Welcome to the third quarter presentation for General Oceans here in Oslo this morning. It is a snowy day, but we hope you have an opportunity to follow it by video. Being with me here today is Anton Van Heerden, our CFO, and my name is Atle Lohrmann, and I am the President and Founder of General Oceans. We are going to take you through the third quarter presentation. It is going to be divided in two sections. I am going to be talking a little bit about the overall impression we have after the first nine months of the year, and then Anton is going to take over and go through the financial numbers with you. In summary, the operating income of the company for the third quarter was NOK 320 million, which is up about 13% compared to the third quarter of 2025.
In constant currency, the similar number is about 19%, and there is going to be a lot of talk about FX today because there has been quite a few changes in the relationship between the U.S. dollar and the Norwegian kroner over the last year. We are not going to spend too much time on it, but you should be aware that a lot of the numbers are moving back and forth a little bit, depending on whether you are looking at volume numbers or you are looking at revenue numbers. The effect on the third quarter is approximately 6%, and that number will be coming back and forth a little bit throughout this presentation. The target revenue for the full year of 2026 has been reduced because of the FX effect, about NOK 100 million, which is the net effect over the year.
Our target for the year is now about NOK 1.4 billion, which is exactly NOK 100 million down from the number that we anticipated at the beginning of the year, which was NOK 1.5 billion. The full year sales volume is actually in line with budget, and that distinction is obviously fairly important from an operational point of view, since we are actually reaching the targets that we set at the beginning of the year, although the numbers are going to be changing. The adjusted EBITDA for the quarter is NOK 43 million, compared to NOK 49 million in Q3 2025. And the adjusted EBITDA for the first three quarters is NOK 186 million, which is about 18% margins relative to the sales, and that compares to NOK 188 million for the first nine months of 2025, which constituted at that time about 20% margin.
A couple of percent point down from last year in terms of the overall EBITDA numbers. The qualification in terms of what is happening underlying all these numbers is that there are quite a few changes going on, and we are going to be getting back to that in the market presentation. But what we are seeing from the outside on the numbers side is very much that the Robotics and also the navigation systems that form a part of the defense space for our sales is exceeding the forecast that we have, whereas Sensor sales are below expectations. And we will get back to some of the details underlying those numbers. Order intake was NOK 293 million for the Q3, and the backlog right now stands at NOK 518 million.
If we are looking at the revenue analysis a little more in detail, we are looking at the first nine months on the left-hand side. You can see the marine construction market has been going down from NOK 449 million to NOK 407 million. Defense is climbing from NOK 269 million to NOK 386 million, which is quite a large increase. The ocean science is going up from NOK 28 million to NOK 229 million. Those numbers include the acquisition of MRV earlier this year. The underlying growth in the ocean science market is about, if you are looking at the sales volume, is very steady. It is actually not really growing, and I think under the circumstances that we have seen happening in the U.S. under the current administration, that is actually pretty good. The science market is still a stable market underpinning several of the companies in the group.
If we look at the segment reporting, the Q3, as you can see, the relative colors of the green and the olive, we are looking at still fairly good growth in the Robotics portion of it, and then a little bit of a decline in the Sensor segments, reflecting the numbers that we talked about before. If we look then at the market development, I think the most dominant issue that is happening on the marine construction side is the decline in wind farm development. It is a little more complex than just saying that wind farms are not happening, because they are. It is basically wind farms are right now in the construction phase. So some of our companies are depending on the early stages of wind farm development, which means the survey portion of it.
Some of them are more attuned to what is happening when the construction is happening. So right now, there are very few new projects starting. There has been increase in sales, an increase in cost. There is reduced subsidies, and obviously, particularly in the U.S., there has been a lot of headwind when it comes to the political situation. So this has then had this effect on the change in the market for marine construction. Offshore oil and gas is more on the maintenance side, very active actually, and some of the companies are benefiting from that one. So it is not a one-size-fits-all type of picture. It really is quite differentiated depending on what part of the market development or the construction versus the early phase project you are involved in.
Science project saw particularly, I think, at the beginning of the year, and particularly in the U.S. market, a lot of deferred projects pushed out. As you probably have observed, in the political situation in the United States, it is complicated. It is not like everything gets cut. What happened this year, a lot of things got pushed. So order intake in some of those areas are actually quite strong right now because projects are getting pushed into the end of the year. So it is not. The overall impression of the market is that it is not really negative. It is more of a stable market is the way we look at it internally.
And then, on the defense side, which everybody is very interested in, I know, because it is a growth area, we did grow from Q3 2025 to Q3 2026 by 43%, which is obviously a significant number. The reason you can argue that it is not more apparent in the overall numbers is because General Oceans as a company really was not originally set up as a defense contracting type of company. What we had was that we had areas in underwater technology that was also being used by defense applications. What we are seeing is we are seeing that activity is growing quite quickly, but it is just a smaller fraction of the overall. It is about one-third of the overall activity. Even though the growth is quite strong there, it does not necessarily show up in the overall numbers yet to the same extent that you may expect.
But that does not mean that it is not growing, which it really is. I want to talk just a little bit about the characteristics of the defense market, because the way we look at it internally is that there are three components to it. There are the direct contracts with military units, which typically are longer delivery times and often create a larger backlog. Then there are the relationships that we have with many of the primes and the companies that are directly interacting with the military, and that actually constitutes, in many ways, the larger and more classical portion of our defense sales. Those contracts are much shorter term and do not necessarily show up in the backlog the same way. Then there is the sales to VC-funded. There are a lot of VC-funded companies, especially in the U.S., that is trying to attack the defense market.
Some of them will succeed, some of them will not, but they spend a lot of money in that phase, and we are obviously benefiting from that. Those projects are very short term in terms of, and do not usually show up in the backlog at all. So it is a complex system in terms of how the defense increases are reflected in revenue numbers as well as the backlog numbers. Because the situation is so dynamic, with regard to both the political, we are talking about the wind changing, the defense market coming up, we need to be very adaptive to the situation and the changes that are happening, and that has forced us to make organizational changes also at a much more rapid clip than we traditionally have been doing.
I think maybe some of the key points in the organizational development is a shift in internal resources towards defense-oriented activities, and obviously the first part of that is the sales organization and a reorientation towards speaking more to military contractors and into the military organizational units. We also had quite a few changes on the management side. At any given point, we kind of have to adapt to what the market requirements are, and we are trying to do that as best as we can. Some people come, some people go, and there is nothing dramatic in the changes we have seen, but I think it is the reallocation of resources really is also reflected on the top management level. It is nothing strange about it, but we are busy constantly trying to make sure that we have an organization that is adaptive to the market conditions that we are in.
At Nortek, we sent out a press release sometime earlier this year where we really did the reallocation of resources towards the product areas that are growing the fastest within the Nortek company, and also looked at the efficiency in production, which has been happening through automation and other processes that we have been implementing over the last few years. The estimated cost reduction for Nortek in 2027 is now estimated to be about NOK 27 million. There is also a one-time cost associated with that will show up in some of the financial reporting of about NOK 5 million.
Otherwise, we are really trying our best to focus on efficiency within the organizations, which means that we are improving the coordination between the different operating companies and also the interaction between the headquarters and the operating companies to make sure that we are aligned on the strategic choices that we make and that we, as a group, actually act as a group and not as a series of just individually operating companies. The governance model within General Oceans is a little atypical in the sense that this is not a compounder type of company, but it is also not a fully industrial integrated company. It is somewhere in between, and with significant elements of interaction between the companies, but not operating as a single brand as some larger entities in this industry will do. AI is obviously becoming a big factor.
I am going to get back to that, but we also have spent quite a bit of resources this year making sure that we are taking advantage of some of the changes that are happening and some of the benefits. That process, as most of you will know, is happening so quickly that every three months there is really a new headline for what can be done with AI, and we are going to get back to some of those things later here. On the product development, as we said during the IPO presentations earlier in the year, there were not a lot of product introductions in 2026. Most of those were planned for 2027, and we are now looking at the new year and seeing that the benefits of those efforts are going to come to fruition in 2027. These are pretty fundamental product developments.
It is not just about putting out a new product. We are really talking about introducing new architectures, which means that these are products that are fundamental and will sustain the different operating companies over several years to come, because an architecture typically has a lifetime of 5- 10 years. Once you have a solid foundation for a company, it will generate the results also over a long time. We are looking at four of those architectural introductions in 2027, and we are very pleased with that and obviously very excited to see what kind of benefit we are going to be getting from it. These products cover both Sensor segments and the Robotic segment, so you will see it is fairly broad-based. We are also adding in internally funded projects in addition, so basically projects that we are looking at specific areas.
Some of this comes from my experience with M&A that is associated with the technology developments. Areas where we believe that we have a missing gap in our technology stack or the base of the companies, we are starting to do some of those things internally. It will be more organic focus in 2027 than you have seen in the past. Again, these projects, these internally funded projects, are also going to cover Robotics and Sensor segments. There is a refocusing in some ways on a combination of organic initiatives and M&A. We are not stopping the M&A process, but we are definitely doing more organic projects next year than we have in the past. The in-house capability that we developed in 2025 and 2026 is now starting to bring fruition.
The two companies that we started, one which is Echosonics, which is the U.K., a smaller company specialized in transducer development. They have now provided internally developed and produced products to some of our operating companies. Ocean Synaptics, which is in Oslo, and it has been focusing on software and AI tools, is also starting to actually show their benefit to the operating companies. It has been quite impressive, and we can talk about AI for quite some time in terms of how it is going to impact product development over the next few years, because it has been quite exciting and encouraging to see what kind of results can come out of an effective use of these tools.
This group is now providing services to the rest of the operating companies, and they just completed a complete complex robotic control system for the ROV company in our group, using AI as the predominant tool, and it is very impressive how that has been working out. Good things happening. One product that was introduced, or soft introduced, was a Nortek product, very end of the year. It is coming in, I think the official launch is early 2027, but they are doing a soft launch right now.
The outlook, this curve, we have taken down the 2026 estimate for the year from NOK 1.5 billion to NOK 1.4 billion, which is entirely from our perspective, and I realize that the financial side may be looking different, but the effect of the FX effect of about NOK 100 million, then has pulled down our estimated target for the year from NOK 1.5 billion to NOK 1.4 billion. Nothing much more to say about that. Internally, it is the same process. It is actually on budget in the different operating companies, if you are looking at the average, but obviously the outward-looking financial numbers are going to be different. There is nothing much we can do about that right now. It is not possible short term to mitigate FX effects. Over time, obviously we do, so we are working out over a long time scale.
If it's happening fairly rapidly over a year, as we see now, it will get reflected in the revenue numbers directly. In terms of the strategic priorities for General Oceans over the next 12 months, we are still active in the M&A space. We have by no means given up. We've been in several processes this year, but we also must admit that for some of those processes where larger neo-primes are getting in, we've seen pretty ridiculous valuations. As a fairly conservative, long-term-oriented company, we don't really want to go way out on a limb in terms of what kind of pricing we're going to offer. When companies come in that have valuations of tens of billions of dollars, obviously for them, it doesn't really matter that much. We are a little more nitty-gritty in our valuation efforts. There are still strategic opportunities out there.
We're looking at some very interesting ones now. It's a very active area. By no means have we stopped this, but we do also realize that there are both industrial companies and PE funds that are very active in anything that smells of defense, as you may expect. In terms of the internal resource allocations, we are really being very active in refocusing our resources onto the areas that we see growth. There is an active process there at all levels. We have been actively working on our connections to the defense industry, which has primarily been looking at how we can interact in a more proactive way with some of the primes or subprimes that are providing equipment to the defense industry.
That has also led to a little bit of a reorientation in terms of how we work with that industry. There are some plans and some changes that are going to be happening over the next 12 - 15 months that you'll see as well. A little more refocusing on where we think our niches really are and how we can provide the most value to that particular market area. On the AI-assisted development, as I mentioned before, it's almost mind-blowing what can be done these days. We would be not doing ourselves a service if we don't take advantage of the capability that's coming along.
We have increased our focus on making sure that the AI resources that are required on the development side are part of the group, and we will continually actively now start implementing the different technologies into our product development activity. Looking forward to that. I think the end game in that and what the result is going to be over time is something I think all of society is wondering about. At this stage, from our limited perspective, we're seeing nothing but benefits at this stage. It really is quite actively pursued and going to be very interesting. I think with that, we're going to be transferring the controller over to Anton, who's going to be talking about our financial performance.
Thank you, Atle. Good morning. I will just be focusing on key areas, so it has not been covered specifically. Just to recap, on the quarterly basis, revenue increased 13% quarter-to-quarter. Gross profit margins is 64% versus 70% in a quarter. That is to do with product mix, that movement. Adjusted EBITDA in the quarter is 13% versus 17%. We are carrying a bit extra costs in overheads as well, other than the downturn we had in Q3 from the sector. Then year to date, 9% growth year-on-year for the nine months. If we focus on adjusted EBITDA, the growth is - 1%, and the gross profit margin is 60% on average across the nine months in both comparative periods, 96% versus 95%. The gross margin adjusted EBITDA is 18% versus 20%.
We ended the nine months with a backlog of NOK 518 million versus NOK 647 million, which is a decrease of 20%, but there is a slide later where I will talk about the backlog. This is the bridge to help understand the movement between September 2025 and September 2026, where we had adjusted EBITDA of NOK 49 million last year for the same time period, and then we had MRV contribution, NOK 8 million. We had the underlying performance of the group NOK -8 million, and the FX effect, we had a NOK -6 million on adjusted EBITDA, and we ended at NOK 43 million adjusted EBITDA. This slide is indicating our quarterly movements. As you can see, it is quite lumpy a bit, but if you compare the quarters, you can see the movement in the light blue.
We had 17% in Q3 2025 and 13% in Q3 2024 for the adjusted EBITDA percentage, and the revenue increased between the two quarters, as mentioned before. Backlog. I am just going to pause in the order backlog. Our order intake in Q3 2025 was NOK 420 million. Our order intake in Q3 2026 was NOK 293 million. Keep in mind that in Q3 2025, we had a large military order intake of NOK 220 million. So if you want to do a like-for-like comparison, it is roughly NOK 200 million versus NOK 293 million on a like-for-like, if you take the lumpiness of the defense order out we received in Q3 2025. As you can see, the order backlog has decreased over the timeframe. That is from delivering the large defense orders. So, even though our order intake has increased.
If you look at the order intake year to date, roughly allocated to Robotics, 33%, our Sensors division at 67% of the order intake, and the backlog ending in September is roughly 50/50 between the Robotics segment and the Sensors segment. Looking at the group financials. As mentioned before in the summary, I am just going to focus on some key areas. The gross margins are still strong. The gross margin in Q3 is lower of 64% versus 70%. That is due to product mix and the tough products we are delivering over the quarter versus the previous quarter. But year to date, we are still on 67% on average across the board. Then EBITDA percentage, as mentioned before, we are on 18% year to date versus 20% year to date in the previous period for nine months. Looking at our Sensors division.
As mentioned before, the downturn in the marine construction has affected our Sensor division. You can see the revenue decreased, which also affected our bottom line with the adjusted EBITDA of 5% versus 13% in the same quarter in the previous timeframe. I will bring you up to the gross margin. Our gross margin is still there. When the revenue decreased, it went straight to the bottom line and affected our EBITDA as a percentage of revenue. Year to date, we can see our numbers are also down on a similar basis. The Robotics segment. As mentioned, in the defense sector, strong growth. A strong portion of Robotics segment is in defense. You can see the growth in the top line, 170% over the quarter, and the gross profit margin has decreased about roughly 10%. That is due to product mix, not anything else.
It also affected gross margin, affected our adjusted EBITDA at 25% versus 34%. Year to date, growth is still 167% in the Robotics segment, with gross margins in the 70s, and EBITDA still strong at 35%. Balance sheet. I just focus on a few highlights. Our CapEx year to date is NOK 22 million, which is 2%, which is still within our guidance of 2%-4% for the group. The ROCE is LTM. That is 12 months comparative over the quarters at 29%. Our target is 30%. It is not on target. There is a bit of a function of the performance in Q4 2025 being added in, and also a bit of FX on the whole group effect, but we are confident that we will recover to be above 30% in short term. Net working capital has increased to 17%.
I think there is a slide which I am hoping. Did I miss? Okay, there is a slide missing. Our net working capital has increased from last reported 14% to 17%. That is mainly driven by reduction in our contract liability short term. That has helped increase that, and also the LTM revenue number sort of being flat over that timeframe. Conclusion on the balance sheet. Our balance sheet is still very strong in the group. Strong cash reserves. We still have our funds from the banks available for us, so we are still in a strong position for our M&A aspirations as we move forward. This is our indicative targets, short and long term. The only change from the last report is that we reduced our forecast for the year from NOK 1.5 billion to NOK 1.4 billion. Q and A.
Very good. Thank you, Anton. We have some questions that came in here, and I think the first two questions are both related to marine construction. It is basically sort of how we adjust ourselves to the difficulties and how we perceive the wind farm industry or the marine construction industry to be changing. I think sort of it is kind of the same question. When it comes to wind farms, there are organizations that have much more of a direct focus on that area. There are service companies that have been really, really struggling over the last years. There has been large layoffs in that industry. The problem with the industry is threefold, I think. It is a price increase that we have seen on the construction project itself.
It has been reduction in subsidies, and then there has been also political headwinds in terms of, I think, our current American president doesn't really like windmills. I think that's kind of the long story short. But the effect of all of that has been that new projects are being pushed out in time, and I don't know if they're coming back again. I honestly, I think that in terms of adjustment to that area, I think we just sort of have a lower direct expectation, what's going to happen. We're definitely not putting our efforts and resources into a hope about that recovering itself.
I think we are looking at something that is going to be fairly persistent, and in terms of adjustments internally, I think the Sensor sales that are going into that particular industry or that was focused into that industry is shifting into other projects, because there's still, there's oil and gas, there is port development, there are bridges being built, there's a lot of marine operating activity. But we're not sort of crying over this particular area because I don't think it's coming back at any time soon. I think what we're doing is we're adjusting continuously to the market's areas where we think there's growth. We kind of go after the money, I mean, long story short. I really have no expectations of that coming back again on the wind side. Next question is, what is the current status on potential new defense projects?
Working with the defense organizations when you're working on directly with the military, it can be quite long term. Now, there are elements of that that are shorter term. Americans are spending something called FMS money, which is Foreign Military Sales. Those come around pretty quickly. I think in terms of the larger projects, I expect there to be a large project coming in in 2027. I don't have a particular date yet. I don't know exactly when it's going to happen because it is a process that is not run by us by any means. It's run by the defense organizations, so they determine the pace of it. But there is a lot of activity, and we'll get back to that a little longer term in terms of sort of how we see the defense industry evolving and how we see General Oceans' role in it.
We are definitely now fairly actively working on the sales side on the defense, and we will see results of that in 2027, but I don't have any dates or any particular numbers for you. Then it's next question. If we can comment on the co-located facility that we set up at SRS in San Diego, and what are you hoping to achieve longer term in combining the respective engineering capability with those two organizations? It's a nice question, very specific. But it's true. We did rent a new adjacent building to the existing SRS building in San Diego, and one of the reasons we did that is that MRV has a license from Scripps Institution of Oceanography to produce something called a glider, which is a quasi-robotic device that goes up and down in the water column and measures ocean parameters and can also be listening to things.
It's a little bit of a combined usage type of device. But it's a robotic area. It uses something called a buoyancy engine, which is sort of how this thing goes up and down. This license, we are intending to start manufacturing that, and actually have started working on that as an internal project. It's one of the four internal projects I talked about, and that's going to be stood up in that facility in San Diego. That's going to be happening, starting actually, we're in the process right now of starting that process. We're expecting that to be basically a glider production facility. Then, last question. What do you do to position your operating companies to profit from the extreme growth in the defense sector? Well, I mean, we are obviously already benefiting from it.
I mean, the Q3 numbers were 43% up, so it's not like we're not paying attention. But as I think what we talked about earlier is that we're really refocusing our internal resources as well as looking at the M&A space for defense type of products, and we are looking at how each individual company can benefit from working with not just sort of defense organizations directly, but also then through the VC-funded companies that are out there, as well as working with the primes and the subprimes and the neo-primes, in terms of benefiting from helping them achieve their objectives, which is obviously to sell directly to the defense organization. So, we're working at it in multiple levels, and there's been quite a bit of shift, especially on the sales side and the focus on defense as a source of revenue for General Oceans for 2027.
I think with that, there was the last question, so we would like to thank you very much for your attention this morning. Hope you have an uneventful day if in case you're in Norway and are facing snowstorms. For the rest of you, just have a great rest of your day. Thank you.