Financial key figures
- Order intake MNOK 9,617 in Q2, compared with MNOK 5,299 in Q2 2018 - an increase of MNOK 4,318 (81.5%). Commercial Marine accounts for MNOK 2,645 of the increase.
- Operating revenues MNOK 6,244 in Q2, compared with MNOK 3,525in Q2 2018 - an increase of MNOK 2,719 (77.1%). Commercial Marine accounts for MNOK 2,029 of the
- EBITDA MNOK 479 in Q2 (MNOK 371 excl. IFRS 16 effects), compared with MNOK 241 in Q2 the previous year.
- EBITDA margin of 7.7% in Q2 (5.9% excl. IFRS 16 effects), compared with 6.8% in Q2 2018.
The acquisition of Rolls-Royce Commercial Marine (RRCM) and AIM Norway have been completed. The companies are now displaying KONGSBERG’s brand in all office locations. The integration and synergy work are progressing on schedule.
The acquisition of RRCM, now Commercial Marine (CM) was concluded April 1, 2019. The figures for CM have been included for the whole quarter, while figures for AIM Norway, now named Kongsberg Aviation Maintenance Services (Kongsberg Aviation) have been included from May 29, 2019.
Excluding CM, Kongsberg Maritime increased its operating revenues by 14.8 per cent, while Kongsberg Defence & Aerospace (KDA) increased its Q2 operating revenues by as much as 26.9 per cent compared with the same period in 2018.
“We had a high level of activity throughout the quarter, and all our business areas achieved growth as expected. Integrating CM and Kongsberg Aviation has demanded an intense, extraordinary effort, and the integration is progressing ahead of schedule. At the same time, we have a continuous focus on delivering on-schedule and on-budget in both defence projects and projects aimed at the maritime market,” says Geir Håøy Chief Executive Officer of KONGSBERG.
Increased order intake maximises maritime growth
Kongsberg Maritime (KM) had operating revenues of MNOK 4,221 for the quarter. The "former KM” had operating revenues of MNOK 2,192, compared with MNOK 1,919 for the second quarter 2018, while Commercial Marine accounted for MNOK 2,029, which is equivalent to the level last year. A good order intake in 2018, especially within the Sensors & Robotics area and Liquefied Natural Gas (LNG) market, resulted in higher operating revenues for KM in the second quarter.
"Kongsberg Maritime is delivering on operations as well as on the largest integration in the Group's history. The profitability program initiated by CM is contributing to positive underlying earnings, despite the lack of improvement in the newbuild market in general," says Håøy.
The process of optimizing and harmonizing the combined portfolio from the “former KM” and CM is well underway and includes products in automation and electronic solutions.
“Going forward the work will provide cost savings in technology development, and increased capacity and breadth of expertise to develop solutions further. Closer integration with the newly acquired propulsion systems and deck machine solutions, together with our sensors and robotics portfolio, strengthens our ability to innovate. There is a growing market demand for integrated solutions that optimize maritime operations and provide enhanced security and sustainability,” points out Håøy.
“Following the acquisition of Commercial Marine, Kongsberg Maritime has become a more complete supplier of products and services to all vessel segments. This makes KM more competitive and robust, as cycles in individual maritime segments have less effect. In addition, we have an after-sales market of around 7 billion (NOK) linked to the equipment we've installed on more than 30,000 vessels," adds Håøy.
Record-high order intake for defence
Kongsberg Defence & Aerospace (KDA) had operating revenues of MNOK 1,829 in the second quarter, compared with MNOK 1,441 in the second quarter last year, representing a solid year-on-year increase of 26.9 per cent. This area has also achieved a record-high order intake, which gives an unprecedented order reserve of MNOK 13,433 at the start of the third quarter.
Two major contracts were signed during the quarter. The first was a MNOK 1,600 contract with Australia for the NASAMS air-defence system, while the second was a MNOK 2,000 contract for additional deliveries to the F-35 programme. Also, KONGSBERG signed a NASAMS contract with Qatar for MNOK 5,600, giving KDA an order reserve of over MNOK 19,000 at the end of July.
"On the defence side, we are now starting to reap the benefits of the strategic, long-term positioning work that has taken place the last years. The contracts we've signed are for significant projects that we have worked on for many years. That builds strength and provides a solid platform for further growth," says Håøy.
"NASAMS has been the world’s leading air defence system for several years, and it is designed to be easily integrated into new missiles and platforms. This makes the system unique. Australia and Qatar are the tenth and eleventh nations to start using it, and the fact that more and more countries are choosing NASAMS reinforces its position as a global leader. We have also confirmed our strong, long-term position in the F-35 programme with new contracts signed in the second and current quarter," says Håøy.
Kongsberg Defence & Aerospace (KDA) also signed two agreements with the Norwegian Armed Forces during the quarter; a strategic cooperation agreement related to maintenance of airborne platforms and a letter of intent for cooperation in support of the Norwegian Armed Forces’ emergency readiness needs.
“The agreements represent significant steps that will strengthen our role as a strategic partner for the Armed Forces’ operational needs, both as an equipment supplier and in the maintenance of military aircraft and helicopters,” says Håøy.
Vessel Insight launched
Kongsberg Digital (KDI) has maintained the first-quarter trend of improved revenue and profitability compared to last year. KONGSBERG’s ambition is to maintain its leading digital position through continuous development. KDI’s growth strategy has therefor been intensified during 2019, with an emphasis on product portfolio and strategic opportunities. Also, the Vessel Insight data-infrastructure system was launched at the Nor-Shipping in Oslo in June. KDI has now an external order backlog worth MNOK 1,000 in external order reserve.
"The market is now more mature than ever for digital solutions that can contribute to realizing the value that lies in the enormous amounts of data generated by companies. Vessel Insight is a unique, subscriber-based service that assists users to gain access to structured data from vessels and leverage the data to achieve optimal and effective performance, among others. This service accelerates the digital transition within the maritime industry, and has been very well received," says Håøy.
Sound basis for growth
While the end-of-year results will be affected by costs linked to the integration and restructuring of Kongsberg Maritime, KONGSBERG is strategically positioned in both the civil and defence-related areas, with strong underlying fundamentals.
"KONGSBERG will continue to develop in a positive direction in the year to come. In our civil areas, we've made strong efforts in both existing and new markets during a period when the markets have in general been challenging. The acquisition of Commercial Marine has been in addition to this," says Håøy, who points out that KONGSBERG is experiencing great international interest in its modern portfolio of defence products.
"That bodes well for the order intake in both the short and long term and provides a sound basis for further growth, and a broader and better service offering for our customers," concludes Håøy.
See www.kongsberg.com/investor-relations/ for KONGSBERG's Q2 2019 report and presentation.
For more information, contact
Jan Erik Hoff, Group Vice President Investor Relations, Kongsberg Gruppen ASA, Tel: +47 991 11 916.
Jon Årvar Rø, Manager Investor Relations, Kongsberg Gruppen ASA, Tel: +47 952 57 717
Ronny Lie, Communications Director, Kongsberg Gruppen ASA, Tel: +47 916 10 798.