Kongsberg Gruppen ASA · OSL:KOG
Kongsberg Gruppen ASA — Q3 2005 Earnings Presentation
42 slides from Kongsberg Gruppen ASA's earnings presentation, Oct 25, 2005
Slide 1: Presentation of Q3, 25 October 2005
Presentation of Q3, 25 October 2005 WORLD CLASS – through people, technology and dedication KONGSBERG 25 October, 2005 1
Slide 2: Q3 2005 – a general summary
Q3 2005 – a general summary Good quarter for KONGSBERG Offshore & Merchant Marine – improved performance in a buoyant market Defence & Aerospace – pronounced improvement in performance Yachting activities sold – reported as an activity under divestment. The gain on the sale is not included i
Slide 3: Agenda
Agenda Financial status at Q3 2005 Business areas – Status and prospects for the future Group – Current situation Shareholders and investor relations Appendix KONGSBERG 25 October © KONGSBERG, 2005 26 August 2003 3
Slide 4: Operating revenues and EBIT by quarter
Financial status at Q3 2005 Operating revenues and EBIT by quarter Operating revenues EBIT MNOK MNOK 2 200 220 1 894 185 172 149 150 1 650 1 428 1 401 1 428 115 1 358 100 1 293 1 269 80 1 100 49 40 41 45 10 550 -25 -60 -95 -91 0 Q1 Q21) Q3 Q4 Q1 Q2 Q3 Q1 Q21) Q3 Q4 Q1 Q2 Q3 2004 2005 2004 2005 All f
Slide 5: Income statement
Financial status at Q3 2005 Income statement MNOK Q3-05 Q3-04 At Q3-05 At Q3-04 2004 Operating revenues 1 428 1 269 4 257 3 920 5 814 Personnel expenses (424) (391) (1 513) (1 461) (2 030) Other operating expenses (816) (734) (2 385) (2 279) (3 397) EBITDA 188 144 359 180 387 Ordinary depreciation (
Slide 6: Main elements underlying Q3 change in EBITDA
Financial status at Q3 2005 Main elements underlying Q3 change in EBITDA 04 – Q3 05 Absolute Effect on Main elements changes EBITDA The positive change in the EBITDA in Q3 05 compared with 144 EBITDA Q3-04 (11.3%) Q3 04 is primarily ascribable to costs constituting a lower Sales +159 18 1) +18 1)
Slide 7: Balance sheet
Financial status at Q3 2005 Balance sheet 30 Sept 05 1 Jan 05 31 Dec 04 31 Dec 04 MNOK IFRS IFRS IFRS NGAAP Tangible fixed assets 919 1 041 1 041 1 041 Intangible assets 1 043 1 249 1 249 1 161 Other non-current assets 289 189 189 387 Total non-current assets 2 251 2 479 2 479 2 589 Current assets a
Slide 8: Cash flow and net interest-bearing debt
Financial status at Q3 2005 Cash flow Cash flow Net interest-bearing debt Net cash flow Q3-2005 (MNOK) Net interest-bearing debt at 1 Jan. 2005 1 101 EBITDA 359 _ (359) Change in prepayments from customers (2) + 2 Change in working capital and other operational items 28 - (28) Net financial items (5
Slide 9: Key figures
Key figures1) MNOK Q3-05 Q3-04 At Q3-05 At Q3-04 20042) EBIT margin: Group 10.4 % 7.9 % 5.6 % 1.3 % 3.8 % Offshore & Merchant Marine 11.1 % 9.5 % 8.2 % 7.6 % 8.0 % Defence & Aerospace 10.5 % 4.3 % 3.0 % -7.5 % -1.1 % Profit per share 2.71 1.92 4.38 1.01 4.03 Equity ratio - - 28.1 % 25.1 % 26.2 % Net
Slide 10: Operating revenues by quarter by segment
Financial status at Q3 2005 Operating revenues by quarter by segment MNOK 1 200 1086 Stable high level in Offshore & 1 000 Merchant Marine 789 786 781 790 800 741 713 725 627 621 664 Defence & 593 600 508 Aerospace is, as 483 expected, showing 400 growth in the latter half of the 200 year 0 Q1 Q
Slide 11: EBIT by quarter by segment
Financial status at Q3 2005 EBIT by quarter by segment MNOK 100 90 Good performance 80 82 in Offshore & 66 69 72 70 Merchant Marine 61 60 47 40 35 Improved 22 profitability in 20 Defence & 6 Aerospace 0 -5 -9 -20 -20 -149 -40 Q1 Q21) Q3 Q4 Q1 Q2 Q3 2004 2005 Defence & Aerospace Offshore & Mercha
Slide 12: Agenda
Agenda Financial status at Q3 2005 Business areas – Status and prospects for the future Group – Current situation Shareholders and investor relations Appendix KONGSBERG 25 October © KONGSBERG, 2005 26 August 2003 12
Slide 13: Defence & Aerospace – Volume trends
Defence & Aerospace Volume trends New orders and operating revenues by Underlying trend in new orders: quarter MNOK – Quarters impacted by large individual contracts 1 200 – Complex, time-consuming decision- making processes 1 000 – Total new orders somewhat ahead of last year 800 Most important con
Slide 14: Defence & Aerospace – Market trends
Defence & Aerospace Market trends – a hot topic in the market Defence budget for 2006 completed recently Possible consequences for KONGSBERG Efforts continue to realise efficiency The defence budget is as expected improvement dividends on non-operative The Government states: ”The Government ac
Slide 15: Defence & Aerospace – Strategy and targets
Defence & Aerospace Strategy and targets – potential improvement measures The development of a common procurement Status and anticipated gains organisation The goal is to cut purchasing costs in the The goal of reducing the annual level of projects costs by at least MNOK 50 measured Main areas
Slide 16: Offshore & Merchant Marine – Volume trends
Offshore & Merchant Marine Volume trends New orders and operating revenues by Underlying trend in new orders: quarter MNOK – Good influx of new orders, especially in Offshore 1 000 800 Most important contracts and highlights: – Continued strong sales to supply boats 600 and LNG carriers 971 994 – Fi
Slide 17: Offshore & Merchant Marine – Market trends
Offshore & Merchant Marine Market trends – a hot topic on the market Very high level of activity in the rig market Possible consequences for KONGSBERG 30 – 40 projects globally – this is an KONGSBERG is very well positioned abnormally high level of activity through its significant market share i
Slide 18: Offshore & Merchant Marine – Strategy and targets
Offshore & Merchant Marine Strategy and targets –a potential improvement measure Internationalisation of the value chain Status and anticipated gains KONGSBERG constantly strives to be more Target to continue improving the competitive. This includes greater operating margin proximity to and know
Slide 19: Agreement signed for the sale of Yachting activities in Simrad
Agreement signed for the sale of Yachting activities in Simrad KONGSBERG has sold the part Sold part of the segment of Simrad that develops, manufactures and sells maritime electronics for yachts and commercial vessels to a Fishery Yachting Nordic investment fund Sales (-04): MNOK 280 Sales (-04):
Slide 20: Strategy for the maritime segment on industrial markets
KONGSBERG is concentrating its strategy for the maritime segment on industrial markets ”The sale of Yachting activities will allow KONGSBERG to focus its strategy for the maritime segment fully and completely on industrial markets" As a result of the sale of Yachting, Fishery will be integrated in
Slide 21: Agenda
Agenda Financial status at Q3 2005 Business areas – Status and prospects for the future Group – Current situation Shareholders and investor relations Appendix KONGSBERG 25 October © KONGSBERG, 2005 26 August 2003 21
Slide 22: Descriptions of the segments
The Group will now cultivate its main business areas: Offshore & Merchant Marine and Defence & Aerospace After the sale of Yachting, the company will cultivate its two main industrial segments Common technology base – segmented approach to the market Offshore & Merchant Marine Product Production
Slide 23: Common technology base decisive for RWS success
Common technology building and knowledge base absolutely decisive for RWS success in record time RWS a significant commercial success New orders, sales and performance living up to expectations From Norwegian prototype to a major contract in the U.S. Still large potential for continued and new
Slide 24: Hugin – ground-breaking Norwegian subsea technology
Hugin – ground-breaking Norwegian subsea technology with growth potential in the offshore and defence markets alike Facts: The world's first autonomous underwater vehicle in commercial use Developed in collaboration with Norwegian Defence Research Establishment and Statoil Uses sophisticated c
Slide 25: Hedging of significant currency flows
KONGSBERG has hedged significant currency flows to reduce currency risk Net foreign currency hedging at 30 Sept. 05 KONGSBERG has substantial foreign MNOK 1600 currency exposure (~72 % of 1400 foreign sales in 2004) 1200 1000 The goal is to reduce currency risk 800 – and facilitate predictabilit
Slide 26: Agenda
Agenda Financial status at Q3 2005 Business areas – Status and prospects for the future Group – Current situation Shareholders and investor relations Appendix KONGSBERG 25 October © KONGSBERG, 2005 26 August 2003 26
Slide 27: Ownership structure
Ownership structure 20 largest shareholders at 21 Oct. 2005) Shareholder distribution (at 1 Oct. 2005) Shareholders # of shares Stake ∆ 2005 1 Staten v/Nærings- og handelsdeparteme 15 000 400 50.00% - The Norwegian State 2 Folketrygdfondet 2 666 860 8.89% 1,21 % 50 % 3 Arendals Fossekompani ASA 2 05
Slide 28: Share price and liquidity
Share price and liquidity Share price trends Liquidity trends Index1) Spread Shares traded (‘000) 200 8% 700 180 OSEBX 7% 600 Spread (30-day Number of 160 OSE Industry 6% moving average) shares traded 140 500 (Daily) 120 5% 400 100 4% 300 80 3% 60 KONGSBERG 200 2% 40 1% 100 20 0 0% 0 Nov Des Jan Feb
Slide 29: Agenda
Agenda Financial status at Q3 2005 Business areas – Status and prospects for the future Group – Current situation Shareholders and investor relations Appendix KONGSBERG 25 October © KONGSBERG, 2005 26 August 2003 29
Slide 30: The Board of Directors of Kongsberg Gruppen ASA
The Board of Directors of Kongsberg Gruppen ASA Finn Jebsen(55), Chair of the Board Siri Hatlen (47), Director CEO of Orkla from 2001 to 2005 Self-employed A member of Orkla's corporate management since A number of other directorships: Chair of the Board of 1984 Health East, SIVA - the Indus
Slide 31: Central product areas in maritime and defence
KONGSBERG focuses on central product areas in the maritime and defence sector Command and weapons Different types of command and control x control systems systems for land-, air- and sea-based defence Defence & Weapons control systems for armoured Dynamic systems Aerospace personnel carriers Com
Slide 32: One of Norway's largest engineering communities
The Group has one of Norway's largest engineering communities – increased added value through the development of high technology KONGSBERG employees KONGSBERG employees 1988 2005 Graduate Graduate engineers Engineers engineers Engineers 8% 27 % Other 10 % 35 % 45 % 17 % 47 % Other 11 % Operators Ope
Slide 33: Historical development of operating revenues and EBIT
Historical development of Operating revenues and EBIT Operating revenues2) EBIT1)2) MNOK MNOK 8 000 600 6980 7 000 6651 485 6439 500 6176 437 6 000 5296 400 383 5 000 4404 4412 287 4 000 3674 300 278 249 243 3023 3 000 192 200 173 2 000 100 1 000 0 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 1996
Slide 34: Geographic spread in earnings
Strong and growing geographic spread in earnings Geographic spread in earnings 1996-2004 7 000 KONGSBERG has a good 13.8% geographic spread in 6 000 15.0% 14.2% 15.8% sales 5 000 21.7% 11.6% 22.6% 19.8% 19.4% 4 000 12.7% 11.2% 17.2% ~72 % of sales were 13.1% 12.8% 15.0% generated outside 3 000 1
Slide 35: Reported pursuant to IFRS as from 1 January 2005
Reported pursuant to IFRS as from 1 January 2005 Changes in equity at 1 Jan. 2005 Significant changes in equity at 1 Equity 31 Dec. 04 (NGAAP) MNOK 1 812 Jan. 2005 Unrecognised actuarial gains/losses on pension expenses of MNOK 482 Equity transactions after tax Pensions (482) The valuation of fi
Slide 36: External finance and net interest-bearing debt
External finance and net interest-bearing debt Sources of external finance at 30 Net interest-bearing debt Sept. 2005 1 400 3,0 External finance MNOK Due 1 200 2,5 Certificate 200 2005 1 000 2,0 Certificate 200 2006 800 1,5 Bond (9701.4) 300 2007 600 1164 1101 932 1,0 Bond (2638.4) 400 2009 400 776
Slide 37: Defence & Aerospace – Market trends
Defence & Aerospace Market trends Norwegian Armed Forces’ Norwegian Armed Forces’ investment level 12 long-term budget plan1) 10 10 10,3 Restructuring of the Norwegian Armed Forces 10 9,3 aims at reducing manpower costs to improve 8,6 investments 8 7,7 2004 Future domestic R&D funding important
Slide 38: Defence & Aerospace – Strategy, risks and profitability
Defence & Aerospace Strategy, risks and profitability Strategic growth KONGSBERG offers a wide range of modern, highly competitive products in the areas of military communications, weapon control systems, missiles, anti-submarine warfare and air defence systems Restructured international sales o
Slide 39: Offshore & Merchant Marine – Market trends
Offshore & Merchant Marine Market trends Ship deliveries 2001 - 2004 (2005 - 2010 prognosis) Market growth (ships > 500 GT) CGT / Region 1) Shipyards in Europe and Asia continue to build strong backlogs 35 30 25 Offshore market expected to remain 20 strong in the short and mid-term CGT 15 Oil
Slide 40: Offshore & Merchant Marine – Strategy, risk and profitability
Offshore & Merchant Marine Strategy, risk and profitability Strategic growth New organisation enables more aggressive pursuit of cross-sale opportunities All automation products now sharing common technology base and meet market requirements for cost effective turnkey solutions Maintain LNG pu
Slide 41: Financial Calendar and Investor Relations Contacts
Financial Calendar and Investor Relations Contacts Q4-resultat IR contacts Presentation of Q4 05 results Arne Solberg, Q4 results: 15 February 2006 CFO General meeting Telephone: +47 32 28 95 75 9 May 2006 E-mail: arne.solberg@kongsberg.com Presentation of Q1 06 results Trond Bakke Nielsen Q1
Slide 42: WORLD CLASS – through people, technology and dedication
WORLD CLASS – through people, technology and dedication KONGSBERG 25 October, 2005 42