Kongsberg Gruppen ASA

OSE:KOG

Earnings Call Transcript 2018-Q4

[Geir Haoy, President & CEO]

Okay. Seems that we have almost all seats taken. That's very good. Welcome this morning to Kongsberg Gruppen's first -- fourth quarter presentation and also the year-end results. I will start saying that it has been very exciting 2018 for Kongsberg, and I think we also had a very strong finish in 2018, and we will come back to that.Entering 2018, we had some -- we saw some priorities for the group. We have seen some years with declining growth, and we was also focusing on the margins, at least, we had some issues on the margins. And then we had also a declining backlog for quite some years. So this was the priorities we set when we entered into 2018.I think we have addressed this in a good way. We have both worked organically to create growth. So I think we are on the path to that. And in addition to that, we did some major acquisitions. At least one of them is very major with acquisition of the Rolls-Royce Commercial Marine, which we signed in June -- July. And then in the end of the year, we also signed an agreement with MoD for acquisition of AIM Norway.I think -- on the margin side, I think Maritime is moving in the right direction. Underlying margin of 9.3%, still not where we want to be. Double digit is still the target. And I think also that KDA on the defense side delivered strong margins. And I'm, in particularly, proud of the order intake. Mentioned that we have had declining backlog, and end of 2018, we have improved our backlog with approximately 11%. And I think also for quite a few quarters I've been talking about taking positions. I think in 2018, we have also executed on these positions and signed some important frame agreements and also some very important contracts.I mentioned that entering into 2018, we had some challenges, but we also saw a lot of opportunities. And in a diversified company like Kongsberg there is so many highlights I could have mentioned today, but we don't have time for that. So here is some of them, maybe some of the most important ones. I already mentioned the acquisition agreement of RCCM (sic) [ RRCM ] and AIM, but I think it's also very important that we saw -- the support we saw when we entered this -- the acquisition agreement with Rolls-Royce that we had strong support from all our major shareholders. So I'm very pleased with that.And then, of course, Kongsberg is a people company. We need to continue attract very best people out there. And I'm also very pleased that we for -- I think it's the fourth year in a row that we are on second place as the most attractive technology company in Norway.Several things has been going on in Kongsberg Maritime. I think we still -- we continue to confirm our positions as an integrated supplier of marine equipment. Johan Sverdrup, we have been working very hard on the Phase 1, and we also secured Phase 2 contract with Equinor during 2018.And we have some of the integrated systems that we have closed in 2018. I mentioned Awilco, OPU and the Grimaldi series of vessels. And again, YARA Birkeland, we finally signed the contract on that one. And of course, this is projects that we expect give us some very strong position in the future maritime area.Kongsberg Defence. In the year-end, we -- or in the September, we signed the frame agreement with U.S. Navy -- U.S. Army. And of course, that was a very strong signal, I will say, that Kongsberg is the world leader in the remote weapon stations. And already now, we -- in 2018, we drawn that frame contract. I think it was approximately NOK 1.4 billion of that frame. So that was very important for us.The Over The Horizon contract, the NSM to U.S. Navy, of course, important. This is the biggest defense market in the world, but also we see that the interest of the NSM has picked up after the selection of the NSM to U.S. Finalizing the test of the JSM, that was of course also important, and we are now into the integration phase of the JSM to F-35.NSM Malaysia, we'll come back to that on -- that we're seeing now the impact of these contracts coming on to the figures. And Qatar, of course, is continuing, and we have been now selected both for the vehicle program as well as the air defense.On Kongsberg Digital, we entered into 2018 with, I would say, a weak second half year of 2017. Not so much order on the Maritime Simulation side and also a rather premature digital market out there. So we had some, I will say, slow start of 2018 on the Kongsberg Digital, but we have a very strong second half year, and I'm very pleased to see the development of Kongsberg Digital going into 2019.So all in all, for the quarter, I will say that throughout the whole organization, a very strong Q4. Very pleased again with the right issue and the support in that sense. On the defense side, the acquisition of AIM, I will come back to that. But that we managed also then to secure the CROWS follow-on was important for us.On the Kongsberg Maritime, I think it's worth mentioning that this is the strongest revenue quarter since Q4 2014, I think it is. It's wrong here. And not at least as we have been focusing on the ongoing business, there has been a lot of activities preparing for the integration of the Rolls-Royce Commercial Marine. And I am pleased to see that we are on plan for the closing of that deal.On Digital, very strong quarter, and we have increased the backlog of Kongsberg Digital by almost 40%, and that bounced very good for going into 2019.Then I think I will leave the word to Gyrid. She will take us through the financial status of Q4 and the year.

[Gyrid Skalleberg Ingerø, Group Executive VP & CFO]

Thank you, Geir. Let's start with 2018 as a whole. Kongsberg came in with a flat top line compared to 2017, down by 0.8%. But if you look below that, you will see that Kongsberg Maritime came in with a growth on last year on 1.6%, and the defense area came down by 3.6% in terms of temporary decrease in the air defense area.Bringing me back to the top line, if you see Kongsberg Maritime, they came in with 50% of the revenue last year, but only 40% of the profit. The defense area came in by 40% of the revenue, but then had 62% of the profit last year.EBITDA for 2018 on NOK 1.4 billion in total, with a margin of 9.7%, up from 8.8% last year, and up from 7.7% the year before. So this is definitely moving in the right direction. In terms of that, you should also be aware that in those 9.7%, there is also a warm-up or integration cost around 110%. So on the underlying margin, it's up to 11% for 2018.Order intake, in total, increased by more than NOK 3 billion. I'm happy to say that all our 3 areas, both defense, maritime and digital came in with a solid order intake for new orders for 2018.Just provide you with this chart just to show you the rolling 12 months that you can also see, you see the top line, and we have also put on the margin, the last 12 months rolling margin for the EBITDA margin, the underlying and the reported margin. Here you can see that we have 9.7% for 2018 in total, but if you put down the integration cost, you end by 11%.What we've done historically is that we have taken out the restructuring cost that especially Kongsberg Maritime has been through over the last year, and you can see here that Kongsberg Maritime since 2015 had been on a decreasing trend in terms of the offshore market, down by approximately 27% from 2015 into 2018. So very happy to announce that they now have a growth for 1.6% for 2018 in total, and also come back to the fourth quarter where they grew by 8.7%.You can also see that even if they have a margin of 7.9% entering out of 2018 on the fourth quarter, if you put on the integration cost isolated NOK 85 million in the fourth quarter, they have an underlying margin of 9.3%. And as Geir said, we are still aiming for 10% also in Kongsberg Maritime, but we are moving definitely in the right direction.In the defense area, we don't have[Audio Gap]fourth quarter growth. Growth with 10.4% isolated for the fourth quarter this year. You can also see that Kongsberg Maritime, as I said, have a[Audio Gap] revenue in total. What we see in the defense area now is that the large orders from air defense from[Audio Gap]EBITDA for the fourth quarter of NOK 520 million. In that figure, it's also booked NOK 85 million in integration cost. Bringing me to the margin of 12.5% isolated for the fourth quarter, up from 12.2% from the last year, but extremely solid margin in the defense area of 19.5%. Three main reasons for that one. The project mix has been very profitable for the defense area this quarter. Also, a lot of key milestones affected the quarter, but of course, also the volume on the[Audio Gap]6.9%. But if you add on the NOK 85 million that we have in the integration cost, Kongsberg Maritime has for the fourth quarter an isolated underlying margin of 11%. So a strong quarter in total for the whole group actually.New orders. New orders almost at NOK 4 billion also this quarter. Doesn't seem that impressing when you look at the fourth quarter last year, but then you have to take into consideration that for the last quarter last year, there was large contract on both Lithuania and Indonesia on the air defense. That -- now you can clearly see how we get the defense contracts. We start to produce them and then we start to book revenue. It's now almost 12 months since we started to produce on those orders.Backlog, order backlog, NOK 7.3 million (sic) [ NOK 17.3 billion ]. It's up NOK 1.5 billion from last year, and we now have a book-to-bill of 1.15, extremely good. Isolated for the fourth quarter, 0.93 on our book-to-bill.If you look at the KDA or the defense part, you can see that the order backlog has grown by approximately 8%. If you look at the maritime part, the order backlog has grown by almost 20%. So it's extremely solid order backlog when you compare to earlier years.New orders. Where do we actually get the orders from? We have provided you with a chart where we look at the fourth quarter isolated compared to all the new orders from Kongsberg Maritime in 2018. This is only the maritime. And you see the new orders total in 2018 was almost NOK 9 billion, which is very strong. Isolated for the fourth quarter, we have a lot of vessel orders from the traditional vessel division. And we also have a lot of orders on the subsea area.If you look into the total new orders in 2018, you can see that, for example, the solutions. They have had a lot of new orders during 2018. But isolated for the fourth quarter, there was no material new orders for solutions. But if you look into the 2018 as a whole, you can see that Kongsberg Maritime has actually been able to change and adapt to the market condition moving away a bit from the offshore market and also had a lot of new orders in new areas and new markets that make them much more robust than they were earlier on that one.What's also is worth to mention here is that the global customer support have high utilization, both in the fourth quarter but also during 2018. We have seen an increase in orders to that area, which is quite important for us in terms of the acquisition of Rolls-Royce Marine as well that we see the same trend in Rolls-Royce Marine.Looking into Kongsberg Defence & Aerospace. You can see that for the fourth quarter, the order on the CROWS follow-on of NOK 805 million was very important for us. That's the frame agreement that we got in June this summer that was some USD 598 million, and this is one order in terms of that frame agreement. If you look at the 2018 in total, you can see the importance that the new orders in the missile division have had for Kongsberg Defence & Aerospace.We had a large order on Malaysia in June this year, and we also have an order on the test missile for the Joint Strike Missile in June this year. So if you can look at the total year, you will see that the missile orders have been very important. If you look isolated at the fourth quarter is the CROWS follow-on order that has been dominant.Cash. NOK 10 billion in cash moving out of 2018. Probably, the most interesting part about this chart is the share issue and the acquisition of Rolls-Royce Marine. We are not quite confident that the closing date will be the 1st of April this year, so it's less than 7 weeks to the closing, meaning that after we have done the closing and in calculating the case in more detail, we will come back in the end of this year to look at the capital situation for the company.We try to focus on what we actually are able to do something with by ourselves. And if you look at the working capital, we have been monitoring that and have a very large focus on that. So we have a positive working capital gain on approximately NOK 1 billion for this year. In addition, we have EBITDA for NOK 1.4 billion, and we have paid down dividend in May this last year on NOK 450 million.Also, I want to bring to your attention to the investments that it's extremely low this year -- or last year, 2018, only NOK 350 million. For 2019, we will be back in a more normal level, so you can calculate in approximately NOK 900 million to NOK 1 billion in investments. So this is extremely low for this year.Very solid and strong balance sheet. NOK 10 billion entering out of 2018, of course, because of the 2 acquisitions that we have done last year that we will close the first half of this year. With the equity ratio of 45%, it's extremely important to look at the capital structure during this year and at the end of 2019.Return on average capital employed, up from 9% last year to 12.5% this year. It will take a hit when we will receive Rolls-Royce Marine, but we will come back with more details on that when we are really seeing the first quarter.Debt position. We placed 2 new obligations this year on NOK 500 million each, one of them with the maturity profile in 2021 and the other one in 2024.Dividend. We said in July when we were announcing the acquisition of Rolls-Royce Marine that we have a business case where we have put in the same nominal value in dividend as we have before. So we are still on the NOK 450 million. So we have -- or we will have a suggestion to pay out NOK 2.5 per share, in total NOK 450 million, in May this year, meaning that we will keep -- still keep our dividend policy that is between 40% and 50% of the net profit, meaning that with NOK 450 million this year, we will pay out 64.2% of the net profit in Kongsberg for 2018.So integration cost. When we were preparing for this presentation, we're going to the integration office and what are we -- how many tasks, what are we actually looking into at the moment because we have spent NOK 110 million in terms of integration cost at the moment. And of course, all of us have a large list of tasks that we are going to deliver in the next 7 weeks because it's less than 7 weeks to the closing. So approximately 6,000 actions in terms of the integration office and of course, what is all left. A lot of IT issues. It's a lot of decisions to be taken in terms of locations, in terms of which IT system to choose, in terms of what to do the first day or day 1.And of course, all of those actions and most of all the decisions are already taken since it's so short time to the closing. But as I said, the closing, we are quite confident now that, that will happen on the 1st of April. So we will come back on the 10th of May when we are releasing the first quarter with both short-term targets and also some more detail integration plans for you. But of course, there have been a lot of work done upfront of that.Two things that have been -- that we have spent a lot of time on is of course the IT but also the legal issues in terms of the competition authorities. There are a very few overlapping revenue streams between Rolls-Royce Marine and Kongsberg Maritime today, but there are 2. It's in the seismic and back machinery -- deck machinery area, and it's also in the dynamic position. So what we have done now, during January, is that we have divested the seismic and the deck machinery in Kongsberg Maritime, and Rolls-Royce Marine have also divested their dynamic position area. So we think that everything is prepared now for having a green light from the competition authorities.So just to round off with Rolls-Royce Marine. We are still quite confident that we will be able to take our cost synergies on NOK 500 million, both in terms of infrastructure and also in terms of streamlining the 2 companies. 75% of the cost synergies already next -- end of next year, 2020, but then 100% in 2022. And after looking more into the details, of course, it's limited how much information we got, but we try to build on our business case to see if we can have some new information. But of course, there is now not very much action between the companies, but we are still confident that we can split into site location on approximately NOK 200 million realization of the G&A for approximately NOK 200 million, and also by being more streamlined on the R&D, approximately NOK 100 million.So with that, some more business from Kongsberg.

[Geir Haoy, President & CEO]

Thank you, Gyrid. Yes, so we look forward to first quarter. Hopefully, we can then say more about this very important acquisition. So we are impatient.Business update. If we look at Kongsberg Defence & Aerospace, as you've seen, very strong finish of the year in the Kongsberg Defence. The F-35 program is ramping up. I think we are close to 120 ship sets a year in 2018. This will continue in 2019, and I think we will get very close to the full-rate production as they call it around 150, 160 ship set. In fact, we just turned 500 ship sets delivered from the start back in 2010/'11. So 500 ship sets is already delivered from our factory.The mix in the projects that we have delivered on in 2000 -- in fourth quarter, but I would also say that there has been rock-solid project execution from Kongsberg Defence, meaning that -- and a lot of them was closed or almost closed in 2000 -- in Q4, which actually then, of course, bring the margins to the level we have seen.AIM. I think this is important acquisition for Kongsberg. We are continuing. Kongsberg have 30 years of MRO business with helicopters, as you know, and this is a very important acquisition being Kongsberg becoming a more -- even more strategic partner to the -- operational for the armed forces in Norway.The backlog. Continue to build the backlog. It's important for Kongsberg Defence, and we have mentioned the CROWS contract, but there has been also other important contracts signed in 2018. But I would say that we are working on some very exciting programs. And I will also come back to that.What I'm trying to show you here is if you look at 2008/'19, and you see the blue color of the bar graph, that is what we call the base business of Kongsberg Defence. And then you have the white part of the bar graph, that is major contracts from NOK 1 billion upwards. And they are not -- unfortunately, not coming every year and every quarter. So just trying to illustrate the importance of the major contracts that we are -- have secured. And what you see here is actually what I have said many times. We are taking positions. It's extremely important programs. And in 2018, we have managed to close some of them, like the CROWS and also the NSM in U.S. -- with U.S. Navy.And then there is several other major programs, which you have also heard about before, the air defense in Australia and Qatar. We have the vehicle programs ongoing in Qatar. We have the NSM with Germany, and we have the submarine programs coming on. So I think this shows that there is a very solid potential for Kongsberg Defence in the next decade.I think if you sum up the potential here, it's around NOK 100 billion. So of course, we have to close them, but we are in a very good position, and I expect that we will see that already in 2019 that we will continue to close some of these contracts. But this should bound for some very solid organic growth in Kongsberg Defence going forward.So I mentioned AIM that we signed an agreement with MoD for acquiring AIM together with Patria. I think this is in line with our strategy when it comes to maintenance repair and overhaul. It's started with Patria, when we entered into the acquisition of 49.9% of Patria, and this is the next step for going further on that part. I would say that AIM Norway, they are doing advanced maintenance repair and overhaul for the F-16 and the helicopters in Norway, and of course, also, we'll be a very important partner for F-35 program. And we announced last -- or this Tuesday that the JPO, the joint project office for F-35, they have now assigned maintenance to AIM and KONGSBERG for F-35 program. And of course, we expect that there is going to be even further opportunities in these programs going forward.We expect that the closing of this will hopefully -- I expect it to be within the first half year of 2019, but as quick as possible also here is important for us. So we are looking forward to welcome these 440 employees from AIM as soon as possible. We have estimated that turnover of AIM to be around NOK 1 billion for 2018.Some business update for Kongsberg Maritime. I think I'm very satisfied with the trend of the underlying margins, of course. We continue to keep the cost focus. I think we see the results of the actions taken earlier, and we have to continue that. We see -- continue to see high utilization of our engineers and the aftermarket. And I think also we see that we are able to close some of the integrated contract out there. I'm satisfied with the development and the focus that Kongsberg Maritime manage to have at the same time concentrating on the plan for the integration.So to keep the customer focus will be also important in 2019 at the same time as we're going to do the largest integration execution in the company's history. Increased backlog, of course, that is our robustness for Kongsberg Maritime. I mentioned some of the projects already. But I also expect that, that trend will continue in 2019.Gyrid showed you a slide of the order intake. This is a slide for Kongsberg Maritime comparing 2017 with 2018. And the pie is not -- even though it looks same size, it's different size of these pies that you have to be aware of. 2017, approximately NOK 7.3 billion and 2018, NOK 8 billion, almost NOK 9 billion. And as you can see, it's quite a well-balanced order intake for Kongsberg Maritime, and I think that is also our robustness. It's not one market that stands out here.But I would also like to mention the offshore area. We see an increase in the offshore area. Of course, it's coming from a low level, but to see an increase in the offshore level is a good sign for us. So I think this was around NOK 1 billion, and in 2018, we have NOK 1.6 billion in order backlog -- order intake for offshore.Another area, which is very strong is OPU and LNG and then particularly the LNG area. I think it was contracted around 50 LNG carriers in 2018, and this is a very strong market for Kongsberg Maritime. And the expectation is that, that will continue also in 2019. So a well-balanced order intake, and that is a robustness in itself.Then some brief update on KDI. I mentioned going into 2018 and the slow start of 2018, I'm very pleased to see that they have managed to turn around and build the backlog and then particularly on the Maritime Simulation side. On the digital side, on the digital applications and platforms and the twins, this is still a premature market for many, but what I have -- what I'm very pleased to see is that KDI has continued to take positions and run several proof of concept with several oil companies in 2018. And I believe and hope that we will see some major thing coming in 2019 on the digital side for Kongsberg Digital.Patria, slightly up on the revenue compared to 2018, despite a declining revenue in -- year-on-year in Q4. I would say that the system division and the maintenance divisions, all delivered as expected, solid. However, we are not pleased with the order intake in the land business, and that is also something that we have very strong focus on together with Patria to make sure that we secure some of the land business opportunities going forward.The share of net profit for Kongsberg was approximately NOK 80 million in 2018 compared to NOK 70 million, NOK 75 million in 2017.So looking forward. Our focus in 2019, I will say there's one important thing for us is to keep the customer in focus. We have to make sure that the customer get what it expects from Kongsberg, also when we're going to do this biggest integration that we have ever done, we have to make sure that the customer are in focus. So operational excellence, continue that on the maritime side, but also on the defense side.And then of course also we need to control our cost, continue that, continue the trend that we see to make sure that we are profitable. So for KM, continue to secure orders, build the backlog and make sure that we welcome 4,000 -- or almost 4,000 new employees, get them integrated, make them a part of one Kongsberg.For KDI, also a little bit smaller integration, but even as important is the AIM integration, and then of course, conclude some of the project, the potential project that I just showed you. For KDI, I expect that we're going to see some scaling effect in 2019 that we manage to take and execute on some of these positions that we have been working on throughout 2018. And then of course, also continue to work on the positive development on the Maritime Simulation. I think the backlog gives us kind of confidence that 2019 will be stronger for KDI than in 2018.So outlook. I started saying that 2018 has been demanding, exciting and a very eventful year. I think 2019 will be as exciting, maybe even more demanding. But I'm so confident with my colleagues in Kongsberg that we will -- we are really energetic about 2019.So for KM, the integration of Rolls-Royce Commercial Marine. Gyrid mentioned that we will have an impact. We will have to spend some money on the integration. We already spent a lot, but that will be important to get that integrated, make them a part of Kongsberg and to take out the synergies so that we will have an impact. But I expect that we will see the underlying margins continue the positive trend. And then of course, we also should focus on the life-cycle business. And I believe that we will see some increase in the revenues for Kongsberg Maritime also in 2019.KDI, a lot of possibilities in 2019 and onwards. Again, it's impossible to say exactly when we can expect to conclude these contracts. Some of them, we know that will be closer than others, but of course, there is always things here that can move. But despite of that, I expect that Kongsberg Defence will also increase their revenues slightly in 2019, independent on the prospect list that I just showed you.And for KDI, it's all about continue to build scale and to continue build up new, innovative solutions for the digital area. And I think also that when we have integrated Rolls-Royce Commercial Marine, we will increase our install base, growing from 18,000 vessels today to 25,000, 30,000 vessels installed base, which also should give KDI and KM new opportunities. So with the increased order intake, I am confident that KDI will continue the positive trend. So 2019 is going to be exciting, is going to be demanding, but we are looking forward to it.Then we will have a short Q&A session.

[Steffen Evjen, Analyst]

Steffen Evjen from Danske Bank. On the 2019 investments, could you give some color on to the reason for the increase? And does this include the Rolls-Royce investments or the CapEx in Rolls-Royce?

[Gyrid Skalleberg Ingerø, Group Executive VP & CFO]

To take the last question first, yes, it includes the investment in Rolls-Royce Marine. So that's partly why it's going to increase, but also it's an extremely low level compared to earlier year that we have had this year. We have been focusing on acquisitions and all the other things this year.

[Steffen Evjen, Analyst]

And also on the order intake on the offshore side, could you give some color on to which segments is driving the increase?

[Geir Haoy, President & CEO]

Yes. It's -- as I said, we're coming from a very low level. We have to remember that. What we see is that there is some movement in the OPU, offshore production units. So of course, to get 1 or 2 OPUs in a year coming from what level we are coming from now, that will give an increase itself. So it's -- I will say, it's in the aftermarket. We see an increased activities and then of course on the OPU side, I would say. And also on the floating production side, there is some exciting leads in that area.

[Knut Erik Løvstad, Equity Research Analyst]

Knut Erik Løvstad, Kepler Cheuvreux. On the defense side, you talked about the timing for signing some of those contracts which, of course, I understand can be a bit difficult to estimate. But is there any sort of change with regards to the size of the programs, the development of the programs, your competitive position related to those programs? Or are they as sort of strong as we saw them when we talked about them last quarter?

[Geir Haoy, President & CEO]

In general, I will say no to both your questions. There is no major changes to the size and to the competitive positions for the project that I showed you here. Because most of this -- I will say all of this project, we are selected as a partner to these project or these programs. So unless something totally changed, we are the only partner they are negotiating with. So -- and then of course, there will always be some adjustment on the scope and amounts, but that will be minor as I see it. So still the Qatarian potential is what we have said before. The submarine will be in the same area. Of course, what we don't know today is the -- what kind of opportunities will Over The Horizon program will give us in U.S. and outside U.S. But all in all, no changes, rather we are getting closer. So that's a good thing.

[Unknown Analyst]

Two questions, if I may. With Rolls-Royce now divesting its DP, and you -- Kongsberg Maritime also divesting, could you tell something about how complementary the acquisition will be? It seems like there will be a limited overlapping though.

[Geir Haoy, President & CEO]

As Gyrid mentioned, we got sound feedback from the competition authorities that these 2 areas might be an issue. That's why we divested, and we'll take -- KONGSBERG will the seismic deck machinery and also Rolls-Royce divested the DP. Except for that, there is basically no overlap. But of course, on the ship intelligence side, because both companies have been focusing on that part on the digital station and the connected vessel. So there, I will say, is still some overlap. It's more a kind of combined forces that we can join forces, and I think we will be even stronger in the digital side but also on the autonomy side. And in fact, we have been working together with Rolls-Royce on Horizon 2020 program, which we have got some funding for, and that is together with Rolls-Royce Commercial Marine. So I think by doing this divestment, this will be even -- it will be like hand-in-hand. And hopefully, I'm quite sure that we will see that these 2 companies become more than -- one plus one will be more than two, and that's of course our plans for that.

[Gyrid Skalleberg Ingerø, Group Executive VP & CFO]

And just a short comment on the revenue stream. When you put those together, it's extremely complementary, as we said. The overlapping was approximately 2% when we started to look at the 2 companies.

[Christopher Møllerløkken, Research Analyst]

Christopher from Carnegie. Just one quick question. Could you update us on the status of Qatar?

[Geir Haoy, President & CEO]

Yes, Qatar, there is 2 programs that we are involved in, in Qatar. And one is the air defense together with Raytheon, and that is currently ongoing negotiation on that side, and that is, of course, we are -- waiting is the prime here, and that we are of course supporting that. And then there is this huge vehicle program. I will say that, that is also continue developing positively. We are established down there, and we are in regular contact with the end user and the Qatarian part. So I will say that this is moving as expected. But again, you have to remember that this is a huge program, and there's a lot of participants in that program, and things will always take more time than you expect. But I'm very confident that this is moving in the right direction.Okay. If no more questions, then I would like to say thank you very much for sharing this morning with us. I appreciate. I look forward to come back in May and tell you more about the new KONGSBERG. Thank you.