the tanker markets, which we see now are booming. We also see increased spending when it comes to cruise and ferries and the same goes also with what you all are reading about and what Eirik was touching into, we see there is increased naval spendings also. But perhaps more importantly for us, we see that now there is a good movement in the more specialized and complex vessels way towards offshore oil and gas and offshore energy. This is really important for us because this is also the segments where we have the opportunity to come in with high-value offerings that really demonstrate our capabilities of bringing in total systems. So if we then look at where will this strong new building outlook bring us revenue-wise in the next 5 years. I would argue actually that just a number of vessels that we are seeing coming through will raise the top line on our behalf with up to 20% and just -- it's just the number of vessels. When we are then also looking in and combining in the positive vessel mix that we are seeing coming through the markets now, that will lay another 20% of revenue growth on our top line. So you can then argue that just riding the market then in the next 5 years, just related to new building, we can expect a revenue growth of up to 40%. But of course, we have higher ambitions than that. Building on the solid position that we already have. So we are going to raise the bar for the green line, and we are going to replace the 2 question marks that you are seeing in the green bubble with as high number as possible. That is what we are aiming for now. I did mention to all of you when I started my presentation that we are present on more than 34,000 vessels. And if there is a key thing you should remember about Kongsberg Maritime is this one because it represents such a solid opportunity for us. And not only does it represent a solid opportunity when it comes to revenue, perhaps even more importantly, it has given us a unique insight in both our own products and systems, but perhaps even more importantly, an insight in how the vessels are operating. And is this insight that we are utilizing when we are entering into sustainability of partnerships with customers like Solstad and our Chief Technology Officer, Bjorn Jalving, will go more into the depth of what we are doing within this sustainability partnerships when he are coming on stage after I have finished my presentation. That is not only Solstad that we are working with. Just to give you a couple of other examples, we are also working on hybridization with SEACOR, and we are also looking into propulsion efficiency and other types of upgrades for Høegh Autoliners. The common theme for all the partnerships that we are working on and all the projects toward existing fleet is that the purpose is to reduce emissions and, of course, also cost. But it's not only the market-driven decisions that are impacting the investments that our customers is putting forward. It's also the 2 major trends within the Maritime Industries, often referred to as the 2Ds. And that is digitalization and decarbonization and they go hand in hand. And for us, as a technology provider, we see it actually as our duty to deliver technology that will support our journey for our customers towards 0 emission. And I must also say it's truly a strength being a part of our technology powerhouse like Kongsberg when we are bringing in new products and systems to the market. It's then perhaps not a surprise to any of you when you then see that these are the 5 strategic themes that will be our priorities when it comes to investments in the mid- to long-term horizon. And they are all built on what I consider to be the key assets of Kongsberg Maritime and they form a fundament for our strategic themes, being the people and the competence, being our deep domain knowledge around marine operations and at least also our technology. So what is our goal in the way forward. Our goal is definitely to be the energy transition partner for our customers. And the way that we plan to do that is to bring integrated solutions into the market, playing on our true advantage. And that is also the only way that our customers can ensure energy efficiency at sea when they're operating their vessels. In fact, it will also be their license to operate in the time going forward. And to be capable of actually bringing these integrated systems into the market, you also need to have a portfolio of mission-critical products that put together into a system speak seamlessly together. And then you then add also a digital layer on top of that, then you have the most advanced solutions that the vessels owners today can ask for in the market. So that is us delivering on all of that. And of course, to meet our really high growth ambitions, we have, of course, in a large organization like ours several ongoing projects in order to ensure that we are delivering. But I will give you a flavor of just 3 of these projects. And they are -- all these 3s are underpinning what have been mentioned as the kind of the major trends in the overall market, both [indiscernible] and meta, being sustainability and security. And to start with the first one, sustainability. I'll argue that electrification is key in a decarbonization journey. So for us, it's natural actually to focus on broadening our electrical propulsion range. And then -- you then also are combining that with a strong electro offering, then you have truly something that can be energy efficient and make a difference for our customers. And then moving on to the second part, security. Energy security and national security is high on everyone's agenda these days. And for us, focusing on that and also bringing into the market what we have in our portfolio, which can support an increased naval spending, it's natural for us to see how we can also then bring in other parts of our product portfolio. Today, approximately NOK 2 billion is related to naval in our revenue portfolio as of today. So together with Kongsberg Defence & Aerospace, we will look into how we can bring a larger part of our portfolio to strengthen their concepts offerings towards the Norwegian program now of standardized vessels. So that is also really, really high on our agenda and representing then the 1/3 of these projects. And then to end my part of the presentation. I will say that we are really, really well positioned. And we will fight hard every day to earn our right to still be perceived as the ocean space experts. And now I will leave the stage to Bjorn Jalving, who will tell you more about how we are bringing new concepts into the market but also how we plan to do the existing fleet even more safe, green and secure. So Bjorn, the stage is yours. And he will really demonstrate how we are planning to shape the maritime future.

Thank you, Lisa. Hi, everyone. It's great to be here. Kongsberg Maritime systematically invest in technologies -- required for the decarbonization and the digitalization of the maritime industry. From these technologies, we develop product, solutions and services that makes us a trusted energy transition partner through the life cycle of our customers' vessels. Subsea construction vessel from Solstad is a great example of the shift to electric propulsion. We are upgrading the mechanical thruster with a Kongsberg Maritime Rim Drive. This thruster with a permanent magnet motor directly coupled to the propeller reduces driveline losses. For this particular vessel, we expect 16% energy savings during transit and 40% in dynamic positioning for the energy allocated to the thruster. Similar, as we see in the car industry, the simplifications achieved by electrification significantly reduces maintenance cost. It is as simple as the new solutions have much less mechanical parts. Batteries. The general trends for batteries are that they get higher energy densities, longer life and not least lower cost. This will lead to larger battery packages. We see strong increase in pure electrification for Ferries, and we expect similar developments for short sea and tugs. In the Offshore Energy segment, we see now strong demand for hybrid power solutions. Lisa mentioned the upgrade to SEACOR Marines platform supply vessels. These vessels will get a containerized deckhouse energy storage system with batteries. The upgrades also include associated switchboards and faster control systems as well as dynamic positioning. When operating in DP mode, we will reduce power consumption by as much as 20%. And the solution also includes onshore connection. For deep sea maritime transportation, container, bulk, tank, reduction in greenhouse gas emissions will be achieved by dual fuel engines. We see significant increase in vessels built with dual fuel engines that can run on methanol and LNG. Kongsberg Maritime has strong positions on these vessels with our auto shift propulsion control system as well as the K-Chief marine automation system. Green fuels will become common and cost fuels will likely increase. This really underlines the importance of KM's contribution to reduce power consumption and improve efficiency on these vessels. Significant progress and benefits are -- often come when we are combining technologies. Kongsberg Maritime offers integrated solutions. The core Kongsberg Maritime product lines of control, navigation and automation allow us to couple energy efficiency with the vessel's overall mission efficiency and maintain safety. We have domain-specific solutions for Ferries, short sea offshore energy vessels, naval, deep sea, to mention a few to have this -- where this optimization happen. We are digitalizing our product lines. That means that our systems are connected and work seamlessly together. And we are digitalizing in 3 main ways. Firstly, our digital-enabled products increasingly have remote operation functionality, allowing both supervision and direct control from shore. This provides cost and safety advantages and more flexibility for the owners in how to man and run maritime operations. Secondly, our products will be open and secure and networked, allowing sharing of data on the vessel and in industrial cloud solutions. This allows us to develop applications for optimized vessel operations, as well as integration with the vessel's value chains. And thirdly, connected products enable digital customer support, software upgrade, new functions over the air and preventive maintenance. Kongsberg Maritime aims and works hard to be the digital life cycle partner of our customers of the future. We invest heavily in IT systems necessary to make this future realistic. Core investments also include the IT/OT convergence and significantly less complex vessel infrastructures, which is suited for digitalization. Kongsberg Maritime has the vision. We have the technology, the products, solutions and services as well as the international setup to be the trusted Maritime energy and digital transition partner. And this concludes the presentation from Kongsberg Maritime. And next out is the new exciting business area of Kongsberg, Kongsberg Discovery, and please welcome its President, Martin Fjell.

So thank you so much for coming and listening to Kongsberg Discovery. So Kongsberg Discovery, it's all about discovering the secrets of the ocean. And today, I'm going to give you a short overview of Kongsberg Discovery before I focus on how our exciting technology really positions us for strong and continued growth. As we all know, the oceans are really important for the world. It covers around 70% of the earth. It has an average depth of around 3,500 meters, and it is highly important for food, for food production. It's highly important for the climate and energy and also from security point of view. Regarding food, more than 3 billion of the world population rely on food from the ocean. And actually, when we introduced our echo sounders and fish finding sonars to the fishing market back in the early 1950s, it was so efficient that it almost depleted the oceans of certain fish species. Since then, the technology has evolved and now we are the market standard for governments and researchers around the world to set fish quotas and by that, ensure sustainable fishing. For climate and energy, ocean currents are vital to understand how the climate is developing. Also, with the move towards more renewable energy, a lot of these renewable energy has to be built offshore. However, if you ask researchers or governments around the world, what are actual the impacts on the oceans ecosystems that is uncertain. What we do is that we provide technology to help understand how this is impacting the oceans and the ecosystems, leading to more fact-based decision-making and less tension between different users of the ocean. Also, when it comes to security, many call the oceans the last place to hide. And we are delivering equipment to detect mines, to detect submarines, vessels and also other potential threats, for example, to critical infrastructure. So Kongsberg Discovery, we deliver quite a lot of different type of products, and this is a picture of some of them. And if I start at the bottom left of the screen, you see a picture of an ROV that is a remotely operated vehicle. So we don't deliver the ROVs. But what we do is that we are providing sensors to ensure safe and reliable positioning of the ROV and also other type of sensor packages. Moving on to the fishing vessel that you can see there. We deliver fishfinding sonars and echosounder to the world's fishing fleet. Moving on to the middle of the screen, you see USV, an unmanned surface vessel. And we have developed USVs that are purpose built to carry our sensor packages. Also, we delivered the same sensor packages to other USV suppliers. Diving down below the surface, you find our AUVs. That is the autonomous underwater vehicles. And we are the market leader for AUVs capable of diving down to 6,000 meters. Our latest development, the HUGIN Endurance, is capable of operating between 15 and 16 days unassisted and can travel around 2,000 kilometers in one single dive. Moving -- about the USV, you see the communication where we will develop and deliver advanced high-speed and secure point-to-point communication. Moving further to the right, you have a research vessel where we are the market leader for hydro acoustic sensors. And to the far right, you see a picture of a traditional offshore supply vessel where we are delivering the sensor package as part of the dynamic positioning system. Kongsberg Discovery, we have around 1,100 employees, and last year, we had a revenue of NOK 4 billion. That was an increase compared to the year before of around 30%. We are split into 4 different product divisions. We have Ocean Technologies where we develop and deliver our hydroacoustic portfolio to all market segments, except for the fishing market, which is being served by Marine Life Technologies. Seatex is developing and delivering a broad set of sensors. And if I'm to highlight some, it's the inertial sensors. It's the maritime broadband radar and it is also our newly developed drone radar. And then all the way to the right, you have Uncrewed platforms, which is delivering AUVs and USVs, both to commercial, gold mental and defense customers. We, in Kongsberg Discovery, we focus on delivering value through products and these products, they build on our strong technology backbone, which I will come back to in a minute. We develop our products to serve the commercial markets, both government and commercial, but we also sell the same products or slightly modified products to Defence customers. Because we see that customer -- Defence customers, they are focusing more on using KOG's products, which is commercial off-the-shelf products, and they are doing this to lower the cost, to reduce lead time, ensure faster development cycles and also actually, in many cases, improving reliability. For us in Kongsberg Discovery, this means that we have multiple channels for the same technology and the same products, allowing for scalability, both when it comes to costs and when it comes to robustness. So we are delivering some of the most advanced products that the market can deliver, and that would not have been possible without our strong partnerships. These partnerships have been developed over decades. And if I am to highlight some of them, we have strong partnerships with marine institutions, both in Norway, in Europe and in the U.S. About 2.7% of the world's CO2 emissions is coming from the shipping industry. And over the last decades, we have developed -- over the last years, we have developed a very strong relationship with Jotun, where we together deliver the Jotun Hull Skating Solutions. The Jotun Hull Skating Solutions is able to reduce the CO2 emissions between 10% and 15%. Also, FFI, a really important partner for us, been instrumental in the development of our AUV product range and also selected other products. We in Kongsberg Discovery, we go to market through 4 different avenues. We have around 100 of our own salespeople. We have a strong collaboration with KM that is delivering between 10% and 15% of our order intake, preliminary for the maritime market. We have a strong collaboration with Kongsberg Defence & Aerospace, where we together position for some of the exciting programs coming out both in Norway and also internationally. And we have around 90 distributors and dealers around in the world. But as I mentioned earlier, our products really build on the combination of a strong technology backbone and strong marine domain competence. Our technology backbone comprise of Hydro Acoustics. That is sound in water, providing high resolution of what is hiding below the surface. This is independent if you are interested in what is hiding in the [ water column ], the seabed or what lies below. Also, Inertial navigation, it's all about detection of movements, and these sensors can be included into navigation solutions where you can operate safely without being aided by, for example, satellite positioning. We have GNSS Positioning, which is a secure satellite positioning resistant of interference and jamming. We are laser for secure and close range positioning, and we have secure and reliable radar and point-to-point communication technology. And lastly, we also have Robotics where we focus on AUVs and USVs, both the platform, the navigation, communication and sensors. To stay on the forefront on all of these different technologies, it's really important that we follow what is being developed and what can be the next really important technology. And I would like to highlight 2 of these examples. One is AI, artificial intelligence, this is already included in many of our products today and will just continue and be important into the future. The second is quantum technology. And this will really be a game changer when it comes to sensor technology. So we are investing time. We are investing money and resources to understand how these technologies are developing, how these technologies can be relevant for our customers and for our products and not the least when the technology is ready to be included into our products. So as I said, we are investing to remain leading within the core part of our technology backbone. But in addition, it is really important to understand how these technologies can be used together to create world-leading products. And this is really relevant for our AUV offering. It is relevant for research vessels, mapping the seabed with the highest possible resolution and it is really important from a dynamic positioning system, where Kongsberg Discovery is delivering the sensing system. And that is to mention a few. So now I have been talking a lot about hydro acoustics but I brought with me my own expert, [ Tony Algrøy ], and he will tell you a little bit more about hydro acoustics, what it's being used for, and how it works. Thank you.

Thank you, Martin. Hi, everyone. Underwater acoustics in 5 minutes, that's going to be a crash course. I'll give it a try. To get started, I would like you to picture yourself in space looking down at Earth and what you see is the blue planet, right? It's blue. You've seen pictures before because it's covered with more than 70% of water. And this masses -- these water masses remain more or less unexplored. We know very little about it. So that's kind of the area that we're covering. Then I would like you to move down to the surface, envision yourself being in the surface on the boat or whatever, looking down into the water, like these guys are doing and try -- if you were asked to picture, what do you see down there, describe it, how would you do it? And I think the answer is it's a little bit in the introduction heading here. But in Kongsberg Discovery, we use acoustics to image underwater, mainly because acoustics travel -- sound travel much more efficiently in water than light. So if you can generate, transmit and receive sound very, very accurately, it's actually possible to create very, very detailed maps of anything that's in the water column. It sounds like a science fiction, but it's really not. Just look at the dolphins, they've done this for ages. So I'm going to show you a few examples. The first one, I will be highlighting the kind of the defense side of things. Obviously, Kongsberg would use this technology to detect submarines and mines or whatever. So the first example is the Sonar. Sonar is basically an underwater radar. So you transmit sound 360-degree around your vessel. And by listening to the reflections, the echos that comes back, you can detect objects in the water column. There's been a lot of focus on the defense side here today. So I'm going to actually explain this more better. So we use the same technology to hunt for fish, to help the fishermen find fish more efficiently. So what you see on the screen here is it's actually a duplication of the screen. One is zoom in more than the other. But the orange or reddish thing that you see on the port side of the bowl coming up is a school of 300, 400 tonnes of hearing. And the skipper uses this technology to find the fish efficiently. And when you find fish efficiently, you save fuel costs, and we talked about sustainability. Safe fuel cost means less CO2 and less money spent by the fishermen. So sonar is both defend kind of instrument, but it's also a commercial fishery instrument. But we don't only use underwater acoustics to find fish. We also use it to identify what type of fish it is, and we use it to inform management of the ocean to actually tell how much fish you can fish. It's possible for us to come up with an estimate of how much marine resources there is in the water. And if you look worldwide, you will find that most of the actively managed [ fish hubs ] is utilized in Kongsberg echo sounder, all around the world, actually. The example you see here is a school of sand eel in the North Sea that digs into the sand in daytime and comes up at night time to feed. And sand eel is the key species scenario where we develop offshore wind these days in Norway. So management as well as finding efficiently. We use acoustics to also measure the currents under water, called acoustic Doppler current profilers and you use the Doppler effect, which is basically what you observe and an ambulance is coming towards you, and you can hear the sound pitching up in frequency. We use this effect to measure the current, which is important for management, for resilience, but it's also important for operations. You can measure the forces that influence your operations. So same technology, a little bit of a twist, and you also measure currents. This image here, now we're in the Southern Hemisphere of the world. This is collected by CSIRO of Australia. And you have -- at least 2 of our multi-beam systems that's used to map this area. This is a vast area. And this is print out slap on the world beautiful, right? But it's not really a picture. This is a map. So every pixel on this picture has a position and a depth, which is important to understand. But I use this example more to show you the superpower of acoustic, which is range, right? You can very effectively map the oceans around the world. And then the last example, if you really, really need high resolution, that's also possible with acoustics. The example you see here is HISAs, slap on top of an AUV, our HUGIN AUV that you can see outside here today, which can map seafloor, racks, stuff on the bottom down to [ central midway solution ]. So you can see that it's a combination of our very good sensors, and our platforms allows this to come up. And I think with that, I'll leave it up over to you to close off. Thank you.

Thank you, Tony. So just to summarize, there are 2 really important drivers today: sustainability and security. And we in Kongsberg Discovery play a key role within both of them. There are several challenges to be solved in both of these 2 mega trends. And in order to solve them, you need to have a good understanding of the ocean. We are the market leader today where we are operating, and we are continuously focusing to develop better and improved sensors. When it comes to autonomy and robotics, this is becoming more and more popular and in many cases, being combined with, for example, traditional vessels. So if you have a traditional research vessel, you can use a combination together with our AUVs and our USVs, and you can dramatically increase the data acquisition capacity in one mission. Also, when it comes to reliable data, everyone talks about big data and all the opportunities that are linked to this. However, in order to have big data, you need to have sensors and you need to have highly reliable and accurate sensors. And this is what we are providing. We are providing sensors accurate data to discover the secrets of the ocean. So with that, many thanks, and over to Shane in Kongsberg Digital.

Good morning, everyone. I start with a quick video. Our team is going to start with a quick video. Thank you. I'm all that stands between you and lunch. So I'm very aware of the time here, and I promised Jan Erik, that I would be concise and accurate no matter how long that takes. [Presentation]

All right. So I very much look forward to sharing more insights about Kongsberg Digital with you today. And if there's 3 key messages I'd like for you to leave with today, they are as follows: #1, we have achieved very strong growth; #2, we have a very large and fast-growing addressable market; and #3, we have everything it takes to succeed. A lot of the solutions you just saw in that introductory video were developed in a direct response to some of the challenges we're seeing happening in the World Day. So as Geir and Eirik mentioned, we have increasing geopolitical uncertainty. We have energy companies shifting more towards energy security and affordability while at the same time, we have a societal need to continue to decarbonize our industries. And what we've seen is that those companies who are digitally enabled, they're just more resilient and robust and able to meet these demands and these ever-changing demands, and change is coming fast, faster than ever before. We've experienced -- the world has experienced more in the last 10 years than we have in the last 100 years. So those companies who have invested into digital now see it as a competitive advantage and those who haven't are starting to fall behind. In Kongsberg Digital, we make industrial data more available, accessible and meaningful to people and to machines, and those machines could be robotics, as Martin just mentioned, or could be AI algorithms. And we do that in order to unlock better ways of working. So first, our products basically solves for inefficiencies across heavy acid industries. Now these industries continue to have very siloed data practices, they have very manual ways of working and planning and executing on the day-to-day tasks on their facilities and assets. Our technology capability solves all the way from the data layer here at the bottom, up to where our users at the top engaged through the digital twin to work smarter and to work better. The digital market is growing and is growing extremely fast, and it's growing because of the challenges we just talked about. We need to address those challenges, they need to address regulatory demands that are just cascading across industries. And there are a number of key, I would say, market trends driving the pace of adoption. Number one, human-centric technology. We're asking and we're expecting people to do a lot more with less to be able to make faster and higher quality decisions. If we just take the Ukraine war and indirect impact there on the energy needs for Europe, Norway had to step up to backfill that energy security and affordability once the gas supply chains were disrupted coming from Russia. Norway had to push the limits of their production facilities. And how we're able to manage to do that is because a lot of energy operators in the North continental shelf had already made early investments into digital, and that really helped them to make that pivot. We see more complexity happening because of integrated value chains and the need to orchestrate that across the ever-evolving industrial landscape. So now we're seeing green electrons being plugged into a more traditional hydrocarbon value chain. And people just aren't able to consume the amount of information and data that's just been served up to them. And in order for them to basically take advantage of this, they need to have AI, what they need to put in and install a digital backbone to take advantage of that at scale. Ironically, data or big data is becoming obstacle to inefficiency here. Finally, we also talked about the energy transition. Everyone has been talking about it today, sustainability. Digital is a key route to achieving those net 0 ambitions that we have in decarbonizing these industries. In 2024 alone, the digital spend across our relevant markets, at least has been USD 5 billion, and that's going to continue to grow by 20% to 40% CAGR over the next 10 years. And you can see some of the industries we're currently addressing today here at the bottom. I just want to take a little step back. Kongsberg made a big bet on us in order for us to take an early mover position in digital. And we were established in 2016, Kongsberg Digital, we're quite descriptive in Kongsberg in describing the companies and what we do. The first couple of years, we basically used on product discovery, looking for that right product to market fit. And we launched beta versions of our digital twin and our maritime data platform in 2019. We landed our first enterprise agreement with Shell in August of 2020, that's a little less than 4 years ago, not that long ago. This was followed by rollouts to MSC, across their entire container liner vessels and fleets, Chevron and many, many more. These early wins allowed us to continue to invest into our core position of maritime and energy. Our more recent announcement on the partnership with Yara, this is significant for the fact -- that is the first time we moved into a new vertical. We've had a lot of focus on core, but this validates the investment that we've made into our product and the ability and ease that they can be used to scale into a new market vertical. So we're very excited about that milestone. Just looking back at 2023, we raised USD 90 million in external capital, together with Shell Ventures and IDE KAPITAL, a very exciting Norwegian Tech PC. I believe that was the largest tech investment made in Norway in 2023. That was a strong validation for what we were doing right now. We've also made some strategic M&A investments during this time, and I just want to highlight one in particular, because they are with us here today. You see here in FutureOn. We invested into FutureOn to basically build a position into Net 0 and in particular, offshore wind. And if you have time, please do go to the exhibition area where we're demoing the pilots of this offshore wind digital twin, it's quite interesting. Together, we've started to partner with TGS to go after this market aggressively. We have a value-add of having the data and the digital solution going into this market. So we have a lot of high expectations, I would say, on progressing this a lot faster than it has been up to now. We do expect a market catch up with the current shift towards energy security and affordability but a market catch-up towards the end of 2030, and we're building that position today. In Kongsberg Digital, we have a number of key competitive advantages that make us a preferred digital partner for our customers. Number one, and we've heard it from several of my colleagues here today is our domain expertise. We build industrial software. When we ship product, it's shipped with that Kongsberg stamp of approval. We know our industries. We understand our customers' processes, and we understand their operational challenges. We codify that domain knowledge into our software and make it intuitive for customers to use. That's very, very important defining factor for us. Number two, we took an early -- we were an early mover and made early investments into AI, and we purposely invested into machine learning and AI as well. As Geir and many other said, we've been doing this for a long time, I would say, machine learning at least within Kongsberg. The AI part is really ramping up now. And when people think AI today, they're more thinking about generative AI and we're going to talk a little bit more in CPO, Stein-Roar, who show what we're doing on that front with our product. Many of you -- I'm sure you're many of you are aware of, I would say, one of the defining technology moments in the last 5 years was the launch of ChatGPT 3 and 3.5. 100 million users adopted this in 2 months. I'm sure everyone in this room and online have used it at least once to do something. What you may not know is that we were one of the first companies to get a plug-in to that algorithm. And why is that interesting? I tell you why that's interesting because what that allowed us to do is instead of having to push all our data or our customers' data into open AI company or into an Internet where would have to be surface stop, we were actually able to take the algorithm with the plug-in to our digital twin and our industrial data set in a very secure and safe sandbox. And when we first prompted into that twin and surfaced up and retrieved and surfaced up information, we were just blown away by the possibilities of what this could do. We got access, I think it was March in '23. So it's not that long ago. And we've been currently developing that product further and further. The reason we had to further develop that product was, we had very much concerns around the fabrications and hallucinations that bubbled up at that time. So a lot of excitement balanced out with a lot of concerns. So we started a research and development project with Microsoft and by extension, the open AI engineers to develop our reliable AI product. Again, if you want to see a demo of this, it's outside here. We have the teams, our Head of Innovation, our CPO, that can actually demo what we're doing here. Right now, we're piloting it with some select customers on real customer data and we expect to launch a commercial model of that later this year. So we have people lining up to get access to this right now. But of course, we have to make sure it's done in a safe and reliable and trustworthy way. We're a global organization built on trust and reliability. Mette, you mentioned at the start when we talked about a lot of this growth and a lot of this backlog is built upon our ability and reputation to deliver. We do that as well. And when you select a digital partner, that's very important because this is a long-term partnership, especially on the industry side. And finally, just like everyone else, we are partnership orientated. Martin highlighted and mentioned a number of key partnerships they have. We've also taken an open partnership ecosystem approach. And we partnered early on with some leading companies, both on the customer side and on the technology side. Digital is not done in isolation. You can't ring-fence innovation, you need to partner, we need to be open. Probably what you're all waiting for. Sure many of you have read the financial reports. I hope you have met it and share this. We've had tremendous growth in Kongsberg Digital in the last year. It's a real inflection point for us. 45% top line growth, underlying and supporting that is a 57% growth on recurring revenue. That is very much aligned with our strategy of being a SaaS business. This picture, with that growth, over 3,000 digitally connected assets, over 50,000 active users, this foundation makes us very comfortable that we'll be able to double our revenues in the next 3 years. We have everything we need to succeed. We have the product, we have the vision, we have the customers, and we have the people. Speaking of product and vision, I want to tell you a little bit about our philosophy and investing into AI. It's built on 3 tenets. Number one, it has to be easy to use as the intuitive. Sometimes it should be invisible, our users shouldn't even know what's happening in the background. This is one of the key success factors of ChatGPT. It was so simple to use, scaled over millions of users in weeks, hundreds of millions of users in months. It's also back to our domain experience. End user empathy. We ship products that our end users love to use, and it's the exact same with AI when we embedded from middle out. We need to solve for the correct business cases. In many scenarios, AI is actually overkill when applied to certain industrial challenges. Sometimes you just don't need to use it. We need to make sure that the use cases we're selecting have actual business impact and it makes sense. It's fundamental. Finally, trust, trust, trust. If we're 80% accurate with our algorithm, we're 100% wrong for our industries. They're so safety critical. And that's why we spent so much time developing our reliable AI product. So how does this all come together? Using machine learning, embedding machine learning from the inside out, interfacing with our technology to ChatGPT or degenerative side of things, it makes it easier for our users to use. So they move from searching through the data to discovering the data. We move from planning and analyzing to actually executing on the jobs they're hired to do. We move from optimizing, which is really just an incremental improvement to eliminating. And that's a really powerful part of AI eliminating. If you can eliminate the time it takes to perform very traditional tasks, as we can see here, remove human fingerprints from that job. You've actually delivered a sustained and permanent efficiency improvement. So what we see here on the left is a picture of a real asset in the real world. Here then is a virtual representation of an [ insider twin ]. We have all of the data associated with this piece of equipment. But more importantly, we have it in context. And that's one of the weaknesses of consumer-driven AI is understanding contextual data in an industrial setting. So now we're actually able to plug that in and start to scale that out, solving such problems as how do I maintain this piece of equipment in a better way. So now we're enabling proactive technical monitoring. We've standardized work packages and we've automated this piece of maintenance program inside an asset. AI loves large data sets. We are servicing millions of data points in our twins today, millions. And that provides us the opportunity to leverage AI to improve on thousands of tasks that impact cost efficiency and the capacity throughput in these facilities. It's just a very exciting space for us to be with now and we do that in very close collaboration with our customers. And I'm going to finish up with this. We are nothing without our customers, absolutely nothing. And we're so proud of the fact that we're actually able to make these people's work day better. So we've taken a select few customers of the tens and thousands that we've onboarded over the last 4 years. We made some videos. Everyone here and online will be provided a link where you can go in. I do encourage you to go in and listen to the customers' experience of using our technology, the benefits that are arriving from using this technology, and the ambitions that we have going into the future and what they have -- what they want to do. So next up, I'm going to introduce, yes, my CPO, Stein-Roar Bjornstad, who's going to walk us through an actual example of what we're doing in this area on reliable AI. Thank you so much.

Thank you, Shane. Hello, everyone. I'm Stein-Roar Bjornstad, Chief Product Officer in Kongsberg Digital, and I'm actually the last guy between you and lunch. I will talk to you about reliable industrial AI today and show you what it looks like. I trust that everyone in this room has experience with different type of AI services such as ChatGPT or maybe GitHub Copilot if you've done some coding. But many of your companies maybe have already implemented Office 365 Copilot. And if you have, you know that you could answer it more complex questions than you could do with the -- sorry, the ChatGPT. If you ask the copilot for Microsoft, for example, make me a summary of the most important customer interactions or events with a particular customer over the last 3 months, it will dive into your data, into the e-mails, into your documents that you have access in sharepoint, into your CRM system, perhaps and create a summary because it understands the context and the purpose of what you're asking for. This is what we do for the industry. This is our asset copilot. It empowers operators, engineers and industrial workers to get better insight in their facility and the asset and how to operate it. It improves decision support, and it provides a new way of user experience, how to interact with your assets, how to interact with your operations. And I will take through a short demonstration of how -- what it looks like when an operator is looking into a nonsystem event, how to solve it using the asset copilot. This is the operational cockpit. This is where the operator will have an overview of the asset and ongoing production, important operational KPIs, alarms and events, ongoing activities and so forth. There is a bit hard to see here, but there are events here, system events could be raised from the control systems or an AI-driven events and other type of systems. The operator looks into the event, dives into the equipment as such a scrubber in this example that has raised the event, and we can see that the temperature is too low. The equipment is operating on too low temperature according to the specifications for this. The operator dives into the asset copilots start asking questions. Why does this equipment do? Where is the maintenance documentation for this equipment? Provide me with the real-time data, give me the temperature trend. What could be the reason for a low operational temperature? Has it happened before? And what is the recommended action for me to look into to try to mitigate this action, try to fix the problem. And this is a situation where we don't want any fabrication data, we don't want any hallucinations. So our AI reasoning engine makes sure that every recommendation made is backed up by the reason behind that recommendation. The documentation that's underlying the recommendation is visible to the user and the operator and is a scoring of the recommendation. So what is the complexity to this? The challenge of any AI copilot is to data context, to make it understand your company, your asset, your operation. And there's complexity to it. Any integrated energy company will have at least 200 different applications in their portfolio, it could be engineering system, maintenance systems, ERP systems and so forth. Our digital twin is able to provide this data context. It understands how a piece of equipment is connected to the system, how our system is connected to system, other systems and how that performs affects the operational performance. So what if you could talk to the asset? Talk to the machine? Ask it questions very easily. How are you performing today? How could I make you perform a bit better today? And this is the beauty with an AI-enabled digital twin. It has the power to consume and process a huge amount of data. It understands context, it understands the purpose of what you're asking for. And if you generate recommendations and information that you will be able to understand as a human being. Our AI reasoning engine is capable of running a range of different large language models, Google's Open AI or more industrial specific ones. And we are currently, as Shane said, piloting this now with several energy majors and the product will be commercially available later this year. So please come visit us outside in the hallway for a demo or I'll talk about AI. Now it's lunch. Thank you.

Thank you, Stein-Roar. Then lunch is served out in the hall. Just some practical information. We will start up again at the stage just outside here at 1:15 p.m. The webcast will be on a break until then. Please enjoy lunch, and please use your time to visit the exhibition, which is located both outside the building here and in here and down the hall where you can try simulators, look at HUGIN systems and other exciting stuff. So please enjoy lunch. [Break]

Okay. So I hope you all enjoyed the lunch and that you also managed to visit all the displays that we had placed around here in the hallway and also outside. I think still there are some sitting in their vehicles. That's quite usual that the guys are not leaving the vehicles. But I think we are now coming to the final part of the Capital Market Day of Kongsberg in 2024. And as Jan Erik already mentioned, we're going to do this in a, let's say, a panel where we're going to open up for Q&A. I will not repeat everything that has been said today. I hope that you got somewhat more insight in our business areas and the potential that lays with the technology backbone of Kongsberg as a whole. That is -- that has been our purpose and also that you have seen that we have an ambition to grow this group and this company further. We have put on somewhat, I would say, longer views on our markets. We see market potentials, which has been, as I said, in my 30 years career in Kongsberg, I have never seen a market in all our areas, a market outlook like we see of today. And I think Kongsberg as we have done for the past 210 years, I think we have a mission and we definitely have a vision to protect the people and planet also going forward. And then we will do that as a group -- and I think utilizing the crossover between the [ 24 ] business areas, we have even further ambitions to deliver on the targets and the ambition that we have set today. But this, I would like to welcome Jette Christensen. She will help us moderate today's Q&A. We are very pleased to have you here with us Jette. And Jan Erik, you have already presented the background of Jette, so I will not repeat that. But Jette, please join me on the stage.

Thank you very much, Geir. You can just stand here and invite the rest of the panel up to the stage, please. And I'm glad to say that you're glad to have me before I start asking difficult questions. Because Geir, NOK 120 billion, we have to stay there for a little while. It sounds extremely ambitious. Why is it possible?

Kongsberg, we are ambitious. Looking at the history, we have, as I said, tripled this company since 2018 and looking with the people we have in the organization, in the entire company, looking at the technology that we have and the market, as we have talked about today, the market outlook. And with the trends, the long-term trends, which is the sustainability and security I'm confident that we need to set an ambitious target, and I'm confident that we, as a group, will be able to deliver at least the NOK 120 billion and also with sustainable margins. So that is our target. You have to stay tuned.

I absolutely will Geir. But to succeed, you have to plan for the bumps in the road. And now today, we have been talking a lot about the possibilities that we have been shown by our colleagues. But what bumps in the road are you planning from between India and [indiscernible]

Yes. I think we have talked about the geopolitical situation. We have talked about the world that is changing more rapidly than we have perhaps seen in the past. I think Kongsberg has proven again in our history, 210 years that we have been able to both navigate and adapt to the changing circumstances in the world. One crucial thing for Kongsberg is, of course, our home market that we definitely depend on but also that we get access to the market out there. So we need to figure out how we should be our -- how we should be able to address the international market, how we should establish ourselves in areas where we are not today to address both the market we see today, but also other opportunities coming along in the next decade. So I think that's going to be one important part of achieving the target that we have said. And I think also my colleagues here have talked about that we already are in expanding our boat present but also production capacity in different parts of the world. So that's going to be important for us as a group to really make sure that we are present and have access to the markets out there.

Thank you. And Mette, let's say, again it's right, and you are right. And in a couple of years, you will be NOK 120 billion -- have a NOK 120 billion revenue. And I think lots of people in the audience and me included, also reflect upon how will this load -- then it will give you lots of opportunities, both to secure more people and to secure more of the planet but you also will have a big load of cash on hand if you reach that goal? And how would that be distributed?

Well, I think I said today that our capital allocation principles remain stable. So we will remain a solid financial situation. as well. And we are also increasing our investments into capacity and production in the medium term. That means that we will invest organically in production capacity like we have done here in Norway, but also outside of Norway. We're also increasing our investments into R&D, both customer financed and self-financed R&D. So from -- we have been around 12% to 13% into these investments previously, and now we are increasing it to 15% in the medium term. So that's the area where we see the increase. Our shareholder remuneration remains stable, and we'll always look at our capacity to pay out an extraordinary dividend in addition to share buybacks, and we have a solid shareholder remuneration policy where we remain stable or increasing dividends over time. So I think that with these plans, and we're always also going to look to strategic M&A opportunities. So that's -- we continuously scan for all our business areas as well.

Thank you very much, Jan Erik, and may I turn to you. First of all, congratulations. The announcement of the selection on the Joint Strike Missile by the U.S. Air Force is a milestone not only for you, but also for Kongsberg and for the whole industry. But can you please elaborate to us what does it mean practically that you are chosen by one of the world's largest air force?

Yes. I think I said to me that it was a good time in just before Capital Markets Day. I answered it in 2 ways. The easiest way is that when U.S. Air Force selected -- now selected JSM, U.S. Air Force is by far the biggest user F-35. JSM is dedicated -- we put the only missile of that category to be put into the [ bomb bay ] or f-35. So for us to get access to the kind of the biggest user of F-35 is very important. But that answer in a little bit differently because NSM and JSM, both missiles, they were in developed, when nobody else developed this type of missiles. So they are unique on this market. And when we -- I look at JSM and U.S. Air Force connection, equally important as when U.S. Navy selected NSM, that was a really big achievement. And after that, with everything, now we have 14 users of Naval strike missile. So taking that into account with [ many ] F-35 users, it's potential for us. We have now in Norway, Japan and U.S. Air Force. So we hope to expand the user community also on JSM.

Thank you. And we are seeing defense budgets increasing all over the part of the world that we resemble and also in NATO. And as we have been told today, that means something for Kongsberg. But for how long do you see this trend going?

Yes, it's a little bit tricky to give a precise answer to. But I think it was quite important when I stated that Europe is in the third investment phase. And by that, I mean, now we see the budget in different countries are increasing. And this is much more long term than just putting money on the table to get some immediate weapon systems. So I normally say that we -- since we now see this all over the world, that it's a 10-year cycle plus at least.

Thank you. And as you all mentioned, you are in some way or another, a stable factor in an unstable world. That's why you have to plan ahead and be accountable. And the world in 2014 compete between the deep fake year and the year of unstableness in this world, you are navigating. And Lisa, you're part of the company is feeling this very strong exactly now because in your field, you can -- you can really see if the Norwegian politicians also feel that sustainability is or stableness and to make sure that this is to show that they are in it for the long term. And you also mentioned in your presentation, the offshore oil and gas -- how dependent are you on the stable political environment in Norway to make sure that you will reach your goal? I think you said, reach as high a number as possible.

Of course, the rules and regulation kind of form a framework for us to operate [ win ] in, and most importantly, also for the customers. So if we see an unstable political situation that will also influence [ us ]. But I think you said something important. It's all about being robust and resilient and then being capable of actually adjusting to this market that will be shifting. And I think what is truly the benefit in Kongsberg Maritime today is that we have a truly global footprint. So being able to navigate through crisis by utilizing our broad global footprint and adjust accordingly to have the robustness that is needed both when it comes to competence, been capable of attracting competence, but also being capable of having access to the necessary supply chains and not also the raw materials, which I think is going to be critical for us.

Thank you very much. And Mette, you talked about predictable [ assets ] access to capital. And in the same sentence, you mentioned also offshore wind. And [ Erik ] you said that you're planning 10 years ahead. And the long-term plan for defense is 12 years. how I can maybe open the floor, how dependent are you that the Norwegian politicians actually stick to the 12-year plan?

I think we are, of course, dependent on long term. When we set a long-term ambition, we need to base that on something, both on the regulation side, on the political decisions. So we are depending on also that the politics that is behind the industry are long term. Obviously, we see that, that is not necessarily all time the case. And then we have to adapt and we have to make new plans or adjust our plans. And I think that's how Kongsberg has been long both adaptable and resilient towards this. But we -- we hope for long-term political views also from Norway and also from other nations, of course.

Thank you. And back to you -- I'm sorry.

No. Maybe I could add on the Defense & Security side is that what we see is that I think the last 30 years, nations have built down their capacity when it comes to defense and to realize to [indiscernible] and get a kind of a readiness level that each country can be -- so that they can use correct radiance level. I think that's why we say a long-term shift is in the defense side here. It needs to be -- you need to get up to the correct readiness level, no matter what happens geopolitically.

And speaking about geopolitical since you have the word I'd talk to [indiscernible] just 1 second, but I would like to ask you, well, in this new geopolitical situation in this -- and there is a coming up election in our most important ally. How do you plan for that what kind of a shift do you plan for after the American election?

Well, I think it's difficult to interpret what -- who will be the winner there. But I think the trends are quite the same in the sense that we have to be present in U.S. We need to have a supply chain which is in U.S., and we need to be more maybe put more production capacity in U.S. I think that's kind of the same driver at least in the defense side, but I also think that's for the commercial side as well. So that is one element. How this will affect the overall situation? It's a little bit difficult to interpret. But I think we just need to continue the way we have strategically positioned ourselves and depend on the products there are and the improvements there. And I think that's a good part we have there.

Absolutely. At the end of the day, the only one you can trust is your own work. Lisa, so you were talking about how important it is to you to have good allies, but also the customers also a good allies and how you operate as a partner to them and with them. How is the Norwegian defense as a partner?

For us and Norwegian Defense, but also the European Defense represent good partnerships. We are working on several research developments. We also defense -- European defense funding, where we are taking and making new green propulsions for example. And this is a good way also of combining our commercial knowledge with the defense knowledge and try to bring more affordable product offerings into the defense market. It is because we know that it will be a focus and increased focus actually to get more for your money actually in the time to come because every nation needs to ramp up in order to meet the national security, and it needs to happen quickly. And you were talking about stable frameworks coming from the political side. I think the political side have an important role here to play also, making sure that we are utilizing our position here in Norway also to innovate and further more -- perhaps even more importantly, to make it an export article in the end because there are great opportunities now coming from on the backside of a very negative board.

Absolutely. And I'd like to turn to you, Martin. There is nothing to say about the ambitions of [ full ] Kongsberg Discovery as well. That's what you have in common. What are the important measures to plan for in a situation where an external impact will -- may enable that growth for you?

I think that when we make a strategy, one thing is that you plan for everything that you know about and you have all these plans and realization and all of these things. But you also need to plan for what you don't know because the future will not move in a linear way. So we are working on how we can make our strategy even more resilient, meaning that today, we are quite heavily focused on product development in Norway, for example. That will continue to be important into the future. but also we need to have more of that same capability in other regions of the world together with supply chains as Erik also mentioned, so that we can be more resilient in the events that probably will happen, but we don't know what is.

That reminds me, I met a soldier whose work was to demolish bumps that he didn't make himself or it was unknown bumps in external countries. And I asked him if he wasn't afraid, and he said afraid, I'm not afraid, I've planned. So that's exactly what you are doing. But what partnerships do you rely on for enabling development of the products that you've shown us earlier today?

Yes, I mentioned that partnerships have been really important for the development of Kongsberg Discovery until now, and it will continue to be into the future. And it's by...

What partnership, what are the most important...

Yes, that's what I'm coming to. The important is to have the right partnerships with the right customers that are actually pushing the boundaries of what they are trying to achieve because if you have a tight partnership with one of those customers, you know that you will develop the right technology that's probably likely to be relevant for more of the market than only those customers. So for us, we have partners, both in Norway. As I said, the FFI has been really important for us for the development of the Hugin AUV range and also partners in the rest of the world.

But I think also, Martin, that which you mentioned in your presentation is the partnership internally in Kongsberg. I mean, if you combine the competence and the technology backbone in the entire group, I think we are good, but I think we can even come better. And I think that is also one important part which is going to take us to this ambition that we have put on ourselves, is a further focus on cross combination of competence, technology and market access. So internal partnership is also extremely important.

Absolutely. And Martin, when I heard both you, and Shane I'll turn to you in just a second, speaking about the use of artificial intelligence, how frustrated are you when you meet the public and listen to speeches, like this is something new. You have been using this tool for so many years now.

Yes. I mean I think it is new to the public. But as you say, I mean, we have had this included embedded into our products for quite a while. And [indiscernible] our latest development, the drone radar, for example. That is already capable of distinguishing a bird from a drone, from a helicopter or certain different type of birds actually. So this technology has been with us for a while, but it's with the new language models where it kind of just takes a big step in a different level. And I think that we will see much more internal efficiencies and improvements coming out of that part of AI. And if that was what you alluded to as well.

I think that's a very good point that you're making there that we have been using kind of more, you can call them, deterministic or probable models internally, machine learning side. But what's new is these large language models. And you're already rolling this out internally inside Kongsberg Discovery and KM and so forth, to get efficiency insight, not just together with our customers. And I think that's the new [ pit. ] And that's why we focused on that part, the generative AI part because that is relatively new, at least from an industrial point of view. From a consumer point of view, it's been out there, Google Translate has built on a large language model. If you flew anywhere in the last couple of days, weeks, large language models have been presenting [ your receipt ], your duty-free tax, all you know, it's been there, the ChatGPT really just lifted a lid on what that was. And then it's up to us as Kongsberg to kind of curate how to use that in an industrial sense or in -- together with our various industries or products. I think that's kind of interesting. And it's really about being faster, being really, really fast, not just talking about it, but actually showing [indiscernible] demo today, real use of this technology.

And speaking about speed, Lisa, maybe I can ask you this because it's not only about producing, it's not only about delivering, but sometimes it's also about being first and delivering the technology that you have to the world. And how -- and I know that you have the technology, you're ready and are there any obstacles that are standing in the way for you to make sure that we get this much out of the speed as possible.

Of course, there will always be obstacles. But I need to go back to what Geir addressed about, it's so impressive also for me to see what kind of technology we have available within the Kongsberg Group. Let's for example, address today, we have talked a lot about digitalization and we are now touching into AI. We are touching into big data and analytics. And we are also talking about autonomy, for example, and you talk about being a front runner [ KD ] has been a really good frontrunner here when it comes to the AUVs and see also what Kongsberg Maritime is doing around autonomy and remote and autonomy to be more precise because it is not fully autonomous yet, even though some people believe it, but it is not. But it -- I think it's really showcase what we are capable of doing because we have and for years, actually been working with all these kind of technologies. And what is truly also essential in this world where we are talking about security and national security is also to add a layer of cybersecurity on top of it, extremely important. And that is truly difficult. And we are also in the forefront when it comes to that. And that is also difficult for others to copy. So building on the strong heritage that we are having, utilizing those technologies across the group is what are going to keep us being also in the forefront in the years to come.

Thank you. Shane, I don't know if you are familiar with a very important part of Norwegian culture called the [Foreign Language]. It was very important for all girls in the end of the '80s and the '90s. It's like a diary that you bring to school and there's quotes and your friends can write in it. And in mine it said, "always be yourself unless you can be a unicorn and be a unicorn." And someone told me that you're actually a unicorn. Can you elaborate that?

We're half a unicorn, yes. You must be a unicorn, yes. We actually have a -- we have a picture inside the office always by yourself unless you can be batman, but that's for the boys. Yes. I mean you're alluding to the valuation that we got last year. Yes, it was a very good valuation. Of course, we're very proud of that. And for us, I suppose, becoming a unicorn is just another milestone. It's this magical number or milestone that tech companies want to reach. But our focus really is just to get the job done, create the value, put in the work that grows the value [ internally ] like Kongsberg for our customers that will just achieve that milestone and it'll just be something we see go by and keep growing and growing so we can really meaningfully contribute to this NOK 120 billion that we've set ourselves over the next 10 years. But of course, it's a nice thing to celebrate. We should celebrate more. We often just focus on achieving our tasks. And yes, it would be magic to achieve that status at some point.

Great. You're also talking about Twin technology, and you mentioned digital twins as [indiscernible] in your presentation. But as far as I know the domain knowledge on fertilizers are limited in Kongsberg. Could you elaborate more on the impact of that?

No, it's a very good point. We talked about our core competencies being maritime and energy. And of course, this is a brand-new vertical for us. So I suppose you got to look at that in 2 dimensions in a way. First of all, does the technology scale from our core industries? Yes, absolutely. And we've tested this in many, many industries. This is just 1 of the more recently announced partnerships. And then there's a pump on an oil and gas facility resemble a pump in a fertilizer facility, absolutely. It's the processes. So our knowledge is very much down into the process of our customers. we understand our operational and maintenance challenges. And that's something that transfers and scales, in fact. So yes, absolutely. We may not know how it's made, but we know the process around the support how it's made.

[indiscernible]

Yes, but we are a fast learner.

I have a few more questions, but I'll also open the floor if there's anyone who would like to ask the panel. Any questions? Yes.

I can kick it off. There are a lot of viewers on the webcast as well, and I received a few e-mails. So I can start with one of the questions from [ Haakon Amundsen in ABG ] could you please put some color on how the revenue growth and the margin expansion trajectory will be in the near term versus the average development to reach your new 2033 ambition?

I can start, I think, looking at our order backlog that has been commented several times today. I think it gives us a kind of broad picture in the near term. Some of the projects -- some of the backlog is on the shorter term. But I think what you can see now that looking into the, let's say, the future is more, what we call it, visible today than it has been in many years in Kongsberg both on the civilian side. We have a longer backlog view definitely in the defense. It goes beyond 10 years in some of the programs. So I think that itself gives confidence that you're going to see a solid growth also in the nearer term than the 10 years then. So...

Yes, I can just I agree on what you are saying [indiscernible] we are on a trajectory to reach our targets in 10 years. And of course, we are working and we are developing towards the announced targets. We will see because we're doing capacity investments, we're doing expansions in our portfolio that there will be fluctuations both on the growth rates and on the margin rates. But overall, we're on the trajectory, and therefore, we're not going to give the short-term targets as well.

Did you have any other questions in your inbox or should we open the floor through the physical questions? Yes.

Hans-Erik Jacobsen, Nordea. To continue on the margins, you have given us a guidance for where we expect to be in 2033. Over the next 10 years, we're going to expand a lot. And I guess that on one side, that will give you a lot of economies of scale. On the other hand, as you said, you're going to expand the business a lot. You have to hire a lot of people. You have to build new plants and so on. Can you explain a little bit the positives and the negatives of the next 10 years in order to reach the margin of 15%.

If I can start. Yes, on the positive side, we are building scale. What we see right now, and it also shows in our current order backlog. Erik showed you that he had NOK 65 billion in secured volumes around NOK 35 billion to NOK 40 billion is on the missile side, a lot is NSM, and we are building a new factory will more than double the volumes the production volumes that we will produce at peak capacity here in Kongsberg. Just from that, with the continuous going down the cost curves and pushing down production unit cost, it will give us significant cost of scale and also be margin expensive for us. And then, of course, we have to -- our markets are expanding. There will be strong competition. We do see that we are in an environment at the moment with really good currency exposure for our Nokia operations. And those are -- that's a negative to our margin development. So of course, we are following that picture. That's also going to be a decisive factor where we expand, and that's also in our global footprint. But these type of fluctuations and changes are going to be challenges for us. We're keeping a very strict eye on that and of course, always something for economies of scales within the different areas. That's a short answer.

Yes. Okay. So everything is clear. Well, Geir, in Shane's presentation, he repeated several times that he has everything he needs to succeed.

Yes, I think we have. As I say, it's an ambitious goal that we have set. It's 10 years. We have the technology of today, but we are also looking at keeping a very close watch on the upcoming technologies. And I think one thing which Kongsberg is very good at is not only to innovate on technology, but actually to utilize available technology when it comes online. And I think that have made us in the forefront and being able to serve the clients, whether that is in the civilian side or the defense side with the latest and greatest capabilities. And that is our ambition to go forward as well. We have 13,500 employees around the world. I think Lisa said and mentioned that we also or Martin, that we need to, let's say, engage even maybe others more than we do today internationally. There was one wise men saying that there might be some clever people outside Norway as well. And I think we need to listen to that. As I say, we have really, let's say, the trends that need to be addressed by technology. It's no way around solving these challenges without applying the latest and greatest technology. And that gives us a fantastic, let's say, solid foundation to continue to grow this company going forward.

Fabian Jorgensen from Carnegie. Also contributing a lot to earnings is your associates you haven't stated anything what you expect from them going forward, which you have exposure to the defense industry there also. Can you give some comments on what you expect there? Are there any capital needs there, expansion projects and so on?

Maybe I could start on the defense side. I think we have 2 main companies, for instance, [indiscernible] related to the space sector. And they are on a growth path, and they're constantly investing into new downloading antennas, and that is kind of the part of their business model. So that will continue. But we expect good growth and really good margin level in that business because what we see is that the space sector and now space is also more and more relevant for defense side, but the combination there will increase case at potential. So that is one thing. And then we have Patria in Finland. I think they're very relevant for the maintenance repair overhaul services business. But because of the situation geopolitically now, we see an expansion and a ramp-up, just i ramp-up for vehicles because they have also a vehicle produced by 66 and 8 is a term that is -- so they are expanding production capacity to produce quite high number of vehicles going forward. And this is a long-term position also. So I think the trajectory for Patria is also good, especially because of the vehicle business, maybe that was a partial answer. I think that was mainly answered actually because there are 2 main associated companies. So I think that that's a good answer.

[indiscernible] My question is a little bit more holistic. It is how are you getting young talent on board and people because we are also in process of getting young people and they demand something else compared when I start in this industry for many years ago.

Can I just ask you before I open them, what do they demand?

You have some views regarding EST and you have a lot of a little bit -- it's another bulking compared to the 80s and 90s. And now it's first time I'm in Kongsberg here. I could imagine I'm born and always down in southern part of Joplin, you have a big company called [indiscernible] who's making [indiscernible], and it's a small town called [indiscernible]. There's 12,000 people working there, and they desperate need engineers, et cetera. So they're making Rob concerts and they're doing a lot of things. So it's more a little bit how are you getting the young people on board?

Maybe I can start. And I think it's -- I think what young people want, and I think also some older people want is a purpose. Why do we go to work, what do we do that we want to spend most of our time attending to. And so purpose is going to be an important factor. And then this also, I would say, for Kongsberg, it is off, of course, you have to be interested in technology and to come up with new ideas on all problems perhaps. So we need to focus on really telling what Kongsberg are doing. It's -- sometimes, I think outside our own organization, it's difficult to understand what Kongsberg is actually doing. So that is for us to communicate the exciting workday that you can get in Kongsberg, not only here in Kongsberg, but the rest of the -- rest of Norway and rest of the world. We are working on some fundamental challenges in today's world. And I think that is a key message for the younger people. Luckily, we see just now, we got recently the universal release. At least there are a lot of the engineers that really find Kongsberg very attractive. So -- but we need more than engineers. So I think, again, we have to work with how we communicate what Kongsberg is all about and what we contribute with.

Lisa, I'm not saying that your apartment is like a youth recruitment department. But have you experienced that how you have been working with the new vehicles on the week after that the politicians also has been talking about. Is that kind of a sign that it's not just a word on a board. It's something that's hard core within your industry to make sure that the planet actually is a better place said after you've been there than before?

Yes. And I'd talk about our vision of shaping the maritime future. And I really repeat this again and again, it's based on 3 equally important anchors. It's how we, at all times, should be the customer's first choice. It's how we are going to deliver technology for 0 emission and also it's about the people, the people who have failed a strong purpose of protecting the oceans. And I think that is so important because in order to meet the IMO targets and it was an important signal sent by IMO in July last year. We are heading towards 0 emission. And in order to do that, we cannot just sell new vessels and put new vessels into the market. We also need to do something with existing fleet. And just what we have done, I mentioned a couple of examples today, but I would like to mention one more with rut. I think all of you are most Norwegians you know rutile. And they have vessels that are almost 30 years old. And by upgrading those vessels, we have actually been capable of reducing the emissions with 23%. I think that's remarkable. And that's truly how we are making an impact. And if that isn't purpose, I don't know what is. Erik?

No. No, I think everything is almost said there, but I think that's short. It's purpose. It's about sustainability. It's about security, and it's about how we communicate to our people. And I see also one thing that has not been mentioned, I think, here is that we try to engage young people, students, in semi students programs, huge summer student programs. And that kind of become an ecosystem that kind of attracts each other. So I think you need to be active be younger people and even start younger, I think.

In kindergarten?

Yes. I think everything said here is quite good. But we also have this hybrid way of working and a lot of younger people. I don't know what it's called now, but below the millennials. They want to be able to work from home sometimes and they want the flexibility to be able to come into the office. And it goes back to what [ Geir ] said as well, it's not just, we have to take a holistic approach to hiring talent. It's not just in Norway. We are very international and global companies. You're talking about the U.S. and expanding. We need to have that flexibility to be able to hire talent from the U.S., from Asia. And during COVID, it really helped us, I would say, mentally flip and say, yes, we can actually have people sitting at home and still producing at a very, very high level. We're a little bit different. We're not in factories, putting -- we ship code, we write code, and it's a little bit easier for us in digital have these remote hubs, people work from home. But we have to remember, it puts a bigger, I would say, more pressure on the middle management of organizations to actually handle and build the culture because it's culture is built by people meeting people. So we have to allow that flexibility. We have to rethink our HR, how we handle people from working from a remote point of view and then just be open to it. And then we've seen huge opportunity for hiring people from South Africa, from Australia, from the U.S. and some eventually end up coming to Norway. I'm one of those people that eventually sent to Norway. But right now, it's just allowed our funnel to be filled up with talent wherever they sit.

Thank you very much. Our time is up. It's been a pleasure to spend the day with you and also thank you very much for the panel and the great discussion here. Thank you for the good questions and the discussion can continue on the train. There's a shuttle outside the 10 minutes plus, but I'll leave the word to you for some final remarks, Geir, thank you very much for an interesting day.

Thank you, everyone, both all of you joining us here at Corpus and also those of you win with us online. We truly appreciate that you spend a day with us. I hope you had got some more insights of about what we are doing and what we plan to do and that you can trust that Kongsberg will continue to grow sustainable also in the future and also make a difference for the planet and the people. So by that, I would like to say also thank you to you yet. Thank you for helping us this last part of the Capital Market Day, very small appreciation from us.

Thank you very much.

Have a safe trip home, everyone. And we look forward to see you again soon. Thank you.