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Challenging first half year

Kongsberg Gruppen (KONGSBERG) posted an EBITA of MNOK -25 (MNOK 139) at 30 June 2004, while consolidated operating revenues came to MNOK 3 001 compared with MNOK 3 318 in 2003. "We have endured a very challenging six-month period that has forced us to implement a number of measures to adapt our costs to the revenues we have managed to earn", comments CEO Jan Erik Korssjøen.

"The main explanation for the operating deficit of MNOK 25 during the early half of the year is that MNOK 150 was charged against income because the development of the NSM missile will take longer and thus be more expensive than originally anticipated. Naturally, we are not at all satisfied with that. We are, on the other hand, deeply satisfied with the success of the test firing in June, which helped reduce the technical and commercial risks associated with the development programme", remarks Korssjøen. "Apart from the additional costs associated with the NSM, we anticipate an operating profit approaching that for 2003", Korssjøen points out.

Other challenges in the early half of the year include the lack of any improvement in the order situation for missiles, and that the market for hydroacoustics products remains slow. Sales are on the rise at SIMRAD, but market price pressures pose a challenge to the profitability of the segment and investment levels in the fisheries sector are not living up to expectations.

"All these areas are subject to downsizing. Such reductions place a strain on the organisation, but they are essential to ensure future earnings and competitiveness", underlines Korssjøen.

"Although we are facing some serious challenges, there are bright spots on the horizon. Kongsberg Maritime's operating revenues are MNOK 120 higher than last year, and new orders have reached MNOK 300, demonstrating growth of about 17 per sent since 2003. This helps lay a firmer foundation for future earnings. There is every reason to be pleased about the exciting development contracts Kongsberg Defence & Aerospace has won for anti-aircraft systems. The backlog of orders in military communications is better than it has been for a long time. The weapons control system that Kongsberg Protech is supplying to the US Army is also turning out well, and it is exciting to see that we have signed a contract with Australia for the same product", says Korssjøen.

The ordinary profit before tax during the early half of the year came to MNOK -91, compared to MNOK 56 in 2003. At 30 June 2004, KONGSBERG had a backlog of orders worth MNOK 5 866, compared with MNOK 5 913 at 31 December 2003. Total consolidated assets aggregated MNOK 5 916 (MNOK 5 694), of which equity accounted for MNOK 1 776 (MNOK 1 787) or 30 per cent (31 per cent).

Q2 2004 Report (pdf)

For further information, please contact: CEO Jan Erik Korssjøen, telephone: 47 32 28 95 10 - 47 920 60 000 CFO Arne Solberg, telephone: 47 32 28 95 75 - 47 920 60 011