Good afternoon, at least in Norway, and welcome to this conference call. I have Geir Håøy, CEO, and Mette Toft Bjørgen, CFO, with me. Just to inform you, the meeting will be recorded. We will start with a short introduction from Geir Mette before we open up for questions. Geir and Mette. Yes, good afternoon. Good to have you with us. Appreciate it. Yeah, I think maybe very briefly start. Comment on the quarter and the first half year. It's been very active and interesting. Quarter and first half year. I think we have a solid quarter now. Growth overall around 20%. On the top line, and also a solid growth on the margin side. All in all, I'm very pleased with the deliveries from all the business areas. We have also a strong order intake, and particularly very pleased to see that Kongsberg Maritime continues to secure orders. In areas where we, I would say, Kongsberg Maritime has a solid market position with more high-spec vessels. Kongsberg Discovery also solid growth, around 20%. A lot of things in the pipeline for Kongsberg Discovery, a lot of interest around our sensors and robotics and underwater capabilities. That is good to see. Of course, Kongsberg Defence & Aerospace had a tremendous growth of close to 40%, 38% to be precise. Then, of course, Kongsberg Maritime. Not that much growth, 7%, but there is some implication there with sale of Steingir and Brother. Then the merger of the Kongsberg Digital, the maritime digitalization part of Kongsberg Digital into Kongsberg Maritime, which Mette can comment on later. A lot of things going on in Europe, of course. Also worth mentioning that we now start with or are opening an office in Ukraine. It is an office that we want to have there to be able to communicate regularly, more regularly with both governments and the government and also the defense forces. We have also some industrial partnership with the industry in Ukraine to be able to. Support them producing missiles for the NASAMS Air Defense Systems that are already in place in Ukraine. That is crucial for Ukraine these days, as you have seen a lot of massive drone attacks and missiles. They need to step up the production of low-cost, high-volume missiles for the air defense system. That is important. We also announced the acquisition of Sonatech in the U.S. for Kongsberg Discovery and also the joint venture with Thales, which is an exciting opportunity for our communication side of Kongsberg Defence & Aerospace. Slower contracting at the yards, which we expected, to be honest, and we talked about it before, but what we also see is that the contracting that we see anyhow is actually ships that fit well with Kongsberg Maritime's position. Where we are able to sell in our more integrated systems and a bigger portion of the portfolio of Kongsberg Maritime. I think we can see that on the last two orders also announced in this quarter. That was the nine shuttle tankers for Tsakos, and also the PCs that we also signed this quarter. It is a good contract, long series for Kongsberg Maritime. I would say we are quite positive for the outlook also in that type of segments going forward. High activity on the aftermarket. 52% of Maritime. Has been higher, obviously, but I think this is a strong aftermarket. There are more projects this quarter than previous quarters, somewhat less spare parts, but that will fluctuate between the quarters. Nothing surprising there, actually. I think with that, probably, maybe the main figures, Mette. Yes, like you said, we had a good top-line development also in the second quarter and altogether 19% revenue growth for the first half of the year. We are growing profitably, so increasing margins also compared with the first half last year. Some comments on the Kongsberg Maritime side when it comes to how we have divested the steering gear and the rudder business. That accounted for NOK 950 million, close to NOK 1 billion in revenues in 2024, with a significant portion being also on the aftermarket side. In the first quarter of 2024, we included two months of this business, and we also included the Maritime Digital portfolio from Kongsberg Digital. In the second quarter, after we have also made some structural changes in Kongsberg Maritime, about NOK 150 million that was included from the previous digital portfolio has been taken out of the maritime aftermarket. It is now reported in the new building segment. There have been some changes to the way we report. Underlying growth, both when it comes to the aftermarket in Kongsberg and also on the new building side in the first half of the year. Consumer Defence and Aerospace has been driven by growth in the missile division and also in the air defense division. We are particularly happy to see that the ramp-up of our missile production facility at Kongsberg is going according to plan. It is right where it should be when it comes to the capacity expansion in Norway on this side. On Consumer Discovery, continued good success. We see growth in the uncrewed platform division and also when it comes to sea techs, also delivering on a very good project mix in the second quarter as well. We've seen three quarters now with EBIT margins above 18%. This is a higher level that we expect in the near to medium term. However, this is a very solid business with good technology content. We are investing for further growth, and we're also expanding our production capabilities in Consumer Discovery. We do expect that to have some impact on the margins also going forward. Yes, all in all, 12.8% and improved from the second quarter in 2024. Like Geir said, we'll have some seasonal and also project mix variations in our margin picture. On the cash flow side, that's neutral from the operations in the quarter. We are paying a dividend or our first tranche of the dividend payments in the second quarter. Of course, we're going to pay the second tranche in the second half of the year. We have a significant. Cash, and we also had significant prepayments on our defense contracts in the fourth quarter and the first quarter. We are now paying out subsuppliers around NOK 1 billion in Kongsberg Defence & Aerospace, impacting our working capital in the quarter. All in all, a solid and good situation also on the cash position that is continued high level at NOK 14.4 billion at the end of the second quarter. I think that I will conclude my comments there, and then we'll open up for some questions. Please just raise your hand if you have any questions. Yeah. Alexandre Steedman. Hello. Thanks for taking my question. It's regarding the maritime disposal. And looking at your Q2 numbers. I was just wondering if I could check, I mean, if you could confirm my numbers. So when I adjust for the gain, I have an EBITDA of around NOK 700 million and an EBITDA margin of 11%, which is down about 350 basis points versus Q2 last year. I was just wondering if it was the order of magnitude in terms of margin drop. And how much was driven by the, yeah, disposal and what were the kind of margins you had on the business that you sold. Because I'm just struggling to understand why the margin was down so much if we adjust for the gain. Yeah. There are several effects, or I should, different effects on the margin picture in the second quarter. Like you said, we have divested the mature business and substituted it with early phase growth business. That, of course, does account for a negative margin effect. However, we also have effects on the shift from aftermarket towards new building, a higher share. The project mix in the aftermarket is also shifting the margin slightly down. We are very hesitant to say that it has 1% or 2% effect because this will also have other effects that are the reasons why the margin is the way it is in the second quarter. Okay, so you cannot confirm the disposal at a 1% or 2% negative effect, but overall, it was a quarter with a negative and adverse mix, right? So potentially with the same parameter going forward. Same top line, we could see again margins moving upwards with a better mix. We have seen margins around 13% at Consumer Maritime or more or less. We have a slightly negative effect of the divestment that was commented on. However, we are growing the business, and we do expect to scale also on the Consumer Maritime side. With the new business, we're also investing more in R&D, and that's also conscious efforts to position ourselves better for the future, both when it comes to energy solutions and also digital solutions on the Consumer Maritime side. It is planned investments that are taking some of the costs up because we're investing high on the R&D side. We are not guiding on specific margins, and the project mix in the quarter will also affect how the margin turns out. It is not giving you more clarity on the guiding there, but I think that we are around a level that we expect. We have seen over the last 12 months that we will deliver on. Okay, thanks a lot. Okay, Eleanor. Can I just stay on, Matte, and just to make sure I'm clear? Did you say that the aftermarket, the rudder business, actually grew? Can you confirm how much it did grow? Are there any kind of trends that you see in terms of pushing out or slow down in spare parts just because it was so strong in Q1 and that weaker Q2? I'm just trying to understand that difference. The underlying growth in the aftermarket is around 5%. Is there a reason? Did you think there was some kind of pull forward of spare parts in Q1, or just. I think Q1, I commented initially, Eleanor, that NOK 150 million of the revenue that was reported as the aftermarket revenue in Q1 is actually moved out of the aftermarket. That affects the aftermarket revenue in Q1. Also in Q1, two months of the steering gear and rudder business was also included. That was also pushing up the aftermarket share in Q1. Yeah, okay. Are there any other trends in terms of what you're seeing with your customers in terms of pushing out some aftermarket or upgrades? Is there anything more discernible in those trends? The trend that we have seen, we saw a significant growth in the spare parts last year. It's somewhat slower on the growth side, but still growth on the spare parts. We have a higher share of projects, and we see a stronger growth on project sides in the aftermarket. There is uncertainty and depending on how the new building develops. What we normally see is that when the new building gets lower, the aftermarket gets stronger. It's really short cycles. It's a bit hard to guide and predict how that's going to turn out with all the fluctuations that we see in the market. Okay. I think, just to add on the spare parts side, I think it's very, the spare parts, let's say, volume depends very much on, I would say, the docking situation, the planned docking situation. It will vary between the quarters. We have said that many times. It's really something that is very difficult. It's very short cycle. I think we have to just live with that. It's very difficult to predict. How I think, particularly first quarter, it was a very strong quarter. I think it was the same, actually, the year before. It varied between the quarters. It's important to follow the mix between project upgrades in the aftermarket versus maintenance and spares because there are margin differences in these segments. That will affect. As Mette mentioned, the portion of new builds is up compared to the previous, let's say, level of aftermarket of the overall revenue. It's fair to say last year was exceptionally strong in the aftermarket. This year in spares within the aftermarket, the aftermarket mix is likely to see a headwind this year. That's what you're saying. Yeah. We need to follow the new build market to see because, as Mette said, if that really drops further, we will also see the effect on the aftermarket. That is counteracting, I would say, the new build phase because they need to invest. It is also important to remember that I am all going to have this meeting in October. I think some of the guys are sitting and waiting to see what is going to be the outcome of that meeting, that's going to be important for the shipbuilder and shipowners and the shipping industry. We expect that will point a more confirmed direction of the shipping market. That means maybe, hopefully, tied to regulation as well. That will also, I think, benefit both the new build as well as the aftermarket. Okay, thank you. Any more questions? Anyone? Alexandre? Yes, another question because it was a big topic this morning on the maritime growth going forward and the worries that the market could slow down. You insisted on the fact that there was a slowdown more on the seaborne ships, right, and seaborne segments, and less on the rest. Actually, I understood that the mix could be in your favor. Could you just explain to me in detail why you have better margins, better, I mean, more products, more content on the other segments, and to which extent could you support your growth going forward versus the market? Because I know on your slide, you have a slide showing the order mix, and it seems that you are more exposed towards offshore LNG, right? I was just wondering if you could explain the differences versus seaborne and why you see more of a decline in seaborne at the moment. I think one main thing here, Alexandre, is actually the technical specification of the vessel. On the seaborne market, it is a very competitive market. Normally, they are splitting up the orders where they are buying one system from one supplier and another system from a second and so forth. They are splitting up to make a very strong competitive, let's say, environment for this type of vessel. It is a relatively low specification on this vessel, and it is more difficult to actually enter into the full integrated system from Kongsberg, meaning that we can sell everything from propeller up to navigation and control and automation and digital systems. It is actually the lower specification. It is a very competitive market. On the vessel that we see now in the strong market in offshore, it is a more complex vessel. Shipowners tend to want to have one integrated system. They want to have the most. Energy-efficient vessel. They want to have the best design. They want to be prepared for future maritime operation. They tend to, let's say, invest somewhat more in the technology scope than a more commodity vessel. That is an area where Kongsberg Maritime has a very strong position. There are fewer competitors in the, let's say, in the system integrated market than the standalone product sales. That is the main reason. What we see going forward is that, and that is also from the analyst saying that it seems that the seaborne market is turning somewhat down, less contracting on that type of vessel. I think it is quite natural if you look at the uncertainties on the fuel selection and the system that they are going to use for the future, they are still unsure what it is going to be. They are waiting out. To see the IMO guidelines coming online. They are waiting out to see pricing on the shipyard, of course. That said, we know that in the medium-long term, it will be need to replace a lot of the tonnage out there. That goes for seaborne. That goes for all the specialized vessels because they are getting one year older every year. The average age of the tonnage out there today is around 23-24 years old. They are getting closer and closer to the breaking point, whether they should invest in upgrades or they should invest in a new ship. I would say for the medium to long term, we are quite confident. On the shorter term, it looks like that there will be opportunities for us. With a bigger scope in the vessel that is contracting or coming on the pipeline to be contracted in the, let's say, shorter term. It is also important to remember that the revenue generation is on the delivery and not on the contracting. That is also, and we have this lag, as we say, from contracting to the shipyard to Kongsberg. There is, of course, a lag on the delivery side as well. That is where we generate revenues from. Okay. Just related to the previous question on aftermarket and the share of aftermarket versus new OE and delivery, how much visibility do you have on the mix, let's say, in 2025, 2026, 2027? I understand it can be lumpy on a quarterly basis because of spare parts and demand. Do you have a rough idea on whether the share of new builds will grow in your mix? Hard to say. What's the underlying trend if we take a two, three years view? If we're just looking at our order backlog, if we're starting there, we have about three to four months visibility on the aftermarket. It is a very short cycle compared to the new building part of the business. Of course, there are some longer-term projects and upgrades that we do know that will come in the next couple of years. In general, we're very short cycle when it comes to our order backlog. Of course, we're watching the market trend and market data, and that's how we're making these type of projections. We are still seeing growth when we're looking at the market data for the aftermarket. Okay. Thank you. Eleanor. Clearly, there's a big ramp-up in the defense growth within Q2 driven by the missile factory coming online. Can you just give any further color during the rest of the year? Is there any further step-up expected or how that ramp progresses through the next 6 to 12 months? Yeah. We are ramping up according to plan. We are pleased with the first half of the year and the second half of the year. We will also start producing a different production line in the missile production factory. We are not reaching peak production this year. We will produce consistently according to our ramp-up plan and according to the customer commitments that we have also agreed on. The further ramp-up will happen in the next two years. We are happy with the progress, and we will continue that going forward. You know that we are not commenting on the number of produced missiles. Just as a follow-up in terms of the mix within the quarter and defense, do you think it kind of reasonably normal mix going forward in terms of the air defense and missile content? That's where we see the most significant growth in the medium term, yes. Okay. I think we have another question from Alexandre. Yes. You related with that. I understand you do not want to comment on the capacity for missiles. I was just wondering if you could give indication on whether you expect some headwinds on margins in H2, given you are in Australia and U.S. facility, I believe. Are we talking 10 basis points, 50 basis points? How should we think about the impact on your P&L this year and next year? Yeah. I think that over the last few years, we've said that. Towards 2025, we will see a shift in our project mix. That will also be headwind on margins. That's where we are at the moment. When we're able to ramp up in the next few years, we do expect scale impacting our margins as well. We are still in the same project mix that we are, shifting towards the mass production and still ramping up. When it comes to our international facilities, we don't expect these to impact our margin pictures in 2025. Okay. So no underutilization impact or okay. Not for now. We have started investing. The big investments for those facilities will start in the next years. Of course, it's CapEx. It's not really hitting margins at the moment. Okay. So DNA will come afterwards in 2027, 2028, I guess. Yes. 2027, 2028 is when these facilities will come on stream. When you refer to the mix, basically, you're ramping up a lot on missiles going forward. The mix will shift towards missiles when we get your order book versus defense. I understand the margin mix is a bit lower or less accretive on missiles, but with scale, you could compensate for that going forward. That's. Exactly. What we have originally seen in the missile division is that we've had. We've said that we're shifting our mix from 70% development to 30% production to 70% production and 30% development. That will have a positive margin impact. Of course, scale and mass production will also have a positive impact. We're still ramping up this year, and we expect that to continue also throughout 2025. Can I just ask on Discovery? You talked about the pipeline of opportunities. Are those things that you expect that could convert this year, or are they longer lead times? Just understanding that decision cycle and that kind of business. I think there is a strong pipeline, and we are also producing some prognosis. That means that if and when the order comes, that means that we can take the revenues earlier than if we just wait for the contract coming online. That will give us some opportunities for the second half year to actually get some revenue generation. It is very difficult to say exactly. We see a lot of interest and a lot of demand out there, both on the civilian side, but also in particular on the defense side. Okay. Alexandre, back to you. Yes. Actually, it's regarding the big order you've announced from Germany. You had a NOK 6.5 billion GSM missile order. I think you had another export order from Netherlands, NOK 2.5 billion for NASAMS. Am I right if I ask you that the order towards European countries ex-Norway, around NOK 10 billion in the order book at the moment, so 10% of your order book? The order ex-Norway towards the European defense is 56% of the defense order book. It is 56%. Okay. It is much higher. It's much higher. Norway accounts for around 15% of our defense order book. That is NOK 109 billion. The European part of that volume is 56%. Okay. So it's 56%. Okay. So those two big orders are just a fraction of. So ex-Norway is 4%. Let's talk very briefly on. Some of the. In 2023, in the fall, we announced the largest order, historical order for Kongsberg Defence & Aerospace, which is NOK 16 billion to Poland on the NSM coastal defense systems. We have announced the. Netherlands air defense, Spain air defense, Lithuania, Denmark, and several others as well. It has been a significant contracting from European nations over the last couple of years. Okay. My second question related to that was, given the recent NATO announcement and the rise in defense budget going forward. I was just wondering to which extent it could impact the mix of orders in your view, in your order book versus what you've communicated at your capital markets day last year. Was it partly reflected? Do you see any deviation going forward? What happens with the margin scope? Because I understand that when you sell to Norway or U.S., potentially you have margin scope. Does it happen as well if you sell to Germany or other NATO countries for missiles? Yeah. I think, again, that depends on the contract type, obviously. If there is an open competition or it's a frame contract, that will depend on the type. I think in general, for us, as we already mentioned, Europe is, I think, 71%, including Norway. That is a very important and strong market for us. That is what we are working on basically every day now, to follow up the sales campaigns that we have in Europe, and particularly within the air defense. We already sold our NASAMS systems to many countries out there in Europe. I think it's both an opportunity with existing customers to further increase the capacity and also with new customers having a demand for, let's say, air defense. I don't see that. Of course, it's important for us to work. Bilateral with each and one country, but it's also important for us to work closely with, let's say, EU to be sure that Norway is a part of the program coming online in Europe, whether that is air defense field or the communication IRIS program or space activities. These are, I would say, areas where we are spending a lot of time on now, making sure that Norway and Kongsberg is a part of these opportunities coming online, especially in EU. Okay. I can, if I'm sorry. Yeah. Go on, go on. Sorry. Yeah. If I just comment on the margin or different contracts when it comes to the margins. Traditionally, when it comes to the Norwegian government, we have a profit cap, and they are supporting our development. So when we have development contracts, that's at a very low margin. And then we turn into delivery contracts, which is a slightly higher margin but still a low margin, especially to Norway that have financed the development of the programs. When it comes to the U.S. government, we also are subject to the rate regime. So that's a profit cap as well. We typically deliver at somewhat lower margins both to Norway and then also to the U.S. We've seen over the last few years, and especially because of the urgent need for defense capabilities, that there are government-to-government contracts. If a European government is. Contract or contracts our systems or capabilities through the Norwegian government, then we can also be subject to a profit cap, although it's a higher profit than what we're typically allowed in Norway. There are different types of contracts that are defining our profits. However, the typical export contract that is subject to competition is where we are able to get the best margins. Okay. Is there, on missile for instance, do you see intense competition? When does a contract, if a European country wants a missile, what are the alternatives to Kongsberg? On the Naval Strike Missile or anti-ship missile, there's not a lot of capabilities that can currently compete with the Naval Strike Missile. We're competing more with different priorities on the capabilities than we are on the specific missile currently. Of course, there are programs working to address this. Currently, especially on the Naval Strike Missile, we have a very good and solid market and competitive position. I would say the same for JSM. Absolutely. Which is in the early phase. Oh, yes, because a lot of these nations are now taking over the F-35 air fighter. To equip them with effectors will come later. We see now with Germany, we have five nations that have acquired the DSM. We expect that to also pick up going forward for several nations that already have acquired the F-35. Okay. Thank you. Okay. We have time for another one or two questions. Marta. Marta. Can you hear me? Hi. Yes. Yeah. I have a very quick question. I'm sorry if maybe you mentioned it, but would you say that the defense push weakened maritime delivery? Sorry, I didn't get your question, Marta. Can you elaborate a little bit? If the defense growth has weakened our ability to deliver on the maritime, is that your question? Yes, yes. The defense push, did it weaken the delivery of the maritime division? Is this something you can confirm, or is it not the case? This is definitely not the case. These are two, I would say, quite autonomous businesses. Kongsberg Defence & Aerospace are building up their capacity and their supply chain. Likewise, for the maritime business units, they are evaluating their market's position and market potential and building up their capacity according to that. There is no, let's say, link to—even though a lot of focus around defense has no impact, I would say, on the Kongsberg Maritime side. Okay. I understand. Thank you very much. Actually, I think rather the opposite because we see also, as I also mentioned in my presentation today, is that we see obviously a lot of attention around Kongsberg Defence & Aerospace, but we see also from our civilian businesses some attention to their capabilities to deliver into the defense and particularly the naval market from our civilian, let's say, civilian business areas. I think it's rather the opposite, actually. Thank you very much. You're welcome. Okay. I think. Can I just—sorry, can I just ask one more quick one in terms of the cognitive win process for strategic options? Can you just talk about how it will differ to the process that you ran before and how you're thinking about running it differently and coming to a decision on that? Given that you already learned the first time that you looked at potentially IPA and digital, obviously, this is a different subsegment of the asset, but also the way you might approach it will be different. Yeah. Again, we have now consolidated the digital maritime business in Kongsberg Maritime, and we have now refocused the business for Kongsberg Digital. I think now we have engaged JP Morgan to be our financial advisor in the process we just started. I think it's early to comment on, let's say, this process. Obviously, we will now look into the evaluation of KDI and also to soon also investigate the interest of that. Obviously, based on that, we will also take, let's say, a decision on where Kongsberg should be in that picture. It's too early anymore. I think coming out in, let's say, early autumn, I think we have more information to share, hopefully. It's really, I think, what we see now with KDI is that they have really. Doubled down on, let's say, the portfolio they have now for the twin and for the wells and for the energy market. I think that is good. They also have a growth in their business this quarter. Obviously, this is a SaaS business, so we need to continue to scale up. That is also, let's see, we hope that we see the right interest out there in the market. Of course, depending on who it is and how they are coming in, then we will make a decision on how we take this further. Thank you very much. I think we are more or less on time. I would like to say have a nice summer, wherever that's going to be. Thank you for joining us this afternoon. We catch up later after the break, and we catch up with all of you, I hope. Thank you. Have a nice summer. Bye. Thank you. Thanks. Bye. Thank you very much. Bye. Bye-bye.