Aker Solutions ASA

OSE:AKSO

Earnings Call Transcript 2020-Q3

[Fredrik Berge, Senior Manager of Investor Relations]

Good morning, and welcome to the presentation of Aker Solutions' Third quarter Results 2020. My name is Fredrik Berge, and I'm the Head of Investor Relations.With me here today is Aker Solutions' Chief Executive Officer, Kjetel Digre; and Aker Solutions' Chief Financial Officer, Idar Eikrem. After the presentation, we will open for Q&A.And with that, I hand it over to our CEO, Kjetel Digre.

[Kjetel Rokseth Digre, Chief Executive Officer]

Thank you, Fredrik. Good morning, and thank you for joining us on this call today. This is my first quarter reporting as the CEO of Aker Solutions. And it will also be the last quarter we report under the current structure before the merger with Kvaerner, which will be completed next month.So for this presentation, I will focus on Aker Solutions' results for the third quarter.Then let me start with some operational highlights in the quarter. HSSE has top priority at Aker Solutions and for me. And in the third quarter, I'm pleased to say we recorded a positive trend and strong results. In fact, all our key performance indicators are in the best position they have been for several years.This has been achieved by implementing the IOGP Life-Saving Rules and developing our leadership and culture to deliver a safe work environment and good operational quality. And this year, it has happened in a very difficult time. While we, in parallel, manage the COVID-19 pandemic.In terms of project execution, big milestones were on one side, the successful installation of the topside module for the Troll Phase 3 project for Equinor, and on the other, deliveries of subsea equipment to CNOOC's Lingshui development in the South China Sea.Finally, on operations, our NOK 1 billion cost-saving program, which was introduced in April this year, has now been implemented across the company. We have streamlined the company and the organization and our utilization rate is now better aligned to the activity levels we are currently experiencing.On July 17, we announced a series of strategic and transformational changes. First and foremost, the proposed merger with Kvaerner, but also the spin-offs of our Carbon Capture and wind development businesses. Following a busy summer, we have now completed the spin-offs, and we are ready to complete the merger in a couple of weeks. I will come back with some more details on that process later.These transactions are designed to create a stronger and more focused supplier company that has the right setup, financial profile and competence to serve customers in the oil and gas and renewable industries.The same drivers support the decision to sell iX3, our software development business to Aker ASA. This company was set up based on our extensive knowledge and usage of software applications relevant to the execution of complex projects. We will continue working closely with iX3 as the company evolves while we will no longer be required to fund the development to new software applications. We will not stop or pause with our digitalization efforts. On the contrary, we will continue to work with the people and solutions in iX3 as a part of aiZe, a company which is being set up by Aker ASA to improve efficiency, drive down costs and change the way we work and collaborate together on major projects.Another highlight this quarter was the strong order intake. This was driven by the temporary tax incentives introduced by the Norwegian government this summer. And we are already well underway with the whole project, which was one of the earliest to be announced after the measures were introduced.In the third quarter, we secured several new contracts in both subsea and brownfield services. In subsea, we have now secured 35 subsea tree orders this year based on our standardized tree. This shows that we have a competitive product and that our efforts to standardize are paying off.We also had 2 brownfield service contracts extended during the quarter. And to me, this is the best customer feedback we can get, when the client, based on ongoing performance and collaboration, wants more of our services. Now let's go to the key numbers for the quarter. Overall, operating revenue for the third quarter was NOK 4.7 billion, excluding special items, down 34% from the same period last year. Our third quarter EBITDA was NOK 938 million. Excluding special items, EBITDA was NOK 243 million, down from NOK 570 million a year earlier. This was equal to an underlying margin of 5.2%. Order intake continued to evolve favorably and was strong at NOK 7.1 billion in the quarter. The order backlog increased to NOK 29.2 billion at the end of the third quarter. And afterwards, Idar will take you through the numbers in more detail.As I said, we delivered another quarter of strong order intake. The order backlog is back to its highest level since the second quarter last year. The temporary tax incentives on the NCS led to several new projects being sanctioned. Let me give you a few highlights.Our first subsea win with ConocoPhillips was a very exciting award. In the new Tommeliten Alpha project, we will combine our topside and subsea system integration capability. Integrating subsea and topside modifications is one way in which we stand out from the competition. We will deliver 10 subsea trees and associated equipment, and we have started on the modification work on Ekofisk to prepare for the successful integration of the Tommeliten Alpha discovery. Next, the SPS award from Equinor on Breidablikk shows that we have a strong portfolio of subsea projects. In the third quarter, we announced additional call-outs for this project. The contract now covers the delivery of 4 subsea templates and up to 23 subsea trees and associated components. It includes our standard lightweight vertical subsea trees as well as our Vectus subsea control system. Low-carbon solutions like the electrification of oil and gas facilities play an important part of our future workload. We're already working on the feeds for the electrification of Equinor's Troll B and C platforms. And during the third quarter, we signed an engineering, procurement, construction and installation contract for the integration of a high-voltage electrical boiler package as part of the electrification of Lundin Energy's Edvard Grieg platform in Norway.The electrical boilers will replace the heat generation provided by the gas turbines on the platform today, making Edvard Grieg a fully electrified platform.During the third quarter, we also secured a 5-year contract extension from ExxonMobil Canada for the provision of engineering, procurement and construction services for the Hebron platform offshore new Newfoundland. We also booked a 3-year contract extension to a framework agreement for work at North Sea fields operated by ConocoPhillips.Finally, the front end business is still active, pointing to more work to come in the future. We secured 23 new front-end contracts ranging from feasibility studies to full feeds, and by that, we have 112 front-end orders year-to-date, one more than the record level of 2019. These provide a solid base for potential future order intake. Current ongoing feeds include Jansz for Chevron in Australia, the Troll West electrification and the [ Hydron B ] upgrade, both for Equinor.We also had 3 projects being converted from feeds to projects this quarter, 2 for ConocoPhillips on Tommeliten and the Hebron project for ExxonMobil.So now let me give you an update on where we stand in the process to merge the 2 companies, Aker Solutions and Kvaerner.On July 17, the merger plan was announced. And since then, we have passed several key milestones on the way to completing the merger. We have identified the new management team and are in the process of completing the rollout of the whole organization. A new Board of Directors has also been elected, this will be effective from day 1 of the merger. Combining the 2 companies will create a stronger supplier company, and we are working to release synergies and further efficiencies, both from digitalization efforts and a new optimized organization globally. As small company, we will be better positioned to serve the oil and gas industry. And we have also set targets for the share of low carbon and renewable projects to grow significantly in the new Aker Solutions. The first day for the new Aker Solutions will be November 11, according to our current plans. And this date will be the first day of trading as one single company.At the same time as announcing the merger between Aker Solutions and Kvaerner, we also started the process publicly to spin-off the developer roles of Aker Carbon Capture and Aker Offshore Wind to shareholders. This process has created significant value for shareholders. Both companies started trading as separate units on August 26. The combined market value of all 3 companies today has increased more than 300% versus the market value on July 16, the day before the news broke. We look forward to continue to work closely with both companies on both Offshore Wind and Carbon Capture projects, such as the Norcem CCS plant in Norway.Now let me turn to the outlook. Following the complete standstill, we experienced when the pandemic broke out activity has picked up. We are currently tendering for about NOK 42 billion worth of new orders. This is split fairly evenly between Norway, Brazil, Asia Pacific, but we are also working on attractive prospects in Africa and North America. I will not go through every project we are bidding for, but one project you have heard about is NOAKA development in Norway. We are currently performing a concept study on the NOA and Fulla field to optimize full NOAKA development.In addition, we are preparing a digital execution of the project that will transform the way we deliver complex projects together. And as always, the timing of these awards remain uncertain. However, the map shows how much market sentiment has changed since the first half of the year. So to summarize, we concluded another quarter with strong order intake. Our increased backlog improves visibility for 2021 and beyond, and we have implemented the cost-saving initiatives we announced in the spring. And as we are prepared to merge Aker Solutions and Kvaerner, we are working to release synergies and further efficiencies. We are also getting close to completing some projects that we've won in a very competitive market a few years back. This will support our financial performance in the future.Sanctioning activity on the NCS is expected to continue in the near to medium-term as the temporary tax relief measure give operators additional incentives to sanction projects before the end of 2022. At the same time, our discussions with clients on international projects are progressing again after everything was put on hold this spring. They are now starting to bring back robust projects to the market. This is the last time we report as Aker Solutions the way it looks today. We plan to come back to the market to give you an update on the outlook and direction for the combined company before Christmas.And with that, I will let Idar take you through the numbers in more detail.

[Idar Eikrem, Chief Financial Officer]

Thank you, Kjetel, and good morning. I will now take you through the key financial highlights of the third quarter, our segment performance and provide some financial guidance.As always, all numbers mentioned are in Norwegian kroner. So let me start with the income statement. Overall, operating revenue for the third quarter were -- was NOK 5.5 billion. The revenue was positively impacted by NOK 804 million gain on the dividend transaction of Aker Carbon Capture and Aker Offshore Wind. Excluding these effects, the revenue was NOK 4.7 billion down 34% year-on-year. The revenue decline was primarily driven by the field design subsegment.As previously guided, following the record activity last year and continued progress towards finalization of several ongoing projects, some with COVID-19 impacts. Our reported third quarter EBITDA was NOK 938 million. Excluding special items, EBITDA was NOK 243 million, down from NOK 570 million a year earlier.This was equal to an underlying margin of 5.2% compared to 8% in the same period last year, reflecting the lower activity level and impact of the coronavirus, partly offset by our fixed cost reduction program. We have included restructuring costs of NOK 114 million in the quarter related to additional rightsizing of the organization following the lower activity level.Depreciation and amortization was NOK 301 million, in line with our previous guidance. Our reported third quarter EBIT or operating profit increased year-on-year to NOK 637 million from NOK 245 million. Excluding special items, EBIT was minus NOK 39 million, and the margin was minus 0.8% versus 3.7% in the previous year. This reflect our project portfolio with lower activity level as well as a few projects, one in a very competitive market, not yielding satisfactory margins. The negative impact in third quarter from this project is approximately NOK 150 million. These projects are now in the finalization phase. Net financial items were negative NOK 116 million in the quarter, and our profit and loss tax charge was equal to a tax rate of 62%. The tax rate in the third quarter was negatively impacted by a noncash impairment of tax assets in Brazil and Angola of NOK 177 million. We ended the quarter with a net income of NOK 199 million, and the earnings per share was NOK 0.75. Now moving to our balance sheet and cash flow performance. Our working capital or net current operating assets ended the third quarter at NOK 429 million, driven by our strong focus on cash collection in addition to other measures to improve working capital performance. Following the normalization of our working capital during last year, we continue to expect working capital to trend around NOK 1 billion going forward. Our cash flow from operations in the third quarter was NOK 496 million, reflecting our working capital improvements. Cash flow from investing activities was positive NOK 109 million, reflecting the sale of iX3 and a reduced CapEx spending. As previously communicated, CapEx and R&D will be significantly reduced by about 40% this year compared to 2019. Excluding IFRS 16, we had a net interest in bearing -- net interest-bearing debt of NOK 1.9 billion at the end of third quarter, down from NOK 2.4 billion at the end of second quarter. Our net interest-bearing debt to EBITDA ended at 2x. And as a reminder, the leverage covenant on both bonds and the revolving credit facility are at 3.5x pre-IFRS 16.Our total liquidity buffer at the end of the quarter was at a healthy NOK 5.9 billion, including our revolving credit facility. In the current environment, our main financial priority remains on cash flow performance and protecting the company's balance sheet.Now on to Projects, where third quarter revenue was down 37% year-on-year, driven by field design following the record activity last year as well as continued progress towards finalization of several ongoing projects. This resulted in an underlying project EBITDA of NOK 190 million with a margin of 5.3% for the quarter, down from 8.1% last year. EBIT, excluding special items, ended at NOK 3 million, reflecting our current project portfolio with significant lower activity level and as mentioned earlier a few projects not yielding satisfactory margins. Third quarter order intake in projects was strong at NOK 5.4 billion, with book-to-bill at 1.5x, increasing our backlog coverage moving forward.Now some further details for subsea and field design within the project reporting segment. Revenue from subsea projects decreased year-on-year to NOK 1.6 billion, and revenue from field design normalized to NOK 2 billion. Third quarter order intake was strong with NOK 2 billion in subsea and NOK 3.4 billion in field design. The backlog in Projects increased to NOK 17.8 billion, further improving our visibility.In Services, activity decreased year-on-year in production asset services primarily related to adverse impact of the coronavirus. Activity in the Subsea Lifecycle Services remained more resilient. Underlying EBITDA in services was NOK 131 million, with a margin of 11.8%, up from 11.2% in the same quarter last year. This resulted in an EBIT of NOK 69 million with a margin of 6.2% versus 7.2% a year ago. Third quarter order intake in services was strong at NOK 1.7 billion with a book-to-bill of 1.5x, the backlog ended at NOK 11.5 billion.Now over to the order intake and backlog performance for the group overall. We had another quarter of strong order intake at NOK 7.1 billion, equal to a book-to-bill of 1.5x when excluding the revenue from dividend transaction. Our backlog increased to NOK 29.2 billion, further increasing our visibility. Our second and third quarter order intake was significantly better than expected earlier this year driven by the recovery of the oil market and the government incentive measures.The outlook for order intake has improved, and we now see encouraging signs project sanctioning moving into 2021 and 2022.Finally, over to our guidance. As you know, during the first half of this year, the activity in our industry was significantly impacted by the coronavirus and steep decline in oil prices. However, the outlook has improved with government measures and recovery in commodity prices. And for the year overall, we continue to expect revenue at around NOK 21 billion to NOK 22 billion, excluding the revenue from dividend transaction.As we move forward, our increased backlog, combined with a healthy feed and tendering activity should turn into a number of interesting opportunities where Aker Solutions is well positioned. This, combined with our leading capabilities within energy transition and low-carbon solution make us more optimistic about the outlook moving forward.We will also continue to leverage on our front-end capabilities to capture opportunities and engage with our customers at an early stage. And as activity level picks up further, it is -- it will be important to harvest the scale effect from our improvement programs and cost and asset base.So to sum up, the third quarter was a transformative quarter for Aker Solutions, unlocking significant shareholder value through the spin-offs. And importantly, we announced the merger with Kvaerner to create a leading execution company and increasing our energy transition ambitions. We delivered another quarter of strong order intake, and we are on track with our cost and CapEx reduction measures, and our merger process is on track. This should provide a good foundation moving forward for the merged Aker Solutions, and we will get back to more detailed information regarding the merged company during the fourth quarter.And with that, I would like to thank for your listening and hand it back to Fredrik.

[Fredrik Berge, Senior Manager of Investor Relations]

Thank you, Idar. We are now ready to open the call for questions.[Operator Instructions]Operator, you may now open the line for questions.

[Operator]

[Operator Instructions]And the first question comes from Michael Alsford, Citi.

[Michael James Alsford, Director]

I've got a couple. I'll start with the first one. Just on your outlook guidance. You don't seem to be referring much to the your margins given the weaker margins in 3Q. So I'm just wondering whether you could give an update of where you expect margins to trend into 4Q and into 2021. Are you going to still see the headwinds around these poorer performing projects? That's my first question.

[Kjetel Rokseth Digre, Chief Executive Officer]

Yes. We have not sort of given specific guidance on the fourth quarter. Personally, I think guidance on each quarter is probably a bit difficult to do, and we need to look it on a more longer term.But as mentioned in my presentation, the underlying margin for the third quarter was 5.2%. We have included the negative impact from those projects I mentioned of around NOK 150 million. If you adjust for that, you will get slightly above 8% in our EBITDA margin for the quarter. And with that, I don't have any better sort of guidance of margins for the fourth quarter then using sort of more than average margin year-to-date.

[Michael James Alsford, Director]

Okay. And then just an unrelated follow-up. I'm just wondering whether you could again outline where you see the share of low-carbon projects in the new combined Aker Solutions going forward. So what it is today and then where you expect it to be over the medium term. That would be helpful.

[Kjetel Rokseth Digre, Chief Executive Officer]

First of all, I can see that the new and combined company has complementary both competencies and capacities that are relevant for this and also ongoing opportunities. And to us, the way that we are engaging in low-carbon opportunities is quite broad.We are already into the area of electrification on existing on-field installations, particularly offshore Norway. And then we have, as previously mentioned, being key to both the shaping and now also spinning off the Aker Carbon Capture and Aker Offshore Wind, which have opportunities that we will be part of when executing.So I think -- and we also see that in our dialogue now with all our key customers, this is becoming a clear topic, really sort of covering more and more of the agenda we have together. And in my mind, that -- it seems like this is really going to get traction in not only Norway, where we are ongoing with electrification projects, but also towards carbon capture, starting with the example around Norcem, which is then due to be decided by Parliament and kicking off the first quarter next year, but then also abroad.

[Michael James Alsford, Director]

Okay. And on Norcem, what would be your share of the scope, I think that Aker Carbon Capture have given an award number, but that would be -- I guess, a lot of that will be for Aker Solutions to prosecute on. So could you give me us a sense as to how big that could be, please?

[Kjetel Rokseth Digre, Chief Executive Officer]

Yes. First of all, I'll just say that Aker Carbon Capture was an integrated part of Aker Solutions. And the way we are collaborating now through both formal agreements and the way we are handling the different opportunities are still in very sort of close collaboration. So we will be part of both that opportunity and other opportunities that Aker Carbon Capture is looking at.Just now, we are looking at the Norcem project, and we are setting up the right way of both covering the roles and then collaborating to make sure that, that project becomes a true success.What we will definitely do is to be key in both engineering and design and also how we control the total plants and the cluster of all the suppliers towards that initiative. But then the weeks to come and towards final sanctioning of the project and contract award, we will then detail out the exact roles and then, obviously, the share that Aker Solutions have in that project.

[Operator]

Next question is from Sahar Islam in Goldman Sachs.

[Sahar Islam, Analyst]

It sounds like the project margins, particularly in 2021, underlying should be better. Could you just confirm like what level you see those going to? And if they are better, is it because pricing is better or because you get some of the benefits of cost savings?And then my second question was on working capital. So you had a very good performance in 3Q, and you're well below the working cap levels you're guiding to. So should we expect a normalization in 4Q in working capital? Or do you expect to end the year with a better working capital performance than you're expecting in the medium term?

[Kjetel Rokseth Digre, Chief Executive Officer]

Yes. Kjetel here. First, Idar covered the issue margins determined. He can refer to that as well.But just also, when we talk about the project that we are due to complete, I just want to also describe how we are now closely working that together with our clients and really being in a countdown mode to make sure that they are as successful as they can be now at the very end.And then also looking forward on sort of key focus areas, obviously, that we will bring learnings from our history and also making sure that we mobilize the right competence, and we will also capitalize on the improvement initiatives we have going to make sure that all of this, including cost cuts, are supporting when ramping up on the newly awarded work.On the pricing side of things, our view is that it's fairly stable. So it's really up to us now to improve further and make sure that we are delivering projects precisely and in a stable manner. Idar?

[Idar Eikrem, Chief Financial Officer]

Yes. Just confirming what Kjetel said. Of course, the project mentioning is a drag on our margins. And we will finalize those projects and finishing them strong over the next 6 to 8 months. And thereafter, as Kjetel mentioned, we will ramp up with newly awarded projects. And of course, our target and mandate is, of course, to have some margins on every project that we embark on.So when you can sort of complete those projects and continue on new projects with some margins, so you should see improvement in margins going forward. That, combined with the cost cut program and as previously mentioned, the NOK 1 billion cost cut program is fully implemented, and we see clearly the effect coming through our earnings this quarter and continue into the fourth quarter as well as our ambition to reduce the CapEx and improve overall cash flow for the group.To the working capital question. You had -- we had a strong quarter this quarter with NOK 429 million in operating or working capital. We expect fluctuation going forward, and the previous guidance have been fluctuation around NOK 1 billion.

[Sahar Islam, Analyst]

Just to follow-up on that, do you expect to get back towards the NOK 1 billion in 4Q? Or is that normalization over the next year?

[Idar Eikrem, Chief Financial Officer]

I don't want to sort of be very specific, but we will, of course, have a high focus on cash collection and working capital improvements, and we clearly delivered on that in the third quarter. But this can fluctuate quite a lot from one day to another. And if -- depending on the cutoff dates in the various quarters, you could expect to see quite large fluctuation from one day to another, and during our quarterly close, not -- let's say, we have seen an example that, that can vary from -- with NOK 300 million, NOK 400 million around a quarterly close from 1 day to another.So the best guidance I can give to you is the NOK 1 billion, fluctuation around NOK 1 billion. And then we will come back with more information later on, as Kjetel mentioned, when it comes to the merged entity and our working capital situation for the merged entity going forward.

[Operator]

Next question is from Frederik Lunde, Carnegie.

[Chr. Frederik H. Lunde]

At the time of the merger announcement, there was a clear plan for NOK 1 billion in annual cash flow for the joint company longer term. Do you have any view on how that will shape up in '21, '22 as it's not included in the financial guidance in your slides?

[Idar Eikrem, Chief Financial Officer]

Yes. Thank you, Fredrik. We -- what we announced on the 17th of July is still valid, and we are continuing working on our sort of merger and strategy plans and we'll come back to you on more sort of precise guidance. But our clear target is to grow the top line for the company going forward. We will cut the cost. And most of the targets that we set at the NOK 1.5 billion is already implemented and as well as the CapEx reduction. So our target to generate NOK 1 billion in average over the next years to come, is still valid.Of course, it's an average number. And we will probably have somewhat lower in the first phase and then growing from there.

[Operator]

[Operator Instructions]And our next question is from Haakon Amundsen in ABG.

[Haakon Amundsen, Lead Analyst]

Just a question on the impact of the tax breaks given to -- well, in Norway. I guess oil companies will be eager to progress quite quickly with awarding new projects. And I was just wondering if this has an impact on your competitive position and potentially the margins you can achieve on these awards relative to the order intake you've had in the last couple of years in Norway?

[Kjetel Rokseth Digre, Chief Executive Officer]

Well, again, back to where we are now as the onboarded in Aker Solutions. We have had a lot of dialogue with all our key clients. And as I said, agendas and discussions is obviously about renewables and transformation together as I already mentioned. But then particularly for the ones operating in Norway, we see also a clear sort of increase in opportunities, and we are in dialogue on what they are and how to actually solve them.And we see that the combined company with the complementary competence and capacities and really sort of a broader offering is highly relevant for most of the positive effects coming from the tax incentives this year.

[Idar Eikrem, Chief Financial Officer]

And just to add to that, when it comes to our competitive position, we -- both companies, Kvaerner and Aker Solutions, have been working on improving their competitive position, that being a project in Norway or outside Norway, and that will continue. So we believe that we have a significant improvement in our competitive positions.And with the interesting opportunities that is coming up as you know, and we see it from studies and stuff that we are doing in -- now, that there will be interesting opportunities over the next couple of years and expect sanctioning on that one.As you probably know, in Norway, you need to submit the planned for development within end of '22, and we, therefore, expect to see a pickup of, let's say, new sanctioned projects during 2021 and into 2022. And then, as you all know, it will take some time before you see immediately uptake in the top line, but very interesting opportunities ahead of us.

[Haakon Amundsen, Lead Analyst]

All right. Just an unrelated follow-up. I'm sorry if I missed it in the introduction, but could you give some numbers on your software divestment in terms of how much it had impact on cash or will have and how it was valued? Can you give some disclosure on that, please?

[Idar Eikrem, Chief Financial Officer]

Yes. The sales value on the iX3 entity was at NOK 222 million, NOK 172 million is paid in the third quarter and remaining NOK 50 million will be paid based on certain milestones going forward. So that is the transaction. And what we -- and as Kjetel mentioned, our digitalization efforts will continue with full force, but we are not a company that is going to be the development company of those. And therefore, we will save, let's say, the CapEx that requires as well as the operating expenses that we historically have had in -- by developing that company.So all in all, we said that if you look at the operating expense savings, we estimate that to be, on an annual basis, around NOK 50 million, taking into account also the license fees that we are going to pay for using those applications. In addition to that, of course, the CapEx savings comes on top of that one.

[Operator]

And our next question is from [indiscernible] in [ Anaconda ].

[Unknown Analyst]

My first question is about the renewable profile that Aker Solutions has post the spin-off of Aker Wind Offshore and Aker Carbon Capture. In other words, what -- I understand that you are now an asset-light engineer. But what percentage of your sales will still be done by -- on renewable projects? Going forward what is your assumption of the split of sales within 2 to 3 years?And on Carbon Capture, we've seen yesterday, a big announcement by BP, ENI, National Grid, Shell and Total, to do a joint venture called North Endurance Part (sic) [ Northern Endurance Partnership ], which will on the go major Carbon Capture projects. I would like to know if your companies Aker Carbon Capture or Aker Solutions as a backup engineer will be part of these projects?

[Kjetel Rokseth Digre, Chief Executive Officer]

First of all, just to sort of reiterate on something that we have communicated earlier on. And it's really linked to ambitions for the company going forward. As we said early on, both engineering wise and our yards and others are involved in projects as we speak, and we see the opportunities coming. And our ambitions going forward is actually to look at 1/3 of our revenue coming from what we call sustainable energy solutions and projects in 2025, up to 2/3 in 2030.And to me, it's really sort of inspiring to see how the 2 companies when being formed into one has this complementary competence and capacities and broad offering also towards the renewable area. And just to remind us, we are already in the Kvaerner setting part of the Hywind Tampen floating windmill project in Norway.So we are there with the right competencies and also projects ongoing, and we will work closely with Aker Carbon Capture and Aker Offshore Wind on their initiatives and also towards other customers.

[Idar Eikrem, Chief Financial Officer]

Yes. I just want to add to that one, Kjetel, that I have already picked up that some believe that our ambition is not as high as before on the renewable side after the spin-off, but it's actually more the opposite. I think that creates an even stronger platform for realizing our ambitious target on renewables going forward. So I think it's an important message from us.

[Kjetel Rokseth Digre, Chief Executive Officer]

And to the last part of the question, I think we should just refrain from commenting on an [indiscernible]. We are there on the technology side, in general. But that -- I don't think it's relevant to comment on that specific project.

[Idar Eikrem, Chief Financial Officer]

Other than we are following, of course, closely all those projects that might be relevant in our targeted area. So that's important.

[Unknown Analyst]

Sorry, just to follow-up. Whom do you see as your direct competition in carbon capture projects business in -- on the engineering side?

[Kjetel Rokseth Digre, Chief Executive Officer]

I think carbon capture is a technology area in itself. So I think that is more to know the technology owner side than us as a general, competent, broad offering supplier towards those type of industry projects. And yes, so I think it's a differentiation here between technology ownership and us being a lot sort of clearer and a cleaner supplier to both Aker Carbon Capture and others having initiatives in that area.So it's really a strength for us, that part with and the spin-off of Aker Carbon Capture.

[Unknown Analyst]

My question was more, do you see people like Technip or other engineering in front of you, when you bid for a carbon capture project? Or...

[Kjetel Rokseth Digre, Chief Executive Officer]

Well, again, just -- I think the technology side of it, they provide sort of distinct offerings. We will then collaborate with different ownership technology in different projects, Aker Carbon Capture and others. And then sometimes, we will compete in those projects with Technip and others, yes.

[Operator]

And there's no other questions at this time.

[Kjetel Rokseth Digre, Chief Executive Officer]

Thank you. And we will end the call. Thank you all for listening.

[Operator]

This will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.