Good morning, everyone. I think we should start. BAE Systems bang on schedule, that's always good. I think you all know who I am. I'm Martin Cooper, the Investor Relations Director, and I get the first chance to wish you one all a very good morning, and welcome to a warm and sunny Sweden. Tommy clearly has a magic trick on the weather, which he needs to teach me about in England for future events. Well done.
Yeah, yeah. Well done for the team, for everything that you've pulled together today. We've got a fantastic agenda for you today. Look, today's presentation is centered on BAE Systems' land domain capabilities, and we will have a Q&A session later with the presenters. You've got plenty of chance at the test track and other things to ask wider questions on BAE. In the Q&A, if we could keep that to mainly what is presented this morning, that would be appreciated. As regards running order, you should all have the schedules here, the presentations will run roughly for 2.5 hours. We will have a small break in between just after one of the presentations at about 9:45 A.M.
What we've got today, we've got Charles, Tom, and Brad will do a very brief introduction. Jeremy, Tommy, and Lena will do the main bulk of the presentations, and then we'll have a Q&A. Just a bit of housekeeping as ever. Phones on silent. We've all covered the Wi-Fi, that should be there. Just on the safety, the exits are marked there and there. Muster point's outside. All good things, like defibrillators and everything are out there, if the presentation's super exciting. We've covered everything. Have a fantastic day. We'll all be around. It should be a really. Lots of good stuff to see.
With that, I'm gonna hand over to Charles, Tom, and Brad, who are just gonna come up and give you a few words of introduction.
I'll just add my welcome to everybody. It's great to see so many of you here. I hope you enjoyed yesterday evening. I think it's after the pandemic, it's just wonderful to get people back around the business. I mean, many of you know the business well. One of the things I'd say, and I've said to many of you in this room, is, you know, we are a genuinely global defense company. That means that we can do things at a global scale, things like AUKUS or GCAP. Some of those are coming through. We've got this wonderful order backlog with much still to come. Within our business, we're quite a complicated business, but there are some real jewels. I like to think of our two Swedish businesses as two of those real jewels within the business.
I think bringing you here, bringing that to life, seeing the dramatic growth rates that they're gonna see within these businesses, I think is really important. I could not be more proud of these businesses, nor the mission which we fulfill, that we protect those who protect us. Whilst I hope you all have a wonderful time and enjoy what you're doing today, I mean, spare a thought, obviously, when you're at the test track, that, you know, these, some of this kit is either already in or in the process of going into Ukraine.
I think one of the things that our Swedish businesses do extremely well, is the kit is generally very easy and straightforward to use, and that could not be more important than it is today, given where it's going and the very brief time that the young men and women have to actually learn in this kit. Obviously, I want you to enjoy it, but there is a serious thought there. On the matters of Ukraine, I mean, we have an awful lot of equipment in the fight. I mean, arguably more than any other Western defense company. You know, I've had several conversations with Ukrainian officials, right up to President Zelenskyy. Obviously, we, as a company, are doing whatever we can do to help, obviously, through our government customers, and providing as much support as we can.
To that end, by the way, I'm gonna have to leave earlier this morning than I'd like to, 'cause the test track is a wonderful experience. I've done it before, and I think you'll all have a great time, and that, for me, would be the highlight of the day for me if I was still here. I do have to leave mid-morning to go to the NATO Industry Summit, you know, later this afternoon in Brussels, obviously in support of, you know, what can NATO do more as a pan-industry approach, in support of Ukraine. With that, I will hand over to Brad and then Tom, obviously, here with me.
Good morning. Thanks, Charles. In the last couple of years, you will have seen our top-line growth, which has been in a leadership position relative to our U.S. peers. A big part of that story, and I think what will continue to be a big part of that story going forward across the medium term, is leadership and top-line growth. That comes from a couple of things. It's the diversification of our portfolio from subsea to space, where we have something to say about everything with all points in between, but it's also our geographic footprint. A lot of what you're going to see over the medium term is growth coming from our European exposure.
Today, you're gonna get a good chance to see some of that, those growth elements, because I think what's happening in Sweden here is a big part of the platform to services growth story over the next few years. The CAGR growth rates for what you're seeing today are gonna be pretty eye-watering. We're really excited about the business here and what it's doing, and I think, you know, how we're creating value for our customers and creating safer environments for the services that we support. I think, you know, beyond the top-line growth story, we're also driving margins, and, you know, that comes from operating models, and it comes from operational excellence and this focus on execution. That's a big part of our story.
You will have seen as well in the last two years that we've led our U.S. peers in margin expansion, albeit from a relatively lower base. We are trying to drive margins across the portfolio. Of course, cash conversion has been a big part of our story, too. Over the last couple of years, we've.
We've managed to deliver, I think, pretty decent cash flow there. How we allocate that cash has also been a big part of the story. We're able to invest in our business, which we're doing through increases in self-funded R&D, as well as increases in CapEx to modernize and make our footprint more efficient. We've been doing a lot of those, increasing those investments. We've also been increasing our dividend, as you know, for 19 years running. In addition to the dividend, we've been doing share buybacks, which I think has also been an important part of that great cash conversion that we're generating and allocating that cash back in different ways. I think that's all of that in concert, is driving a lot of shareholder value.
We're happy to see you here today, and we look forward to the rest of the day.
All right. Thank you, Brad, and welcome! You know, for nearly 20 years, the Hägglunds and Bofors businesses have been part of the BAE Systems family, and we could not be more delighted. Over that time, they have been a force to reckon with here in the European market. They form a significant dimension of our international portfolio of combat vehicles, and it really strengthens the point, the points made, that our ability to address multiple markets with multiple products. Our artillery and combat vehicle products are tuned to the local markets, the technologies, the sort of exportability of those technologies are all carefully strategized across our global portfolio.
To that end, I mean, we've seen with this recent surge in backlog in Europe, in the wake of the Ukraine invasion, you know, a significant growth here in Sweden. We're delighted today to have you with us and get a chance to see these vehicles up close and personally. I'd like to introduce, to start the bulk of the presentations today, our President of the Platforms & Services business, who runs that, the strategy across that international portfolio of combat vehicles, Jeremy Tondreault. Thank you.
Thank you. Hey, good morning, everybody. My name is Jeremy Tondreault. Thank you, Tom, Brad, Charles. Welcome to sunny Sweden. Lovely to have all of you here today and, you know, really looking forward to getting a chance to try to tell you some more of our story from a Platforms & Services perspective, and mostly, this afternoon, you get a chance to see some of these great vehicles out at the test track. Okay. Just a little bit about Platforms & Services. I'll start a little bit with footprint in terms of geographic footprint. In this business, we look after our land domain across the corporation, and that's what we'll spend most of the time talking about.
We also do some maritime work, which we'll have a little bit of a lighter touch on. This is a bit of our kind of geographic footprint. 11,500 people strong across a number of sites in the U.S., but also our sites here in Sweden, where we are today in Örnsköldsvik, headquarters of our Hägglunds business, but a little bit south of us, closer to Stockholm, in Karlskoga, which is the headquarters of our Bofors business. You'll hear from both Tommy and Lena with a bit more detail on both of those. Also sites in the U.K. and through a joint venture in Ankara, Turkey. Quite a global footprint for this business.
What do we do? We, we do really five main things in terms of the product portfolio that we have. Combat vehicles and artillery are what you'll hear about probably the most today. It's what we do here, what we do here in Sweden, so you hear the most about those. Also naval weapon systems, which we do both out of the U.S. and out of our Bofors business, munitions, and U.S. ship repairs. We'll give you a little bit more flavor of each of those here in the presentation.
Then you can see a bit of sort of the diversity in terms of customer base, both in the U.S. and internationally, and a bit about how we split between land and naval domain. Again, today, we're gonna focus just because of what we can show you today, we're gonna focus more on the land domain piece of Platforms & Services. This gives you just maybe a little bit more flavor of the types of products that we have in this sector. We've sort of grouped them into kind of grouped weapon systems and munitions together here for the purposes of this slide. You get kind of the different flavors of what we do.
Artillery, we are a little bit unique, I think, across the world, in that for artillery, we have kind of all the different types of 155 mm artillery that you can have. Everything from towed artillery with our M777, from mobile artillery with our ARCHER, which you'll see today, and from armored artillery with our M109 out of the U.S. From a combat vehicle perspective, this, of these four segments is the largest. We've got a really wide range of combat vehicle products in this business, from infantry fighting vehicles. You'll get to see probably our most popular in CV90 here this afternoon.
Personnel carriers, which we provide both out of this business and out of the U.S. Support vehicles, what's shown there is what's called an M88. It's a recovery vehicle. It's a tow truck for an Abrams tank, and any number of other large combat vehicles, and also amphibious vehicles. These are vehicles that are effective both on land and on the water. U.S. Ship Repair. Two major shipyards on the East Coast of the U.S. and one on the West Coast. These do about half of the U.S. Navy's non-nuclear, major surface fleet maintenance on an annual basis, pretty significant player for the U.S. Navy.
Then Weapon Systems and Munitions, everything from naval guns, naval missile launchers, a variety of munitions, and then a somewhat unique position, supporting almost all munitions out of the United States, running two of the U.S. Army's ammunition plants. We'll talk about each of these in a little bit more detail. A little bit about how the business has performed. Brad talked a little bit about operational excellence and kind of some of our story around margin expansion. Certainly, Platforms & Services has been a part of that story, with, frankly, a lot of hard work over the last over the last few years. We're pretty proud of the trajectory that we're on from a margin expansion perspective.
Again, really driven by a focus on operational excellence, and really focusing in on how well we perform on each of these individual programs for each of our customers, and then a bit of cost structure management blown in there to generate that kind of nice trajectory, albeit from a low starting point, but a nice trajectory in terms of margin expansion. As we look forward, we do see growth in this business, as you can imagine, and, you know, a lot of that comes from some of the big international awards that we've seen across our Platforms & Services business. Frankly, most notably, right here in Sweden, that you'll hear about today.
Also some of our larger U.S. programs are transitioning from low rate initial production into full rate production, and that comes with some growth as well. We see both of those kind of underpinning some growth into the future, but also underpinning in combination with that focus on operational excellence, sort of a continued trajectory of margin expansion. Pleased with the trajectory and pretty optimistic about what the future looks like. These are across this part of the business, these are really the imperatives that we focus on. You'll hear operational excellence a lot from us. It's a big part of our focus, but also talent.
We're 11,500 people strong, and it takes a great team to do the complex and challenging things that we do. A lot of the work that we focus on is making sure that we continue to have a great team, and you'll get to see quite a few of them here today. Pursuing and delivering growth. A lot of this, you'll hear again, more about some of the exciting international wins that we've had in the last year or so, and, you know, a lot of focus in that area. These are really our three kind of strategic focus areas. A little bit about how this sector is structured.
We have a number of different business areas of varying, kind of sizes, within the Platforms & Services sector, and this gives you a kind of a sense of it, and also a sense of relative size of those businesses. I'll walk through these in a little bit more detail on some subsequent slides, but at a top level, our largest business is Combat Mission Systems. This is our U.S. product-based business, all of our products that come out of the U.S. come out of that business. Our next largest is Ship Repair. I mentioned three major shipyards, in the United States, focused on maintenance, repair, and overhaul.
Ordnance Systems, our next largest business, is where we run these two U.S. Army ammunition facilities, which are government-owned, contractor-operated, and we're the contractor. That's what those businesses are about. You get into now our Swedish businesses with Hägglunds and Bofors. I won't steal Tommy and Lina's thunder. You'll hear quite a bit more about those two. Then a weapon systems business in the U.K. and our joint venture in Turkey, which is called FNSS. That gives you kind of a sense of these things.
One of the reasons why we're here today is, I think the growth rate, across our sector, is really paced by what we're seeing here in Hägglunds and Bofors. We're excited to show you some of that. Again, with a more of a focus on the Land Systems, again, because of what we can show you today, just a little bit more detail on, some of these business areas. Combat Mission Systems, three major things we do here. We make ground combat vehicles for the U.S. Army, and international customers around the world, largely through FMS sales, sponsored by the U.S.
Amphibious vehicles for the Marines, these would be vehicles that come off a ship, swim to shore, and then are a combat vehicle on land from there. Again, Marines are the principal users of those. Weapon systems, not exclusively, but principally for the Navy, and everything from gun systems, missile launchers, and munitions. Ordnance Systems, this is a somewhat unique type of business in that here we are, a service provider to the U.S. Army, operating their two main ammunition facilities in the United States. One in Radford, Virginia, and one in Kingsport, Tennessee.
These are the one and only places in the United States where energetics, so propellants out of Radford and explosives out of Kingsport, where those energetics can be supplied inside the continental United States. These are sort of national assets that are owned by the U.S. Army, and we operate them for them. Very large facilities. If you take the two of these facilities together, they're about the size of Manhattan, and many thousands of buildings and significant capacity to be able to serve really all of the U.S. kind of munitions needs that need energetics or need explosives. Hägglunds, again, I'll hit this at a high level because Tommy will give you a little bit more detail, but two real products here.
CV90 Family Infantry Fighting Vehicles. A year ago, we would have stood here proudly in talking with you about our seven user nations. That is now up to 10 with recent selections in Slovakia, Czech Republic, and the Swedish government's decision to provide some CV90s into Ukraine. BvS10 and Beowulf are kind of sister vehicles, and they are all-terrain vehicles that serve as great kind of personnel carriers. You'll get to see both of these today. Bofors is about half of this business is naval guns, and so serves kind of the maritime domain. We'll focus a little bit more today on the land domain piece, which is self-propelled howitzers.
You'll get a chance to see our Archer howitzer system today, and then munitions. These are the things that would actually get fired out of these guns. You'll get a chance to learn a bit more about those today as well. Charles talked a bit about the whole corporation's support into Ukraine, and while the wider corporation's support into Ukraine is even more significant than this, in Platforms & Services, we do quite a lot of what this corporation is supporting in Ukraine. As you can imagine, being the company's sort of land division, land business.
There's about 1,000 vehicles and artillery systems that are either in Ukraine or on their way, because they've been promised but are sort of not quite there yet, that come from all different parts of what I've just described. A lot through those ammunition facilities in the U.S., because they go into so many different types of munitions. Much of the munitions that's come from the United States, anyway, has some trace back to those facilities and things we've done at some point over the years.
Quite proud of our teams across all of these businesses stepping forward in the support needed to take some of this, some of this kit that our national customers in the U.S. and Sweden and the U.K. have chosen to provide into Ukraine, but support is needed. Whether that's training support, technical support, spares, repairs, all of those kinds of things that someone who's gonna use these types of equipment need has been a significant part of our energy and effort over the last year, and I suspect over the coming time as well. Pretty proud of the support that our business has been able to provide into such a terrible and tragic conflict in Ukraine.
A little bit on opportunity pipeline. You know, this is a place where we do see some, we do see some growth. I won't go through kind of, you know, line by line by line here. I think you've got some of the listings for reference for later. You know, in general, I think we see growth kind of out of the U.S., you know, really in the form of combat vehicles and things like the Optionally Manned Fighting Vehicle, which will replace the Bradley someday. You know, we are competing for and looking forward to that.
Foreign military sales out of our U.S. footprint and our AMPV program which replaces sort of Vietnam-era M113 personnel carriers, will enter into full rate production in the second half of this year. We're pretty excited about that. Next slide here is really things that I think Tommy and Lena will bring a little more life to out of our Hägglunds and Bofors businesses around opportunities that we see in CV90 and BvS10, ARCHER, et cetera.
You know, we also continue to see demand for our naval guns and, you know, frankly, with the worldwide increase in demand for munitions, frankly, our U.S. Army facilities in the U.S. are pretty busy these days, and we expect them to continue to be pretty busy to serve that big growth and demand. Okay, I know that's a pretty high level, kind of flyover of Platforms & Services, but hopefully, that gives a little bit of context as we head into a bit more detail for Hägglunds and the Bofors parts of the business before we're able to get you out and actually see some things in the workshop tour and in the test track.
Again, just welcome again. Thank you for being here today. We're proud, looking forward to showing off a bit for you and showing you some of the things that we're that we've been working on, and hope you enjoy the day. I'm gonna turn it over to Tommy. Oh, sorry, I do have a closing. I guess I should have had this up for my closing. Without repeating that, I'm gonna turn it over to Tommy here, just look forward to having you here for the day and getting a chance to show you some of the great things that we do. Okay. With that, I bring Tommy up, the managing director of our business here in Hägglunds. Thank you. Here you go.
Thank you. Thank you. Good morning, and welcome again. Tommy Gustafsson-Rask, been with Hägglunds for 27 years, been running the company the last 14 years. My agenda is to talk a bit about the history, but main focus is around our products. Also, how have we performed and how will we perform going forward? That's it. By Swedish terms, a fairly young business, started 1899. You'll see Lena later on, she has a greater history than I have. It started off here, very locally, Johan, he was a carpenter, and as you saw on the way down from the airport, it's a lot of forest. The raw material is trees.
He was a carpenter, and the farming land here required buildings, so he built windows, doors, started off there, then building agricultural machines, mainly out of wood. He got sons, actually, eight of them, so it became Hägglund & Sons , and it was just like 500 meters down the road when they started off. There is a saying, still a part of my business, and that is, "If somebody can do something, we can do it as well, but just a little bit better." They continued with transport area. One of the first buses that was built in Sweden was built here, and through the years, we've built more than 11,000 buses, yeah, based on chassis out of Volvo and Scania.
We built trams, we built trains, commuter trains, subway trains, still some of them operating in Stockholm. Also airplanes. During the war, we built airframes, to Saab, we did assembly and production of a school plane at that time. Electrical engines, welding machines, skis. We actually did skis once upon a time, and, yeah, you know, where we're in the country. It was a very diversified business, and it was a family business until mid-seventies. The Wallenberg Group took us on board. They bought out the family, and we came in, and I think it was much of the rail stuff we were doing that ASEA was, at that time, very interested in.
We sustained within the Wallenberg Group, we ended up in Incentive, 1997, we were bought by Alvis. We had a journey from 1997 and 2004, we came into BAE Systems. It's a long journey, but we have a heritage of innovation, finding new solutions, and it's in the DNA of the company. Coming in more specifically to what we do here. Our history of armored vehicles start off in the mid-1970s, sorry, 1950s, where Sweden had procured, and coming back to that connection, actually from Czechoslovakia, just after the war, some APCs and some tanks, but they had to rebuild and upgunned. That was the start of the armored vehicle for Hägglunds.
From 1960s into 1970s, it was the mechanization of the Swedish Army. We were doing armored personnel carriers, bridge layers, recovery vehicle, light tanks. Continue on the tank side. We did upgrade of the Centurion tank. Also we did license production of the Leopard 2 for the Swedes, Sweden, Swedish Army. I have the all-terrain vehicles. Starting off with Bv206, I think you have seen them. We sold more than 11,000 of them. They are used around the world. Today, roughly 4,000 of them are still in military use. They're used for hunting and for rescue, relief, you find them all over the world. That had continued then, its evolution. Today is the BvS and the Beowulf. I'll talk more about those.
The main product, CV90, started off as a development program in Sweden. Actually, at that time, Bofors did the turret, and we did the chassis. Further on the export, I'll talk more in detail about that. From first export, it is the complete product of Hägglunds. We did some mortar systems, and... For me, having this 60 years of experience of combat vehicles is a very good foundation. Done more than 12,000 all-terrain vehicles, almost 3,000 combat vehicles, and a number of other systems as well. A great history and background for where we are today then.
The two main streams, as Jeremy Tondreault said, are the CV90s, 17 different variants, and you have the all-terrain vehicle side with the main vehicle, the BvS10, that you're gonna see up in the test track later on today. Extreme mobility is the footprint. It has half the pressure of a soldier on soil, so it's over snow capacity, goes in swamp, and it can swim short distances across a river, across a lake. You can have mobility to wherever you like, and in combat situation, the real competitor out there is a helicopter. It's the extreme mobility of getting soldiers or staff into the scene. Sorry, I get some water. Coming in more in detail then. CV90, yeah, started off as a Swedish project. First export customer was Norway, that was 1994, we signed that contract.
Norway has done a recently an major upgrade, so they started off with 104 vehicles. Today, they have 164 vehicles. Major upgrade a couple of years ago. After Norway, we continued with Finland and Switzerland, mainly in parallel at that time. After that, we had Netherlands and Denmark. We've had these customers for a very long period, these seven customers. Also important with this community of CV90 users, is that they share the development. What we had a couple of years ago, and we'll come back to that, is that both Switzerland and Netherlands, major upgrade, $0.5 billion each of the program, and they're running as we speak. Sweden is doing a life extension of the existing CV90s.
Finland is also on the contract. Denmark is on the way. The advantage of having customers with different generation, now we're in the fifth generation of CV90. We spent more than 5 million engineering hours through the years of the original development for Sweden. Some of my competitors think that the CV90 means 1990. Yes, it did from the beginning. Today, it's more a name of something. It's like you have your Porsche 911 name. First one came out late 1960s. If you have one of those, you're a proud owner of a 911. If you recently bought one, also proud owner. It's more a trademark, CV90 as such, since it has been continually developed through the years with these customers.
Recently, from end of last year, we signed a contract with Slovakia, $1.4 billion, 152 vehicles. Typically, a CV90 contract from first contact with a customer to a contract is 5-8 years. It's a long sales cycle with approval of budgets through governments. They did it in one and a half year. Here also, you start to see consequences of the war, that if you have the budget, the government decisiveness of getting into contract, the pressure that Putin is creating, that was a real effect that we saw in the Slovakian contract. Just three weeks ago, we signed the biggest contract ever signed by Hägglunds, with Czech, $2.2 billion, 246 vehicles.
There, we started off 10 years ago, so that journey from first request for information until contract took 10 years. The end, the acceleration that happened in the end when they selected CV90 to come to a contract, was like six months. I will say, the situation of the war in Ukraine is getting decisiveness into governments to come to contract. Actually, they wanted the equipment yesterday, but... These are gonna be delivered, these contracts start deliveries in 2026. Also, another thing with CV90 is that if you go back, it was called Offset. Today, it's called Industrial Corporation. Earlier on, it was driven by, employment in country. Slided softly with the security of supply, and I will say today, the IC requirement is security of supply.
The country is investing, they want to have capacity to maintain, to upgrade, to deal with the equipment within country. Typically, we're doing 40% of value in, like, Czech and Slovakia now. The other advantage of all these other programs we've done through industrial corporation, is that I typically here develop or build a first on type, say, like 10 vehicles. I transfer assembly of turret and chassis locally in some of the subsystem production as well to reach the 40%. That means I have capacity. I don't need to invest and have all the things done here. Now, for example, where I have a contract with Sweden for family vehicles, 60 of them. Now I'm using my former partner in Norway, Ritek, that just did that for the Norwegian program.
They're going to do the production of those. Looking at the ongoing Swiss contract, here we've done the first, six first of type, done here, tested, verified, technology transfer done, and production is now ramping up at RUAG in Switzerland. Same with the Dutch contract. That is a built of a new turret. There I have a local partner, Van Halteren. We've done the four first of type. They're running verification as we speak, and now they're ramping up production. That's the same what I'm going to do in Czech and Slovakia. That means I have a growth opportunity of not investing here. Here is building the first of types, do the test verification, technology transfer to my local partners.
I'm welding the chassis hull, because that is something that takes more than half a billion U.S. and four years to transfer, and you will see when going out in production. I have a strength with this setup that was some pain, actually, when we started off, but I have a blueprint of doing that, and that means I can increase, and I'll come back to capacity in the end of the presentation. That was CV90. Mobility. Please enjoy the video. If you're good in snow mobility, you're good in all other terrains. You will see the CV90s up at the test track. You're going to see them demonstrating, and you will have the ability to ride with them as well later on. More technical questions, we can talk up there on the vehicle.
Coming over to the all-terrain vehicles, the BvS10 and Beowulf. Starting off with the BvS10, as I said earlier, 11,000 Bv206s sold around the world. The demand came of protection because the Bv206, totally unprotected, reinforced glass fiber body on the 206, to get protection and increased workload. There, actually, U.K. Royal Marines was out first, wanted to get more load capacity and protection. We started off with U.K. We had Netherlands, France, Austria, and now Germany. Today, Sweden took the lead of a free nation procurement. Take the lead together with U.K. and Germany following on. We got last year, a contract of 436 vehicles to these three countries. This year, Germany added 227.
We have an order book of BvS10s of 700 vehicles from these corporations. We have a running production today for Sweden. That is what you're going to see when we're out in the workshop. This with cooperation in procurement, I think, also a sign that we see now that it's actually going towards buying more of the same. Earlier on, when I talked last week with the Swedish Supreme Commander, he said, "Tommy, earlier on, we had time, but no money. Today, we have money, but no time." I think this with joint procurement, being able to sell more of the same, don't need two, three years to test, verify. No, you can actually accept that the Dutch has tested the mine protection, and then we can take that into Sweden.
I think that is a change that we are seeing now in the procurement trends among the governments. Do cooperative, stick, and you get a 95% solution towards your requirement, but you get it two years earlier and to a deducted price. The sister vehicle, the Beowulf, sorry. If you look at the BvS, the track system, the engine, the running gear, steering system, cooling system is the same on Beowulf, but the cabin is unprotected, so it's a thin plate cabin. What do you get instead? You're trading off in the triangle of capabilities. You're trading off protection, but you get load capacity. The Beowulf has 4 x the load capacity over Bv206.
The Bv206 today is predominantly a logistic support to combat units, and that is what we see with Beowulf, that it can replace the 4,000-ish Bv206s that's out there used today. The launch customer, really proud to have U.S. as the launch customer for this contract. Will be used in Alaska and the National Guard. I'll talk more about that going forward. Same there, extreme mobility, and here is just down outside the hotel, basically, where we stayed. You see it's early winter, and it's not always this warm as we have it today. It was on the verge to freeze in the Baltic Sea. To come to get the latest wins and where, what have we done to summarize that? Starting off with CV90, start from below.
Sweden have done a life extension of their existing 449 vehicles. They have added new family variants. They have added 80 motor systems into that, and the latest orders, and that was actually last year, was around GBP 200 million, but I think they've spent, like, GBP 700 million-GBP 800 million totally on the life extension on the CV90s. I mentioned the other existing customers, both Switzerland and Netherlands, where Switzerland is doing more of a life extension. They're adding some capability into the program. Netherlands, they basically are taking a new turret on board, and that turret's gonna be the standard even coming into Czech and Slovakia. What we're talking of here now is that earlier on, a IFV had a main cannon, 25mm, 30mm, or 35mm. We're doing 30mm and 35mm.
Now, we're adding anti-tank guided missiles. We're adding active protection system. I think the active protection system is something when we talk to the Ukrainians, that is what we really like. What is an active protection system, then? You've seen these handheld RPGs or anti-tank guided missiles. That is the real threat of an IFV, because an IFV is less protected than a tank. Active protection system has, like, radars in the corners, optical sensors, so if you have an RPG at 100 meters, fired, sensors detect something is coming against me, classify RPG. Will it hit me? Yes or no? If it says yes, radar is tracking. You have throwers on the top of the roof, sending out a projectile with explosives, explodes just in the proximity of the RPG, so it blasts it apart, so it can't detonate.
It's happening 15 meters out from the vehicle, so we're talking milliseconds. What's coming is just shredded metal hitting the vehicle. That is new technologies that's coming in. We're talking a completely digitized vehicle. You're talking 20 sensors. You have a commander sight, independent, so you can do hunter-killer. The gunner can defeat, commander finds a target, directs it in. The independent sight has AI, so it scans in the mode, scanning for UAVs, so you can automatically detect UAVs coming in. You can use the main gun to defeat, and in the future, you can use the active protection system to defeat. A real technology step that the Dutch are doing for the future with this turret. I mentioned Slovakia and last year, and coming into Czech just three weeks ago. BvS10.
Current, as I said, out in production now, we have a BvS10 program for Sweden that's running. That's going to go seamless into production of the First Nations initiative, with 700 vehicles in order book. If you, if you want to buy a BvS10 today, you're going to get it end of 2029, with current capacity coming back to that. Beowulf for the U.S. Army that we actually are assembling the first four. They're going to be delivered in the end of this month to the customer. Customer is here on acceptance testing. What about the future, then? Starting with CV90, existing customers, Denmark will go into a mid-life upgrade. They will do a copycat on what the Dutch did with an upgrade of turret.
They also have a commitment for a heavy mechanized brigade. They have 45 vehicles today. You need to be somewhat 100-150 vehicles to be qualified as a NATO heavy brigade, there are more new vehicles to be joined there as well. Norway has 164 vehicles. They are looking at adding a battalion up north, that's an opportunity for new vehicles. Slovakia bought 156. They probably have a need of family vehicles of 30, 40 family vehicles, that's something to be added. I have, within my existing customer base, need for upgrades, continued upgrades, and new vehicles. There is a number of opportunities that we are working, that probably gonna be competitive going forward. Brazil is just cranking up a program.
Greece has been on and off for the last 15 years. I would say to buy or not to buy, we'll see what happen there. There is a program starting off. Italy has a program that we are gonna bid into. Romania has a replacement program for their BMPs. There are some more, but there are some examples where we're looking at both growth but also beyond the 5-year plan going forward. We are starting off the development of next generation CV90, together with a Swedish customer. If I look at CV90, with the existing base now of 10 users, with Ukraine joining, I have existing customers that will continue to use the CV90 to do upgrades. Are getting new customers on board with Czech, Slovakia, probably more, and I'm starting the development of next innovation.
For me, I'm working all 3 perspectives, and that gives a long trustworthiness by these existing 10 customers to continue to develop CV90. Coming into BVS, we have the Four Nations cooperation, with Sweden in lead. We know that there is a need for more vehicles within these three countries. We also have now Italy, with a need of up to 450 vehicles. They are publicly assigning to the Four Nations cooperation, between the government to government MOU, that's happening as we speak. Finland, also 100-200 vehicles, probably to be joined within the Four Nations initiative as well. Buying more of the same, adding to the production and capacity of what the Four Nations is doing. Beowulf, I think we're only in the start of the need in U.S.
U.S. bought Bv206s. They started off with a couple of 100, ended up in 1,100. Now we're starting off again with just north of 100. Netherlands will replace the Bv206s. They're taking the initiative. Probably, that will look like the Free Nations initiative. Netherlands will take the lead for procurement of a joint procurement of Beowulf. As I said earlier, is 4,000 Bv206s out there that are built in the 1970s, some in the early 1980s, need to be replaced. I see Beowulf as a growing part of the business going forward. Ukraine. Sweden has gifted 50 vehicles, approx, to Ukraine. What I can say, they are in country. I can't say more than that. They're gonna be used there. It's gonna be experienced from there.
Netherlands decided to give away a number of BvS10s, and also got, I think it was yesterday, that Germany is gonna give away Bv206s to Ukraine as well. It is something that we will find ways through the existing governments, mainly here now, Sweden and the Dutch government, to support them, but through the governments now, initially, we'll see how that pans out going forward. I'm sure we go off later, but with the wins I had, we're in a real growth. We gonna grow a bit more than three times. What are we doing then to manage that growth?
Manufacturing optimization, you will see it going out in the workshop because there we are now, we just invested in the new laser-cutting machine, 3x the capacity of what it had earlier on. Milling machine, we're going to put in just after the summer. We're moving some of the central storage, you'll see it when we pass by. Number of investments rolling on to get up the capacity of the things I'm going to do here in Sweden. Right sourcing, that is more around CV90 now with, what do I do internally, and what do I do with my partners that I described earlier? Now we're starting up transfer of technology to Slovakia. We will have one company building, assembling chassis, one company assembling turrets.
That is an ongoing activity to really use the capacity that I built up through the years and adding new capacity for future growth. Facilities, we're just outside here, building a new office for 450 white collar. We're building a new test and verification, mainly garages, but offices up at the test track. All in all, in my plan, counting from last year, go over the 5 years, I put roughly $100 million into investment in hard stuff, both facilities and in the production capacities. Go back a little bit more than 2 years, 800 people here, we've grown to 1,600. We're on the stretch, mainly, I will say, on the engineering side. As you know, we're a bit north to attract and get more engineers here.
We're on the verge there. We're starting to use satellite offices, engineering hubs, by contractors, where we put out work packages around in Sweden, and we'll also do in some of the export countries as well, to use the capacity of Swedish engineers. As you know, for example, Saab, they shut down, or that was news that was Saab's electrical cars in Trollhättan just closed down. They were setting up an office with 100 engineers coming out of electrical automotive competence that we take locally there. Using that capacity and know-how, that thing, that exists. We're speeding up BvS10 production. Today, every third day, we deliver a BvS10. We're gonna be more than one vehicle per day in a couple of years, taking out here.
We need to expand the supplier base to get the build-to-print stuff for the BvS10. Since we're growing, number of project is growing, we're working in the matrix organizations to grow the leadership of the line organization, but also the leadership of the programs and projects. That is an activity ongoing in the growth we're doing with people. Skilled labor workforce. Yes, white collars, you can recruit more or less all over. You can get them to move here, work on distance, and we learned a lot through the pandemic to work on distance, and therefore, we're doing these hubs. The blue-collar workforce, the welders, the CNC operators, they need to be here.
We're following the plan of the growth there and been able to attract, but they are the ones that really needs to be on the site. It's a number of parallel work streams that we're following, and we're following the plan for the growth to be able to deliver the order intake we just had. This is roughly my plan, what I have. I have a, like, just north over 3 x growth in my five-year plan. It's, in principle, as you see on the slide. Then it's also further opportunities that I plan to, so looking into opportunities to further grow and invest in the business. Finally, net zero sustainable production. Circular economy, that's what we do. Reuse of things.
We're looking into electric drive of the vehicles we're using, so it's in the design, minimize the footprint overall. If I look on the operation side, outside here on the wall, on the manufacturing hall, it's Scandinavia's biggest wall-mounted solar panel. You don't see it's just integrated, and therefore, we have the sunflower. I don't know if you noted when you arrived, that really is sending the messages. In the new developments, the new office, the new test and verification facility, we're going towards net zero. We're using geothermal heating, and we're using solar panels. For example, up on the test track, we have the long test track, you will see. We heat that during winter, so we can do braking, performance testing, and that investment paid back in four years.
We are reducing, for example, just on the test track, with 200 tons of CO2 by those. We're doing as much as we can step by step. We are now working with a new parking lot. We're gonna have 100 chargers for electrical cars because that is the movement that's happening going forward. I think that was me.
Fantastic. Thanks, Tommy. We're running a little bit ahead of schedule, which is always good. We're gonna have a 20-minute comfort break now, get some drinks and things, and then we will restart, and then that will give us plenty of time for Q&A at the end.
The facilities, if needed, out to the left of the reception. Coffee, buns, water. Thank you very much.
Thanks so much, Tommy.
Thank you.
I think there's a couple of people still having a pit stop, but Lena is going to cover Bofors business, so, and then we'll have Q&A. Over to you.
Thank you very much. I can say also welcome to Sweden again. Nice, beautiful weather, and it's a pleasure meeting you all. I will cover the Bofors business. My name is Lena Gillström, and I have been in the company for, like, 25+ years, and I've been leading the business a little bit over 10 years. This is what I plan to cover. Go through some of the milestones, talk a little bit about history, to kind of paint the picture, where does Bofors fit into the BAE Systems? Munitions, ARCHER, artillery, and also kind of moving forward, what do we see moving forward? I will also touch upon something that is not on the agenda as well, because that plays an important role of what Bofors is doing today. I will start off with this picture of a man.
I guess you recognize this man, he plays an important role in the history of Karlskoga. Karlskoga is the site where Bofors is located, Karlskoga and Bofors, close link. I will talk a little bit more about Alfred Nobel. Tommy mentioned that, if we look at kind of Swedish perspective, Hägglunds is a young company, but it depends on what you compare with, Bofors is a real old company. It was actually founded 1646, it goes back many, many years in time. At the time, it was a steel production company, and, you can still see some of the, kind of the old legacy pieces from this time in when you are visiting Karlskoga. The first cannon was delivered 1883, and you can see that when you visit our workshop.
There are some important years. I will not go through all the lines, but I will put up a number of them for your attention. One is 1894, when Alfred Nobel acquires Bofors. You know, Alfred Nobel, he was the inventor, and at the time, he was looking for somewhere where he could combine his experiments with high-tech production capability at the time. He found Karlskoga, and he found Bofors. Alfred Nobel, he, as you know, as the inventor, he was happy if one out of 300 ideas came into being a success. He understood it needs to be a number of ideas to get hold of the real good ones. Alfred, he found also opportunity to perform firings in Karlskoga.
He was looking for firing range, he had three homes when he procured Bofors, because together with Bofors, there is also something called Björkborn Mansion, and that is where he lived when he was in Karlskoga. He also had a home in San Remo in Italy, and he had one home in France in Paris. Alfred Nobel only owned Bofors for two years, but that turned out to be two really important years in the history. Because when Alfred Nobel dies, 1896, it was decided in French court that where a man has his horses, that is the place to call his home. He had his horses in the stable of Björkborn, and Björkborn is the facility that is now part of our pieces. His will got legalized in Karlskoga.
There is a museum in Karlskoga, they always bring the Nobel Prize winners to Karlskoga. That is, I would say, the innovation culture emanates from that, so it's part of the DNA. Tommy mentioned the innovation here as well, and in Karlskoga, it's a cluster of defense companies. You will find Bofors, you will find Saab, Repkon, Nammo. The number of engineers in this section of Sweden is quite large. That is the story about the short story about Alfred Nobel. The 40-mm system was something that was used during the World War, and I will talk a couple of minutes about the new version of the 40-mm that we are working. We started very early on to work on the proximity fuzes and intelligent munition.
Tom mentioned that we have now been part of BAE Systems for quite a number of years. Bofors became part of BAE in 2005, and Hägglunds, 2004. Before that, we were part of United Defense. We have been kind of international when it comes to the ownership since year 2000. Important year for us is when we got the serial contract for the artillery system, ARCHER, that you will have the opportunity to see at the test track. We also have the new version of the 40-mm system. One thing I would like to mention is the last bullet, because it says it's a major contract for the U.K. Royal Navy.
We are focusing on the land side today, but when we talk about the Bofors business, we have the base business in the naval segment, so I will just stay there for two minutes. When it comes to this order, it's a decision from U.K. to go ahead and have two 40mm Bofors guns and one 57mm on each of the Type 31 frigates. This is the first time ever that you have three Bofors gun on one of the same ship. As we speak, we are delivering the first system to U.K., and this week is the factory acceptance test taking place of one of the 40mm naval guns to U.K. We are doing this acceptance test at our own firing range. That is located only 15 minutes from our facility.
I would say that's also a key asset. We can do qualification tests, and we can do acceptance tests with the customer. As you know, there are not that many firing ranges in Europe nowadays. It's important for us, and it gives us flexibility. If we take the next. This shows a little bit why I wanted to at least talk a little bit about the naval side. Right now, the naval side plays an important role, and that's a stable base business that is also growing. What we have seen over the last years is, we have always been stable in the naval side, but the main customer is U.S., but we are seeing that it's increasing in Europe.
Some of the later contracts is now with, I mentioned U.K., but we are also delivering to Belgium and Netherlands, including Germany. Europe is growing, and a lot of the other sides are growing as well. You see that artillery seems to be a small pie chart here, and artillery is 1 area where we see growth, and we are growing. If we would look at these numbers one year from now, it will look a bit different. The pie chart with artillery will be bigger, but we plan to kind of keep the stable naval business. Munition is also something that I will come back to, because that also plays an important role when we are talking about the base business.
Moving over to the munition, and this picture shows one of the products that I'm going to touch upon, and the product is called BONUS. What you see is a warhead kind of overlooking an area just below. BONUS ammunition, that's a 155 artillery launch, fire-and-forget ammunition. It can be used against many targets, but the hard targets. If you think about the conflict that we have today, this is the kind of target that will take away tanks, and they take them away from the top, where they are least protective. That is how they work. Each BONUS round contain two submunitions, as you can see on the slide here.
The way it works is that when fired, and you have two expulsions when they are kind of released, they are searching for targets. They will search for 32,000 sq m of area, and each of these submunition will find their own target. We can fire them up to a range of 35 km when firing from an L52 gun. This is a cooperation program, and we are working together with Nexter in France, and it has also been kind of cooperation between the governments, Swedish and French government. It's a good and fruitful cooperation, and we are delivering those as we speak, and we are also working on the next generation. This is called BONUS Mark II. We are planning for BONUS Mark III. That will be ordered later this year from Sweden and France.
The next step will be BONUS Mark IV, when new optimizations against new threat scenarios will take place. If we continue on the ammunition side, and we talk about the more of the cooperation project, we have a product called M982, but the name that I guess you might have heard is, like, Excalibur. This ammunition is designed to engage stationary targets with pinpoint accuracy. The range, as I said, is in excess of 50 kilometers, so it can take it really far away, and we know that these systems have been sent by several countries to Ukraine as well. The way this system work is that it minimize the collateral damage, because you can decide exactly where you would like to hit. It can be programmed for airburst, point, and delayed detonation.
It was a cooperation development program together with Raytheon in the U.S., but also here is the two governments, U.S. government and Swedish government, that were kind of part of the cooperation. This have been going on for 20 years, and the same with the BONUS, it's kind of stable cooperation projects. When I'm in U.S., the U.S. Army very often brings up Excalibur as one of the very good examples of cooperation. You know, sometimes it's a challenge to have these cooperation projects, but the experience that we have from both BONUS and Excalibur, it works fine. This system can only be sold as foreign military sales. We are delivering...
We were part of the development, and we are producing subsystems to the Excalibur, which we are delivering to U.S., and the systems are delivered as a complete round from U.S. Now we have looked upon the ammunition, but in order to fire them out or something, we need to have systems. The ammunition that you have seen is qualified in the artillery system, ARCHER. You will also see the ARCHER on the test track a little bit later on today. If we look at the battlefield of today, it's a quite complex battlefield, and it needs to have an artillery where you have flexibility. With ARCHER, you get firepower, you get mobility, you get protection, and you also get some really good benefits when it comes to in and out of action.
What is important, and that has been kind of demonstrated a number of times in Ukraine, the importance of quick get out of action, because otherwise, you will be identified, and you will be taken out, and I mean, the systems will be taken out. That is kind of the real purpose with the ARCHER as the artillery system, in and out of action, and I will soon show you a little bit of a video. If we look at some technical data about ARCHER, this is how it looks like. You can see that it's a truck. This is an 8x8 truck. We also have 6x6 trucks. We have a fully automated loading system. That means that a crew can be protected and sit in the armored cabin all the time.
We can fire, as I mentioned, up over and about 50 km if we are using the Excalibur rounds. We can fire a little bit less if we are using kind of standard or traditional ammunition. How long does it take? It takes less than 20 seconds in the in and out actions for this three-man crew that you have in the protective cabin over there. It provides a really powerful and swift support for every mission. This is a kind of ultimate flexible system that can make a huge difference on the battlefield, and that's also why it has been something that been so high on President Zelenskyy's wish list about the systems that he would like and the systems that would make a big difference. I mentioned the 6x6.
That is the system you are going to see on the test track today. That system have been operational a number of years, actually seven years in the Swedish Armed Forces, and it's the only system in the world with this capability that has been operational that long. That means that we have a stability when it comes to performance because it has been tested out through demonstrator, prototypes, pre-serial systems before we delivered all the serial systems to the Swedish customer. Right now, we are doing the integration on the 8x8 vehicle, and we will not have an 8x8 here, but we are conducting the kind of final integration of that. As you can see on the pictures here, the automatic loading system is what you see in the back.
That is, looks fairly the same, and it is the same. What is happening is that we can mount it onto different kind of vehicles. To the right, you see the next integration that will take place, and that is to integrate it on an Oshkosh vehicle. And it will be kind of the same process of integration, and this is fairly fast to be able to integrate it, because the system as such has already been tested. What I will do, I will very soon bring up the short shoot-and-scoot video. Something to mention is also, when firing the Excalibur round, ARCHER is the only system in the world where you can deal with a fuse setting of Excalibur in an automated system. It's no one else that can do it.
Are you ready for another video? Yeah. With a large Excalibur long-range artillery system, it can execute the fire mission up to 40 km, and ARCHER can receive a fire mission when ARCHER is moving. Here comes ARCHER, and ARCHER gets a fire mission. ARCHER stops. Deploy, you see the supporting leg in the back, and get ready to fire against the target. What is happening now, it will execute the fire mission. You can see in the second. Now the first round is in the air, and remember, it's indirect fire, so it, kilometers now. You get the next round that is going on, and it's in the air. You will have the last one, in this example, the three rounds. Before the first round hits the target- ARCHER will be moving out.
That means that the enemy will not be able to detect Archer. Because as soon as you have hit the first target, then you can be identified and someone can hit you, that's the unique capability with Archer. If we look at kind of similar systems, the normal time it takes is 5-15 minutes to complete a fire mission like this. With Archer, you do it in less than a minute. Time is a real asset when you are in that kind of conflict situation. Now we have impact for all the three rounds that we have fired. If we look at the contracts to date, when it comes to Archer, what contracts are we working on?
We have delivered 48 systems to the Swedish customer, and that includes the gun itself, as you see on the slide here. It also includes the ammunition resupply systems, because that is a vehicle that you can carry all the kind of additional information that you would like to bring along with you. Spares, tools, training, and training equipment, that was part of the initial delivery to Sweden. Now Sweden are kind of adding more and more and more contracts on us right now. Last time we looked at it was 15 contracts with the Swedish Armed Forces and the FMV, and we are delivering these ones right now. It's both upgrades of the battle management systems, it's long-term sustainment programs, and that is something that we see with the customer right now.
They are ready to place orders for long term, and we are having those discussions also when it comes to ammunition, because they understand, giving lead times, that they need to be proactive and sign up for this long-term agreement. Tommy mentioned that what we see, the customer behavior right now, it's completely different from what it was if we go back a number of years, before, I would say, the conflict in Ukraine. Everyone understands that in order to get the deliveries, you need to place order for the long term, and that is what is happening. We are now kind of very proactive when it comes to procuring in advance, and that comes with the customer giving us those opportunity.
Another contract that is of importance for us is the ARCHER Divisional Artillery. When Sweden decided to procure more system, two months ago, Sweden signed the next step to procure 48 new additional systems. We are working those hard now in our workshop. We also have a contract called Rapid Procurement Support. What Sweden have done is to Sweden and FMV have supported systems to U.K. What Sweden is doing, they are buying more systems from us in order to backfill.
We think this is really good, and I know that Sweden value this cooperation very much with U.K., because it's a strategic cooperation that will lead into the future as well, to have more users of the ARCHER system, and we see many opportunities going forward. Our part of the contract will be direct with FMV to support U.K., but it will also be a direct contract with U.K. MOD as well. Where are we heading if we are looking ahead? I mentioned the long-term contracts when it comes to a number of systems. I talked about ammunition, and ammunition is something that have been heavily discussed these days. We also produce the ammunition for the 40 mm and the 57 mm on the naval side. We see the same here. It's long-term contracts that will happen.
It's not just go in one year and procure 4,000 rounds. You set it up for, like, five years of period to secure that you get hold of the ammunition. If we look at the artillery, the next step for us is to have the firm delivery contract for the ARCHER Divisional Artillery. We signed the first part for the additional 48 systems two months ago, and this is to kind of get the full scope of everything that is needed in order to deliver 48 complete systems with ammunition, resupply vehicles, and training and support. That is currently something we are working very closely with the Swedish customer. The U.K. support contract is very close as well.
We have an ongoing campaign in Switzerland, where ARCHER is selected as one out of two systems for their plan for artillery. Right now, it's ongoing tests with the 8x8 system for Switzerland, and they have completed part of those tests with very successful results.
Last bullet saying that we have an interest amongst a large number of countries, and here we mention U.K., U.S., and Ukraine. There are more countries that are interested and would like to procure ARCHERs, and they would like to deliveries immediately, here and now. I would like to mention that in 2021, the ARCHER system was spent four months at Yuma Proving Ground and participated in a shoot-off evaluation trial with very successful results. I will stop there and leave the floor for Q&A. Martin will lead the Q&A session.
Great. Thanks so much, Lena.
Thank you. Thank you.
Do a bit of furniture rejigging, and then I'll call up the speakers, and we'll run the Q&A. I think if it's okay with everyone, we'll probably go for a maximum of about 40 minutes Q&A, and then that'll give us more time for the factory tour, and get up to the test track, and give you more time to do some driving and all sorts of things. It's a beautiful day. We should be out there. Okay, great. Jen and Barry will have roving mic, so when I call you out, please wait till you ask your question. Questions for the panel? I will Sash.
Thank you, Sash Future Agency Partners. Sorry, this is slightly tech question for Lena, but with an autoloader for ARCHER, does that limit the natures of charge bags or munitions that you can use across the, what would otherwise be NATO standard 155 mm, or can you use all NATO standard charges and rounds?
ARCHER can use more or less all NATO standard ammunition.
Which bit is the less?
Pardon?
Which bit is the or which are the less?
There have been some small modifications in order to take on some of the charges, but that has already been tested in the U.S.
Thank you.
Okay, great. David, why not?
Thank you. David Perry, JPMorgan. I've got one for Jeremy, maybe, and one for Tommy. The one for Jeremy, the high level is, great products, clearly. The margins in Land are quite a bit below Rheinmetall, quite a bit below General Dynamics. Actually, versus Rheinmetall, you've probably got a better mix because you don't have as many trucks, so arguably, your margins should be higher. If you could just speak to that and where you think that business could go. Then the question for Tommy is, I'd just be interested, why you think you won the Czech Republic and Slovakia.
What do you think made them more attracted to the CV90 versus the Rheinmetall product, any other future competitions going forward, how you see yourself squaring up against, I think it's the Lynx. Thank you.
Okay, I'll take the first one, then Tommy can take the second one. Yeah, I mean, I showed you that slide of sort of how the business has performed in terms of margin expansion. You know, a lot of that has been, you know, really, I'll say, very significant focus on, you know, we use this term operational excellence. Really, that is, you know, doubling down on how we execute on contracts for customers. It's doubling down on engineering capability, supply chain management, manufacturing, you know, project management. Those kind of core competencies in this type of, in this type of a business, make a big difference. You know, we're pretty proud of the sort of direction of travel, if you will.
In terms of margin expansion over the last, you know, several years, I think we'll take another step this year. I think we'll take another step for higher margins this year. Frankly, we intend to keep going. I think we'll take another step next year, I think that is really just continuing to get better from an operational excellence perspective. We were also seeing a little bit of portfolio mix shift with some of our U.S. combat vehicle programs coming out of EMD and LRIP phases and going into full rate production, which across the industry, we see higher margins the deeper you get into the life cycle. I think with that provides some help as well.
You know, I think the trajectory we're on over the last several years, it's our intention to keep pushing that forward.
Okay. why did we win Czech Slovakia, and how are we gonna win in the future? starting off with Slovakia, and there the advantage is that the customer has officially announced their evaluation report, and I think we can make that available to you. From that, I can say we won in all categories. If I break that down a bit, price, it was fairly close, but we were the cheapest. technical performance, we won that as well. going back price-wise, also life support cost, highly evaluated to be a part of, at that time, the eighth user. You're coming into a community that will, yeah, keep your life support cost in, within that community. Then, from a technical point of view-
Yeah, we really did well, and I think the, as you will see, looking at the vehicles later on today, design efficiency and managing all the capabilities is one of the features of CV90. Finally, our experience of delivering industrial cooperation. We have delivered, before the Slovak contract, we have delivered, except Sweden, but seven contracts where we delivered the industrial cooperation at time or ahead of time, fulfilling the obligations. I think there are the points, but we can make that report available to you, so you can go into the details. Coming to Czech, then. Czech, as I said earlier, had been running for 10 years. They have done. How do I put this polite? A little political turmoil in that country, put it softly. Then they realized the war came.
They've done the evaluation, same contenders as in Slovakia. They relied on what Slovakia did. They did a government-to-government agreement with Czech and Slovakia to cooperate on CV90. Decided the route of doing a government-to-government supported deal with Sweden. That took the six months I talk about to come to contract. Going forward, I think what we've shown by both Czech and Slovakia is that we're a leader. Yes, that means we have a target on our back. Our competitors will try to hunt us down, but I think the continuous evolution that we have on CV90 with customers paying, we're putting our own investment to continue to invest in the product, will keep us in the leading position. If it's a fair and open game, we're gonna continue to win. Thanks.
Okay. Charles?
Thanks. A couple of questions. First of all, as I understand it, you sell the thing, and then you've got maintenance and mid-life updates. What proportion of your group sales, however you wish to put it, is support? As you grow the fleet, how does that evolve? That's the first question. The second question is on Archer. How many, if the U.S. were to go for it, presumably, that's orders of magnitude larger than the 48 systems to Sweden, et cetera. What sort of numbers are we talking about?
Tommy, do you want to take-
Can I start the first one?
Yeah.
Start support business?
Yes, support for you. Yeah.
If you look of a lifetime, like on the CV90 product, it's basically the investment cost. These systems typically live 30, 40 years. 1/3 is the procurement cost. The 2/3 is the life support cost, if you look totally over the life cycle. Typically, those 2/3, with the setup we have with industrial cooperation, those 2/3 is divided by half of that in country, half of that done by us, if I look over time. If I look backwards, when we were in the lower years, I think the support business constitute, like, 30% of the business. Now, when we're coming into delivery phase, we maybe go down to 10%-15%, but that's gonna come back and continue to grow.
Yep. If I take the ARCHER question, the 48 plus 48 systems, that is for Sweden, but the campaigns I mentioned when we talk Switzerland, we talk U.K. and U.S., it's much larger numbers. If we mention U.S., that's + 500 systems. It's a substantial number.
Yeah, Christophe.
Thank you. Question on the margin PNS U.S. Quite obviously, it's progressing, but there are other parts than the bits we've seen today, like Ship Repair. Can you comment on the momentum on the margin on that subdivision, I would say? On CV90, clients seem to be predominant, essentially European. Is there a reason for this, or is it because of the network you described? What is the reason behind it, and can you expand beyond Europe?
Yeah, I'll take the first one. You can take the second one. Yeah, so our ship repair business actually follows a pretty close the margin expansion kind of trajectory of the whole sector as reported. I think that and that will continue, I think, to expand as we head into this year and next. It actually pretty closely mirrors the sector as a whole from a margin delivery and margin expansion perspective, so pretty straightforward answer, actually.
European market. Yes, that's close to us. We have maybe sold Bv206s, existing customers. We have a relationship, it always goes to probability of win and what's the investment to be done. You have a second part, and that is Swedish export control. I have never done anything in Middle East, because I will not get the export control. Will we expand? Yes, we were in LAND 400 phase III. Where that's gonna land, I don't know. I'm fairly happy that we didn't win there, to be honest, because it's not settled yet. I have 400 in order book now instead with Czechoslovakia. I mentioned Brazil. I think we're gonna see expansion of where you have requirements because CV90 is high-end.
There are a number of RMMV replacement, and they're looking more at APCs, but I think the IFV markets will continue to grow. As I see it now, with the war in Ukraine, Europe is still gonna be the main focus for us. Thank you.
Thanks. Ross. Ross is behind the pillar, Chairman.
Good morning.
You might wanna come this way.
Ross Law from Morgan Stanley. Thank you very much for the presentations. Just a question on supply chain. Can you just give us a bit more of an idea of the location, the size, diversity of your supply chain? Obviously, given the huge growth that you've got in these businesses, how are you confident that they can keep up?
Yeah, it's a great question. I mean, you know, I'll start, and maybe have you do a little bit about industrial cooperation.
Right.
Yes, if I think broadly, you know, across the business, we have a very diverse supply chain because we have a very diverse, you know, kind of business portfolio to start with. For vehicles, it is typical that, you know, 70% and 80% of the kit inside of a vehicle is actually in the supply chain. Pretty significant in terms of partners all around the world. I'd say our U.S. vehicle business dominantly partners in the U.S., but also to a lesser degree, but still significantly in Europe. I think when you get into the European vehicles, it's the other way around, right? Dominantly European partners, and to a smaller degree, kind of U.S. partners.
You know, I think we've seen similar challenges, as everybody relative to supply chain these last couple of years, both in terms of price inflation for raw materials and the like, also in terms of electronic components and things of the like, you know. Frankly, we've been able to, with a lot of hard work, been able to mitigate through a lot of those and be able to protect our ability to deliver on time to customers, largely.
So that just continues to be a place where, you know, we put a lot of emphasis in terms of picking the right partners, in a lot of cases, making sure we have more than one choice, so have more than one supplier for a given, for a given kind of technology or item. I think the place where we have the most significant partnerships as a percentage of a vehicle, really are CV90. Where, as Tommy talked earlier, industrialization, we do a significant portion of these vehicles in country.
So I think maybe that's a place y ou could talk about it, which makes us dependent on suppliers, but also gives us access to capacity that I think enables a level of growth that otherwise would actually be more difficult for us to achieve when you sort of look at, particularly in this business here, we're looking to triple the size of the business from a revenue perspective, without tripling the size of the footprint here, by leveraging some of those other partners.
Just a very quick follow-up.
Sure.
Have all your key suppliers committed to the production rates that you set out?
Yes.
Should I continue to elaborate on your question? If you take both VBS and CV90, there are some highly integrated subsystems that you don't change, where you have, like, guns from NGS. You have CV90's Scania engine, you have tracks from Soucy, Canada. They're highly integrated and used existing supply chain there. On CV90, we localize, we do a lot of the build to print, cables, boxes, road wheel stations and things, and that's moving along. The advantage we have with having maybe one country running, we're ramping up another one, is that we have the start, we have the backup of at least two. VBS, a bit different, but same with engine tracks, is that we have typically used localized when we have a low rate.
Now when we, 3x there as well, we are now spreading that mainly Europe. Thank you.
Great. Olivier?
Thank you. Good morning. Thank you for the presentation. Olivier Brochet with Redburn. I have, well, I have one question for Tommy and two for Lena. Tommy, 2026, you're reaching 3x plus the revenues. When is the peak in revenues for the business, based on what you have in the backlog and the rather certain business that you're expecting? Lena, the ARCHER has been running for some time already, and you've not exported yet the product. Why is that? When we are thinking of the U.S., we're talking, you said 500 units, will it be a system like what you have on Excalibur, i.e., partnering or license in the U.S.?
Peak is in 2026, but it's gonna be stable, 2026, 2027, 2028, current order book. Going nine, going down a bit with current order book, 2029. That is safe delivering of the current order book. Thank you.
Yeah, if I answer the ARCHER question, your question about why hasn't it been sold to more countries before? I think, yeah, ARCHER was a little bit ahead of time because the conflicts, if we go back, like, five, 10 years in time, it was other kind of conflicts, and the systems were more sent to Afghanistan doing these kind of missions. What we see now in the battlefield, that it's what the capabilities of ARCHER and the performance, that exactly what everyone is after right now. That is also why we are seeing so many demands when it comes to these kind of systems. You have the shoot-and-scoot capability. You have the protective cabin, and that means that you have your soldiers that you will meet later on today.
They are protected in the cabin, and they can do the fire mission from inside. They don't need to be exposed, to kind of the world outside of the cabin if they don't decide to go out. I think that is one good thing about it. Now it's the right time for ARCHER. Talking about U.S., if we have and are successful as we plan to be, it will not be produced in Sweden. It will be so that it will be cooperation, and we will also use the broader BAE. We can have production going on in the BAE facilities in U.S., so it will be Americanized ARCHER, and not just the vehicle itself with an Oshkosh vehicle, it will also be production in the U.S.
That goes with the same for the other countries that I mentioned about Switzerland. We are looking at having production of components, subsystems in Switzerland, in UK as well, that is part of our concept. The ARCHER is a modular design, it enables us to have these kind of setups. Some of our naval systems are exactly the same. Our kind of biggest naval product is a 57 Mk 110, as it's called in U.S., 57 Mk 3 in the other markets. What we are typically doing is working together with weapon systems in Jeremy's business, CMS. They are the kind of front runner in U.S., and being the ones on board ship, they can do the integration test. They can also produce components.
I strongly believe in this close cooperation.
Just to add on that. One of the advantages I think we have of having footprint in U.K. and Sweden and U.S. and like, is when it comes to an opportunity like ARCHER into the U.S., where we want to find a place to produce that in the U.S., well, we already have places that can do that. We already have a, you know, a business and a leadership team that can sort through how to do that. Likewise, in the U.K., obviously, the same. I think we try to take advantage of that footprint to help do that localization that really all of our customers do expect at some level.
Okay. Charlotte?
Hi, Charlotte Keyworth, I'm from Barclays. I just wanted to follow up on the industrialization comments. For Czech Republic and Slovakia, you talked about it being 40% of the contract value. How has that tracked sort of versus pre-Ukraine in terms of the level expected? Do you expect that to go higher as security of supply becomes more important to customers? I think the follow on as well is, does that limit your negotiating skills because you've got to place suppliers in a certain region or country? Does it impact margins?
Will you take that?
Um-
40%, I think, is what you can practically do, since as Jeremy said, 70%-80% is procured. Can we set up a manufacturing of Scania engines for 200 engines? No, not cost effectively, because they produce those engines in a month in their normal. I think 40% is the reasonable limitations. I don't think it will grow. Will the nature change? Yes, we saw how the Czechs, for example, wanted to get access to intellectual property and what they can use it for, so I think that is a change coming. I think from a margin point of view, we have the blueprint with CV90 of how we've done this, so we work very much with target pricing.
We know that if we've done this in Netherlands or in Norway and so on, we tell now the suppliers, and we try to compete in the country as well. We at least have two or maybe sometimes three suppliers if we want to produce, like, a roadwheel station. These countries we've been in so far, you have the industrial capacity to have that competition, so we sustain margin by using the experience we had from previous years in targeting pricing. Could it be more the flip to that? If we produced everything in all roadwheel stations in Netherlands and all the sites in Czech, and so, yes, we could probably earn a couple of more, 2%, 3%. That is what we calculate as the cost, but that is the cost of winning because the customer has the setup.
If you want to be in the game, you need to play the game.
The other thing I would say is it's not necessarily a, everybody has the same requirement, right? The people you're competing with have to do the same thing as well.
Yeah.
Maybe slight inefficiency that you see other than what you could ideally produce from an efficiency perspective, your competitors have that same factor as well. It's sort of leveling.
Good. Nick?
Thank you. Charlotte asked, actually asked my question, but better. I just have a sort of technical addition to that, which is, when you state a contract value for CV90, as you have with the big wins recently, is that the gross value, i.e., including the transferred value? If so, do you count all of that, or do you just count your added value bit? If you're accounting their bit, do you take a prime contractor margin, a small margin on the transferred value? Thank you.
I will say yes.
Yeah, well, it's the full value. We're the prime contractor. The whole value of the contract flows through us, we subcontract to the IC partners. Through the production phase, yeah, we have margin on all of it. That's. It differs sometimes when you come to the support business. If we are the prime, typically we are through the support business, sometimes, they point at a company, typically state-owned, they should be prime for the support. They are priming, we are subbing them. Through the production phase, always prime.
Don't get too complex on your modeling, Nick. We won't give you a break. All right, Jeremy.
Just to simply put, in these recent larger kind of production programs, they're just any other supply chain. Just like you would if you had none of it, you'd be buying this stuff from somebody, right? It would all flow through the prime, and you'd have prime margins on top.
Thank you.
Next.
Thanks very much for having us. A.J. Rice from UBS. I've got one question, all quite simple for each of you, but maybe Jeremy first. Can you just comment on the profitability of new orders versus old orders?
Mm.
Tommy, you mentioned talent. Have you seen wage inflation with your engineering base, and how are you handling that? Finally, Lina, with ARCHER, if I was to order one today, when would I get it?
Okay, very specific questions. Yeah, I think, as we pull from kind of mid-single digits up to sort of high, high single digits, heading to double digits for margin, obviously, some of that is on older contracts. As we sort of work our way through some of the more challenged contracts that we've had in our past, again, that's really inspired a lot of this sort of focus on operational excellence. Also I would describe it as, you know, pricing discipline, as we head into new competition. I'd say generally, it's not universally true, but generally, newer contracts are a little more profitable than some of our older ones, as we work through that kind of operational excellence sort of margin expansion.
You know, frankly, in this, in this type of business, life cycle matters a lot as well. You know, when you're into a, you know, a development program or a low rate initial production program as opposed to a full rate production program, kind of the pricing dynamics change a little bit across the whole industry, you know, we're consistent with that.
Wages. Start with Sweden. Sweden is highly unionized. It has advantages and disadvantages, but the real advantage is predictability, where we, the last... Now we have a two-year deal. I think it's 3.5% this year and 3% next year, so we have a high level of predictability. Have we seen an increase now in the recent negotiations, Czech and Slovakia? Yes, we've seen increases. The good thing is that we, in these contracts, has variational price formula, so we have built in labor index for Slovak and Czech and Swedish. So we are protected in the way we are contracting in those increases, but not really affecting the work. Say, the cost of that is quite low in comparison to the bill of material, but we're well protected. Thank you.
Lina?
A question regarding the delivery times. If you order now, you can get the system at Q4 2025.
Thank you.
If you'd like to, she'd take one.
Yeah.
She accepted a major project for us.
Daniela
Thank you. Daniela from Goldman Sachs. Actually, a follow-up, Lina. You talked about how procurement was happening earlier during the presentation. This is maybe more broadly than just on ARCHER, how does that change the working capital profile across the business, if at all? Does that have any implications that you're getting paid much earlier as well?
What we try to do is to get a customer to fund all the material that we need to procure in advance. As it looks now, some of it will be paid when we are placing the orders to a supplier. We have a mix, really, but we get paid from the customer when we can place the order to the suppliers.
Yeah, I'd say just maybe, just broadly, you know, we have, you know, customary in the U.S. for something called progress payments, which allows us to sort of be paid as we go. For some of the larger programs that we're talking about today come with cash advance payments. They actually stay cash positive through the life of the program, and particularly these last two big ones in Czech and Slovakia. With a mix of all that, actually cash delivery performance for this portfolio is pretty good.
If I can just add one thing regarding what we see is happening right now. It's much more customers that are interested in placing contracts just in order to get started, procure their own lead. We don't need to do that as a, as a company. The, the customer is willing to do that, even if the final contract is not signed yet. They understand that they need to secure the hardware, and this is due to the conflict in Ukraine. We haven't seen this kind of behavior before, but it has opened up the eyes for everyone.
Charles, follow-up.
I vaguely understood the European armored fighting vehicle industry, and then suddenly, South Korea comes in.
Yeah
With a GBP 13.7 billion order. I mean, what's happening there? Is this a disruptor? Are they, you know, clearly, they've won a great order there and looking good in Australia. What's the threat there for you?
Yeah, I mean, I think for us, when we think about vehicles, is I would argue there's four, you know, main players across the globe, so General Dynamics, us, you know, Rheinmetall, and Hanwha. I think all four are very credible competitors in this space. You know, Hanwha's got a good set of vehicles, as do we, and I think that's. We did not meet head-to-head with Hanwha in Czech and Slovakia. We met head-to-head with Rheinmetall and General Dynamics, who chose to compete. We will continue to meet head-to-head with Hanwha all across the world, I suspect, and they're a good company.
Yes, George?
Hi, it's George Zhao from Berenberg. I think one for you, Jeremy. Just on your U.S. Combat Vehicles business, can you talk about what opportunities you see in FMS across that business, and maybe in terms of the vehicles and countries you're looking at? Thank you.
Sure. I'd say today, the U.S. vehicle business is probably maybe only 10% FMS. We think that will grow. I think just about each of the products that we have an FMS market, we think. You know, a couple that I'll highlight, M88, which is a recovery vehicle. You can think, sometimes your car needs a tow truck, so do these combat vehicles, sometimes they just need a bigger tow truck. That's what M88 sort of offers, and it's the one vehicle that can tow an Abrams tank, which is the largest sort of vehicle out there. Obviously, it can tow everything smaller as well.
We've seen some success there in a number of countries, Poland, most significantly, recently, but we think, you know, there's a market kind of around the world for for that. Our Amphibious Combat Vehicle for the Marines is a pretty unique type of vehicle. This is, you can launch it from a ship, it can swim to shore on its own, and it can cover open water over quite some distances, and then it's a formidable vehicle on the land. There aren't a lot of vehicles in the world that can do that, frankly. That is now into full rate production for the U.S.
Generally, the U.S. wants to see one of these vehicles get into full rate production, kind of stably before starting to support it for FMS, but, you know, ACV is there now. We think Spain is likely to be the first. We think there are a number of countries around the world. Some of our U.S. vehicle systems already have a pretty significant install base around the world. Bradleys, M109, or Paladin, you can use either term for that. There's quite a significant number of those around the world, and so all of those nations are often looking for upgrades or looking for, you know, for additional, you know, additional work scope there.
Bradleys, Croatia is looking to move forward with some Bradley work. We think there's some opportunity for us there. I think longer term, very long term, AMPV will be a very attractive vehicle on the international market. It is the replacement for Vietnam- era M113s, of which there's, like, 100,000 of those around the world, most of which are not owned by the U.S. That is a very attractive kind of vehicle option that the U.S. has chosen and developed, that I think a lot of others will see will see attractive over time. That will take a little bit longer.
We expect to start full rate production in the second half of this year, negotiating a contract now with the U.S. Army. I think once that is, you know, kind of stably into full rate production, the U.S. would start to get quite interested in supporting that from an FMS kind of perspective. We think really, all of those vehicles have varying degrees of market around, kind of around the world. I would expect that kind of 10% of that business is FMS today. I would expect that to grow over time.
We've got time for a couple more. Olivier?
Thank you. One, maybe for Jeremy on the AMPV. Full rate production in the second half, you've retired all the risks, or is there anything left to do there?
Actually, we feel really good about that program. We're building about 12 vehicles a month right now in low-rate initial production. We'll go to about 16 vehicles a month in full rate production. We think that we think we're well positioned to be able to do that. We finished all of the testing that needs to be done, which is good. All of the government testing, all of the contractor testing is complete and has been successful. At this point, we think it's just contracting and ramping up a little bit, but not of a scale that we've not seen many, many times before. I think we're in pretty good shape, actually.
Perhaps the last one from Christophe, and then we'll get you outside.
Yeah.
I have a rather naive question on ARCHER. You're developing the 6x6, you're moving to 8x8 and 10x10, and usually we think that the smaller, the better, and now you're getting for bigger. Is it because you increase the load or because a bigger truck is more difficult to move? Just wanted to understand the rationale. Is it to fit with the U.S. market?
Yeah. To have, there is also an Oshkosh 8x8, so it doesn't necessarily need to be a 10x10. It's important to have a U.S. vehicle and to build it on. For the other one, why 6x6 and 8x8? When it comes to performance, they perform the same. They just look different. The reason why we went from the Volvo articulated hauler, which is the 6x6, to the 8x8 on the truck side, is to be able to attract more users. Usually, if you look at, for instance, in U.K., there is a big installed base of that kind of trucks, and also in a number of other countries.
In Sweden, the Volvo 6x6, yeah, that has been kind of the installed base in Sweden. Sweden will also change to the 8x8 because Sweden are also procuring this 8x8 for other purposes. The plan for the army in Sweden is to replace all the 6x6 to 8x8 for all 72 systems. That's in the kind of army plan. I think we need to look at the logistics perspective, depending on what country it is, to make sure that we have a setup that works fine. The ammunition handling system, the automation, it's proven, it exists, and you need to have a vehicle that fits together with kind of any kind of country and what they have in their fleet.
I would just add to that, I mean, sort of simply put, a country wants to use a truck they're already using for other reasons.
Yeah.
They want a common truck with. It's not necessarily just for what it would do for ARCHER, it's I want the truck to be something I'm already using.
Yeah.
Okay, great. Well, from the live broadcast perspective, we'll end the Q&A session now. Thank you to everyone who dialed in online, and thank you to everyone in the room. Perhaps a round of applause for our panel speakers. Thank you.