Good morning and welcome to Kongsberg Automotive Capital Markets Day 2024. My name is Therese Skurdal, and I'm the Group's Communication Director. Along with my colleagues, we welcome all of you to participate here physically as well as during our webcast. At KA, we put safety first, so please pay attention to the nearest emergency exit, which is here marked with the green signs. Let me introduce today's presenters: CEO Linda Nyquist-Evenrud, Frank Heffter, CFO, CTO Christian Amsel, CSO David Redfearn, as well as Corporate Sustainability Manager Dirk Eckert. Now on to today's agenda. We have divided today's event into two parts. During the first part, our President and CEO Linda will present the executive summary, where she will give an introduction on who we are and what we do. Linda will then also move over to a more detailed overview of KA's new business strategy.
This will be followed by a presentation by our Sustainability Manager, Dirk Eckert. Moving on to the financial updates given to us by our CFO, Frank Heffter. In the last two parts of the event, our CSO, David Redfearn, will give a market update and share and discuss on growth plans and new business wins. Further on to this, our CTO, Christian Amsel, will continue with a presentation on KA's product portfolio. Linda will then conclude today's session with some key takeaways, and after, which will open on to a Q&A session.
Good afternoon, everyone. Let me just sign in here. And welcome again. I'm pleased to invite you to the Capital Markets Day, this Capital Markets Day, which is the first one that we host since December 2021. And I'm happy to be here together with some of our key members in the KA team. And we are also pleased to have one of our board members here today, Erik Volden, in the room. And today we will share some insights into our company strategy, performance, as well as vision for the future. So let's start with the executive summary and who we are. So we are a global automotive and industrial applications provider with more than 65 years of experience working with the automotive industry, providing engineering excellence and solutions. Our revenues last year ended on EUR 885 million.
We are represented in 17 countries worldwide, including 22 plants and six technology centers. We have 5,300 employees, whereas the majority is located in best cost countries. Our company structure was updated as per January 1st this year, introducing a structure based on two business areas: Drive Control Systems and Flow Control Systems. Last but not least, we are listed on the Oslo Stock Exchange, and as per our announcement yesterday night, we are reestablishing our headquarters to Kongsberg and Norway. So in 2017, KA centralized its business model with the intention of streamlining business and decision processes in Zurich, Switzerland. In alignment with the changes in our strategic business focus, the board of directors, together with myself and the executive management, made an evaluation which led to the decision to reestablish Kongsberg as the headquarters.
Zurich will still serve as a financial center, including also some other key functions such as legal, treasury, and tax. This brings the company back to where it is publicly listed on the Oslo Stock Exchange and back to its roots and origin that goes all the way back to 1957. With this, we also strengthen our ties to two of our technology centers in Kongsberg and in Raufoss, as well as to two of our key production locations, Hvittingfoss and Raufoss. So what do we do? We have a diversified portfolio of different products suited for both automotive industry and industrial applications. We focus on cost-effective solutions engineered for sustainability and safety, and we deliver mobility solutions for the future. We have six technology centers, including the two ones here in Norway that I just mentioned, and we have 343 highly skilled engineers spread over the world.
As part of our strategic work, we have evaluated all our product areas, and we have ended up defining five key product areas, which are Powertrain and Chassis Solutions, Off-Highway Solutions, Air Management, Fluid and Thermal Management, and Industrial Fluid Applications. And as you can see on the movie running on the screen, some selected focus areas are represented in more than only one market. Christian and David will later on give you more thorough introduction to those key product areas. They're linked to the megatrends and the targeted markets. So how do we develop our products? We design efficient products that are safer and that minimize the environmental impacts. Sustainability is of high importance for our industry as well as for us as a company. And it is defined as a competitive advantage within the automotive industry.
This has led to a specific sustainability chapter in today's presentation that will be presented by Dirk in a few minutes from now. As said, sustainability is a key focus area for us, and we are well on our way to achieve 100% renewable energy in all our sites by 2030 and to deliver carbon-neutral products by 2039. With whom we cooperate with? We have a wide range of customers covering both passenger car, truck, trailer, bus, coaches, as well as Off-Highway and industrial market. What you see on the screen is key customers representing a diversified customer portfolio that we are very proud of. A portfolio that we expect to further expand in the coming years. Our focus today is on the future.
However, before we start to go into the depth, I would like to reflect on last year and our focus on a turnaround in 2024. So last year, we had the highest level of new business wins being booked since 2018, resulting in EUR 989 million of lifetime revenues and a book-to-bill above one. David will present more details about our new business wins later on in the presentation, as well as our customers and market growth path in the coming years. We had increased revenues related to the commercial vehicle markets being our key strategic area within automotive. And as you can see, we outperformed these markets in all three main regions. So what achievements and milestones have we made since the last Capital Markets Day in the end of 2021?
First of all, we made three divestments in the period 2021 to 2022, followed by three acquisitions last year, a combination of shares acquired in Chassis Autonomy, a Swedish startup company with solutions focusing on autonomous driving, patents and IP acquired from the Norwegian company Romalina, as well as vertical integration of the injection molding tooling manufacturer Skriverform. We had an election of new board members at the end of September last year, Erik being one of those also represented here today, as I said. We formed a new company structure valid as from January 1st this year with the Drive Control Systems and Flow Control Systems. As I mentioned as well a few minutes ago, we are now reestablishing our headquarters to Kongsberg, Norway. Last but not least, we have launched a new business strategy for KA, something that we'll present in a few minutes.
2023 was a challenging year. We have had a clear focus on 2024 being a turnaround year with improved earnings and positive cash flow. We have focused on overhead cost reduction and as well footprint optimization. As per the guidance we gave in our Q4 earnings call back in March, as well as the restated one in our Q1 earnings call last week, May 8th, we are confident that we are to deliver improved earnings and positive cash flow this year. Our focused and competitive product portfolio is another initiative that will further improve our position, primarily 2025 and onwards. Christian will, as I said, share more details with you later on in this presentation.
So coming back to the footprint optimization being an important part of our, and driver of our cost optimization focus and our cost optimization program that we launched at the end of last year. In addition to the news already released about the move of headquarters to Kongsberg, we are also relocating our Zurich office to a smaller office. As previously announced, we have closed our office in Dortmund, Germany, as well as our office in Tokyo, Japan. We are expanding our manufacturing footprint in the best cost countries such as India, Mexico, China, and Poland. And a couple of weeks ago, I had the opportunity to take part of the inauguration of our new plant in Ramos Arizpe in Mexico, expanding our floor space from 4,500 square meters to 15,500, so tripling and a little bit more than that.
This state-of-the-art upgraded plant is fully dedicated to our business unit or business area Flow Control Systems and allows us to continue to double our FCS business in North America in the next three years. And we will continue to look for further optimizations, footprint optimizations that will support our continuous growth and competitive position. And our primary focus is to find an optimal setup for our European footprint. So long-term ambitions, 2028, also something that we launched then yesterday night in relation with today's Capital Markets Day. So together with the board of directors, we have made a thorough analysis of the company's operational and financial prospects. And as I already stated, on a short-term basis, we are focusing on reducing the structural costs and increasing our operational efficiency. The objective is very clear. It is to secure positive earnings and positive cash flow.
Going beyond 2024, the focus is on organic growth and improved profitability. We have a successful pipeline of new long-term contracts that we won with well-reputed automotive brand names. This portfolio of contracts ensures that we have a platform for growth. Our Driveline business, now labeled as non-core, is set to decrease, though we are confident that we will deliver sustained organic growth in our core business area above EUR 1 billion by 2028. When we have been able to establish a solid earnings platform, we would consider bolt-on acquisitions as an opportunity to further enhance our growth. By 2028, we are also expecting that minimum 70% of our revenues will be linked to commercial vehicles. At the same time, our non-core business will be insignificant in terms of revenues.
And with continuous focus on cost control, optimized operational footprint, and higher sales, this will lead to improved earnings performance. And the ambition we have is to lift the EBIT margin to at least 8.5% EBIT margin, bringing KA in line with the best-in-class suppliers in the automotive industry. And this would also mean a double-digit percentage CAGR for our core business being above expected industry growth. Our ambition is to become a technology and market leader within our core business areas, offering our customers world-class mobility solutions for the future and creating lasting value for all our stakeholders. We are optimizing our operations for a more effective and cost-efficient structure to best serve our customers and to build a more competitive position in areas we excel.
Moving into business strategy, and as I mentioned a few minutes ago during our highlights since the last Capital Markets Day in 2021, as part of our strategic work, we have spent time defining the company's business strategy that focuses then on our mid and long-term ambitions, strategic pillars, our values, culture and heritage, and our people. We have chosen a common way of visualizing that by using a strategic house. The foundation in our house is built on our heritage, going all the way back to the '50s, as we said, as well as values and people playing an important role for our future success. Our focus is to continuously improve, that we become a single inch better for each day that goes by, creating a winning team and a winning spirit.
Our company is built on four strategic pillars that create the basis for our mid and long-term ambitions. The performance of each strategic pillar is measured by our policy deployment model, ensuring that our strategic goals, progress, and action at every level within the company. My colleagues will give more flavor to those four strategic pillars later on in the presentation today. On top of our strategic house, we have the roof being then defined by our mission and vision. Our focus has also been to integrate the Shift Gear Program into this strategic house, ensuring that we have one approach going forward. As you can see of the illustration, our strategic house covers a broader perspective than the Shift Program does, ensuring that we also consider areas such as our foundation and mission and vision, and that they are all linked to each other.
With that, I conclude the first part of today's presentation, and I leave the word over to you, Dirk, to give an introduction to our work with sustainability.
Thank you very much, Linda. Also, a warm welcome from my side. Just have to make one click here, then I can move on. So again, yeah, nice welcome from my side. And the intention is to give you some insights in our sustainability program. And as Linda mentioned, we see sustainability really as an opportunity for us also to differentiate from competitors and to create a competitive advantage. And of course, it's about sustainability, also creating a positive impact regarding social and environmental aspects. When I click, as I know it, moves into the next one. So our program as it is today is mainly based on two pillars.
You see on the left side, and you have seen it already in the presentation from Linda before, we have two long-term goals, and in addition, we called it forever goal, zero accidents we are striving for, and this is based on, of course, short and midterm goals and also different programs and initiatives, and on the other side is transparency of high relevance here, especially if we look on ratings, which is in most cases a simple way to see maybe with a number where a company is currently in terms of sustainability, and also, if I think about the capital market, you see CDP, which is of high relevance for investors and capital markets. They recently improved our scoring from C to B minus, so we are already doing step by step achieving new improvements.
The A is already close, so this is what we have to work for. And on the other side, you see sustainability, which gives an indication also for investors, if they are from an investor perspective, risks ESG's associated with companies in terms of ESG. And here we are rated with a low risk. So this is also quite a positive performance in terms of sustainability. And in addition, of course, we are also regularly reporting in terms of sustainability reports. In the future, we will also report according to European regulations with the CSRD. So in the future, you will find all the sustainability information in the annual report, which is then also audited. So also the sustainability part. Moving on, just briefly, because there are a lot of topics mentioned. So in a nutshell, we did a good job in 2023.
Nearly all things we have planned and we have achieved in terms of sustainability. I will not mention everything here, but to mention at least a few highlights. We managed to reduce our energy consumption and also significantly our CO2 emissions, so Scope 1 and 2 emissions, which are related to our production plants. We also mentioned it. We also managed to improve our safety performance. We had the best achievements in the last 10 years with such a low injury rate, which is quite impressive. We are now roughly 80% of our direct supply chain covering also with sustainability assessments and topics. Also worth to mention, from a compliance perspective, there have been no cases reported via our whistleblowing channels in terms of corruption and also other incidents.
You find all the details also in the annual report and also in the upcoming sustainability report, which will be published mid of this year. When we look on the highlights in 2023, we are currently running an internal sustainability project. This has been already started last year, which helped already to define our ambition levels. We also had to do a so-called double materiality. I will not go into the details here. The next step is now, and then we are currently finalizing it to readjust some of our sustainability targets to develop more roadmaps. The project will help to develop our sustainability program to the next level. This is currently going on. In addition, you see this on the bottom called Zero CO2, and this is quite impressive for a company which is producing.
We already have one plant in Sweden, Ljungsarp, which is producing with zero CO2 emissions, and there's no offsetting or compensation. This is really producing with zero CO2 emissions. Long term, of course, this is our ambition that all our plants will produce with zero CO2 emissions, meaning Scope 1 and 2 emissions. Safety. I mentioned it already. We had here quite impressive performance with the best for the last 10 years. The rating. I mentioned it already with CDP, where we made this improvement from C to B, which is related to CO2, and also the data we are able to provide. Also from the people perspective, we recently launched a learning platform. This is only the first step, as we will set a clear focus on improving, developing our people and supporting them to also personally develop within our company.
Maybe in the middle, quite impressive to see this. If you are not familiar with it, you see the small bubble are our emissions, which are related to our own production facilities. And the big bubble is mainly related to all the materials we purchase. And of course, those are the so-called Scope 3 emissions. And this has also included our long-term target to bring also the big bubble here to zero in the long run, which is, of course, a challenging topic. If I move on and now looking more on our products, but this will be explained even in more detail later on also from our CTO and our CSO. What you see here, just briefly on the left side is, well, in general, how can our products contribute to sustainability?
On the left side, you see if we call it performance view, how can our products contribute? And they can directly contribute in terms of they have less weight. We are using other materials with lower CO2 emissions. They are recyclable, or they have a performance that says less pressure drop in brake systems, which leads then to a lower fuel consumption. So this helps all for better environmental footprint, which is directly related to our products. This is called performance view. And on the other side, application view, and this will be even explained in more detail. This showcases also how our products contribute and are positioned in the transition to zero CO2 mobility, if I call it like this. You see there on the left side of this graphic, combustion engines. And on the right side, you see electrical, battery electric vehicles and also fuel cells.
As you can see on the bottom of this graphic, quite a lot of our product groups are in the end independent from the type of vehicle they are built in. They will contribute to all types of engines you see here. In the middle, when you go a little bit up, you see that some are contributing to those parts of engines, also hybrid engines, and on the other side, electric vehicles. In a nutshell, we are well positioned how the industry will develop. As I said, this will be also explained in more detail when it comes to the different types of engines in our products. Coming already to the latest page, here you see what we already mentioned before. We clearly commit to our two goals, to our two long-term goals. On one hand, switching to 100% renewable energy.
As I mentioned, we have already success here with one plant already producing zero CO2 emissions. There will be more plants to come. We will also further detail this target that in the end, we will have a zero Scope 1 and 2 emissions target, which we will develop during this year. In the middle, we also commit clearly to our long-term target, so 2039, of carbon neutral products. Also here, we will, on one hand, invest further in getting better data on product level and also company level, and also to develop clear roadmaps, which are also strongly related to alternatives in terms of purchased materials to bring the emissions down here step by step for the different products, and also to develop here a zero CO2 target for the company and, of course, also the product groups in the long run until 2039.
But ESG is not only about CO2 and climate. It's also about a lot of social and human rights topics. And this is as well covered with this project we are currently working on. So this will be, on one hand, of course, still the clear focus on safety, where we had a lot of success in the last years, but we're still striving for getting zero every year in the end. Circularity is quite an important topic where we are also currently looking more into details, which options are existing for our business model. And of course, the focus on our people. I mentioned already the learning platform, but there are other things in the pipeline to support and help our people in the end. And of course, human rights, especially in the value chain, as we are a global company, also with purchasing activities across the world.
Also here, we are investing in better systems and supplier selection processes to get all those things covered in a professional way in the end. That's it from my side. I have no more slides, and I hand over to Frank now.
Thank you, Dirk. Very well, then let's continue with the financial update. As we have just had our Q1 2024 earnings call and release of the Q1 report, I hope you don't expect me to repeat all of that. I will rather concentrate a little bit more on what is overall on the CFO agenda, and these are three things. More I cannot remember, so start with the first one.
It is already in the DNA of Kongsberg to constantly improve, and over the last years, the Shift Gear Program and what is now subsidized under Performance Excellence has already delivered more than 50 million of annual improvements compared to the previous year. Unfortunately, in the past years, these improvements were needed in order to offset all the negative headwinds that we saw coming from the market: volume declines, price increases, scarcity of materials, freight cost inflations, so that at the end, you didn't see the bottom line improving to the same extent. Nevertheless, it was extremely important that the company and every employee was working on contributing to this program. Now, going forward, we will continue our efforts, and the expectation is that now 2024 is going to be a year where at least some of these improvements will already also hit the bottom line.
First and foremost, our overhead optimization program, where we clearly stated that we want to take out EUR 17+ million of cost in the support functions by reducing staff, by offshoring staff, optimizing processes, and right-sizing. We will also continue in the areas of procurement or Purchase and Excellence, addressing the direct and the indirect material spend, as well as in operational excellence in improving the processes on the shop floor. Here again, we are targeting improvements of more than EUR 10 million in each bucket. But this will, at least to a good extent, be utilized to offset things like inflation and additional raw material cost increases that are expected and not fully passed on to the customers. When we come to allocation of resources and capital available, then clearly R&D is one of the important topics of Kongsberg, where we spend around EUR 30 million a year.
The question here is more where do we spend it? And you can see that we have already started to significantly reallocate resources by reducing in the non-core or Driveline, excluding e-actuator business, driving it down from above 5% of revenue level to almost 3%, while at the same time in the core business, we have had a stable investment in 2022, 2023, and are now even considering to invest slightly more in terms of % of revenue in order to fuel innovation and future growth. When it comes to CapEx, then also here, we have a clear prioritization. The non-core business was already running at an investment rate significantly below its depreciation level. So we shrunk the asset base. While in the core business, the investments in the last two years were close to zero. Also here, we had declining top line in some areas.
So we were very cautiously investing in new capacity. Going forward, we will allow to make the business grow and invest in additional capacity. Linda has mentioned the expansion in Mexico, tripling the size and the other investments. But nevertheless, it will still continue to underlie a very stringent capital allocation or approval process, where in the different stages of any new customer inquiry, we will review and release the investment if required. Same applies to our asset base that we already have. So here, fixed annual fixed asset counts, preventive maintenance shall ensure that we are really taking care of the investments we have made in the past. And last but not least, part of the CapEx is also intangible CapEx, so capitalization of R&D efforts. Here, we want to increase the share of R&D expenses that we are capitalizing from below 5% in 2022 to above 10%.
This benefits in a way the P&L, the income statement, but it goes into the CapEx household and on the balance sheet. What's important is that the criteria when you are allowed to capitalize these efforts are pretty strict and defined under IFRS, and there must be a very clear business case behind it and the market demand. So it helps us to steer the engineering resources into the right direction. Don't just develop for the sake of developing. Develop things that have a demand. And that is, I think, the positive in this aspect. When it comes to overall profitability and cash generation, then obviously networking capital is one of the key elements.
Here we have seen elevated levels in the recent past from, on one hand, increase in material cost, disruptions in the supply chain, where we intentionally increased our inventory in order to be able to secure that our customers will get what they need in time and don't face any line downs or shortages. Nevertheless, this now normalizes, and therefore we also need to drive down, continuously drive down the net working capital, specifically the inventory level to a more reasonable level again. For me, the 16% in 2024 as a target is kind of an interim step. I personally believe there is more potential there to get it even further down going forward. When you look at the non-core business, you see a slight increase from 2023 to 2024. This is just due to the fact that the revenue in the non-core business is declining significantly.
So the ratio is increasing slightly, whereas we still target to take out EUR 3 million of inventory, which would be more than 10% of the inventory in the non-core business. When you take all these elements together, you would expect that our capital employed, so all the assets that we are having and the liabilities will, as a net amount, reduce in an average over time so that we are below the EUR 331 million that we have reported at the end of Q1 2024. Improved profitability, on one hand, combined with lower capital employed, then both lifts up the return on capital employed, which is shown on the lower end. At the moment in Q1 and also Q2 and Q3, you will see the negative impact on the ROCE from the impairments that we have taken in Q2 and Q4 2023 because it's the last 12 months average every day.
The moment we hit Q4, then these negative impacts from 2023 will disappear, and I'm expecting to land in the range of 12%-13% at the year end. When I only take Q1 EBIT and the average capital employed in the first quarter and leave out the past, we are already at that level. So it's more the disturbance from the past that currently shows the negative impact. When I move on to the long-term outlook, then one might ask, how do you get to this 8.5% of EBIT margin, which would be a historical high? And I think it's really not rocket science. When you look at the top line development, then we will, over this time frame, lose around EUR 100 million of revenue in the Driveline business or in the non-core business.
In order to get to EUR 1 billion overall, you need to replace it with more than EUR 250 million of core business revenue. Then this should have a higher contribution margin than the commodity Driveline business. That already significantly supports the profit improvement. What we still need to do is to continue to aggressively drive out cost from the non-core business when it goes down in volume so that we get rid of the fixed cost associated with the business. And at the same time, make sure that any type of negative material or labor inflation development is offset minimum by the internal improvement measures that I've elaborated earlier on under Performance Excellence. With that, you would end up at above 1 billion in revenue and above 8.5% of EBIT margin. That concludes the first chapter. Let me move on to financial stability and flexibility.
The first important ratio when you look at the health of the company is the equity ratio. Here we have reported a solid 30.9% at the end of the first quarter, well above the 25% we have set as a minimum in our liquidity policy, so I would say check on that one. You have seen also that our net income was basically break-even in the first quarter already, so there shouldn't be a lot of additional equity consumption going forward, and then we are already today in a very solid position. Second important ratio is the leverage ratio, where you take the net interest-bearing debt and divide it by the last 12 months adjusted EBITDA. Here, everything below 2, I'd say, is regarded solid. We are at 1.8 currently at the end of the first quarter, so also from that perspective, healthy and sustainable.
When it comes to flexibility, an important element is the liquidity and the headroom. So what is available to the company to operate? Here, at the end of the first quarter, we were looking at a cash and cash equivalent position of almost EUR 148 million. In combination with the unused accounts receivable securitization facility and our revolving credit facility amounting to EUR 25 million and EUR 30 million, respectively, we are looking at a headroom in excess of EUR 200 million. So also this provides a lot of flexibility to operate the business.
But last but not least, when we look at the maturity profile of our debt instruments, then we clearly see that some of them are either already in a 12-month or in a close to 12-month maturity range, i.e., the revolving credit facility that is going to mature in January 2025, as well as the bond, which is maturing in July 2025, and that is why we have already initiated the refinancing of these two facilities, and I'm happy to see also some of our advisors here in the room. We are, I think, very well on track to get this refinanced well ahead of the maturity date. We are currently targeting as a prime facility a Nordic bond, a very attractive and flexible debt instrument. I guess you are pretty familiar with that being here in Norway.
And we want to again combine it with the RCF in roughly the same magnitude as of today. The main facility we want to significantly reduce in size in order to reach comparable or even slightly lower interest rates overall. As obviously, the 5% interest rate we are paying today on our current bond will likely not be achieved. We have to accept a slightly higher margin here or margin on top of the Euribor. So it's going to be higher, but a lower facility in terms of size. So all in all, similar magnitude. We constantly monitor the market together with our advisors, and we'll see whether the best window or a very good window will be already prior to the summer break. Then we will already go out there.
But as stated here, latest by end of the year, we should have everything done and over with to provide ample security also to the current bondholders. With that, let me come to the last section, increase returns. Little reminder that we have already significantly returned value to the shareholders, and this through two share buybacks conducted starting in 2022, May, and the last one was now concluded two months ago in March. We have repurchased all in all 12.5% of the outstanding shares and already redeemed the 10% in the last or following the last Annual General Meeting. It goes without saying that the share price performance below is not what we are proud of, but the share price is being done on the market. We concentrate on running the company.
When it comes to the bond, also here, we have, following the three divestments, redeemed EUR 75 million of the initial EUR 275 million facility. We have, in the meantime, repurchased around EUR 10 million in the open market and now just recently launched a tender offer for additional excess cash still available to the company, EUR 36 million. That is going to be concluded in this month as well, in May, and things sign up pretty positive that this will be a success. All in all, we have summarized it in our liquidity policy published in early May. Again, financing stability and flexibility with enough liquidity at attractive conditions, still honoring the net interest-bearing debt to EBITDA leverage of 2.0, equity ratio of 25%, and continue to utilize a bundle of different instruments to be diversified.
Capital allocation, clear priorities, support the organic growth is the number one, specifically in CapEx and R&D, but then as well provide the flexibility to look left and right whether we can even boost the growth of the company through equity investments, joint ventures, or bolt-on acquisitions. Last but not least, return of excess cash or liquidity. There are and there will continue to be two ways, and that is, on one hand, share buyback programs. On the other hand, the dividend, where we clearly define the dividend policy that we are able to pay out up to 50% of the net income, provided that the goals or conditions of the finance strategy are being met.
With all the activities in terms of profitability and cash generation, it should also have a positive impact at one point in time on the share price, which obviously is an additional return directly to the shareholders. With this said, I invite you to a short break. I think we are okay in time to have 15, 20 minutes. It's 20 minutes past one, so 25 minutes is okay. Very good. Thank you very much and see you in a bit.
Okay. Good afternoon, everybody. My name's David Redfearn. I'm the Chief Sales Officer. I've been with Kongsberg virtually my entire career. I joined the company with the acquisition of Global Motion Systems back in 2008. So thank you, Linda, for giving me this prime spot. You're all fed and watered accordingly, so I'm sure you're super excited. I'll get you before the sugar wears off.
I'm going to take you through the sales presentation, a little bit about what we do, how we do it, but primarily what's happening in our market, what are we excited about product-wise. I'll sort of prep that a little bit. Kristen will take you into detail as to why we think we have the product segments correct, and we'll talk about new business wins. I think we've had a lot of success recently, and we feel that that will continue, and we'll show how that trends towards sales in the out years. We'll give you a little bit of guidance that we've already stated recently with regards to our financial aims on the revenue side. Market updates. I have taken these copied with pride directly from Frank's presentation with regards to Q1. So this basically references the last trailing 12 months.
Not too many changes, slightly better 2024 Q1 than what we had in 2023. That to us sort of highlights there's more stability in the supply chain now. It's allowing us a little bit more operational. We can see further into the future. We're not as stressed as we are on the supply side, and the OEMs are showing that as well with slightly more growth. The demand's not quite as clear when you go out into further quarters and we go forward. There's still macroeconomic factors which can have an impact, but primarily the Western markets are fairly solid, both in car and in truck. Asia, well, India's going very, very strong. China has pulled back a little bit, but still is a very, very dominant market, huge scale, as you can see over the 12-month frame.
What's more interesting for us, did I click, is where we are in the five-year frame, because this is how we also do our strategic planning over five years. We show you with and without the impact of China because it is so dominant, both in terms of passenger car and commercial vehicle. I think the huge growth that we've seen in these segments over the past 10 years, we now have a period of stability, as you would expect as you go into a transformational change when it comes to technology. So the CAGRs are not particularly stellar. I get they're kind of following GDP rates, but that's because of where we've come from in terms of the huge growth, both in passenger car and in commercial vehicle. You'll see Kongsberg's projected CAGR rates are significantly higher than this, which points to two things.
One is we feel we are gaining in market share, and we see that very clearly in certain segments, and that we're also benefiting from content improvement based upon the technology shifts, as Christian will take you through in his presentation as well. So solid markets, solid expectations over the next five years. Again, macroeconomic things. We're just going with the forecast in-house. We don't have a crystal ball. I think both global pandemics and land wars in Europe, they weren't predicted. They're not predicted now. So this is just a steady-state forecast taken from both of our forecast houses that we subscribe to. So business wins and customer update, the exciting part of my job. Going back to the slide that Linda showed, I think sometimes we go over this really quickly. We don't reflect on how impressive this is for a company like ours.
Yes, it's taken 50, 60 years to develop, but we have some very important relationships. Some of these go back to the '60s and '70s. We have a mix of new entrants. You'll see some electrified companies in there that only have been around for the last 10 years, some even shorter. And then you'll see the core historic businesses, global businesses such as Volvo, such as Traton, such as Ford, companies that we work with, that we have supply codes with in various regions. And if you were starting a business like this, trying to develop that as your nameplate, you would probably take a similar amount of time to what Kongsberg have as well. It's important that we appreciate what's been developed over time and also be selective about continuing those relationships. They should benefit both parties.
I think we also occasionally have to remind the OEMs of that as well. Our top 20 customers, just a quick note here. When we refer to, for example, Volkswagen, we're talking about the mother brand. So in reality, it's Traton. The bulk of that is truck and bus, Scania business, as opposed to business with Volkswagen passenger car. The same goes for Volvo, Tata. For us, it's primarily Jaguar Land Rover. So just that we do reference the mother brand. It's diversified. We have a good mix between passenger car, commercial vehicle, off-highway, and Tier 1. Tier 1 being where we supply a subproduct and they take the responsibility of delivering it directly to the OEM. The OEM is the original equipment manufacturer. I assume everybody knows that, but perhaps not. So just to clarify.
The OEMs, Ford, Volvo, JCB, Caterpillar, the actual company supplying the final product. New business wins. Frank mentioned it briefly during his presentation. We got close to EUR 1 billion last year in annualized revenue. 61% of that, that's unusually precise for me, was in commercial vehicles. That's an area where we have constantly pushed over the last five years that we feel we have a stronger product portfolio here. We feel we have more sustainable gains on margin within that area. That's why we have focused both the products and our resources into commercial vehicle. It's paying dividends with regards to the areas that we've won within. Then you see the split in the old business area between Powertrain and Chassis and Specialty Products, which we now refer to as Drive Control Systems and Flow Control Systems. Just a breakdown of the actual products.
Does that mirror what we've said to the market in terms of what we want to prioritize on? I feel that it does. The product we have on the gearshift systems, they are very expensive control units. So one order of reasonable scale is very dominant with regards to the actual volume and the EUR revenue. They are very expensive products, very complex products. It's different to a hose and tube or an air brake coupling. So that's why they tend to dominate in a year when we're looking to win or re-win a contract within that particular area. Hose assemblies within the fluid transfer system, the flow control unit, and electric actuation, we also started to gain more wins within that area in 2023. That's continued into Q1, which nicely segues into where we are now.
You had a little bit of another update come in as well. Within the first quarter of this year, we're already at EUR 450 million of lifetime revenue prediction. Slightly different to 2023. We were expecting the first half of this year to be stronger than the second half. It's just how the customer decision dates are falling. So far, we are very much in line with expectations, perhaps slightly over in some areas. Again, truck, trailer, bus is the dominant part as per our predictions, as per what we've shared with the market over the last few years. The product range overview, gearshift systems. Again, as I already mentioned, it's an expensive product, so it does dominate hose and tube, air couplings, clutch actuations, small part of our business where we re-won some head restraint and then shift-by-wire and the other area.
So a very interesting and strong Q1, very much in line with what we guided towards. As I mentioned, I think we are very confident, let's say confident. We're confident that this year will be one of our strongest, if not the strongest, in new business awards, whether you measure that at annual peak or whether you measure it at lifetime revenue. And we do take the lifetime revenue. Yes, we have an RFQ. We look at it with the customer, but we also discount or add using the forecast houses. So we don't just take the customer's information. We'll go to the forecast houses. We'll try and understand to make sure that we're referencing as best we can the prediction of the future when it comes to volume. One very interesting award was the gear control unit for an important partner customer.
We've had this business for almost six years. We've re-won it for a further five years and with extra sales into Asia. And from a sales perspective, this is every bit as important as brand new incremental wins. We spent an awful lot of effort, money, time developing a product like this. And to have it for five years, that's what you do your business case on. If you can keep it for 10, yes, there's modifications. Yes, you can't leave it alone as a product. That's very, very important. And I think most salespeople will share the same view that retaining business is a route to sustainable profitability. Winning new customers with new products, it's expensive initially. Keeping what you have, providing you have a good product, and it is profitable, is very, very important. And you have to re-win it. You'll go into a genuine competitive environment.
We were very pleased to announce last month that we've managed to do that with one of the largest single awards in our history. So I think that's very positive. We also won our second e-actuation product for a European passenger car OEM. This product will be built in Europe. The reason why this is important is we'd had success in Asia, but we weren't able to make that step into the European market, which is important. It's good technology. I think Christian will explain perhaps why we were successful in these awards and what we have in the future with this product portfolio. But again, just highlighted a couple to show that there were strategic reasons why we went after them and we were successful in achieving it. Just very quickly, checking my nine minutes remaining.
One thing which I think we forget about is we also have choices. We have a lot of RFQs that we don't quote because quoting in commercial vehicle and passenger car can be an expensive business. We have to design, develop, we have to make the trips. It's a long process, as I'm going to explain in a future slide. We've got a lot better at selecting the right opportunities for Kongsberg, and we've done that via a customer roadmap process, via having multidisciplined teams, purchasing, engineering, sales, the whole business coming together. Why is this opportunity more likely to be successful for us, and I think a company our size has to do that and constantly do it. Our Book-to-Bill ratio, basically a measurement of predicted future success in terms of revenue growth versus where you are today.
From the last seven quarters, we're trending at a record high, currently 1.2. So it basically takes the last trailing 12 months in sales versus your business awards of that same period. So it does change over time. And as we've stated, with a strong 2023 and a very solid Q1, you'd expect this to be trending to where it is now at 1.2, which, if you work that out, shows that the future growth is reasonably secured. Growing and winning, the life cycle of the awards, two different parts of our business, commercial vehicle and passenger car and off-highway, is primarily us designing products for the OEMs. And that has a life cycle and a time process, maybe anything from zero to four years from when we first get an awareness of the opportunity to invoicing a finished part number. It can be shorter.
It can be longer in very technical products. But basically, our OEM-type business that you saw outside on the tables, it's a zero-to-four-year process from when we announce a win to getting pure revenue. There are opportunities within that timescale to revenue-generate prototypes, design and development, but primarily, there's a long period. The good news is about that, you tend to keep it for a long time as well. The OEMs don't tend to change unless you've given them a reason to do so. So you have the stability, but you have to invest upfront. 15% of our business, approximately, industrial and aftermarket, is a very different sales cycle. We can go out today and bring back the order tomorrow, providing we have capacity, providing we have sufficient feet on the street in terms of salespeople. That's where we can influence a calendar year that we're already in.
But remember, it's between 12% and 15% of our overall turnover. So if any of these markets catch a cold, truck and car, you're putting a lot of pressure on here to make up for those differences. But we can do it. And in some years, this has been the area which kept our top line where it needs to be. So just different sales cycles within those two segments. You probably know some of this. I'm just refreshing. Okay, product range, the commercial vehicle range that we have. I'm going to give a very top-level overview on this. Christian is going to dig in in a more detailed way. Powertrain and Chassis Solutions, Fluid and Thermal Management, and Air Management, the three main product segments that we fall within. Commercial vehicle, our most important sector. What you have here is, I think Christian is going to reference it.
I know he is. We're in a sweet spot now when it comes to this change from traditional combustion engines going towards electrification and whatever guise that may take in commercial vehicle, fuel cell, battery, hybrids, mixture of both. All of these things are going to require more content than what we as a product portfolio currently supply today. And we have the majority of the products already developed and most of them in production. So we have a very long period of increased content per vehicle, maybe from one to seven years. Christian will share data when electrification starts to gather pace in commercial vehicle. It won't be in this decade when they get anywhere near a 50% share. Christian will give some guidance on that. So I think we have the right products. We're in different areas within the vehicle, and we specialize in these areas.
And these selections, I mentioned it briefly outside. We're making the right decisions now when it comes to, we can be good at this, we can win at this, but not at that. And this is why you have the core versus non-core, the Driveline decision that we made. That's a better way of looking at it. You can't be the best in everything. We don't have the scale. So now we're being more focused, and that reflects in the wins as well. Passenger car, again, it's an area which is important to Kongsberg Automotive. Yes, it's becoming a little more niche, perhaps, and opportunistic where we look at the areas where we can make better than average returns. We don't have the same range that we have in commercial vehicle, nor should we. But we do have strong opportunities within Fluid and Thermal Management, battery coolant.
We have some business there, both with two European OEMs, one a significant SUV manufacturer. Air suspension is a mixture of our coupling business and our traditional flow control business with formed nylon products. Some examples are outside on the table. This is increased take rate globally. It used to be the domain of SUVs and very expensive limousines. Now, with electrification and the heavy battery cars, you will find it on more and more vehicles, giving natural volume growth just by retaining your market share. This is an area that we are focusing on both in Asia, North America, and Europe, truly a global product, and I think we offer certain things there which do differentiate, and electric actuation, as I mentioned on the slide earlier with our first European awards, another important product group.
Off-highway, a business area which primarily came with the Global Motion Systems acquisition in 2008: some really interesting products. It's a nice market. The margins are relatively strong, and we have a very unique steering column product, two or three derivatives, modular-based, so we can supply in scale to a number of off-highway manufacturers. The examples would be of the type of vehicles: the yellow cab, the JCB, Caterpillar-type vehicles, as well as large construction equipment, pedal and throttle controls, and then what we've done within the centralized sales, the team that only used to sell this now is putting forward the other products they have, the air brake systems and the engine hose and tubes, so that's another area where centralizing sales provided benefit for cross-selling. The industrial application, fluoropolymer hose products, a variety of applications. It's a problem solver where rubber hose, nylon, or metal wouldn't work.
Then you move toward a fluoropolymer product, petrochem, pharmaceutical, we have new product launches. We've put three separate ranges into the market in the last five years, all very well received. We have very strong growth plans for this particular area, completely different to automotive, but we benefit from being part of an automotive group because the customers, the quality, the purchasing power we have, it gives us some unique advantages which most of our competitors don't enjoy within that area. Our growth ambitions, the exciting part of my presentation. So we are, and we've stated that we expect to achieve a 10% CAGR through the next five years. And we are aiming to get toward EUR 1 billion of our core revenue. Go back to what Frank said about the non-core, reducing by approximately EUR 100 million, requiring extra new business of around about EUR 250 million within our core business.
I'm going to show you on the slide to the right here, the graph to the right, that we're on track. We're performing pretty well in terms of forward order bookings. Now, as I explained, there is a length of time which you would expect in automotive between one and four years to get those business. But we have awards 2026 is somewhere in the region of 85% of our committed order book of our predicted volume, i.e., the year scale already booked. That, my history in the business is very solid. I think we normally have more gaps to fill than what we have. That isn't to say that this is a slam dunk. We're in a competitive environment. We have to go out there and convince the customers that we should be the ones that they select.
Our recent win performance suggests that we're on the right track. The key takeaways. I won't read them all line by line. I'm sure the people online and you guys can see and read for yourself. The new business wins. I'd like you to remember that we've booked significant work for the future. That's a testament to what the customers are telling us in terms of our competitive position and that they put faith in us. The fact that we are looking at a product portfolio which is very, very focused now in comparison to perhaps three or four years ago when we were trying to do everything for everybody. We're more focused. We have better control. The sales force and the cross-selling, the benefit of centralized sales. Yes, we've taken cost out of the business as part of the cost optimization.
We weren't immune from that, but it hasn't impacted our ability to be with the customers, to work on new projects, and we are basically putting more tools into the salesperson's bag and the engineers. The new business win I already referred to, the industry area, it's important. Yes, it's small in terms of the total scale, but we have very strong growth ambitions and we have a very good product portfolio. So I think overall, we shouldn't forget that. As we started with it, the customer list, we're very appreciative of them putting their faith in us, and now I'm going to hand over to Christian, and we're going to dig into the products in more detail and why we feel we have the right product groups. Thank you.
Yeah, welcome from my side as well.
Christian Amsel, I'm the CTO at Kongsberg Automotive, joined the company roughly three years ago. Yeah, half of my time I also spent as a business unit leader of Powertrain and Chassis, which I have seen on some of the slides as well. Now merged with off-highway into the new business area, Drive Control Systems. Yeah, David, thanks for sharing our very positive track record in the new business wins. I think for us, that's really important having such a solid order book. I would like to share in my presentation and disclose some more details of our growth strategy, what are the key product areas we would like to invest in and why we believe in this growth story.
And also about telling a little bit more about the sweet spot David mentioned we are in currently. I'll call it between the old world, the conventional diesel and gasoline engines, and the new world moving towards e-mobility and fuel cell vehicles, which is, yeah, mentioned everywhere, but we also need to reflect what is the real growth rate in the different segments we are in. So if you now look into the megatrends, I think everybody knows different kinds of megatrends. What is really driving our company? What is driving our growth? What is driving the transformation of our company? You see here the four major megatrends: electrification, optimization, safety, and sustainability, which are also driving our and influencing our company. You see significant growth rates in the different elements up to 30%-38%.
Also this brings new technology to the market, autonomous driving with camera, laser sensors, but also new technology in steering and braking, which is also part of our growth strategy. Electrification towards electric-powered vehicles, fuel cell vehicles also brings new technology, and you will see how we can scale successfully in future this kind of technology also to these new markets, new growing markets. On the other hand, as I said, we should not forget about the other business areas which are still remaining in the conventional world. There's still a lot of potential for us to earn. I would like to introduce a little bit more in detail how we would like to call it the harvesting phase from our end to further get more market share and good order intake in that area as well.
This slide shows the regulations in the world for passenger vehicle PV and commercial vehicle CV. You will see that, for example, in Europe, the regulation is already the most far defined. It will go to zero in 2035. Everybody knows in Europe there will be no more conventional ICE engines, internal combustion engines in the passenger vehicle anymore. In the commercial vehicle segment, there are also defined steps, but there is not a zero emission target in the next 10 to 20 years. But there are steps defined to reduce by 30%, 60%, and 90% the emissions from the commercial vehicles as well. What we clearly see is commercial vehicle won't be at 100% reduction within the next 20 years. So really a long period, a long transition period, which we can use in our favor.
And also the battery electric vehicle, the BEV penetration is not on the expected level in commercial vehicle levels. We see this later, which also gives a lot of opportunities for us to grow in that area. New technologies need to come as well to support the reduction of emissions like synthetic biofuels and also fuel cell vehicles. And also here we have prepared our current product portfolio to meet these requirements for these products as well. We have now discussed a couple of times core products of KA in future. As you know, we have three divestments in the last two years done successfully and also the announcements in January of this year to not consider the Driveline business, I call it cable shifter business, no longer as core business of KA in the future. These are our five key product groups which are the elements for the future.
Two are in the newly defined Drive Control Systems business area consisting of the conventional Powertrain and Chassis Solutions and the off-highway applications which have been briefly introduced by David already, and the other three are in the Air Management, Fluid and Thermal Management, and Industrial Fluid Applications. Yeah, nobody can predict the future, and as I said already, the transformation phase is not a short run. It's a long run. It's like a marathon, and the question is how to position ourselves in this long run, and we believe that the three elements are very important for our growth strategy. On the one hand, in the lower part of this graph, we see that one third of our products are resilient products. They are not affected by the transformation towards e-mobility. They are just there. They will go.
They are successful, and they will continue to grow also in the future, and you will find here good examples like Air Management, where we are one of the market leaders globally in the world, and we will further enlarge this kind of business successfully, but it's not affected by e-mobility at all at this point in time. The second growth pillar is for us the conventional ICE, internal combustion engine related products. We call it extension harvesting phase. As you will see on my next slide, this harvesting phase will continue for the next 20 years. That's still for us a very, very interesting growth opportunity applying the well-developed product portfolio, as David stated, not investing in new technologies in all areas, just rolling out the technology we have successfully to more customers and gaining more market share, and the third pillar we have prepared are the growth products.
As David mentioned, the content per vehicle will increase. The requirements for cooling, for example, in electric trucks, in electric passenger vehicles will increase for battery and electric motor and inverter cooling, for example. And there the content per vehicle for our products will increase significantly. And this will also drive the growth of our company further. What you see here is the transformation of the industry in the commercial vehicle segment concerning the electric mobility. In the dark blue area, you see in the lower parts the battery electric vehicles and the fuel cell electric vehicles, which will represent roughly 30%-32% market share in 2035. So from now on, 11 years ahead of us, one third of the commercial trucks vehicles will be equipped with electric drivetrain technology. Two thirds of the business will remain in the conventional area.
And this is one part of our strategy to stay as well in this commercial truck area for conventional drivetrains as we still see a huge market here. Yeah, after the introduction a little bit of the growth drivers, megatrends, regulation, and also explaining a little bit the positioning of our company in this battlefield, I would like to go a little bit more into details concerning the two product areas and explain a little bit products and strategy there. Drive Control Systems. As I said, the merger of Powertrain and Chassis Solutions and Off-Highway Solutions for good reasons. We have seen a couple of remarks in David's presentation about electric actuators, for example.
There are a lot of product platforms where we share a common ground and where we see a lot of synergies between Powertrain and Chassis Solutions and Off-Highway Solutions when it comes, for example, to electric actuators. All of these products you see here on the screen. We are in a strong market environment, one of the market leaders globally under the top three, and with the new products, of course, we have the same target to become market leader under the top three globally in the world. A few applications like vehicle dynamics. We are a niche provider, but within one customer, we are single source. That means we provide 100% of all deliveries to that customer. You see how successful we can scale technology even though if we are not scaling it globally, but dedicated to one customer. The future drivetrain can look like this.
This is an electric axle with electric motors. And here you see in the middle potential products of Kongsberg Automotive, our so-called electric actuators for several applications. These actuators, for example, provide functions like gear shifting and decoupling with an innovative brushless DC motor technology. Eva will share more details outside of the room. This is a newly developed electric gear shift actuator, very compact, the most compact design in the world for gear shifting, different lock applications, and decoupling. Also here, a modular design which can be deployed to several applications. Up to three of these actuat Driver Control System ors will be equipped in one electric axle. Yeah, to conclude a little bit in the area, we have a couple of drivetrain constellations, a multi-speed central drives, but also underfloor applications like in buses.
All of our products are meeting these requirements for shift-by-wire shifters, electric actuators, and gear control units. In all of the products, we are deeply engaged in new technology development with customers and are very successful, as you could see in the order intake. Autonomous driving as a new trend coming up now in the last one or two years is really picking up. We believe that autonomous driving will also change technology in steering. This is the reason why we invested into the startup Chassis Autonomy a couple of months ago, and we are cooperating with them on steer-by-wire technology. In this case, it was a high priority on people mover business. On this slide, you can see the impact of the electrification on our product portfolio.
You see that the majority of the products are not affected or partially affected, but getting replaced like gear control clutch actuation systems by stronger growing products like electric actuators. I don't go through all the product trends in detail. You can read it on your own, but it's clear, for example, electric actuators have a lot of benefits being more accurate, increasing the lifetime of the vehicles, offering less noise, and are easier to be integrated in the drivetrain. Off-highway, as David said, we are market leader in steering column modules with a modular platform. The same is valid for our pedals, electronic throttle control and pedals. This is part of our growth strategy as well.
In addition, we have set up the new product, electric actuators for differential lock applications, but also electric power steering applications and steer-by-wire systems, which is also in the off-highway segment, strong growing growth pillars in the next years. And it's part of our DNA as we serve these electric power steering systems also in the last 15 years. The resilience of this product portfolio you see as well here on the left side is much higher. And we are serving product trends like autonomous driving and e-mobility here properly as well. Yeah, to conclude, Drive Control Systems, you see here some of the four winning products of the future.
On the left, you have heard about the significant order intake, but also in the last months, we have been awarded in Asia with the start of production in 2026 and further rollout plans to be continued in the conventional ICE engine business, but we also see that also hybrid electric vehicles and plug-in hybrid electric vehicles will use this technology as well, so we are getting green there as well, at least partially. All the other products, electric actuators in commercial vehicles and off-highway applications, will represent a strong growth in the next years in our current product portfolio with an already strong order intake, and the steering control modules and pedals already representing number one in the market will be part of our growth path as well.
Coming to the second pillar, Flow Control Systems, Flow Control business area designs and manufactures products for both automotive and commercial vehicle markets, as well as industrial applications. It consists of the three business groups, Air Management, Fluid, and Thermal Management, and Industrial Fluid Applications already introduced shortly by David. I would like to start with a short movie as well. You see here several tube and hose applications, connectors, and manifolds, which are part of our deliveries, including sensors and valves. Today, we use this kind of technology for conventional drivetrains and chassis cooling, and we will transfer this technology towards electric vehicles and fuel cell vehicles. You will see some of our prototypes outside. Here are the future trends in the fluid and highly efficient Air Management.
We clearly see that the ABC couplings will continue, air brake applications will continue in the truck, and we started to scale this technology to high-performance couplings for air suspension systems. That's a huge growth market in passenger vehicles where we can scale the technology we have towards other applications and continue further revenue based on the key competence we have. In the Fluid and Thermal Management, the second growth pillar in this area, of course, we stay in the chassis cooling systems, but we will heavily invest into battery and fuel cell powertrain types where we can apply the current developed technology. And the last but not least field is Industrial Fluid Applications. Currently, the smallest business unit we see, but in this area, we are quite successful in growth in the last years.
We intend to grow further, over-average in this area as we clearly see this market is unlimited, and we want to have here a stronger growth compared to the other business groups. When it comes to the resilience check, it's clear that some part of the products which are related purely to the internal combustion engine will have no long-term future. They will get introduced in the plug-in vehicles in the next 10 years, but in the long run, there's no future. But they will be replaced, as already stated, by a higher content per vehicle in the thermal coolant lines and also with the newly introduced air suspension lines and other products which we have in the pipeline. Industrial hose products and markets. When we started to talk about this topic, my question was, are these all areas we are providing our technologies? Yes, that's the case.
We have a variety of different technologies which you can see here on the left side, which will be served to the different market segments in chemical, oil, and gas industry, pharmaceutical, food and beverage, and others. Here are some examples of different applications where this technology from Kongsberg Automotive is already successfully used. As said, this is one of the key growth areas in the future. It makes us less dependent from the automotive cycles, and therefore, we will continue to invest in this area. Yeah, to summarize, what are some of the four key winning products and areas? It's Air Management, as stated, as a market leader in Air Management. We will work on our next generation ABC couplings. We will use more and more lightweight material, and yeah, also entering new applications in air suspension, but also in thermal management applications.
In the fluid management, this is related purely to ICE engine and plug-in vehicles. We continue with the improvement of our products, investing into lightweight and high-performance materials, replacing steel and rubber, and also, yeah, serving customer needs for improved emission regulations, Euro 7, for example, in Europe, which will, again, create more revenue and increase the content per vehicle compared to today's systems. In the thermal management, as shown, the transformation towards e-mobility will continue, but will be slow. In 2035, only one-third of the products will be equipped in the commercial vehicle with thermal management systems to this extent. But this market is continuing, and therefore, we are investing, and we will scale our current portfolio to the thermal management applications. Last, again, industrial applications, growth target from EUR 40 to EUR 100 million by 2028.
As I stated, it's a strong growth ambition we have, and we see that's possible in this more or less unlimited market environment. Yeah, to summarize my presentation, as I said at the beginning, we have run through a big portfolio cleanup in our company with the three divestments and also the announcements in January. We introduced the five strong product groups. We believe that is a well-balanced between conventional products, innovative products, and this will be defined as a core product of KA in the future. We aim for two-digit growth in all of these core products. And the product and marketing split is uniquely positioned to benefit from megatrends and electrification and sustainability transformation transportation as presented. Business wins have been very successful, and we are very confident that this journey will continue based on the new five areas we have defined.
We will also go for bolt-on acquisitions, as already mentioned by Linda, to strengthen the core business in the defined product groups. Yeah, that's it from my side. I would like to hand over to Linda. Thank you.
Is the sound back? Very good. A long presentation, and we are above 80 slides already. What I would like to do now in the end is to bring you some key messages that I want you to bring with you from this presentation today. The ones that I would like to highlight for you are the following. We are a company with high focus on innovation and improvement, always aiming to provide our customers with the best solutions to a competitive price. We have a strong focus on cost and footprint optimization. Our current short-term focus is to reduce structural costs and increase operational efficiency. The objective is to secure positive earnings and positive cash flow in 2024 and onwards.
We have launched an updated long-term financial ambition for 2028, including revenue above EUR 1 billion for our core business, representing a double-digit percentage CAGR and growth above market, as well as EBIT margins at or above 8.5%, bringing KA in line with the best-in-class suppliers to the automotive industry. We have announced that we are reestablishing Kongsberg as our headquarters, returning to our roots, and reaffirming our commitment to our customers and other stakeholders. Sustainability is a key focus for us, and we are well on our way to achieve 100% renewable energy in all our sites by 2030 and deliver carbon-neutral products by 2039, and last but not least, we are to become a technology and market leader in our core business areas, so as a last slide, we would like to highlight some key messages for why you ought to invest in Kongsberg Automotive.
First of all, we have a focused and resilient product portfolio that is linked to our core business, including both our Drive Control Systems and Flow Control Systems. We are well positioned to capitalize on the growth within commercial vehicles, defined as our key priority and well explained by both David and Christian here today. We are strategically placed in the market to leverage the growth of electric vehicles, and we have a healthy balance sheet and a sizable and secured order book, something that we have showcased over the past months with regard to new business wins and the announcement that we've shared, as well as the updated guidance for our expected bookings within this year. We are well positioned to take on bolt-on acquisitions to further enhance our growth.
Last but not least, we have a loyal and long-term relationship with both Tier 1 and OEM customers, a diversified customer portfolio covering both automotive as well as industrial segments where commercial vehicles are defined as our key priority. With that, we conclude the presentation here today, and we have then an open Q&A session. I suggest then that all the presenters come up here as well, considering that we are live streaming, so everyone can see who is actually also giving an answer. Yeah?
Okay. Let's start with the questions that have come in on our web stream. This is a question for you, Frank. Good to hear that the headquarters is moving back to Kongsberg, Norway.
Can you please elaborate a little bit about the expanded cost reduction related to having the headquarters in Kongsberg, Norway, compared to the cost related to having headquarters in Zurich, Switzerland?
Yeah, I would say we have already initiated cost optimization measures back in 2023, and that is already implemented with the exception of removing the headquarters into a new location. But therefore, once this is done, I wouldn't expect significant additional immediate cost savings from this move.
Thank you. Another question for you here, Frank. The revenue target of EUR 1 million in 2028 implies that there will be not much growth beyond covering the inflation. What are the inflation assumptions reflected in that target?
Okay. We have elaborated on a double-digit growth, which I would kind of disagree that this only reflects inflation. Yeah, it is an underlying growth as well. When we put the mid-range plan together, we take the best available customer price assumptions and leave them stable. So there's no general piece price inflation included. What we do is we account for a small amount of customer compensation for inflation in areas like labor or electricity, but this is in the 1%-2% range. So there is a strong underlying 8%, let's call it, growth in the business case and not just inflation, to make this clear.
And just to add in there as well, I think that came through very well as well in the slide deck of David, where we also showcase in terms of the KA for the market in general versus what we are anticipating with our double digits as well.
Okay. Next question is for David or Frank, and you can decide which one is to answer this one.
I had to.
Can you tell us what the value of today's order backlog is and what the split is per year going forward?
I think by backlog, I'm assuming the person who posed the question is referring to the order book. Backlog is our arrears, which are minuscule. We have capacity to fulfill demand, and obviously, we're expected to deliver 100% on time. In terms of our forward order book, I'll refer back to the slide which presented in 2026. We're approximately 85% of where we hope to be with that top-line revenue development. We haven't stated the specific 2026 target, but we're trending towards a billion. That's our aim. And 85% of 2026 requirement is fulfilled. 72% of 2028 is fulfilled. That's, I think, what the questionnaire might have meant. If not, they can email me or.
Yeah. Maybe I also try to add there, if you just make a really rough back-of-the-envelope calculation, we have around roughly EUR 800 million of annual revenue in our backlog or in our booked business. Take an average 20% gross margin contribution, then you are looking at something around EUR 300 plus million, EUR 320, just to make it a simple calculation. But keep in mind, neither the volume nor the prices are guaranteed at this point in time. There will be variances with the market.
Thank you. Next question is for you, Linda. How big of a customer was KA for Skriverform before KA acquired the company? And can you tell us a little bit more on the savings that KA has by owning this company now?
Okay. Yeah. So KA Raufoss, I think that's just to start with that one, was one of the top three customers to Skriverform upfront to the acquisition. They were an important part in terms of then tooling manufacturer for injection molding tools. And you've seen many of those products here today, for example, on the air coupling side and products produced in polyamide materials, and that's where you use those tools. So that was vertical integration. That was the key for us to have a better control on our supply chain, as well as also gaining then technical expertise and knowledge transfer into our own team working with this as well. So that is what it is.
We will see if we can also then further scale up that part of the business because we also use polyamide materials in other areas than for our Raufoss facility, but that's a little bit too early to make a statement on.
Thank you, Linda. Next question is for you, Frank. Has there been a consideration made for the reverse split of the shares?
We actually, in preparation of this year's annual meeting, discussed that but concluded that at the moment, we don't see really a benefit in doing so or the cost-benefit relation made us decide not to pursue that at the moment.
Thank you. Another one for you, Frank. Are we within the framework of paid dividend if the guidance delivers for 2024?
So with the guidance of EUR 34- EUR 44 million of EBIT, if you then deduct the interest that we have to pay and the taxes that we have to pay, I would not yet expect a significant net income to be generated in 2024. Therefore, the likelihood, from my perspective, that the board of directors will, following the results, propose to the AGM a dividend and the AGM to conclude and decide on the dividend, I think it's rather unlikely. I wouldn't keep my hopes too high on that one.
One note that has come in here as well is representing our executives traveling in from different locations today and the cost related to that. So maybe you want to give a short comment on that, Linda?
I can at least answer up for myself. I drove here. I live in Zurich. I drove here. I think we are other team members here today as well that drove here. Clearly, when it comes to we focus a great amount on cost optimization, cost cutting, cost reduction, and clearly, travel is also part of that initiative. We are a global team, and we are a global company. And for me, it's also important then to represent that with some key members, as I said in the start, that we have here today. So clearly, not everyone has the ability. We could take a sustainable approach as well, and we could take both train and boat for that sake. But clearly, flight is what we are using, traveling in as well then from other countries. So yeah, I think that's enough.
I came with Norwegian, so I'm doing my bit.
Very good.
I took the Vy and not the Flytoget .
So as far as it looks now, that concludes the question on the digital platforms. So if there are questions from the audience, we can if there are any, raise your hand. Yes? Just wait for the microphone.
Hilde will come.
Need it for the digital participants.
From today, after this meeting, are the members of the board and other leaders in the company free to buy shares in the company, or are they still insiders?
If you consider in terms of the announcement that we did then late yesterday night in terms of reestablishing the headquarters to Kongsberg, as well as our long-term ambitions, yes, that is valid for that. Then we are released from that perspective.
Okay. Thank you.
I just want to follow up on that question. I suppose we can agree that the share price is relatively low historically. I would expect that you as management and also board members would state that you believe in the company and buy some shares. We haven't seen much of that yet. I'm a bit disappointed by that.
Understood. I think, as just mentioned as well, clearly there have been a great amount of activities now recently. Also, from that perspective, we have silent periods that we need to consider. When that's been said, the management is incentivized with a long-term incentive program, which is also explained in our Annual General Meeting documentation. And that is then clearly part of that. On top of that, some of the management members have been buying shares as well throughout the years. And in the end, I would say that this is upon individuals' discretion as well on what to be done or not to be done. Yeah.
Any additional questions from the audience? We have one more on the digital platform. It's for you, Linda. Will the phase-out of the non-core business be made through expiring contracts, or are there opportunities to make the divestment on the non-core parts?
When we concluded the structural part of the strategic review last year, we also announced that we were branding then our Driveline business as non-core, and we also made it clear that we saw it as a better option to do then an internal wind down or whatever you want to describe it as and take that under our own control, and that's the path that we are running towards. If there would be other options coming up along the way, we will evaluate those, but that's the current path that we are working with.
So, last question that I can see here on the digital is for you, Frank. How long will the high tax charge continue on the above-average level?
The high tax charge?
High tax charge.
Okay. I thought you were referring to the high-tech company status. Yeah, that's a good question. I think it highly depends on the constitution of our earnings and the tax losses that we can currently not utilize in both Switzerland and Norway. We are obviously working on improving the situation by both bringing the profits up and by improving also the intercompany loan structure in conjunction with the refinancing that should ease the situation. In 2024, I would not yet expect that to have the significant impact. We will have to wait a little bit more to get the earnings up there.
Thank you, Frank, so as you know, further questions in here, so if there are no more from the participants present, I think that concludes today's session, so thank you all for coming and participating, and thanks to all of our presenters.
Yes. Thank you all.