Release Date: July 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kongsberg Gruppen ASA (NSKFF, Financial) reported a 23% increase in revenues for the first half of 2024, reaching NOK 23 billion.
- Operating profits for the first half of the year came in at NOK 2.9 billion, with a margin of 12.6%, up from NOK 2.1 billion and an 11% margin in the first half of 2023.
- The company secured significant new orders, accumulating to NOK 30 billion in the first half of the year, resulting in a book-to-bill ratio of 1.3.
- Kongsberg Maritime delivered a 20% growth in Q2 2024, driven by high activity in both new builds and aftermarket sales.
- Kongsberg Defence & Aerospace saw a 28% increase in revenues in Q2 2024, with strong growth in air defence and missile systems.
Negative Points
- Kongsberg Digital reported a negative EBIT of NOK 125 million in Q2 2024, attributed to continued investment in product development and sales and marketing activities.
- The EBIT margin for Kongsberg Discovery decreased from 15.1% to 14.2% due to project mix and increased development activity.
- Despite strong order intake, the company faces challenges in maintaining stable working capital, particularly in Kongsberg Defence & Aerospace.
- The shipyard capacity is currently running at high utilization, which may limit the number of vessels delivered in the short term.
- The move to a new missile production facility is expected to slow down growth for the missile division in the next one to two quarters.
Q & A Highlights
Q: Is the Joint Strike Missile order from the US only for integration of the system? Can you comment on the expected timeline and potential missile orders going forward?
A: This is a JSM missile order, not related to integration. It's a definitized contract allowing us to start securing long lead items for the JSM missile. We cannot comment on the timing or the number of missiles at this stage. - Geir Haoy, President, Chief Executive Officer
Q: Could you be more specific on what constitutes a favorable project mix for Kongsberg Maritime?
A: A favorable project mix includes vessels with high scope, reflecting Kongsberg Maritime's strong market position. The diversity of the market and technical specifications due to new regulations and requirements also contribute to what we consider a favorable project mix. - Geir Haoy, President, Chief Executive Officer
Q: What CapEx commitments do you project to need to reach your 2023 ambition, and how do you expect this to be distributed over the period?
A: Our capital allocation priorities remain firm, and we expect to increase organic investments in the medium term. Currently, we are at a level of 5% investments in PPE and R&D to support organic growth, and we expect this level to remain for the next three to five years. - Mette Bjorgen, Chief Financial Officer, Group Executive Vice President
Q: Can you provide more details on the new orders for NASAMS systems to Spain and Norway?
A: Spain's order represents an expansion and modernization of their current NASAMS capacity. Norway's order is part of a new long-term plan for the Norwegian defence forces, including a fixed price option that could more than double the original contract of NOK2.3 billion if exercised. - Geir Haoy, President, Chief Executive Officer
Q: What are the primary drivers for Kongsberg Discovery's products, and how is the demand shaping up?
A: The primary drivers are security and sustainability, with demand coming from segments such as ocean-based energy production, commercial fisheries, seaborne mapping, and surveillance of critical infrastructure. We are experiencing increased demand and are recognized for having a well-suited technology portfolio. - Geir Haoy, President, Chief Executive Officer
Q: How is Kongsberg Digital's Dynamic Digital Twin solution performing, and what are the future prospects?
A: Kongsberg Digital's Dynamic Digital Twin solution, Kognitwin, has become a leading player in the digitalization of industrial and process facilities. It has primarily been sold to the energy industry but is attracting attention from other industries as well. We expect continued growth and expansion into new sectors. - Geir Haoy, President, Chief Executive Officer
Q: Can you elaborate on the new missile factory Nexus and its impact on future growth?
A: The new missile factory Nexus opened in June, and the transfer of missile production to this modern facility is well underway. Our order backlog for missile deliveries now exceeds NOK33 billion, setting the stage for continued significant growth. - Geir Haoy, President, Chief Executive Officer
Q: What are the financial highlights for the first half of 2024?
A: Revenues came in at NOK23 billion, 23% higher than the first half of last year. Operating profits were NOK2.9 billion with a 12.6% margin. Net earnings amounted to NOK2.3 billion, with earnings per share at NOK13.15, a 53% year-on-year improvement. - Mette Bjorgen, Chief Financial Officer, Group Executive Vice President
Q: How did Kongsberg Maritime perform in Q2 2024?
A: Kongsberg Maritime delivered revenues of NOK5.98 billion, an increase of 20%. This was driven by high activity in deliveries to new builds and sales and projects to the existing fleet. The EBIT margin improved to 12.2% from 7.9% last year. - Mette Bjorgen, Chief Financial Officer, Group Executive Vice President
Q: What are the key growth areas for Kongsberg Defence & Aerospace?
A: Kongsberg Defence & Aerospace continues to see strong growth, particularly in air defence and missile systems. The largest revenue contributor in Q2 was remote weapon station deliveries to the US Army. The new missile production facility will further increase our capacity. - Geir Haoy, President, Chief Executive Officer
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
