Q1 2006
WORLD CLASS – through people, technology and dedication KONGSBERG May 9, 2006
1
Overall summary MNOK 1 661 in operating revenues, up 16.3 % from Q1 2005 EBIT of MNOK 89 (MNOK 41) EBIT margin 5.4 % (2.9 %) Profit per share NOK 1.70 (NOK 0.54) Defence & Aerospace Growth in both operating revenues and operating profits compared with Q1 2005 Relatively low level of new orders
Offshore & Merchant Marine Generally good Q1 Strong influx of new orders gives record-high backlog of orders
Growing possibilities in remote weapons systems Rig contracts totalling MNOK 400 signed in Q1 (RWS) International breakthrough for automation for floating production
KONGSBERG May26 9, August 2006 2003 © KONGSBERG,
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Agenda Financial status at Q1 2006 The business areas – Status and prospects for the future Relevant factors Shares and shareholders Appendix
KONGSBERG May26 9, August 2006 2003 © KONGSBERG,
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Financial status at Q1 2006 Operating revenues and EBIT Operating revenues by quarter 1800
20 %
1661
1600
1428
18 %
1448
1428
1401
16 %
1400
14 %
1200
12 %
1000
10,4 %
10 %
800
8,4 %
8%
600
6%
5,4 %
400
4%
3,5 %
2,9 %
200
2%
0
0%
Q1
Q2 2005
Q3 2006
Q4
EBIT margin 06
149
The Group's Q1 operating margin was 5.4%
140 121 120 100
Operating revenues up MNOK 233 (+16.3 %) from the corresponding quarter last year Operating profit up MNOK 48 from Q1 2005
EBIT by quarter 160
Both business areas demonstrated growth in profits and volume compared with 2005
89
80 60
49
41 40 20 0 Q1
Q2
Q3 2005
KONGSBERG May26 9, August 2006 2003 © KONGSBERG,
Q4
2006
4
Financial status at Q1 2006 Cash flow Net interest-bearing debt
- Net interest-bearing debt increased by MNOK 124 in Q1 2006 - Primarily due to periodic fluctuations in the project portfolio
1 400 1 200 1 000 800 600 400 200 0
Net cash flow Q1 2006 (MNOK) 129
Change in pre-payments from customers Change in capital employed and other operational items
(55)
Net financial items
2,0
284
408
1,5 1,0 0,5 0,0
2002
2003
2004
2005 Per Q1 06
Net interest-bearing debt
Debt / EBITDA
(15)
(81)
Cash flow from investing activities
(31)
Cash flow from financing activities
(14)
KONGSBERG May26 9, August 2006 2003 © KONGSBERG,
2,5
795
(140)
Cash flow from operations
Net change, cash and short-term deposits
776
2001
EBITDA
3,0
1164 1101
(126)
-200
-150
-100
-50
0
50
5
Financial status at Q1 2006 New orders and backlog of orders Group 6000 5000 4000 3000 2000
1644
1453
1281
1445
1219
1000
New orders
-0 6 Q 1
-0 5 Q 4
-0 5 Q 3
-0 5 Q 2
Q 1
-0 5
0
Backlog of orders
New orders for the Group – MNOK 1 445, down MNOK 8 from the same quarter last year - Strong influx of new orders for Offshore & Merchant Marine, lower for Defence & Aerospace
The Group's backlog of orders – MNOK 5 208, down MNOK 252 since 31 March 2005 and down MNOK 208 since 31 Dec. 2005 KONGSBERG May26 9, August 2006 2003 © KONGSBERG,
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Financial status at Q1 2006 Key figures MNOK
Q1-06
Q1-05
2005
EBIT margin: Group
5.4 %
2.9 %
6.3 %
Offshore & Merchant Marine
7.7 %
6.0 %
8.6 %
Defence & Aerospace
3.4 %
-0.8 %
4.6 %
Earnings per share, continuing operations (NOK)
1.70
0.54
7.19
Earnings per share
1.70
0.54
8.70
0.7
3.2
0.6
24 %
25 %
23 %
408
1 208
284
3 321
3 394
3 372
Net interest-bearing debt/ EBITDA Equity ratio Net interest-bearing debt (MNOK) Number of employees KONGSBERG May26 9, August 2006 2003 © KONGSBERG,
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Agenda Financial status at Q1 2006 The business areas – Status and prospects for the future Relevant factors Shares and shareholders Appendix
KONGSBERG May26 9, August 2006 2003 © KONGSBERG,
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Defence & Aerospace Performance trends
Operating revenues by quarter
900
769
800 700
80 686
664
621
EBIT by quarter
90
70
70
61
593
600
60
500
50
400
40
300
30
200
20
100
10
0
0 Q1
Q2
Q3 2005
2006
Operating revenues MNOK 769, up 23.8% from the corresponding quarter last year. Primarily due to higher earnings in the division for dynamic systems (remote weapons systems)
KONGSBERG May26 9, August 2006 2003 © KONGSBERG,
Q4
-10 -20
26
-5
-9 Q1
Q2
Q3 2005
Q4
2006
EBIT MNOK 26, up MNOK 31 from the corresponding quarter last year
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Defence & Aerospace New orders and backlog of orders Defence & Aerospace 4000 3500 3000 2500 2000 1500 1000
699 424
500
396
375
237
Ordreinngang
-0 6 Q 1
-0 5 Q 4
-0 5 Q 3
-0 5 Q 2
Q 1
-0 5
0
Ordrereserve
Modest influx of new orders, no large individual orders
New orders expected to pick up as the year progresses
KONGSBERG May26 9, August 2006 2003 © KONGSBERG,
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Defence & Aerospace The defence market Q1 2006
Remote weapons systems (Protector) saw good results in Q1. There is a high level of activity and it is expected that more contracts will be signed during the year. The Group's largest development project ever, the new Naval Strike Missile (NSM), is on schedule. Negotiations are currently in progress with the Norwegian Armed Forces regarding serial production
KONGSBERG May26 9, August 2006 2003 © KONGSBERG,
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Offshore & Merchant Marine Performance trend Operating revenues by quarter 865
900 800
EBIT by quarter 90
790
781
741
722
700
70
600
60
500
50
400
40
300
30
200
20
100
10
0
0
Q1
Q2
Q3 2005
82
80
Q4
2006
Operating revenues MNOK 865, up 10.8% from the corresponding quarter last year The business area has smooth operations and good capacity utilisation
72
67 61 47
Q1
Q2
Q3 2005
Q4
2006
EBIT MNOK 67, up MNOK 20 from the same quarter last year
The figures have been adjusted for the sale of Yachting
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Offshore & Merchant Marine New orders and backlog of orders Offshore & Merchant Marine 2500
2000
1500 1173 994
909
1000
857
806
500
New orders
-0 6 Q 1
-0 5 Q 4
-0 5 Q 3
-0 5 Q 2
Q 1
-0 5
0
Backlog of orders
Good influx of new orders Q1
New orders related to the rig market totalled approximately MNOK 400
Highest backlog of orders ever
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Offshore & Merchant Marine The market in Q1 2006 – 'rig boom' continues KONGSBERG is part of the 'rig boom' – KONGSBERG landed orders worth about MNOK 400 in Q1 2006 – KONGSBERG has won total contracts in this market valued at MNOK 500 in the past six months
Strategically important contracts – The business area has seen important international breakthroughs with BP and Bluewater in respect of its integrated control systems for vessels for floating production.
The LNG market remains at a stable good level Continued market boom for shipbuilding in South Korea, China and Europe
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Agenda Financial status at Q1 2006 The business areas – Status and prospects for the future Relevant factors Shares and shareholders Appendix
KONGSBERG May26 9, August 2006 2003 © KONGSBERG,
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Surveillance – a new target area
Kongsberg Defence & Aerospace has established a Land Systems & Surveillance division – Based on the Group's expertise in command, control and information systems (CCI), communication, and harbour/coastal surveillance – Focus on civilian and military installations exposed to security risks, nationally and internationally
Which products and systems do we offer?
A number of products and systems for surveillance onshore, and over and under water – – – – – –
Sensors Sonars Cameras Satellite data Software Underwater vehicles
KONGSBERG May26 9, August 2006 2003 © KONGSBERG,
How have we improved our position in this area?
Norcontrol IT -
-
Coastal and harbour surveillance, offshore, and AIS (Automatic Identification System) Market leader in harbour surveillance
Gallium Software -
Map systems for extremely rapid updates
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Offset agreements What is an offset agreement?
When the Norwegian Armed Forces procure materiel from abroad, the foreign supplier must in return secure assignments for the Norwegian defence industry equal to the size of the contract. – Generally speaking, all Armed Forces' contracts with foreign suppliers in excess of MNOK 75 are to generate 100% offset agreements – The actual value of an offset agreement depends on the technology content of the project (multiplier 1-5) – There is broad political consensus that Norway will retain the offset regime as long it is practiced by the international defence industry
KONGSBERG cooperates with other Norwegian defence companies and the Ministry of Defence regarding offset agreements with foreign players that supply products to the Norwegian Armed Forces – KONGSBERG participates either directly in the supplier's project or indirectly through another development or production contract
Historically speaking, KONGSBERG as an enterprise and the city of Kongsberg as a technology hub have benefited greatly from the offset agreements signed by Norway
KONGSBERG May26 9, August 2006 2003 © KONGSBERG,
Prospects for the future The Armed Forces' budgeted annual investments in materiel have increased from NOK 7.5 billion in 2000 to NOK 9.4 billion in 2006. No signals have been given to indicate that this investment level will not continue If the fighter craft programme were to come to fruition, offset agreements attached to the investment could be of the utmost importance for KONGSBERG in the years ahead
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Prospects for the future
KONGSBERG's maritime markets are still booming. Orders are on the increase in offshore markets, especially for rigs. In the commercial vessel market, there is high capacity utilisation among the shipyards, which means that delivery times are longer than usual. KONGSBERG expects a continued strong influx of new orders in these markets, although a large part of the new orders booked in 2006 will be delivered in 2007 and 2008.
It is expected that new orders for Defence & Aerospace will pick up as the year progresses, and that overall new orders for the year will be ahead of 2005.
All in all, operating revenues and the operating margin are expected to be somewhat better in 2006 than last year.
KONGSBERG May26 9, August 2006 2003 © KONGSBERG,
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Agenda Financial status at Q1 2006 The business areas – Status and prospects for the future Relevant factors Shares and shareholders Appendix
KONGSBERG May26 9, August 2006 2003 © KONGSBERG,
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Ownership structure 20 largest shareholders (at 3 May 2006) Shareholder 1 Staten v/Nærings- og handelsdeparteme 2 Folketrygdfondet
Distribution of shareholders
# shares 15 000 400
Stake 50,00 %
∆ 2006
2 722 060
9,07 %
0,18 %
-
3 Arendals Fossekompani ASA
2 055 822
6,85 %
-
4 Odin Norge
1 224 900
4,08 %
-1,05 %
5 MP Pensjon
1 203 200
4,01 %
-
Total for the 5 largest investors
The no rwegian state 50 %
22 206 382
74,02 %
6 Skagen Vekst
956 050
3,19 %
0,04 %
7 Odin Norden
918 537
3,06 %
-0,07 %
8 Ferd Invest AS
650 000
2,17 %
-
9 Odin Offshore
279 600
0,93 %
-0,17 %
10 Orkla ASA
166 400
0,55 %
Ny
11 Storebrand Livsforsikring
146 939
0,49 %
-0,06 %
12 Danske Fund Norge Vekst
135 800
0,45 %
-0,17 %
13 Stichting Pensioenfond
126 557
0,42 %
Ny
14 Danske Fund Norge
121 750
0,41 %
Ny
15 Vital Forsikring
119 957
0,40 %
-
16 Fondsavanse AS
100 000
0,33 %
-
17 Pactum
100 000
0,33 %
-
18 Mustad Industrier
98 100
0,33 %
-0,07 %
19 Terra Norge
84 800
0,28 %
-
20 Trondheim Kommunale Pensjonskasse
80 000
0,27 %
-0,06 %
Total for the 20 largest shareholders
26 290 872
87,6 %
Total number of shares
30 000 000 100,0 %
In fo reign hands 3% Securities funds 14 %
P rivate individuals 5%
Stake 1 – 1 000 1 000 – 10 000
No of. Shareholders
% of shareholders
% of total no.of shares
3 314
86.78%
2.48%
418
10.95%
3.15%
10 000 – 100 000
70
1.83%
7.61%
100 000 – 1 000 000
12
0.31%
12.74%
5
0.13%
74.02%
1 000 000
Hedging EUR
Other anticipated currency flows are hedged for up to 5 years under particular percentage parameters Average hedging exchange rates are reflected in price trends over the past 2-3 years High hedging ratio for the remainder of 2006
KONGSBERG May26 9, August 2006 2003 © KONGSBERG,
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The Board of Directors of Kongsberg Gruppen ASA Finn Jebsen(56), Chair of the Board Self-employed CEO of Orkla from 2001 to 2005 Member of Orkla's corporate management since 1984 Has had several directorships in Orkla-related companies, for example, as Chair of the Boards of Directors of Orkla Foods AS and Elkem
Siri Hatlen (48), Director Self-employed A number of directorships: Chair of the Board of Health East, SIFA SF, the State Education Loan Fund, Det Norske Samlaget Publishing House and AS Vinmonopolet. Director of inter alia Smedvig ASA, NTNU and Det Norske Teateret
Benedicte Berg Schilbred(59), Deputy Chair Executive Chair of the Board of the Odd Berg Group A number of other directorships: Chair of the Board Tos Lab AS. Member of the Boards of Norway Pelagic Group AS, Egersund Seafood AS, Fiskeriforskning AS, Norsildmel AS and Norsildmel Innovation AS
Roar Marthiniussen (49) – Director (employee representative) Sales & Marketing Manager at Kongsberg Maritime AS Engineer from the Horten College of Engineering Employee representative on KONGSBERG's Board of Directors since 1999
Erik Must (63), Director Chair of the Board of Fondsfinans ASA and Fondsfinans Kapitalforvaltning Holding AS A number of other directorships: Chair of the Board of Arendals Fossekompani and Erik Must AS. Director of Gyldendal and Norges Handels- og Sjøfartstidende, among others
Jan Hagen (47), Director (employee representative) Shop Steward at Kongsberg Protech AS Educated at the Kongsberg College of Engineering Guild certificate as a mechanical engineering supervisor Employee representative since 2003
John Giverholt (53), Director CFO of Ferd AS Experience from Orkla ASA, DNB ASA and Norsk Hydro ASA Several directorships: Chair of the Board of Oslo Pensjonsforsikring. Member of the Board in Telenor ASA
Audun Solås (47), Director (employee representative) Chief engineer at Kongsberg Defence & Aerospace Graduate engineer, Royal College of Technology, Stockholm Employee representative from 2005
KONGSBERG May26 9, August 2006 2003 © KONGSBERG,
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Financial calendar and investor relations contacts Financial calendar 2006
IR contacts
Publication of the quarterly figures
Arne Solberg, CFO
Q2: 9 August
Q3: 23 October
Presentations
Q2: 10 August
Q3: 24 October
Capital Markets Day
21 September
Telephone: +47 32 28 95 75
E-mail:
[email protected] Jan Erik Hoff Investor Relations Manager Telephone: +47 32 28 83 30 / +47 99 11 19 16
E-mail:
[email protected] Kongsberg Gruppen ASA Telephone: +47 32 28 82 00
E-mail:
[email protected]
For more information, please see: www.kongsberg.com/eng/kog/investor_information/ KONGSBERG May26 9, August 2006 2003 © KONGSBERG,
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WORLD CLASS – through people, technology and dedication KONGSBERG May 9, 2006
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