Earnings call transcript: Kongsberg Gruppen sees robust growth in Q3 2025

Kongsberg Gruppen (KONGSBERG) reported a strong third quarter for 2025, with a notable increase in revenue and net earnings, despite a slight decline in certain segments. The company delivered total revenues of NOK 13.3 billion, marking a 12% year-on-year increase. Net earnings rose by 24% to NOK 1.7 billion. The results underscore Kongsberg’s robust position in the defense and maritime sectors, supported by a solid order backlog of NOK 142 billion.

Key Takeaways

• Kongsberg Gruppen’s Q3 2025 revenues increased by 12% year-on-year.
• Net earnings rose by 24%, reaching NOK 1.7 billion.
• Defence & Aerospace sector saw a 38% revenue surge.
• Maritime revenues slightly declined, reflecting market challenges.
• The company is focusing on energy-efficient and autonomous maritime technologies.

Company Performance

Kongsberg Gruppen showed significant growth in Q3 2025, driven by its Defence & Aerospace division, which experienced a substantial 38% increase in revenue. The Maritime segment faced a minor 1% decline in revenues, highlighting ongoing challenges in the sector. Despite this, Kongsberg’s strategic initiatives in energy-efficient and autonomous technologies are paving the way for future growth.

Financial Highlights

• Revenue: NOK 13.3 billion, up 12% year-on-year
• Quarterly EBIT: NOK 2 billion, with a margin of 15.2%
• Net earnings: NOK 1.7 billion, up 24% from last year
• Cash position: NOK 15.76 billion, an increase of NOK 1.38 billion from Q2
• Order backlog: NOK 142 billion

Outlook & Guidance

Kongsberg anticipates maritime revenue growth to pick up in 2026, supported by increasing investments in production capacity and a solid order backlog of NOK 14 billion for Q4 2025. The company expects continued growth in defense spending, aligning with European defense investment trends.

Executive Commentary

Geir Håøy, CEO of Kongsberg Gruppen, emphasized the company’s commitment to innovation and sustainability, stating, "The maritime industry is at the start of a major energy transition, and we believe Kongsberg Maritime will play an important role in driving this change." He also highlighted the company’s strategic position in defense, saying, "Defence spending will increase in the years to come, and Kongsberg Defence & Aerospace will continue to contribute to strengthening the defense capabilities in Norway and for our allies."

Risks and Challenges

• Maritime market volatility could impact revenue growth.
• Supply chain disruptions may affect production timelines.
• Geopolitical tensions could influence defense spending patterns.
• Rapid technological advancements necessitate continuous innovation.

Kongsberg Gruppen’s Q3 2025 results reflect its strategic focus on high-growth areas and innovation, setting a strong foundation for future expansion in its core sectors.

Full transcript - Kongsberg Gruppen ASA (KOG) Q3 2025:

Webcast Moderator, Kongsberg Gruppen: Good morning and welcome to the presentation of Kongsberg Gruppen’s third quarter 2025 results. This is a webcast only presentation, but questions submitted through the webcast will be answered towards the end of the presentation. Today’s presentation will be given to you by President and CEO Geir Håøy as well as Executive Vice President and Chief Financial Officer Mette Toft Bjørgen. Questions regarding the proposed demerger will not be answered in this webcast but will be addressed at the press conference later today, and with that I’ll give the floor to Geir Håøy.

Geir Håøy, President and CEO, Kongsberg Gruppen: Thank you. Welcome to the third quarter presentation 2025. It is a pleasure for Mette and myself to present another strong quarter for Kongsberg Gruppen. Before I go into the third quarter results, let me start with comments on another important announcement this morning which I guess many of you have already seen. The Board of Directors has proposed to demerge Kongsberg Maritime. In recent years, increased geopolitical tension and trade wars have characterized the global landscape. This affects our business areas differently and underscores the importance of positioning our areas as effectively as possible. Kongsberg Maritime holds a leading technology position and offers products and integrated solutions for a wide range of segments from offshore vessels to merchant fleet and the naval segment. Kongsberg Defence & Aerospace and Kongsberg Discovery address critical needs within defense, security, and surveillance, delivering solutions for both civilian and defense applications.

The Board of Kongsberg Gruppen has then proposed to demerge Kongsberg Maritime and list it as a separate maritime technology company on the Oslo Stock Exchange. Kongsberg Defence & Aerospace and Kongsberg Discovery will continue as a technology and defense company. Separately, the companies will have better navigation opportunities and execution capabilities within their respective markets. This will provide additional competitive strength in the effort to create value in a world where security and sustainability will be dominant for decades. We will come back to more details during a press conference that is scheduled to start at 9:30 A.M. Norwegian time. The Q&A session following this Q3 presentation will focus on the third quarter performance and we would like you to address questions regarding the proposed demerger to the press conference later today. With that, it’s time to dive into the third quarter.

We have delivered another quarter with growing revenues and solid profitability. Book-to-bill is well above one in all business areas and is a good indication of continued growth going forward as well. We are experiencing strong demand for our energy efficient solutions from the vessel market. Despite shipyards receiving fewer orders for new vessels compared to last year, the vessels being ordered are more advanced. There have also been positive developments in markets where Kongsberg Gruppen has strong positions, such as the offshore market. Drones and counter-drone defense have been a topic of high attention over the past year. We deliver systems related to this both from Kongsberg Defence & Aerospace and Kongsberg Discovery. In August 2023, Kongsberg signed a contract for the delivery of Cortex Typhoon counter-drone systems. The first system was delivered and operational within one year after signing, and the contract has since been expanded.

Over the past year, we have also launched our own drone radar. This was developed in Kongsberg Discovery with the purpose of detecting small commercially available drones and has quickly become a product that has attracted significant interest from both civilian and defense customers. Kongsberg Gruppen is well equipped to meet existing and new needs in a world characterized by rapid change, with global presence, close cooperation with authorities, customers and suppliers, and an organization driven by high competence and innovation. We continue to create value by delivering solutions that make a difference for our customers and partners. Over to the business areas, we continue to see a strong order intake from newbuilds in Kongsberg Maritime. So far in 2023, newbuild order intake is up 46% compared to the same period last year.

Despite the number of vessels contracted from the yards being down compared to last year, we emphasize that the current contracting favors our exposure. During Q3, order intake was especially strong from the offshore segment. Among others, we signed a contract with Reach Subsea for the design, construction, and delivery of two additional unmanned surface vessels, vessels number three and four, expanding the pioneering Reach Remote fleet. This contract reflects a growing industry with confidence in remote and autonomous technologies. For the past couple of years, the strong growth in maritime has come from aftermarket sales. The sales mix this year has changed more towards newbuilds, which continues to increase our order backlog. We have also previously emphasized that yard capacity is stretched in the short term. On the positive side, the current strong contracting increases the longer-term visibility for us.

The backlog for delivery next year is 40% higher than corresponding backlog coverage a year ago. European defense investments have increased and are expected to continue to increase going forward. Over the past years we have seen the number and size of orders coming from both Norway as well as the rest of Europe are increasing. In 2023 and 2024, the combined defence revenue from Europe, including Norway, amounted to approximately 50% of our total defence revenue. Looking at our current backlog, 72% of the orders are for deliveries to European customers including Norway. Our European exposure is expected to stay strong and we continue to see increased demand both when it comes to missiles and air defence, including counter drone capabilities. We have already delivered counter UAS systems that are deployed in Ukraine and we are actively working on several leads around the subject.

The order backlog coverage for defence and aerospace continues to strengthen both in short, medium, and long term, and with the strong position we have towards the defence priorities in NATO, we expect the trend to continue to pave the road for further strong growth in the coming years. In Kongsberg Discovery, order intake year to date is up 27% compared to last year. We continue to experience strong demand for our sensors and underwater technologies and the pipeline continues to be solid both in the civilian and the defence market, making me very confident of a positive development going forward. An important take when looking at Kongsberg Discovery’s order intake year to date is the increased exposure towards defence. At Q3 last year, defence contracts accounted for approximately 90% of the total, while the corresponding figure now is 27% of NOK 900 million higher total for the remaining year.

Kongsberg Gruppen have already secured NOK 14 billion worth of orders for deliveries. This is more than NOK 2.6 billion above the corresponding number a year ago and indicates growth also in the last quarter of 2025. The main driver will be defence related revenues and with that I leave the floor to Mette to take us through the financial status.

Mette Toft Bjørgen, Executive Vice President and Chief Financial Officer, Kongsberg Gruppen: Thank you, Guy, and good morning to all of you joining us for this Q3 presentation. I’m happy to once again present a quarter which demonstrates solid and profitable growth for Kongsberg Gruppen. I will now take you through the financial highlights. For the third quarter, Kongsberg Gruppen delivered a total of NOK 13.3 billion in revenues with a year-on-year increase of 12%. The growth this quarter comes from Kongsberg Defence & Aerospace, which achieved an impressive 38% growth compared to Q3 last year. The largest revenue contributors were missile projects in air defence, with the coastal defence system to Poland being the largest project this quarter. Capacity ramp-up is progressing according to plan, which is key to deliver on the growing order backlog for this business area. Kongsberg Maritime delivered revenues of NOK 6.39 billion, a year-on-year decline of 1% in 2024.

Two changes have been made to the business area’s portfolio impacting operating revenues and results. These changes include the divestment of the steering gear and rudder business and the integration of Kongsberg Digital’s maritime portfolio. In addition, Q3 2024 was impacted by approximately NOK 100 million in one-offs related to reduced risk in specific projects. Adjusted for these effects, Kongsberg Maritime has an underlying growth of about 2% in the quarter. The growth was driven by increased delivery volumes to new vessels in several different vessel segments. Currently, the newbuild order intake market is growing more than the aftermarket, which in the third quarter accounted for 52% of the revenues compared to 56% last year. Newbuild order intake typically has a longer conversion time to revenue. We expect this shift to lead to a temporarily slower growth rate in the second half of 2024.

Going into 2025, we expect growth from maritime to pick up as we capitalize on the strong order backlog and convert newbuild orders to revenues. Kongsberg Discovery delivers NOK 1.1 billion in revenues, 2% below Q3 last year. As previously stated, the contribution from autonomous underwater vehicles will fluctuate between quarters due to the timing of project milestones and deliveries. With a 27% increase in the order intake year to date compared to last year, we are confident in the growth for Kongsberg Discovery going forward. The group achieved a quarterly EBIT of NOK 2 billion, representing an EBIT margin of 15.2%. The third quarter typically delivers higher margins due to holiday effects compared to last year. EBIT is improved by NOK 155 million and adjusting for the NOK 100 million one-off in Kongsberg Maritime in Q3 last year, the EBIT margin has improved by both 0.3 percentage points.

Kongsberg Maritime delivered an EBIT of NOK 0.99 billion with a corresponding margin of 15.4% in Q3 last year. The EBIT was NOK 1.11 billion adjusting for the portfolio changes and the one-off in Q3 last year. The EBIT margin in Q3 2025 is at the same level as the underlying EBIT margin in Q3 2024. Kongsberg Defence & Aerospace delivered NOK 0.87 billion in EBIT with a margin of 14.8%. This compares to NOK 0.69 billion and a margin of 16.2% in Q3 2024. As previously stated, defense margins will fluctuate between quarters depending on project mix and delivery milestones. Kongsberg Discovery reported NOK 0.21 billion and a margin of 19%. This is up from NOK 0.17 billion and 14.9% margin in Q3 last year. Favorable project mix and strong project execution contributed to the increased margins.

We ended Q3 with a solid cash position of NOK 15.76 billion, an increase of NOK 1.38 billion compared to Q2 as working capital remained stable quarter on quarter. The increase in cash was primarily driven by EBITDA which came in at NOK 2.45 billion. Our investment level increased slightly this quarter as we continue to invest in capacity expansion. As mentioned at the Capital Markets Day last year, we expect this level to be maintained for the next years. Total contribution from associated companies was NOK 124 million in Q3. Our two largest associated companies are Kongsberg Satellite Services and Patria. Kongsberg Satellite Services delivered revenues of NOK 562 million in Q3, which is in line with last year. EBIT in the quarter is NOK 140 million with a corresponding EBIT margin of 24.9%.

This is an improvement from last year and a result of favorable project mix and execution. The order backlog is NOK 5.2 billion. Patria reported 39% revenue growth in the third quarter compared to the same quarter last year. The growth was primarily driven by deliveries of armored vehicles. So far, seven members have joined the CAV 6x6 vehicle program as Norway and UK signed up this quarter. EBIT improved from last year due to scaling effects and increased positive contribution from NAML. Going forward, we expect Patria to continue to grow with the same seasonality effects that we have seen in previous years and with most of the profits towards the end of the year. Patria’s order backlog has increased to EUR 2.6 billion.

The improved performance from associated companies contributed to a solid increase in net earnings from NOK 1.4 billion to NOK 1.7 billion, up 24% from the same quarter last year. I will leave the floor to Geir for some final remarks.

Geir Håøy, President and CEO, Kongsberg Gruppen: Thank you, Mette. As we approach the end of this presentation, I would like to summarize the outlook going forward. We continue to be exposed to major global trends across all our business areas. Our products and services, which are based on advanced technology, system integration, and years of experience, are highly valued in their respective markets for commercial maritime. Despite the general slowdown in contracted vessels at the yards, our win rate is strong, and we continue to build order backlog. Kongsberg Maritime has a unique combination of products and solutions that are integrated into systems based on our deep domain knowledge. The maritime industry is at the start of a major energy transition, and we believe Kongsberg Maritime will play an important role in driving this change.

The transition towards renewable energy is not only about fuel, it’s about making the operations safer, more efficient, and reducing costs, which have been on Kongsberg Maritime’s agenda for decades. Kongsberg Defence & Aerospace has a record high order backlog that stretches well into the next decade. We have made significant investment in increased production capacity to meet this demand, and these facilities are progressing as planned. Tendering and marketing activities remain very high, and our defense solutions, particularly within missiles and air defence, but also remotely operated turrets and naval, are experiencing significant demand globally. Defense spending will increase in the years to come, and Kongsberg Defence & Aerospace will continue to contribute to strengthening of the defense capabilities in Norway and for our allies. Kongsberg Discovery operates in segments that are increasingly high on the global agenda.

Securing critical infrastructure above and below sea level is of utmost importance, and the business area is delivering cutting edge solutions to help solve these challenges. In total, at the end of Q3, we have an order backlog of NOK 142 billion and more than NOK 14 billion for delivery in the last quarter of 2025. As I have mentioned, we have also announced a proposed major strategic move on the path of realizing our long-term growth ambition, and that is to demerge Kongsberg Maritime and list it as a maritime technology company on the Oslo Stock Exchange. Kongsberg Defence & Aerospace and Kongsberg Discovery will continue as a technology and defense company. Kongsberg Gruppen invites to a press conference today at 9:30 A.M. local time to give further information on this proposal.

The press conference will be held in Norwegian with English translation, and a transcript will be made available in English. Again, we ask that questions regarding the proposed demerger are directed to the press conference. With that, I would like to open for Q and A from our viewers. Thank you.

Thank you. I would also like to remind that we host a conference call for investors and analysts at 11:15 A.M. today. You will find information about that in today’s press release. We have a question from Fabian Jørgensen, Pareto. You stated that the cost of maritime growth will pick up in 2026. Do you mean revenues or orders? Can you elaborate a little bit around it?

Mette Toft Bjørgen, Executive Vice President and Chief Financial Officer, Kongsberg Gruppen: As I mentioned, we are now shifting towards a higher share of new buildings. Just to also emphasize what Geir Håøy said, Kongsberg Maritime has an all-time record high order backlog at the moment. It’s a very good market for new building vessels. We see that revenue growth will start to pick up in 2026 when we’re also done with the portfolio effects that actually took place in the beginning of this year.

Thank you. A question from Martin Granvikin, Kepler. Last quarter, Kongsberg Defence & Aerospace order intake was NOK 9.8 billion, including a missile contract of NOK 6.5 billion. This quarter, order intake is NOK 7.3 billion, with one contract announced of $118 million. What is the remaining order intake residual?

Kongsberg Defence & Aerospace had a significant order intake when it came to air defence and anti-drone systems, and also a lot of smaller orders for this business area in this quarter. Air defence and anti-drone systems was also main orders from Kongsberg Defence & Aerospace.

Geir Håøy, President and CEO, Kongsberg Gruppen: Defence & Aerospace contracts, yes.

Thank you. It seems like that is the final question from the viewers.

Very clear. Okay, thank you very much. We look forward to see all of you in the press conference later today. Thank you so much.

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