Kongsberg Gruppen ASA

OSE:KOG

Earnings Call Analysis

Kongsberg Delivers Strong Q4 Results, Upbeat 2024 Outlook

Kongsberg concluded Q4 with a robust cash flow of NOK 3.9 billion and reduced its interest-bearing debt by NOK 1.2 billion. Significant working capital improvements and solid operational results contributed to a net earnings of NOK 3.7 billion, resulting in an EPS of NOK 21 per share. The Board suggests a total dividend increase to NOK 14 per share, nearly doubling from the prior year. Associated companies Patria and Kongsberg Satellite Services reported strong results, with the latter growing 50% over last year's Q4. Looking forward, the company anticipates growth across all business areas in 2024 despite uncertainties, with strong demand and no short-term capacity constraints forecasted. Kongsberg aims to maintain a favorable book-to-bill ratio in defense orders while optimizing working capital for project execution.

Kongsberg's Year of Substantial Growth Amidst Global Challenges

In the backdrop of rising geopolitical tensions and global economic challenges, Kongsberg has navigated the tumultuous waters of 2023 to achieve substantial growth, surpassing NOK 40 billion in turnover. Q4 marked a period of continued expansion across all business areas, leading to a record-breaking quarter with an unprecedented demand throughout the company's diverse operations. This upward trajectory is buttressed by the addition of over 1,100 skilled employees and the anticipated inauguration of the most modern missile factory. With sustainability at the forefront, the company advances towards its net zero emissions goal by 2050.

Robust Financial Performance and Solid Order Book

Kongsberg Maritime and Kongsberg Defence & Aerospace witnessed impressive revenue growth of 21% and the strongest quarter ever in order intake, respectively. Notably, Kongsberg's total order backlog stands at a staggering NOK 65.4 billion, promising NOK 15.7 billion for delivery within the year. Financially, the group achieved a robust 28% growth in revenue, with operating results improving to NOK 4.6 billion, an increase from 10.4% to 11.3% in margins.

Significant Transactions and Strategic Investments

2023 saw the Kongsberg Naval System framework agreement, potentially valuing up to NOK 17 billion, securing sustenance until 2040. Investment levels are expected to remain elevated as expansions and modernizations carry into 2024 to address heightened demands. The organization's commitment to strengthen its operations is evident from its sizable order intake, strategic investments, and efforts to streamline production for better cost efficiency and margin sustainability.

Sector-specific Highlights and Strategies

The maritime sector enjoyed a 21% revenue surge in Q4, while the focus on emission reduction upgrades propels the aftermarket's growth. Defence & Aerospace celebrated a record quarter in order intake, including significant contracts with Poland, Spain, and Lithuania. Kongsberg Discovery's order intake and turnover reflect a growing demand for sophisticated subsea technology and swift backlog turnover. Meanwhile, Kongsberg Digital aims to achieve EBITDA positivity in the latter half of 2024, operating with a forward-looking vision in high-investment domains.

Financial Prudence and Promising Outlook

The Q4 cash flow strength of NOK 3.9 billion, coupled with a NOK 4.8 billion improvement in working capital, has put Kongsberg in a favorable financial position. Patria and Kongsberg Satellite Services, the associated companies, have experienced high product and service demand, contributing significantly to the group's financial prosperity. A prospective total dividend of NOK 14 per share reaffirms the Board's confidence in Kongsberg's prospective growth, laying the groundwork for continued expansion and shareholder value creation in 2024 and beyond.

Earnings Call Transcript 2023-Q4

[Jan Erik Hoff, executive]

Good morning, and welcome to the presentation of Kongsberg's Four Quarter 2023 and Preliminary Annual Accounts for 2023. This presentation is a webcasted session, and you will be able to submit questions through the webcast or through your browser. Please include your name and who you're presenting when submitting questions. Today's presentation will be given to you by our President and CEO, Geir Haoy; as well as our Executive Vice President and CFO, Mette Bjorgen. And with that, I'll leave the floor to you, Geir.

[Geir Haoy, executive]

Thank you, Jan Erik. Welcome to Kongsberg's presentation of the fourth quarter and the full year results for 2023. As you all know, we are living in a time of change and geopolitical tension. The distance between the super power has increased and the world has become more unpredictable. In Europe, we have had an ongoing war in Ukraine for almost 2 years. At the end of 2023, I had the honor of meeting President Zelenskyy when he visited Oslo. That was a moving meeting with an impressive man.

President Zelenskyy expressed his gratitude for Norway as a nation of defense capabilities, including the air defense, NASAMS, which every day contribute to saving lives in Ukraine. For me, it was important to express my deepest gratitude to President Zelenskyy. The war in Ukraine, people are fighting, it's not only about Ukraine, it is about Europe, Norway and each of us defending our right to live in a free democratic and independent country.

In the Middle East, we see horrifying pictures from the conflict between Israel and Hamas and with a conflict escalation in the region involving more countries. Global shipping in the Red Sea has been targeted and global value chains are being challenged. Internationally, we experienced economic challenges with rising costs. At the same time, we see technological advances transforming the way we live and work. Artificial intelligence represents huge possibilities, but also security and cyber threats as well as ethical dilemmas. The effects of climate change are becoming more visible with extreme weather, diminishing sea ice, record-breaking heat, droughts, fires and stress to the ecosystem.

Consequently, we see the security, sustainability and digitalization is top of the mind for every government. In 2024, more than half of the world's population re-choose their leaders and elections will be held in almost 70 countries, including their European parliament. In November, the Presidential election in the United States will be of particular interest to follow. This wave of 2024 elections will have a great impact on world politics, institution and the global economy in the years to come. In a more unpredictable world, it is more challenging to navigate and make decisions. We tend to overplay the short-term consequences at the cost of longer perspectives. That is why we always must ask ourselves. What will be the outcome of the decision we make today in 5 years, in 10 years.

We see that politics, both national and global, has become more important to the business of global companies such as Kongsberg. Despite the challenging and changing world, Kongsberg exceeded NOK 40 billion in turnover in 2023. This gives me confidence that we have people, mindsets, solutions and a proven record play an important role also going forward.

Then looking at the highlights for Q4. Q4 turned out to be yet another strong quarter for us. The growth continued in all business areas, and we signed and concluded some major contracts that I will come back to shortly. We are currently experiencing a very strong demand throughout our businesses. Our order backlog is at record levels, meaning execution on this along with handful new opportunities is a key. To be able to execute, we have increased our staff with more than 1,100 skilled employees during 2023. We are also building new and expanding current facilities. The opening of our new missile factory is approaching. And in just a few months, the missiles from Kongsberg will be produced from the most modern facility of its kind.

We are also expanding and modernizing capacity in both consumer Kongsberg Maritime and Kongsberg Discovery, meaning our investment levels that Mette will come back to, will stay at a relatively high level also in 2024. One significant deal we signed in Q4 was Kongsberg Naval System frame work agreement for the maintenance of the Norwegian frigates. Kongsberg Naval System is jointly owned between Kongsberg Maritime and Kongsberg Defence & Aerospace. And the deal could be worth up to NOK 17 billion lasting until 2040. Maritime and defense technology as well as digitalization are main pillars in Kongsberg. And in this frame work agreement with the Norwegian Armed Forces, these are united to optimize operation and increase technical availability for the Norwegian frigates throughout their lifetime, while at the same time, facilitating predictable operating and maintenance costs.

This contract win is a clear example on how we position ourselves by combining and utilizing technology and forces from the Board of Kongsberg. In Q4, we further progressed our work on sustainability and climate. This is a central strategic priority for the group and we are pleased to share that our climate targets were approved by the Science Based Targets Initiatives in December 2023. This indicates that our commitments are in line with latest climate science and represent a significant milestone towards our 2030 target and our journey towards net zero by 2050. Together with our suppliers, customers and business partners, we take an active role in engaging and creating value in the transition to a more sustainable society. We remain convinced that supporting our customers to solve their security and sustainability challenges is a part of our value proposition.

In our upcoming and sustainability report, we will present the first net zero transition plan with more insight to our action plans and decarbonization strategy. We continuously progress our dedication to responsible business practice and prudent risk management. Operating with the highest integrity is the foundation of how we work. In December, I signed a declaration to reconfirm that we are not involved in any controversial weapons. Our commitment is also reflected in the external evaluation, but via central data and analysis providers, assessing the performance of organizations on topics such as sustainability and ESG risk management. We have also improved our ratings across the evaluation of CDP, MSCI and Sustainalytics.

Then if I move to the business updates of the business areas. Kongsberg Maritime continued on a fast-moving journey and grew the revenue by 21% in Q4 compared to Q4 2022 and 22% in 2023 compared to the previous year. The revenue growth comes from both our aftermarket business as well as from the new build segment. Throughout 2023, we have seen continued strong pace in the aftermarket, coming especially from the emission reduction upgrades and spares. This trend continued also in Q4, and I believe it will continue as the ship owners across the world are determined to cut cost and to comply with new emission and ESG standards. With regards to spare sales, we are proactively working together with our customers on maintenance and service planning. This approach is a win for both.

The ship owner gets more time on their vessels and for us, as a supplier, a more predictable demand. We have also started to see revenue impact from major LNG orders concluded in the market in 2022 and there is also growth on deliveries to dry dock cargo on back of the booming contracting levels a couple of years ago. The new building order intake in 2023 was strongly influenced by order for deliveries to the LNG carriers, which account for more than NOK 2 billion for the full year. We have also seen a pickup in orders for offshore vessels. Offshore vessels have traditionally been a very strong market for Kongsberg Maritime. And looking at the prospects offshore numbers, we see from different analyst firms give room for some optimism. There are several factors indicating new-build ordering to develop positively going forward. We do see an aging fleet.

Over the past 10 years, the average age of fleet has increased from 19 to 23 years. And over the past 15 years, the order book to the total fleet has declined from 20% to 5% when looking at the number of vessels and from 50% to 13% when looking at the gross ton. This in combination with even stricter regulations being implemented from IMO, EU and the national ports are clear indicators for future new-build demand.

I do not necessarily expect a rapid booming market hitting us though. There are some limitation out there, yard capacity being the most important. There are also challenges when it comes to selection of fuel and technology that can dampen the short-term demand; however, looking at the market from a high level, the underlying trends are currently optimistic for us as a supplier into the industry and I have a very positive expectation for the medium to long-term development, both for our new building activities as well as for our services and aftermarket business.

Then moving to Kongsberg Defence & Aerospace. Q4 ended up becoming the strongest quarter ever with regards to the order intake for Kongsberg Defence & Aerospace. NOK 16 billion out of the total NOK 25 billion is related to the coastal defense contract with Poland, where the contract was signed back in Q3, but become effective in Q4 when the export financing agreement came in place. In addition to this contract, we signed a NOK 3.6 billion contract on NSM to Spain, and Lithuania awarded us with a NOK 2.3 billion for additional NASAMS. That will be integrated with their already operational air defense system. We have seen a strong backlog growth over the past years, and our product portfolio are higher in demand and more relevant than ever.

The total order backlog is now at NOK 65.4 billion, whereof NOK 15.7 billion is for delivery already this year. We are also currently involved in several international sales campaigns. As I also said last quarter, during my 30 years now in Kongsberg, I have never seen such a strong momentum and demand for our portfolio.

Then we are moving to Kongsberg Discovery. Kongsberg Discovery had an order intake of NOK 1.3 billion, which is a book-to-bill of 1.16 in Q4. The business area signed orders for HUGIN AUVs as well as for several orders for deliveries to new research vessels. Two of these HUGIN contracts were each worth more than NOK 100 million, one to a commercial customer and one to a naval customer. Because our HUGIN AUV functions without cables or remote control, they have a multitude of applications in oceanography, environmental monitoring and underwater resource studies. A key element in the HUGIN concept is the application of common technology that makes systems adaptable for both naval and commercial application.

Our modular design allows different payloads, configuration depending on customer needs. The need for subsea knowledge as well as security has led to a solid jump in demand for the features our HUGIN fleet can offer. Kongsberg Discovery's order backlog has a quicker turnover compared to the previous 2 business areas.

Currently, the business area has a NOK 2.9 billion backlog, whereof NOK 2.1 billion is for delivery this year. To meet the market demand, we have also increased our capacity here. Kongsberg Discovery's unique position within energy, fisheries, research, security and surveillance give an exciting outlook for the years to come. And we see an increased demand and interest for the solution we are offering.

Then to Kongsberg Digital. Kongsberg Digital is continuing its growth path and are delivering solid growth and strong order intake both in Q4 and in 2023 as a whole. As you see from the slide, we continue to roll out new Kognitwins. And by the end of the quarter, we had more than 40 twins up and running with more than 22,500 user license connected to them. In March last year, KDI signed a deal with Chevron on a deployment plan for Kognitwin. And in Q4, this agreement was extended from 2 to 5 years, and this is the main explanation for KDI's very high order intake in Q4. These twins will be deployed from now and over the next 4 years, meaning KDI's order backlog is also start to stretch out in time. So together with the agreement with Shell, this contract forms a sound basis for KDI's continued rollout of new systems.

With regards to other areas in KDI, the Maritime Simulation showed positive development in 2023. Due to the nature of this business, simulators for training purpose, we saw a major decline during the pandemic when schools and training centers closed. In 2023, this market finally seemed to normalize and the area both delivered solid growth and also good order intake. With regards to Vessel Insight, we are continuously selling the solution to new users, and we are also increasing the number of applications available with the platform. Vessel Insight is now sold to more than 2,600 vessels.

So with that, I leave the floor to Mette to take us through the financial status.

[Mette Bjorgen, executive]

Thank you, Geir. Good morning, and thank you all for attending our fourth quarter presentation. It's a pleasure for me to present another strong quarter that concludes yet another important year in the Kongsberg history.

Now I want to start by taking a step back and talk about 2023 before we focus on the quarter. In 2023, we delivered 28% growth for the group, and our total order intake came in at NOK 65.4 billion, up from NOK 45.2 billion in 2022. The high order intake grew our total order backlog to NOK 88.6 billion, and it's important to underline that the largest orders signed in Kongsberg Defence & Aerospace stretches out in time and for some of them into the 2030s. The order backlog gives us a very solid foundation to continue our growth path. We have secured more than NOK 30 billion in orders that are to be delivered this year. This is NOK 5.5 billion higher coverage compared to last year and indicates further growth in 2024.

Our operating results showed the solid growth to NOK 4.6 billion in 2023. This is an increase of NOK 1.3 billion and a margin improvement from 10.4% to 11.3%. This improvement comes as a result of solid growth, strong project execution, favorable project mix and good cost control. Product development is key in our business model. In 2023, expensed R&D accounted for NOK 2.1 billion, an increase of more than NOK 400 million compared to the year before. This impacted the operating margin with 1 percentage point for the group as a whole. The majority of the R&D cost goes into our civilian business areas since customer finance projects are the way to typically finance R&D in our defense business.

Now moving to Q4. Our revenues grew by 26% compared with Q4 2022 and came in at almost NOK 12 billion. That makes this quarter our highest ever, beating Q3 2023 by almost NOK 2 billion. All business areas contributed strongly with growth ranging from 21% to 54%. Kongsberg Maritime grew revenues by close to NOK 1 billion from Q4 last year, totaling NOK 5.6 billion. This comes as a result of strong deliveries to the new building segments, combined with high activity in the aftermarket. Kongsberg Defence & Aerospace grew 29% and added more than NOK 1.1 billion in revenues from Q4 last year, reporting just over NOK 5 billion in this quarter with the missile division delivering the highest growth. We are ramping up production to deliver on our backlog after several years of strong order intake.

We expect to further increase deliveries as a result of investments in new capacity in 2024 and beyond. Kongsberg Discovery broke a NOK 1 billion ceiling for the first time this quarter, reporting revenues of NOK 1.15 billion, up from NOK 827 million in Q4 last year, representing 38% growth. The most important driver was high activity related to our AUVs as well as mapping and positioning systems. Kongsberg Digital delivered revenue growth at 54%, which amounted to NOK 439 million, up from NOK 285 million in Q4 last year. Recurring revenues accounted for 53% of total revenues.

Total operating results for the quarter came in at NOK 1.27 billion as a result of growth and excellent project execution. The EBIT was impacted by an all-employee appreciation totaling NOK 170 million (sic) [ NOK 107 million ] for the group. The EBIT margin came in at 10.7%, down from 11.3% in the corresponding quarter last year. Adjusting for the employee appreciation, the EBIT margin would have come in at 11.6%. Kongsberg Maritime reported operating results of NOK 538 million, up from NOK 374 million in Q4 '22. The operating margin was improved by 1.5 percentage points compared to last year due to a combination of both project mix, increased revenue and improved cost efficiency. Kongsberg Defence & Aerospace delivered NOK 748 million in operating results. The margin was 14.9%, largely in line with the first 3 quarters in 2023. As I have stated before, we are trending towards lower and more normalized margins due to a shifting project mix. Still, we are working hard to scale our operations, and we expect to continue to deliver strong margins from our defense business.

Kongsberg Discovery had an EBIT of NOK 150 million in this quarter compared to NOK 102 million in Q4 last year. This corresponds to an increase of 47% and a margin increase of 0.8 percentage points. Kongsberg Digital reported negative EBIT of NOK 153 million, NOK 7 million down from the Q4 last year. We continue to focus on growing this business, which requires high investments in developing systems and applications. R&D came in NOK 68 million higher in Q4 '23 compared to Q4 '22. Contribution from acquired companies impacted operating results by negative NOK 22 million in the quarter. As previously stated, our ambition is that Kongsberg Digital will turn EBITDA positive in the second half of 2024.

Net working capital improved significantly in Q4. In Maritime and Discovery, the increase over the first 3 quarters was mainly driven by strategic buildup of inventory to serve increased demand, especially within global customer support and [ recruitment ] platforms. In the fourth quarter, this development stabilized, and we have also seen positive development in trade receivables. In Defence & Aerospace, the development throughout the year is typically driven by phasing of projects. In Q4, Kongsberg reached milestones in several key deliveries and at the same time, some major payments from customers, including a prepayment related to the coastal defense systems contract with Poland. For those of you that have followed us for a while, you are used to see fluctuating working capital. It's important to keep in mind that these prepayments finance the start-up of the programs, including sub-suppliers.

With regards to the specific Poland prepayment, there was no outflow from Kongsberg from this in Q4 as this will occur in Q1. Kongsberg delivered a strong cash flow of NOK 3.9 billion in Q4. The NOK 4.8 billion improvement in working capital was a major contributor to this, but also the strong operational results contributed. Kongsberg continues the investment in production capacity and product development. In addition, we reduced interest-bearing debt with NOK 1.2 billion this quarter, of which NOK 500 million is related to a bond redemption and the remaining was related to reducing our overdraft facility. Kongsberg ended the year with NOK 6 billion in cash. Net earnings came in at NOK 3.7 billion for 2023, representing EPS at NOK 21 per share. Based on the strong performance in 2023 and a good outlook, the Board of Directors proposes a total dividend of NOK 14 per share for 2023. This represents shareholder remuneration of NOK 2.5 billion. The ordinary dividend has been raised to NOK 7 per share, and this is close to a doubling of last year's ordinary dividend level.

Finally, Kongsberg has moved up several leagues in the last years. Looking at our current prospects, along with our solid foundation, this is considered the time to raise the floor. The ordinary dividend will be proposed to be paid out in May. The additional dividend of NOK 7 per share is proposed to be paid out in October in 2024.

Finally, let me comment on our 2 largest associated companies: Patria and Kongsberg Satellite Services. As for the rest of the group, both delivered a very strong Q4, demonstrating the high demands they currently experience for their product and service portfolio. Patria's revenue grew 17% versus same period last year, reporting revenues at EUR 312 million in Q4, and operating results grew at 31%, driven by development to Patria's subsidiaries. For the full year, Patria delivered revenues of EUR 733 million with EUR 68 million in operating results. I would like to remind you that we report 4 months in the fourth quarter for Patria.

Kongsberg Satellite Services came in with a top line of NOK 587 million in the quarter, which represents an impressive 50% growth versus Q4 last year. For the full year, KSAT delivered NOK 1.9 billion revenues and NOK 616 million in operating results. A record high order intake throughout the year resulted in an order backlog of NOK 5.7 billion. The backlogs from our associated companies are not recognized in Kongsberg's reported backlog. For the full year 2023, the contribution to Kongsberg from these 2 companies was NOK 389 million and is recognized as income from associates.

And with that, I'll leave the word back to Geir to conclude the presentation.

[Geir Haoy, executive]

Thank you, Mette, for that good finance update. I think we have already pretty much touched on the most important outlook. But let me end where I started. The world is more uncertain and more unpredictable than ever. Multiple challenges and crisis must be addressed and solved. Kongsberg's overall portfolio of technology and solutions can make a difference in most of these areas to protect people and planet. There are strong growth prospects in all our business areas in the short to medium term.

This means that we aim to continue to grow in all business areas also in 2024. We see strong demand throughout our portfolio. Despite contracting from the maritime new build market was somewhat weaker in the final quarter of 2024, we believe that the underlying basis for strong demand is in place. Kongsberg is well positioned to be a partner and benefit in the ongoing transition of the maritime market. We continue to have a solid prospects for continued strong order intake in defense and security. Discovery has a very advantageous position in the growing markets and Digital continue to moving in the right direction. So to conclude, I'm confident that we will stay on course on our sustainable growth path also in 2024.

And then I would open up for Q&A from our viewers.

[Jan Erik Hoff, executive]

Thank you, Geir. We have a couple of questions from the viewers here. The first 3 questions comes from Håkon Fuglu, SEB. The first one is regarding the new NSM facility that will open this summer. And how do you expect the ramp-up of the NSM production will go and how will it eventually impact EBITDA margins for Kongsberg Defence & Aerospace?

[Mette Bjorgen, executive]

I can try to answer that. Yes, it's true. We are starting our production from our new facility after the summer this year. And of course, it's always exciting with the ramp-up period for the production. I think the margin picture for Kongsberg Defence & Aerospace is more complex. And as we have said, our project mix will shift towards a more normalized margin. So this will impact the margin going forward as well. I also want to emphasize that we are working hard to scale our operations and are looking to take down costs from the production going forward. So I think that there is a good potential also to deliver strong margins from the defense area also going forward.

[Jan Erik Hoff, executive]

Second question, do you see any capacity restrictions in the short to medium term for Kongsberg Maritime?

[Geir Haoy, executive]

I think Kongsberg Maritime has a strong order intake, a strong backlog. And Kongsberg Maritime also have, I would say, ambition targets going forward also for the new build side. I don't see any particular areas where we have, let's say -- based on what we know today, I don't see any particular areas where we have capacity constraints in the short term, at least. So -- but of course, as I mentioned in my presentation, 1,100 new employees in 1 year, and we also have ambition to further increase capacity also in Kongsberg Maritime.

[Jan Erik Hoff, executive]

Final question from Mr. Fuglu. How will net working capital develop over the coming years given the significant increase you've seen in your backlog?

[Mette Bjorgen, executive]

I think that due to the execution cycle that we have on the projects in defense and reaching major milestones has a huge effect on payments. I think we will see that our net working capital will continue to fluctuate; however, we keep a very tight focus on working capital so that we have the optimal level to enable deliveries and also keeping the working capital down.

[Jan Erik Hoff, executive]

Thank you. Then a couple of questions from Mr. Ben Heelan, Bank of America. The first one, do you see growth in original commitment for Kongsberg Maritime in 2024? And does the backlog provide visibility to get you there?

[Geir Haoy, executive]

Yes. As I said, it's a strong backlog and it's a high activity on the aftermarket. And I believe that the aftermarket will still continue to be strong. On the new build side, what we see in the prospects and analysis is that it will be, I would say, counting number of vessels, it will be on a lower level. But I think still that the vessel that might or will be built in 2024 is suiting Kongsberg Maritime quite well. So our ambition for Kongsberg Maritime is to continue to grow also in the new sales in 2024.

[Jan Erik Hoff, executive]

Here's second question from Mr. Heelan. How do you see orders in defense in 2024? And can you continue to see book bill ratios above 1 in this segment?

[Geir Haoy, executive]

I think I also said that in my presentation that we are quite optimistic about the opportunities out there. We are currently working on several sales campaigns for defense. I'm quite optimistic about -- and I know that Kongsberg Defence & Aerospace are ambitious for 2024 as well. So the simple answer is, yes, we have ambition to also secure a number of good orders in 2024.

[Jan Erik Hoff, executive]

Thank you. Then moving to a question from Niclas Gehin, DNB Markets. Could you say something more about where the increased demand and orders for HUGIN is coming from in Kongsberg Discovery, for example, what sort of segments, et cetera.

[Geir Haoy, executive]

Now it's coming from a wide spectrum actually. It's coming both from the commercial sector, and it's coming from the naval sector. And I think the reason behind it is, of course, as I mentioned, the need to know more about subsurface environment. And also, I think it's also related to a security issue for example, critical infrastructure. So we see that the attention around our product portfolio and particularly the underwater vehicles are increasing. So again, we are quite optimistic about that market.

[Jan Erik Hoff, executive]

Thank you. That concludes the questions from the viewers.

[Geir Haoy, executive]

Thank you very much for joining us this morning. Look forward to next opportunity. Have a good day.