So many of you have decided to take the trip here and spend the days with us. And to those of you watching us from the webcast, welcome to you as well. Today, you will hear presentations from a broad group of Kongsberg management, as well as some of our experts diving into some of our exciting technologies. During the lunch break, those of you present will be able to take a better chance to take a better look at our systems and some of our products that are on display out in the hall and outside this building. We have a NASAMS system, a NASAMS system up outside the building. We have remote weapon stations. We have a full-scale HUGIN AUV.
We also have two maritime simulators up running, one located just across the hall here, and one towards the opposite side of this building, an offshore wind simulator. I would also urge you to visit our Future Fuel Energy Lab, which is open down at the opposite side of the building. Very exciting. You see the program behind me. You will get presentations from all the business areas before lunch. After lunch, we will have a moderated Q&A. Jette Christensen will join us today, and she's an expert on European politics and previously member of Norwegian Parliament's Committee on Defense and Foreign Affairs. I will urge you to save your questions to this session. Then some practical information. We have no planned emergency exercises today, so in case of the alarm going, please exit the building through your nearest emergency exits.
The one nearest here is just behind the scenes, outside this room. Restrooms may be found just where you entered the building. There are also other restrooms down the hall, and lunch will be served out in the hall. With that, I think it's showtime, and it's my pleasure to leave the floor for our President and Chief Executive Officer, Geir Håøy.
Thank you very much, Jan Erik, and good morning, everyone. Welcome to Kongsberg Capital Market Day. It's been quite a few years since we have hosted an event like this here in our own premises in the city of Kongsberg. As Jan Erik said, we are very pleased to see so many of you joining us here today. Also, I'd like to extend a warm welcome to those of you joining us online. It is truly my privilege stand here today together with the Kongsberg management team to provide you with some updates on Kongsberg, and also on our ambition for the future.
In addition to myself, you will today hear from our CFO, Mette Toft Bjørgen, and you will also hear from our business presidents, Eirik Lie, Kongsberg Defence & Aerospace; Lisa Edvardsen Haugan, Kongsberg Maritime; Martin Wien Fjell, Kongsberg Discovery; and Shane McArdle, Kongsberg Digital. So our story is one of dedication and determination, and this is a narrative that spans days, weeks, and years of engineering, testing, and fine-tuning complex technologies, integrated into systems for critical tasks and operation. At Kongsberg, innovation isn't merely about creating. It's about cultivating sustainable solution that endure and perform consistently under any circumstances. So our goal is to deliver technology, today's critical challenges, to create a better tomorrow.
We know that our technology will be a part of the solution, and that's why we never settle for anything less than excellence, driving to innovate and lead by example in everything we do. And that's why we go to work every day to protect people and planet. And I would also like to add, for me personally, as a father, and also lately as a grandfather, the important task of leaving the planet in a better condition to the next generation is the most important driving force. Kongsberg is a different company today compared to when we hosted the last Capital Market Day back in 2022. The world has also undergone significant changes the last couple of years, and our markets are experiencing an unprecedented surge in demand.
This growth comprises both the need for enhanced national defense capability and the need to actively address global challenges related to the decarbonization and also the energy transition. All this happened at the same time. Kongsberg is uniquely positioned to meet this demand. Our solution are specifically designed to tackle these critical issues. We are uniquely positioned to meet the needs of our customer and to help them solve their challenges. We have never encountered such a strong demand for our entire portfolio. This moment presents an extraordinary opportunity for Kongsberg to lead the way in providing innovative and effective solution that not only enhance global security, but also contribute to a more sustainable future. Today, you will receive a thorough overview of our business, but if I should ask you to remember three key takeaways.
Number one, Kongsberg's offerings are directed towards solving two major trends of today: security and sustainability. During my more than 30 years in the company, I have never experienced such sustainable demand and solid outlook demand. So, Kongsberg, number two, Kongsberg has a deep domain knowledge and a comprehensive technology portfolio. We are expert in what we do, and have skills and competence among the best in the world, in all our areas. Number three, the demand we see from the two drivers I mentioned. These are not short-term fluctuations. It will take years for the nations to build their defense and security framework. At the same time, the world is aiming for net zero in 2050.
In my view, this means that we have entered the cycles that most likely will generate solid demand, not only today, not only the next years, but most likely the next, next decades. Today, the world find itself at the crossroad, facing challenges that shape our geopolitical and environmental landscape. Conflict and challenges in Europe, in the Indo-Pacific, and in the Middle East, coupled with the rising tension among global powers, underscore the growing instability. The geopolitical situation creates demand, not only for immediate action, but also long-term, to ensure a secure and sustainable future. This growing commitment underscores the importance of strengthening collective defense capabilities in response to the security challenges in Europe. Europe is in now in a new investment phase.
By 2024, 18 NATO member countries are expected to meet or exceed the alliance target of spending at least 2% of their GDP on defense, which is a significant increase since 2014. This also includes Norway, which has proposed an historic defense spending increase over the next 12 years, and will meet the 2% GDP commitment already this year, and also aiming for 3% towards the end of the 12-year period. Like Norway, the new European investment phase has also a long-term perspective. Kongsberg already play a crucial and expanding role in enhancing the security of NATO members and allies through our advanced technologies.
As a leading technology company, we are uniquely positioned with our portfolio to address the current challenges, and provide customers with technology they need, which also means that we can expand our foundation for export opportunities even further. Sustainability and security are closely linked. One cannot exist without the other. As the world faces the escalating crisis of climate change, evidenced by extreme weather, ice melting, and record-breaking temperatures, our expertise in advanced security and defense solution, as well as technology to reduce the maritime and the ocean industry's climate footprint, is more relevant than ever. Thus, this is why, complying with the Paris Agreement is essential for our collective efforts to combat the climate change. That was a little bit early.
Our innovation in energy and net zero maritime technology already serving a 1/3 world fleets are well-proven and well-positioned to meet the ambitious goals set by the Paris Agreement, and the goals of reducing greenhouse gas emissions substantially by 2030, and net zero by 2050... which is set by the International Maritime Organization. Kongsberg is dedicated to leading the charge by continuing to provide innovative solution that ensure both. This will also be further highlighted during today's presentations. I think Kongsberg is a company that can rightfully call itself truly unique. Kongsberg possesses extensive domain knowledge, positioning us as a leading system integrator with expertise in both hardware and software.
Our ability to seamlessly integrate our own technology with that of others spans all parts of the company, from design to operation, forming the foundation of our strong technological competence. Our expertise and creativity have made us a master of dual technology, extending from the ocean depths to the outer space, from defense innovation to civilian application. Kongsberg's success is based on our close collaboration with our demanding customer, and as a result, we have managed to be at the forefront applying new technology. Today's much-discussed technologies, such as the artificial intelligence, machine learning, these are something that we have already been doing for many decades. Our strength is that we have always adopted modern technology to improve internal efficiency, but also performance of our system and solution. So throughout today, you will get the chance to learn more about several of our systems and application.
All our business areas will give you more insight into the technology world of Kongsberg. You will see how we provide precise illustration based on sound in water, how we utilize artificial intelligence, how we continuously develop our system to be even more efficient and offer greater capacity, and how we empower ship owners to seamlessly navigate their energy transition journey towards zero emission. Kongsberg operates globally, with more than 13,500 skilled professional across 40 countries. Each team member contributes to our diverse markets, defense, security, maritime, energy, space, and the underwater ocean domain. In recent years, we have welcomed thousands of new members with specialized expertise. These new colleagues, alongside our more experienced staff, ensure that we continue to develop and innovate our technological competence.
The skills and knowledge of our employees are instrumental in advancing our capabilities and maintaining our leadership in the industry. Our collaboration with our... with the nation's customers, partners, and suppliers is also essential for Kongsberg. This collaborative approach drives our international growth and development, allowing us to meet the diverse needs of our stakeholders actively. Due to an unprecedented surge in demand and also a large after-market, Kongsberg is proactively enhancing its capability and also investing in production capacity. We have recently opened a new office in Kochi in India, and we will soon open a new office in Ålesund and production facilities in both Kongsberg and Adelaide in Australia. We are committed to expanding our global footprint across various location, consistently investing and growing internationally. Our reach is global, supporting our customer wherever they operate.
Kongsberg has demonstrated remarkable growth and resilience, tripling our revenue from 2018 until today. In my view, this is quite okay. This significant achievement is a testament to our firm strategy, commitment, and solid execution. We have not relied on the market growth alone. We have succeeded due to our confidence in our people, technology, and solutions, and we are also a forward-looking company by nature. Balancing the short-term operational excellence with the long-term planning is key. For the past years, our long-term visibility has grown substantially. Even though there will always be areas for both overperforming as well as underperforming in a broad portfolio like ours, the outlooks are, in general, positive... very strong for our entire business, and the trends that we are facing are long-term.
As I mentioned earlier, I have never during my career experienced a more solid and long-term demand to what we see today. Yes, we will, as others, see a shorter-term fluctuation in our operation, but looking at our total portfolio, we are uniquely positioned to address the current trends. To ensure that we have the right long-term focus, we have thoroughly reviewed our portfolio and concluded that 10 years from now, our ambition is to triple the revenue size of the company. And this means that our 2033 ambition is to deliver revenue of at least NOK 120 billion. Going from NOK 40 billion- - NOK 120 billion in 10 years is ambitious, but as I mentioned, given our unique position and also our long-term outlook, market, this we believe this is achievable.
We experience strong demand, we are well positioned, and with my competent colleagues and our unique technology, we are ready to respond directly to the major global trends on sustainability and security. With that, it is my pleasure to introduce our CFO, Mette Toft Bjørgen. Welcome you to the stage. Thank you very much.
Thank you, Geir, and welcome to Kongsberg, everyone. Also, welcome to everyone online. Today, I will focus on the longer horizon, how we have come to where we are today, and also how we plan to prioritize our resources to meet our longer-term ambitions going forward. Let me first take a look back. When we set our target in 2022 to be a 40+ billion NOK revenue company in 2025, with a group-wide EBIT margin of 12%, we have met our targets well ahead of plan. Evaluating these targets today, you could argue that we were a bit conservative, but achievements like this does not come without strong and strict priorities of our resources, and very solid project execution along the line. We've been through a period of currency fluctuations, high inflation, and supply chain disruptions.
But in Kongsberg, we're dedicated to deliver our projects on time, at cost, and at high quality, and this shows also... in our financial results. Over the last years, we managed to capitalize on our investments and initiatives across the company. Kongsberg ended Q1 2024 with a record high order backlog at NOK 90.2 billion. Our order backlog has increased within all business areas, which is a solid foundation for further growth. Kongsberg's unique positioning, as Geir has talked about, to the markets that are impacted by security and sustainability, makes us confident that the growth will continue in the long term. Kongsberg Maritime has, for the past years, delivered strong performance. This is driven by the aftermarket, our ability to protect and increase our deliveries in already established positions, as well as entries into new.
We are well positioned to take part of the maritime transition to net zero with our integrated solution for energy efficiency and decarbonization. Kongsberg Maritime is also developing solutions and technologies that can increase the life cycle for vessels, and increase scope of our deliveries. We expect to capture further market shares in a growing market in the years to come, as Lisa will give you more details on later. For Kongsberg Defence and Aerospace, we have, for a while, experienced solid growth based on demand for our defense portfolio, in particular for missiles and air defense systems. These two product areas constitute a majority of our order backlog and will be important also for future growth. We also see a major aftermarket potential. The NOK 410 million contract for upgrade and expansion of NASAMS to Spain is a good example of this.
In the proposed long-term plan for Norwegian Defense Forces, naval defense capabilities are specifically important. This presents interesting market opportunity business areas, also besides defense. The increased defense and security spending, especially within NATO is a driver for the defense industry, and Eirik will come back to the addressable market. Kongsberg Discovery has shown solid growth in the first year as a separate business area. With a comprehensive technology backbone and a vision to discover the secrets of the oceans, this presents significant opportunities also for strong growth. Now, digitalization is at the core, and a denominator in all our business areas. It has been key to our success at Kongsberg, and Kongsberg Digital is focusing on utilizing the available data, generating simulated data to increase operational efficiency across several industry. Kongsberg Digital's competence on digitalization and advanced processes are keys for their success.
As I have showed, the historical growth has been strong, but just as important is that we have developed and we have delivered solid profitability and improvements over the period as well. The macro conditions during this period has been challenging. Inflation is an area of high focus at Kongsberg, and thorough planning and excellent project execution have made this challenging development manageable. In addition, parts of our backlog, especially in the defense area, have been protected by pre-negotiated inflation clauses. With such a high growth pace, it's also important to scale efficiently and keep strict cost control to secure the profitability. There have been major margin improvements within Kongsberg Maritime. Kongsberg Maritime has continued to release synergies from the acquisition that was done back in nine...
2019, and this, in combination with strong project execution and dedicated improvement initiatives, are the basis for the margin development as we have seen. For defense, we operate in a regulated market where the majority of the contracts are subject to profit caps. For several years, we've said that in defense and aerospace, we have enjoyed a favorable project mix with regard to profitability. This mix is, as you have seen over the last year, about to change. However, the change is still towards a historical high level. It's the excellent project execution, continuous hunt for synergies and cost efficiencies that form the basis for the strong margins. When we say that the mix is changing, we really mean that a larger part of the portfolio we are delivering on are made up of by contracts that have profit caps.
This includes development contracts, such as the new supersonic missiles for Norway and Germany. At Kongsberg, we have delivered on our targets, but we will not dwell on past success. We will look ahead and mobilize to deliver on our new ambitions. At Kongsberg, we have a strict and conscious prioritization of our resources. For us, capital allocation is an important key to secure profitable growth and realize our potential. Our capital allocation priorities remain stable and have been so over years. Firstly, our objective is to maintain a solid balance sheet. Customer confidence is our license to operate. This is especially the case on the defense side of the business. With long-term contracts, delivering long-lasting capabilities, and indeed being an important part of the customer's national defense for decades, also grants us with access to debt capital markets at competitive terms.
Which is important to us for many reasons, and one of them being the working capital requirements in Kongsberg that can fluctuate considerably. Since April 2021, we have held an A- rating from Nordic Credit Rating. Going forward, our stated objective is to remain investment grade. Secondly, to continue the organic growth, we need to invest. We have a record high order backlog, and we expect strong market demand to continue in the next decade. Kongsberg will further invest in capacity and product development. This is financed through our own balance and together with our partners and customers. Currently, our largest capacity investment is the new missile factory that will be open in just a few weeks from now. Eirik will also come back to the new supersonic missile development we're about to begin together with Norway and Germany. Now, capacity does not only include people in production.
Supply chain partners and the processes we utilize in the executions of our projects are important factors as well. To meet the growing demand, we expect to increase our combined investments in PPE, self-financed R&D, and customer-financed R&D up to 15% in the medium term. This is an increase from historical levels around 12%-13%... and it also corresponds to the level that we've seen in 2023. The investments needs to be seen in a global perspective. It's important part of our business to have capacity and competence geographically close to our customers, both to meet local content requirement, but also to secure adaptiveness as well as urgency from customers. We've experienced during supply chain disruptions that our global footprint is essential. Thirdly, our policy re-related to shareholder remuneration is stable and remains unchanged.
Kongsberg aim is to provide our shareholders with a healthy shareholder remuneration, paying an ordinary dividend that is stable or growing from year to year. On top of the ordinary dividend, the board of directors will continue to assess additional shareholder remuneration on an annual basis through additional dividends and/or share buybacks. Such assessments will be based on a holistic view of the group's need for capital. This year, the board chose to lift the floor for the ordinary dividend to NOK 7 per share. This is responding to the increased size and financial outlook for Kongsberg. Further on, Kongsberg is a technology driven company with a world-leading portfolio. We seek to have an active portfolio management with focus on areas that will complement and grow our existing technology portfolio. We divest and acquire to support profitable growth with technology that bring us forward.
We will always seek synergies between our existing operations and inorganic growth to nurse a complementary growing portfolio. We look for activities in markets adjacent to our existing business, or markets which can benefit from our technology, competence, and footprint. Divestment should also be expected for non-core operations when we see that other parties may be better owners. Moving on to our ambitions, Kongsberg is a long-term company. We're subject to long-term market trends and drivers. Our current order backlog extends into the next decade, and we make investments today that will significantly increase our ability to deliver going forward. It makes sense for us to have long-term ambitions. We aim to triple our revenues from NOK 40 billion in 2023 to NOK 120 billion in 2033.
We're also facing drivers that are going to make strong impact on the business, not only for the next couple of years, but for the next decades. The maritime industry is in a major transition, and our attention is on near-term changes as well as longer-term major shifts, such as the future choice of fuel, electrification, and new industries such as offshore wind. We believe these shifts hit the market in the years to come, and within the next decade, we will see major changes, and Kongsberg Maritime will be among the drivers for this change. When it comes to Kongsberg Defence & Aerospace, we expect increased spending across our markets.
We will further develop and expand our portfolio, and Kongsberg Defence & Aerospace, with a strong position around defense technology, together with good prospects in other areas, such as the space industry, will make Kongsberg Defence & Aerospace even a more important player in the markets going forward. Kongsberg Discovery is exploring the unexplored. With a wide portfolio of products, especially within subsea operations, we are exposed to a market with huge potential. Martin will give further details about the technology and potential that lies within Kongsberg Discovery. And Kongsberg Digital has started on a solid growth path. This growth has come in areas that did not previously exist only a few years ago and is now starting to mature. There are huge potentials in between and across our business areas that we aim to utilize.
This paves the way for our bold ambition of tripling the size of the company over the next decade. We manage a broad portfolio and will secure a profitable growth, focus on continuous improvement, and we aim to generate a portfolio of businesses delivering more than 15% EBIT margin on an overall level. This is, this is achievable through scale, firm cost control, and solid project execution. The world is aiming to be net zero in 2050. This will require a total renewal of the maritime fleet, and our solutions are helping our customers reaching their ambitions and reducing their footprints. We're at the time where the world has realized that we have underpinned the importance of defense investments for decades. Both security and sustainability are at the core of our business.
We offer solutions designed to solve many of the challenges we see today, and we have proven that we're able to adapt in a changing world... delivering on our customer needs and coming up with solutions that are there to protect the people and planet. To summarize, we have the floor to our business areas to tell us more, and first up is Eirik. Thank you.
Thank you, Mette, and good morning to everyone. I think many of you know Kongsberg very well, but for those who are new to Kongsberg, I give a little bit of introduction to Kongsberg Defence & Aerospace. Our core business is to develop and deliver advanced weapon systems and core command and control systems to be put on aircraft, vehicles, and vessels. We also have a space division and a growing service and aftermarket business. Personally, I've been in this business for more than 30 years, and I've seen many CMD capital market days throughout the years. But I must say that today when standing here, what we experience today and what we expect going forward is very unique. The backdrop is serious.
We are experiencing a dramatic shift in how countries prioritize defense capabilities. This creates challenges for us as a business, but also it leads to or gives a way forward, how can we make a difference in order to protect our nations? So today I want to share with you three key messages about Kongsberg Defence and Aerospace. We have invested in our production capabilities and can deliver on our record high order backlog. That's the first one. The second key message: our key markets will continue to grow, and we are well positioned to take new orders, win new orders, and also take new market shares. And number three, we are investing and innovating in the next-generation technologies and capabilities so that Kongsberg Defence and Aerospace can be in the forefront in the coming years.
Well, first topic: How are we going to deliver on our record high order backlog? Take a look at this. This is the order backlog we see today. Two years ago, I presented in the capital market day, that we, I talked about identified opportunities worth NOK 150 billion. Billion. Today, 24 months later, we have an order backlog of NOK 65 billion, and if we add in frame agreements, like the Norwegian Frigate Maintenance contract or CROWS weapon systems, remote weapon systems, in U.S., we are close to NOK 100 billion in backlog. This also say something about how we're going forward. We are transforming our business. I used to say that we had 70% engineering, 30% production. Now it's the opposite.
Even though engineering is increasing, so we have now approximately 30% engineering and 70% production. Most of what you see in our order backlog as of today are a result of processes started long before the Ukraine war. Some of them come perhaps in earlier, but the processes started many years ago. At the same time, I would say that Ukraine war was a wake-up call to everyone, and I will come back to that later. When we saw this ramp-up and growth for us, we initiated an internal project. We called it Big Jump. That was to identify risks in order for us to secure that we were able to deliver on our promises.
One of the key areas was to secure that we were able to upgrade and expand our facilities, and we have done that for many years now. Some of them has already been mentioned. The facilities at National, where we have our production site here in Kongsberg, back in 2010, approximately 35,000 sqm was our production capacity. We expanded for air defense, for space, and now we are opening the new missile factory later this month. Altogether, we have now approximately 100,000 sq m of production capacity only here at Kongsberg. When we acquired KAMS, earlier named as AIM, we are building up at Rygge. We continue to do that with what we call the medium depot maintenance center for F-35.
We have established a site in Moss for engineering activities, so that's what we're doing currently in Norway. Outside of Norway, we're also doing a lot. Mette mentioned Australia, where we are building up a facility there, and we are also expanding or looking into expanding production capacity, both in U.S. and also more in Australia. But this growth is not only about facilities. Every year, we are hiring 500 more people. We need processes. That sounds boring, but it's important for us. When growing outside of Norway, 80% of what we're doing is outside of Norway, actually, on the export market. We need processes in an efficient manner. And you all know about supply chain.
So what we are doing with the supply chain is to secure that we have a robust supply chain, meaning we need redundancy, multiple sources, being present in different countries to secure that we are always able to deliver. And also partnerships, that has always been part of our business model. And that will continue, both to secure good business, secure market access, and also technology partnerships. That will continue, and it's very important for us. While we have a strong order backlog, which we are ready to deliver on, I think we are well positioned to continue growing our business going forward. And I think in this context, I'd like to talk about two main drivers. The first driver, the world has changed, both in terms of geopolitics, but also in national security.
The Western world faces a new normal, as the security threat has become real. We can look at what's going on in Ukraine, in the Middle East, and also challenges in, challenges in the Indo-Pacific region. These are drivers of security challenges. As a consequence, security has become a significant market thread, a significant market thread, a trend, on par with sustainability. And this situation drives a significant increase in defense budget across the world, and we expect this growth to continue for many years. Furthermore, I think we also realized that during the pandemic and also trade, trade wars, we need to also be local in the areas where we are. Because we see that there is a need for developing domestic capabilities, and there is also a need for more national control of supply chain. The second driver is a combination of industrial warfare.
I think when you're reading the papers, newspaper, and listen to the television, what's going on, it is an industrial warfare going on. So this in combination with new conflicts that are different in nature from what we experienced in, seen in the past. So I think that the Ukrainian war is transforming the defense industry. First of all, we see that the Western modern technology works. It's very important, but you also see the need for production ramp-up and as soon, as quick as possible. We also see that we need a rapid supply chain management, and we also see this trend that things must go much faster. We need to innovate much faster, and it needs to be put on to where it needs much quicker.
The second part of this development, as I talk about, relates to changes on the battlefield. If you go back some years, we talked about counter-insurgency activities in caves, deserts, in Iraq, Afghanistan, completely changed now with what's going on in the fields of Ukraine. Such future conflicts will lead to very different air, sea, and space battlefields. This is driving demand for the products in our portfolio. So rising geopolitical uncertainty is driving defense spending higher. You see that in Europe, Asia, and they are catching up with U.S. Going back, I think it was Guy talking about the investment phases in Europe. The first investment phase, as we see it, was after Crimea, a small defense increase. The second phase was when the Ukrainian war started. We needed to do something, we needed to act.
Now we are in the third phase, where we see more on the long-term basis. So I think back in 2014, three countries were at 2%. Now, two-thirds is on 2%. And I also think that the majority of European countries, they are continue to increase the spending, and we see that in the budgets. Use Norway as an example, reaching 2% this year, reaching 3% 12 years from now. If Norway is an example, that will pave the way. Well, while we see a higher growth in Europe and Asia, U.S. remain still the biggest market in the world, and still very important to us in KDA. Look at this chart. That's quite interesting. It shows the growth in defense spending, only on the procurement side, combined with our revenue development. That's the black line.
That shows that the KDA revenue is growing faster than the market. I believe this is because, and it's gonna continue like that because of our strong order backlog. We see more and more that we are getting a stronger position as a prime contractor, and also our product mix is very well positioned for the defense priorities we see. On top of this, we also are enhancing our product portfolio to match the need in the market. Kongsberg has always been a technology-focused company, seeking number one positions in our niches. This is a position we will work towards going forward, and that drives our demand for investing and innovating. I could talk a lot about technologies, what technologies are important to us.
But if I should have three technologies that we are working on right now, one is autonomous systems, the second is artificial intelligence, and the third is real-time digitalization. Those three are important part of our embedded, or to be put and embedded in our systems. So we are expanding our product portfolio. And we utilize our strong position in the market to develop this further. But I'd like to highlight five priorities that are important to us. We have more, but if I should put something up here, these are the five. We call it full-spectrum air defense. You have all heard about NASAMS, very important, make a difference as a fundamental defense capability. With full-spectrum air defense, we mean secure the whole area. And Kjetil will join me just in a minute, explain more about that.
The 3SM , Supersonic S trike Missile, will be ready in, for production in 2030-2035. Extremely long range, high speed, gonna be the best on the market at that time. Space for defense is gonna be more and more interesting and relevant for us and, and, and for defense, surveillance, communication, targeting, or weapon systems. If you look into the long-term plan for Norway, a huge, a huge part of the naval situation is based on procuring, standardized vessels. We have the Vanguard concept that is a match for this demand, and we also see this demand in many other countries in the world. And also, the aftermarket, and the maintenance, repair, and overhaul, it will be more and more complicated and sophisticated systems that require industry to take more and more of this, maintenance and services.
I think, I will call for Kjetil to come on stage. He's head of Defense Systems Division, and he will go a little bit more deep into the NASAMS and air defense system full spectrum. Here you are, Kjetil.
Thank you, Eirik. Good morning to everyone here and joining us online. I'm here, as Eirik said, to talk a little bit about NASAMS, and more into detail about what we're doing there, and how the system is actually developing. NASAMS is recognized as a world-class, ground-based, short and medium-range air defense system. Today, it is a cornerstone for air defense in thirteen nations, including the Ukraine, and will continue to grow in the future. Current users are also, as mentioned earlier, coming back and ordering upgrades and additional units. Since its inception in the 1990s, it has been under continuous development and represents today one of the most modern and capable air defense systems available. The system is developed in close cooperation with the Norwegian Armed Forces and the growing international user community.
NASAMS is a collaboration between Norway and the United States, an industrial partnership between Raytheon and Kongsberg. The system is combat-proven, and a total of more than 1,000 missiles have been fired over the years in live-fire exercises and in combat. As current events shows, air defense is a crucial element for national protection and defense. NASAMS has proven its effectiveness on the battlefield again and again. It is a true multi-missile system. It can launch three different missiles from the same launcher against any target. The three missiles you see also up here on the slide is the AIM-9X Block II, which is an infrared missile. We have the AMRAAM missile or AIM-120, which is an active RF or radio frequency missile, and then we also have the new AMRAAM extended range, increasing the engagement range and effectiveness of NASAMS in general.
The system's missile mix significantly increases the challenge for an adversary facing NASAMS, as it is difficult to counter all the capabilities at the same time. The system can defeat a wide range of threats, from cruise missiles and drones to aircraft and helicopters. It is a complete air defense system. Both AIM-9X and AMRAAM are what we call dual-use missiles. The exact same missile can be used on an aircraft or in NASAMS without any modification. The dual-use capability provides nations more flexibility and ability to optimize their munition stockpiles. It is based on an open architecture, capable of easy integration and cooperation with other systems. The real-time networking capabilities on NASAMS provide significantly increased system capability and survivability. The NASAMS network is actually a force multiplier and sets NASAMS apart from other systems. You can say that the magic is in what you cannot see.
The missile mix, combined with the real-time networking capabilities, provides the NASAMS users an array of tactical advantages in the field. NASAMS is continuously evolving, and new capabilities are being introduced continuously. Defending an asset, a base, or a city against threats requires a layered defense. This is where NASAMS excels. So when we have an important asset, and we add NASAMS, we get an inner dome, which provides the short-range air defense part of it. We get an outer or an additional dome, which provides the medium-range capability that really protects the area or the asset. Moving forward, the flexibility of the system is being exploited to introduce new capabilities, such as long-range air defense, including anti-tactical ballistic missile defense or TBM defense, and further, counter UAS and very short-range air defense capabilities.
In addition, we are also looking at additional, sensors and effectors, such as lasers and other novel effectors, including high-power microwave and guns. The NASAMS architecture and design inherently supports this growth without increasing manpower demands, which is essential to reduce life cycle costs. NASAMS is, as Eirik said, on a path towards full spectrum air defense. Thank you.
Thank you, Kjetil. I think just two comments to that. This full spectrum air defense, then we have that this is going to be the only affordable air defense system that cover the whole thing in the world. That's one important point. The other point is, Kjetil mentioned the digital solution. For KDA, the digital platform developed for NASAMS and further developed... Exactly the same as we use for combat systems in submarines, in vehicles, in ships, but also in the commercial, like, remote tower solution we have for airfield. So it's a very important solution for us. So I think, with those words, I think I leave the floor to Lisa. Thank you.
Yeah, it's a true pleasure to be here today and being able to present Kongsberg Maritime. So who is Kongsberg Maritime? We are a company who has built a really solid position as a major supplier of maritime equipment and systems. We are actually on board more than 34,000 vessels, sailing across the entire globe today. That actually accounts for 1/3 of the sailing IMO-registered fleet. This has given us a deep domain knowledge around marine operations. When you are combining that with our innovation capabilities, we have been a strong partner for our customers in the past, and we plan to be it also in the coming decades. In order to deliver on our commitments, we have grown to become a company of more than 6,700 employees, highly competent and dedicated.
We have also, last year, passed our revenue of more than NOK 20 billion. We delivered 10.2% EBIT, and I must also say, we have had a good start of 2024. And in order to deliver on all of this, we are present on all continents and in 34 countries. And that's why we believe that we deserve the title as the ocean space experts. So if we were to look into the market and how the market outlook looks like for new building in the years to come, I would say that when it comes to number of vessels, we do expect a growth. Perhaps not the same prominent growth as we saw from 2005 and onwards, but still a really solid growth.
And if we were to look at the more short-term outlook for our markets and our segment, I would like to pay attention to the tanker markets, which we see now are booming. We also see increased spending when it comes to cruise and ferries, and the same goes also with what you all are reading about and what Eirik was touching in for. We see there is increased naval spendings also. But perhaps more importantly for us, we see that now there is a good movement in the more specialized and complex vessels with towards offshore oil and gas, and offshore energy. This is really important for us because this is also the segments where we have the opportunity to come in with high-value offerings that really demonstrate our capabilities of bringing in total systems.
So if we then look at where will this strong new building outlook bring us revenue-wise in the next five years? I would argue, actually, that just the number of vessels that we are seeing coming through will raise the top line for our on our behalf, with up to 20%, and just, it's just the number of vessels. When we are then also looking in and combining in the positive vessel mix that we are seeing coming through the markets now, that will lay another 20% of revenue growth on our top line. So you can then argue that just riding the market then in the next five year, just related to new building, we can expect a revenue growth of up to 40%. But of course, we have higher ambitions than that, building on the solid position that we already have.
So we are going to raise the bar for the green line, and we are going to replace the two question marks that you are seeing in the green bubble with as high a number as possible. That is what we are aiming for now. I did mention to all of you when I started my presentation, that we are present on more than 34,000 vessels. And if there is a key thing you should remember about Kongsberg Maritime, is this one, because it represents such a solid opportunity for us. And not only does it represent a solid opportunity when it comes to revenue, perhaps even more importantly, it has given us a unique insight into both our own products and systems, perhaps even more importantly, an insight into how the vessels are operating.
It's this insight that we are utilizing when we are entering into sustainability partnerships with customers like Solstad. Our Chief Technology Officer, Bjørn Jalving, will go more into the depth on what we are doing within these sustainability partnerships when he are coming on stage after I have finished my presentation. It's not only Solstad that we are working with. Just to give you a couple of another examples, we are also working on hybridization with Seacor, and we are also looking into propulsion, efficiency, and other types of upgrades for Höegh Autoliners. The common theme for all the partnerships that we are working on and all the projects toward the existing fleet is that the purpose is to reduce emissions and, of course, also cost. It's not only the market-driven decisions that are impacting the investments that our customers is putting forward.
It's also the two major trends within the maritime industries, often referred to as the two Ds, and that is digitalization and decarbonization, and they go hand in hand. And for us, as a technology provider, we see it actually as our duty to deliver technology that will support a journey for our customers towards zero emission. And I must also say, it's truly a strength being a part of a technology powerhouse like Kongsberg, when we are bringing in new products and systems to the market. It's then perhaps not a surprise to any of you when you then see that these are the five strategic themes that will be our priorities when it comes to investments in the mid to long-term horizon.
They are all built on what I consider to be the key assets of Kongsberg Maritime, and they form a foundation for our strategic themes. Being the people and the competence, being our deep domain knowledge around marine operations, and not least, also our technology. So what is our goal in the way forward? Our goal is definitely to be the energy transition partner for our customers. And the way that we plan to do that is to bring integrated solutions into the market, playing on our true advantage. And that is also the only way that our customers can ensure energy efficiency at sea when they are operating the vessels. In fact, it will also be their license to operate in the time going forward.
To be capable of actually bringing these integrated systems into the market, you also need to have a portfolio of mission-critical products, that put together into a system, speaks seamlessly together. When you then add also a digital layer on top of that, then you have the most advanced solutions that the vessels owners today can ask for in the market. So that is us delivering on all of that. Of course, to meet our really high growth ambitions, we have, of course, in a large organization like ours, several ongoing project in order to ensure that we are delivering. But I will give you a flavor of just three of these projects, and they are... All these three are underpinning what have been mentioned as the kind of the major trends in the overall market, both for Gate and Meta, being sustainability and security.
To start with the first one, sustainability. I will argue that electrification is key in a decarbonization journey. So for us, it's natural actually, to focus on broadening our electrical propulsion range. And when you then also are combining that with a strong electro offering, then you have truly something that can be energy efficient and make a difference for our customers. And then moving on to the second part, security. Energy security and national security is high on everyone's agenda these days. And for us, focusing on that and also bringing into the market what we have in our portfolio, which can support and increase naval spending, it's natural for us to see how we can also then bring in other parts of our product portfolio. Today, approximately NOK 2 billion is related to naval in our revenue portfolio as of today.
So together with the Kongsberg Defence & Aerospace, we will look into how we can bring a larger part of our portfolio to strengthen their concepts offerings towards the Norwegian program now of standardized vessels. That is also really, really high on our agenda, and representing then the 1/3 o f these projects. To end my part of the presentation, I will say that we are really, really well-positioned, and we will fight hard every day to earn our right to still be perceived as the ocean space experts. Now, I will leave the stage to Bjørn Jalving, who will tell you more about how we are bringing new concepts into the market, but also how we plan to do the existing fleet even more safe, green, and secure.
Bjørn, the stage is yours, and he will truly demonstrate how we are planning to shape the maritime future.
Thank you, Lisa. Hi, everyone. It's great to be here. Kongsberg Maritime systematically invest in technologies required for the decarbonization and digitalization of the maritime industry. From these technologies, we develop product, solutions, and services that makes us a trusted energy transition partner through the life cycle of our customers' vessels. The subsea construction vessel from Solstad is a great example of the shift to electric propulsion. We are upgrading the mechanical thruster with a Kongsberg Maritime rim drive. This thruster, with a permanent magnet motor directly coupled to the propeller, reduces driveline losses. For this particular vessel, we expect 16% energy savings during transits and 40% in dynamic positioning for the energy allocated to the thruster. Similar, as we see in the car industry, the simplifications achieved by electrification significantly reduces maintenance cost.
It is as simple as the new solutions have much less mechanical parts. Batteries. The general trends for batteries are that they get higher energy densities, longer life, and not least, lower cost. This will lead to larger battery packages. We see strong increase in pure electrification for ferries, and we expect similar developments for short sea and tugs. In the offshore energy segment, we see now strong demand for hybrid power solutions. Lisa mentioned the upgrade to Seacor Marine's platform supply vessels. These vessels will get a containerized deckhouse energy storage system with batteries. The upgrades also include associated switchboards and thruster control systems, as well as dynamic positioning. When operating in DP mode, we will reduce power consumption by as much as 20%, and the solution also includes onshore connection.
For deep sea maritime transportation, container, bulk, tank, reduction in greenhouse gas emissions will be achieved by dual fuel engines. We see significant increase in vessels built with dual fuel engines that can run on methanol and LNG. Kongsberg Maritime has a strong positions on these vessels with our Autoship propulsion control system, as well as the K-Chief marine automation system. Green fuels will become common, and fossil fuels will likely increase. This really underlines the importance of KM's contribution to reduce power consumption and improve efficiency on these vessels. Significant progress and benefits often come when we are combining technologies. Kongsberg Maritime offers integrated solutions. Kinds of control, navigation, and automation allow us to couple energy efficiency with the vessel's overall mission efficiency and maintain safety.
We have domain-specific solutions for ferries, short sea, offshore energy vessels, naval, deep sea, to mention a few, to have this optimization where this optimization happens. We are digitalizing our product lines. That means that our systems are connected and work seamlessly together, and we are digitalizing in three main ways. Firstly, our digital-enabled products increasingly, increasingly have remote operation functionality, allowing both supervision and direct control from shore. This provides cost and safety advantages, and more flexibility for the owners in how to man and run maritime operations. Secondly, our products will be open and secure and networked, allowing sharing of data on the vessel and in industrial cloud solutions. This allows us to develop applications for optimized vessel operations, as well as integration with the vessel's value chains. And thirdly, connected products enable digital customer support, software upgrades, new functions over the air, and preventive maintenance.
Kongsberg Maritime aims and works hard to be the digital life cycle partner of our customers of the future. We invest heavily in IT systems necessary to make this future realistic. Core investments also include the IT/OT convergence, and significantly less complex vessel infrastructures, which is suited for digitalization. Kongsberg Maritime has the vision, we have the technology, the products, solutions, and services, as well as the international setup to be the trusted maritime energy and digital transition partner. And this concludes the presentation from Kongsberg Maritime. And, yes. And next out is the new exciting business area of Kongsberg, Kongsberg Discovery, and please welcome its president, Martin Fjell.
Thank you. Okay, so, thank you so much for coming and listening to Kongsberg Discovery. So Kongsberg Discovery, it's all about discovering the secrets of the ocean. And today, I'm going to give you a short overview of Kongsberg Discovery before I focus on how our exciting technology really positions us for strong and continued growth. As we all know, the oceans are really important for the world. It covers around 70% of the Earth. It has an average depth of around 3,500 m, and it is highly important for food, for food production. It's highly important for the climate and energy, and also from a security point of view. Regarding food, more than 3 billion of the world population rely on food from the ocean.
Actually, when we introduced our echo sounders and fish-finding sonars to the fishing market back in the early 1950s, it was so efficient that it almost depleted the oceans of certain fish species. Since then, the technology has evolved, and now we are the market standard for governments and researchers around the world to set fish quotas, and then by that, ensure sustainable fishing. For climate and energy, ocean currents are vital to understand, to understand how the climate is developing. Also, with the move towards more renewable energy, a lot of this renewable energy has to be built offshore. However, if you ask researchers or governments around the world, what are actually the impacts on the ocean's ecosystems? That is uncertain.
What we do is that we provide technology to help understand how this is impacting the oceans and the ecosystems, leading to more fact-based decision-making and less tension between different users of the ocean. Also, when it comes to security, many call the oceans the last place to hide, and we are delivering equipment to detect mines, to detect submarines, vessels, and also other potential threats, for example, to critical infrastructure. So Kongsberg Discovery, we deliver quite a lot of different type of products, and this is a picture of some of them. And if I start at the bottom left of the screen, you see a picture of a ROV, that is a remotely operated vehicle.
So we don't deliver the ROVs, but what we do is that we are providing sensors to ensure safe and reliable positioning of the ROV and also other type of sensor packages. Moving on to the fishing vessel that you can see there, we deliver fish-finding sonars and our echo sounders to the world's fishing fleet.... Moving on to the middle of the screen, you see, USV, an unmanned surface vessel, and we have developed USVs that are purpose-built to carry our sensor packages. Also, we deliver the same sensor packages to other USV suppliers. Diving down below the surface, you find our AUVs, that is the autonomous underwater vehicles, and we are the market leader for AUVs capable of diving down to 6,000 m.
Our latest development, the HUGIN Endurance, is capable of operating between 15-1 6 days unassisted and can travel around 2,000 km in one single dive. Moving above the USV, you see the communication, where we develop and deliver advanced, high speed, and secure point-to-point communication. Moving further to the right, you have a research vessel where we are the market leader for hydroacoustic sensors. And to the far right, you see a picture of a traditional offshore supply vessel, where we are delivering the sensor package as part of the dynamic positioning system. Kongsberg Discovery, we have around 1,100 employees, and last year we had a revenue of NOK 4 billion. That was an increase compared to the year before of around 30%. We are split into four different product divisions.
We have Ocean Technologies, where we develop and deliver our hydroacoustic portfolio to all market segments, except for the fishing market, which is being served by Marine Life Technologies. Seatex is developing and delivering a broad set of range sensors, and if I'm to highlight some, it's the inertial sensors, it's the maritime broadband radar, and it is also our newly developed drone radar. And then all the way to the right, you have Uncrewed Platforms, which is delivering AUVs and USVs, both to commercial, governmental, and defense customers. We in Kongsberg Discovery, we focus on delivering value through products. And these products, they build on our strong technology backbone, which I will come back to in a minute. We develop our products to serve the commercial markets, both governments and commercial.
But we also sell the same products or slightly modified products to defense customers. Because we see that customer, defense customers, they are focusing more on using COTS products, which is commercial off-the-shelf products, and they are doing this to lower the cost, to reduce lead time, ensure faster development cycles, and also actually, in many cases, improving reliability. For us in Kongsberg Discovery, this means that we have multiple channels for the same technology and the same products, allowing for scalability, both when it comes to costs and when it comes to robustness. So we are delivering some of the most advanced products that the market can deliver, and that would not have been possible without our strong partnerships.
These partnerships have been developed over decades, and if I'm to highlight some of them, we have strong partnerships with marine institutions, both in Norway, in Europe, and in the U.S. About 2.7% of the world's CO2 emissions is coming from the shipping industry. And over the last years, we have developed a very strong relationship with Jotun, where we together deliver the Jotun Hull Skater solution. The Jotun Hull Skater solution is able to reduce the CO2 emissions with between 10%-1 5%. Also, FFI, a really important partner for us, been instrumental in the development of our AUV product range and also selected other products. We in Kongsberg Discovery, we go to market through four different avenues.
We have around 100 of our own salespeople. We have a strong collaboration with KM that is delivering between 10%-15% of our order intake, preliminary for the maritime market. We have a strong collaboration with Kongsberg Defence & Aerospace, where we together position for some of the exciting programs coming out, both in Norway and also internationally. We have around 90 distributors and dealers around in the world. But as I mentioned earlier, our products really build on the combination of a strong technology backbone and strong marine domain competence. Our technology backbone comprise of hydroacoustics, that is sound in water, providing high resolution of what is hiding below the surface. This is independent if you are interested in what is hiding in the water column, on the seabed, or what lies below....
Also, inertial navigation, it's all about detection of movements, and these sensors can be included into the navigation solutions, where you can operate safely without being aided by, for example, satellite positioning. We have GNSS positioning, which is secure satellite positioning, resistant of interference and jamming. We have laser for secure and close-range positioning, and we have secure and reliable radar and point-to-point communication technology. And lastly, we also have robotics, where we focus on AUVs and USVs, both the platform, the navigation, communication, and sensors. To stay on the forefront on all of these different technologies, it's really important that we follow what is being developed and what can be the next really important technology. And I would like to highlight two of these examples. One is AI, artificial intelligence.
This is already included in many of our products today, and will just continue and be important into the future. The second is quantum technology, and this will really be a game changer when it comes to sensor technology. So we are investing time, we are investing money and resources to understand how these technologies are developing, how these technologies can be relevant for our customers and for our products, and not the least, when the technology is ready to be included into our products. So, as I said, we are investing to remain leading within the core part of our technology backbone. But in addition, it is really important to understand how these technologies can be used together to create world-leading products. And this is really relevant for our AUV offering.
It is relevant for research, vessels, mapping the seabed with the highest possible resolution, and it is really important from a dynamic positioning system, where Kongsberg Discovery is delivering the sensing system, and that is to mention a few. So now I have been talking a lot about hydroacoustics, but I brought with me my own expert, Tonny Algrøy, and he will tell you a little bit more about, hydroacoustics, what it's being used for, and how it works. Thank you.
Thank you, Martin. Hi, everyone. Underwater acoustics in five minutes, that's going to be a crash course. I'll give it a try. To get started, I would like you to picture yourself in space, looking down at Earth, and what you see is a blue planet, right? It's blue, you've seen pictures before, because it's covered with more than 70% of water. And these, these masses, these water masses remain more or less unexplored. We don't... We know very little about it, so that's kind of the area that we're covering. Then I would like you to move down to the surface. Envision yourself being in the surface, on a boat or whatever, looking down into the water, you know, like these guys are doing. And try to...
If you were asked to, you know, picture, what do you see down there? Describe it, how would you do it? And I think the answer is lies a little bit in the introduction heading here. But, you know, in Kongsberg Discovery, we use acoustics to image underwater, mainly because acoustics travel, sound travel much more efficiently in water than light. So, if you can generate, transmit, and receive sound very, very accurately, it's actually possible to create very, very detailed maps of anything that's in the water column. It sounds like science fiction, but it's really not. Just look at the dolphins. They've done this for ages. So I'm going to show you a few example. The first one will be highlighting the kind of the defense side of things.
Obviously, Kongsberg would use this technology to detect submarines and mines or whatever. So the first example is a sonar. A sonar is basically an underwater radar. So you transmit sound 360 degrees around your vessel, and by listening to the reflections, the echoes that comes back, you can detect objects in the water column. It's been a lot of focus on the defense idea today, so I'm going to actually explain this more better. So we use the same technology to hunt for fish, to help the fishermen find fish more efficiently. So what you see on the screen here is actually a duplication of the screen.
One is zoomed in more than the other, but the orange or reddish thing that you see on the port side of the bow coming up is a school of 300-400 tons of herring, and the skipper uses this technology to find the fish efficiently. And when you find fish efficiently, you save fuel costs. And, you know, we talked about sustainability. Saved fuel cost means less CO2 and less money spent by the fishermen. So a sonar is both a different kind of instrument, but it's also a commercial fishery instrument. But we don't only use underwater acoustics to find fish, we also use it to identify what type of fish it is, and we use it to inform management of the ocean, to actually tell how much fish you can fish.
It's possible for us to come up with an estimate of how much marine resources there is in the water.... And if you look worldwide, you will find that most of the actively managed fish stocks is utilizing Kongsberg echo sounder all around the world, actually. The example you see here is a school of sand eel in the North Sea, that digs into the sand in daytime and comes up at nighttime to feed. And sand eel is a key species in an area where we develop offshore wind these days in Norway. So management as well as finding efficiently.
We use acoustics to also measure the currents underwater, called Acoustic Doppler Current Profilers, and you use the Doppler effect, which is basically what you observe when an ambulance is coming towards you, and you can hear the sound pitching up in frequency. We use this effect to measure the currents, which is important for management, for resilience, but it's also important for operations. You can measure the forces that influence your operations. So same technology, little bit of a twist, and you also measure currents. This image here, and now we're in the southern hemisphere of the world, this is collected by CSIRO of Australia, and you have at least two of our multibeam systems that's used to map this area. This is a vast area. You know, this is print out, slap on the wall beautiful, right?
But it's not really a picture. This is a map. So every pixel on this picture has a position and a depth, which is important to understand. But I use this example more to show you the superpower of acoustic, which is range, right? You can very effectively map the oceans around the world. And then the last example, if you really, really need high resolution, that's also possible with acoustics. The example you see here is HiSAS slapped on top of an AUV, our HUGIN AUV, that you can see outside here today, which can map seafloor, wrecks, stuff on the bottom down to centim resolution. So you can see that it's the combination of our very good sensors and our platforms that allows this to come up.
I think, with that, I'll leave it up over to you to close off. Thank you.
Thank you, Tonny. So just to summarize, there are two really important drivers today: sustainability and security. And we in Kongsberg Discovery play a key role within both of them. There are several challenges to be solved in both of these two megatrends, and in order to solve them, you need to have a good understanding of the ocean. We are the market leader today where we are operating, and we are continuously focusing to develop better and improved sensors. When it comes to autonomy and robotics, this is becoming more and more popular, and in many cases, being combined with, for example, traditional vessels. So if you have a traditional research vessel, you can use a combination, together with our AUVs and our USVs, and you can dramatically increase the data acquisition capacity in one mission.
Also, when it comes to reliable data, everyone talks about big data and all the opportunities that are linked to this. However, in order to have big data, you need to have sensors, and you need to have highly reliable and accurate sensors. And this is what we are providing. We are providing sensors, accurate data, to discover the secrets of the ocean. So with that, many thanks, and over to Shane in Kongsberg Digital.
Morning, everyone. Let's start with a quick video. Or the team is going to start with a quick video. Thank you. I'm all that stands between you and lunch, so I'm very aware of the time here, and I promised Jan Erik that I would be concise and accurate, no matter how long that takes.
The demand for more efficient and sustainable operations are bigger than ever. But the world demands change. We are up for the challenge. Our powerful blend of domain expertise and technology innovation puts us in a unique position as the preferred partner for heavy asset industries, making the oil and gas sector more energy efficient, making ships less polluting, and making green energy future-proof. Today, businesses look to us when they need to solve complex challenges, and every day, our products create impact. Driving cleaner, more efficient, and lower cost operations in carbon capture and storage, new energy ventures towards net zero, voyage optimization and emissions reduction, and by balancing grids and complex power systems. We're accelerating digitalization by transforming how businesses operate and utilizing technology to redefine how people work. And it's part of our DNA. We're committed to continuous improvement and turning great ideas into sustainable-...
Kongsberg Digital, shaping the future of work.
All right. I very much look forward to sharing more insights about Kongsberg Digital with you today. If there's three key messages I'd like for you to leave with today, they are as follows: Number one, we have achieved very strong growth. Number two, we have a very large and fast-growing addressable market. And number three, we have everything it takes to succeed. A lot of the solutions you just saw in that introductory video were developed in a direct response to some of the challenges we're seeing happening in the world today. As Geir and Eirik mentioned, we have increasing geopolitical uncertainty, we have energy companies shifting more towards energy security and affordability, while at the same time, we have a societal need to continue to decarbonize our industries.
What we've seen is that those companies who are digitally enabled, they're just more resilient and robust and able to meet these demands and these ever-changing demands. Change is coming fast, faster than ever before. We've experienced, and the world has experienced more in the last 10 years than we have in the last 100 years. Those companies who have invested into digital now see it as a competitive advantage, and those who haven't are starting to fall behind. In Kongsberg Digital, we make industrial data more available, accessible, and meaningful to people and to machines, and those machines could be robotics, as, as Martin just mentioned, or it could be AI algorithms. We do that in order to unlock better ways of working. First, our product basically solves for inefficiencies across heavy asset industries.
Now, these industries continue to have very siloed data practices. They have very manual ways of working and planning, and executing on the day-to-day tasks on their facilities and assets. Our technology capability solves all the way from the data layer here at the bottom, up to where our users at the top engage through the digital twin to work smarter and to work better. The digital market is growing, and it's growing extremely fast, and it's growing because of the challenges we just talked about. The need to address those challenges, the need to address regulatory demands that are just cascading across industries. And there are a number of key, I would say, market trends driving the pace of adoption. Number one, human-centric technology. We're asking and we're expecting people to do a lot more with less, to be able to make faster and higher quality decisions.
If we just take the Ukraine war and the indirect impact there on the energy needs for Europe, Norway had to step up to backfill that energy security and affordability once the gas supply chains were disrupted coming from Russia. Norway had to push the limits of their production facilities. And how, how were they able to manage to do that? Is because a lot of energy operators on the North Continental Shelf had already made early investments into digital, and that really helped them to make that pivot. We see more complexity happening because of integrated value chains and the need to orchestrate that across the ever-evolving industrial landscape. So now we're seeing green electrons being plugged into a more traditional hydrocarbon value chain, and people just aren't able to consume the amount of information and data that's just been served up to them.
In order for them to basically take advantage of this, they need to have AI, but they need to put in and install a digital backbone to take advantage of that at scale. Ironically, data or big data is becoming an obstacle to inefficiency here. Finally, we also talked about the energy transition. Everyone has been talking about it today, sustainability. Digital is a key route to achieving those net zero ambitions that we have and decarbonizing these industries. In 2024 alone, the digital spend across our relevant markets, at least, has been $5 billion, and that's gonna continue to grow by 20%-40% CAGR over the next 10 years. And you can see some of the industries we're, we're currently addressing today here at the bottom. I just wanna take a little step back.
Kongsberg made a big bet on us in order for us to take an early mover position in digital, and we were established in 2016, Kongsberg Digital. We're, we're quite descriptive in Kongsberg in describing the companies and what we do. The first couple of years, we basically used on product discovery, looking for that right product-to-market fit. And we launched beta versions of our digital twin and our maritime data platform in 2019. We landed our first enterprise agreement with Shell in August of 2020. That's a little less than four years ago, not that long ago. This was followed by rollouts to MSC across their entire, container, liner vessels and fleets, Chevron, and many, many more. These early wins allowed us to continue to invest into our core position of maritime and energy.
Our more recent announcement on the partnership with Yara, this is significant for the fact that it's the first time we moved into a new vertical. We've had a lot of focus on core, but this validates the investment that we've made into our product and the ability and ease that it can, that it can be used to scale into a new market vertical. So we're very excited about that milestone. Just looking back at 2023. We raised $90 million in external capital together with Shell Ventures and Idékapital, a very exciting Norwegian tech VC. I believe that was the largest tech investment made in Norway in 2023. That was a strong validation for what we were doing right now.
We've also made some strategic M&A investments during this time, and I just want to highlight one in particular, because they're with us here today. You see here in FutureOn, we invested into FutureOn to basically build a position into net zero, and in particular, offshore wind. And if you have time, please do go to the exhibition area where we're demoing the pilots of this offshore wind digital twin. It's quite, it's quite interesting. Together, we've started to partner with TGS to go after this market aggressively. We have a value add of having the data and the digital solution going into this market, so we have a lot of high expectations, I would say, on progressing this a lot faster than it has been up to now.
We do expect a market catch-up with the current shift towards energy security and affordability, but a market catch-up towards the end of 2030, and we're building that position today. In Kongsberg Digital, we have a number of key competitive advantages that make us a preferred digital partner for our customers. Number one, and we've heard it from several of my colleagues here today, is our domain expertise. We build industrial software. When we ship product, it's shipped with that Kongsberg stamp of approval. We know our industries, we understand our customers' processes, and we understand our operational challenges. We codify that domain knowledge into our software, make it intuitive for our customers to use. That's a very, very important defining factor for us. Number two, we took an early...
We were an early mover and made early investments into AI, and we purposely invested into machine learning and AI as well. As Geir and many others said, we've been doing this for a long time. I would say machine learning, at least within Kongsberg. The AI part is really ramping up now, and when people think AI today, they're more thinking about generative AI. And we're going to talk a little bit more in CPO Stein-Roar, we show what we're doing on that front, with our product. Many of you, I'm sure you're, many of you are aware of, I would say, one of the defining technology moments in the last five years was the launch of ChatGPT 3 and 3.5. 100 million users adopted this in two months.
I'm sure everyone in this room and online have used it at least once, to do something. What you may not know is that we were one of the first companies to get a plugin to that algorithm. And why is that interesting? I'll tell you why that's interesting, because what that allowed us to do is, instead of having to push all our data or our customers' data into OpenAI, the company, or into the internet, where it would have to be surfaced up, we were actually able to take the algorithm with the plugin to our digital twin and our industrial, data set in a very secure and safe sandbox. And when we first prompted into that twin and surfaced up and retrieved and surfaced up information, we were just blown away by the possibilities of what this could do.
We got access, I think it was March in 2023, so it's not that long ago. We've been currently developing that product further and further. The reason we had to further develop that product was we had very much concerns around the fabrications and hallucinations that bubbled up at that time. So a lot of excitement balanced out with a lot of concerns. So we started a research and development project with Microsoft, and by extension, the OpenAI engineers, to develop our reliable AI product. Again, if you want to see a demo of this, it's outside here. We have the teams, our head of innovation, our CPO, that can actually demo what we're doing here. Right now, we're piloting it with some select customers on real customer data, and we expect to launch a commercial model of that later this year.
So we have people lining up to get access to this right now, but of course, we have to make sure it's done in a safe and reliable and trustworthy way. We're a global organization built on trust and reliability. Mette, you mentioned at the start when we talked about a lot of this growth and a lot of this backlog is built upon our ability and reputation to deliver. We do that as well. And when you select a digital partner, that's very important, because this is a long-term partnership, especially on the industry side. And finally, just like everyone else, we are partnership-orientated. Martin highlighted and mentioned a number of key partnerships they have. We've also taken an open partnership ecosystem approach, and we partnered early on with some leading companies, both on the customer side and on the technology side.
Digital is not done in isolation. You can't ring-fence innovation. You need to partner. We need to be open. Probably what you're all waiting for. I'm sure, sure many of you have read the financial reports, I hope you have. Mette has shared this. We've had tremendous growth in Kongsberg Digital in the last year. It's a real inflection point for us. 45% top-line growth, underlining and supporting that is a 57% growth on recurring revenue. That is very much aligned with our strategy of being a SaaS business. This picture, with that growth, over 3,000 digitally connected assets, over 50,000 active users, this foundation makes us very comfortable that we'll be able to double our revenues in the next three years... We have everything we need to succeed.
We have the product, we have the vision, we have the customers, and we have the people. Speaking of product and vision, I want to tell you a little bit about our philosophy in investing into AI. It's built in three tenets. Number one, it has to be easy to use, it has to be intuitive. Sometimes it should be invisible. Our users shouldn't even know what's happening in the background. This is one of the key success factors of ChatGPT. It was so simple to use, scaled over millions of users in weeks, hundreds of millions of users in months. It's also back to our domain experience, end user empathy. We ship products that our end users love to use, and it's the exact same with AI when we embed it from middle out. We need to solve for the correct business cases.
In many scenarios, AI is actually overkill when applied to certain industrial challenges. Sometimes you just don't need to use it. We need to make sure that the use cases we're selecting have actual business impact, and it makes sense. It's fundamental. Finally, trust, trust, trust. If we're 80% accurate with our algorithm, we're 100% wrong for our industries. They're so safety critical, and that's why we spend so much time developing our reliable AI product. So how does this all come together? Using machine learning, embedding machine learning from the inside out, interfacing with our technology through ChatGPT or the generative side of things, it makes it, and it makes it easier for our users to use. So they move from searching through the data to discovering the data.
They move from planning and analyzing to actually executing on the jobs they're hired to do. We move from optimizing, which is really just an incremental improvement, to eliminating, and that's a really powerful part of AI, eliminating. If you can eliminate the time it takes to perform very traditional tasks, as we can see here, remove human fingerprints from that job, you've actually delivered a sustained and permanent efficiency improvement. So what we see here on the left is, you know, a picture of a real asset in the real world. Here then is a virtual representation of it inside a twin. We have all of the data associated with this piece of equipment, but more importantly, we have it in context, and that's one of the weaknesses of consumer-driven AI, is understanding contextual data in an industrial setting.
So now we're actually able to plug that in and start to scale that out, solving such problems as, How do I maintain this piece, piece of equipment in a better way? So now we're enabling proactive technical monitoring, we've standardized work packages, and we've automated this piece of maintenance program inside an asset. AI loves large data sets. We are surfacing millions of data points in our twins today, millions, and that provides us the opportunity to leverage AI to improve on thousands of tasks that impact cost, efficiency, and the capacity throughput on these facilities. It's just a very exciting space for us to be with now, and we do that in very close collaboration with our customers. And I'm gonna finish up with this: We are nothing without our customers, absolutely nothing.
We're so proud of the fact that we're actually able to make these people's workday better. So we've taken a select few customers of the tens of thousands that we've onboarded over the last four years. We made some videos. Everyone here and online will be provided a link where you can go in. I do encourage you to go in and listen to the customers' experience of using our technology, the benefits that they're deriving from using this technology, and the ambitions that they have going into the future and what they want to do. So next up, I'm going to introduce, yes, my CPO, Stein-Roar Bjørstad, who's going to walk us through an actual example of what we're doing in this area on reliable AI. Thank you so much.
Thank you, Shane. Hello, everyone. I'm Stein-Roar Bjørstad, Chief Product Officer in Kongsberg Digital, and I'm actually the last guy between you and lunch. I will talk to you about reliable industrial AI today and show you what it looks like. I trust that everyone in this room has experience with different type of AI services, such as ChatGPT or maybe GitHub Copilot, if you've done some coding. But many of your companies maybe have already implemented Office 365 Copilot, and if you have, you know that you could ask it more complex questions than you could do with the ChatGPT.
If you ask the Copilot from Microsoft, for example, "Make me a summary of the most important customer interactions or events with a particular customer over the last three months," it will dive into your data, into your emails, into your documents that you have access to in SharePoint, into your CRM system perhaps, and create a summary because it understands the context and the purpose of what you are asking for. This is what we do for the industry. This is our Asset Copilot. It empowers operators, engineers, and industrial workers to get better insight in their facility and the asset, and how to operate it. It improves decision support, and it provides a new way of user experience, how to interact with your asset, how to interact with your operations....
And I will take you through a short demonstration of how what it looks like when an operator is looking into an on-system event, how to solve it using the Asset Copilot. This is the operational cockpit. This is where the operator will have an overview of the asset and the ongoing production, important operation KPIs, alarms, events, ongoing activities, and so forth. And there is a bit hard to see here, but there are events here, system events. Could be raised from the control systems or an AI-driven events and other type of systems. The operator looks into the event, dives into the equipment, a suction scrubber in this example, that has raised the event, and we can see that the temperature is too low. The equipment is operating on too low temperature according to the specifications for this.
The operator dives into the Asset Copilots, starts asking questions: What does this equipment do? Where is the maintenance documentation for this equipment? Provide me with the real-time data, give me the temperature trend. What could be the reason for low operation temperature? Has it happened before? And what is the recommended action for me to look into, to try to mitigate this action, try to fix the problem? And this is a situation where we don't want any fabrication of data, we don't want any hallucinations. So our AI reasoning engine makes sure that every recommendation made is backed up by the reason behind that recommendation, that the documentation that's underlying the recommendation is visible to the user and the operator, and there's a scoring of the recommendation. So what is the complexity to this?
The challenge of any AI copilot is the data context, to make it understand your company, your asset, your operation. It-- there's complexity to this. Any integrated energy company will have at least 200 different applications in their portfolio. Could be engineering system, maintenance systems, ERP systems, and so forth. Our digital twin is able to provide this data context. It understands how a piece of equipment is connected to the system, how a system is connected to a system, other systems, and how that performs affects the operational performance. So what if you could talk to the asset, talk to the machine, ask it questions very easily? How are you performing today? How could I make you perform a bit better today? And this is the beauty with a AI-enabled digital twin.
It has the power to consume and process huge amount of data. It understands context, it understands the purpose of what you're asking for, and it can generate recommendations and information that you will be able to understand as a human being. Our AI reasoning engine is capable of running a range of different large language models, Google's, OpenAI's, or more industrial-specific ones. And we are currently, as Shane said, piloting this now with several energy majors, and the product will be commercially available later this year. So please come visit us outside in the hallway for a demo or a talk about AI. Now it's lunch. Thank you.
Thank you, Stein-Roar. Then, lunch is served out in the hall. Just some practical information. We will start up again at the stage, just outside here at 1:15 P.M. The webcast will be on a break until then. Please enjoy lunch, and please use your time to visit the exhibition, which is located both outside the building here and in here and down the hall, where you can try simulators, look at two game systems and other exciting stuff. So please enjoy lunch.
Okay? It's free seating. So, please come forward. Okay, so, I hope you all enjoyed the lunch, and that you also managed to visit all the displays that we had placed around here in the hallway and also outside. I think still there are some sitting in the vehicles. That's quite usual, that the guys are not leaving the vehicles. But, I think, we are now coming to the final part of the Capital Markets Day of Kongsberg in 2024. As Jan Erik already mentioned, we're gonna do this in a, let's say, a panel where we're gonna open up for Q&A. I will not repeat everything that has been said today.
I hope that you got somewhat more insight in our business areas and the potential that lies with the technology backbone of Kongsberg as a whole. That is... That has been our purpose, and also that you have seen that we have an ambition to grow this group and this company further. We have put on somewhat, I would say, longer views on our markets. We see market potentials, which has been, as I said, in my 30 years career in Kongsberg, I have never seen a market in all our areas, a market outlook like we see of today.
And I think Kongsberg, as we have done for the past 210 years, I think we have a mission, and we definitely have a vision to protect the people and planet also going forward. And then, we will do that, as a group, and I think, utilizing the crossover between the two, four business areas, we have, even further ambitions to deliver on the targets and the ambition that we have set today. By this, I would like to welcome Jette Christensen. She will help us moderate, today's Q&A. We are very pleased to have you here with us, Jette. And Jan Erik, you have already presented the background of Jette, so I will not repeat that. But Jette, please join me on the stage.
Thank you very much, Geir. You can just stand here, and then I invite the rest of the panel up to the stage, please. And I'm glad to say that you're glad to have me before I start ask-
Yes
... asking difficult questions. Because Geir, NOK 120 billion, we have to stay there for a little while. It sounds extremely ambitious. Why is it possible?
Kongsberg, we are ambitious. Looking at the history, we have, as I said, tripled this company since 2018. And looking with the people we have in the organization, in the entire company, looking at the technology that we have, and the market as we have talked about today, the market outlook, and with the trends, the long-term trends, which is the sustainability and security, I'm confident that we... We need to set an ambitious target, and I are confident that we, as a group, will be able to deliver at least NOK 120 billion, and also with sustainable margins. So, that is our target-
Mm.
You have to stay tuned to see.
I absolutely will, Geir. But to succeed, you have to plan for the bumps in the road. Now, today, we have been talking a lot about the possibilities that we have been showed by your colleagues, but what bumps in the road are you planning from between India and Ålesund?
Yeah, I think we have talked about, you know, the geopolitical situation. We have talked about the world that is changing more rapidly than we have perhaps seen in the past. I think Kongsberg has proven, again, in our history, 210 years, that we have been able to both navigate and adapt to the changing circumstances in the world. One crucial thing for Kongsberg is, of course, our home market that we definitely depend on, but also that we get access to the market out there. So we need to figure out how we should be...
or how we should be able to address the international market, how we should establish ourself in areas where we are not today, to address both the market we see today, but also other opportunities coming along the next decade. So I think that's going to be one important part of achieving the target that we have set. And I think also my colleagues here have talked about that we already are expanding our both present, but also production capacity in different parts of the world. So that's going to be important for us as a group to really make sure that we are present and have access to the markets out there.
Thank you. Mette, let's say Geir is right, and you are right, and in a couple of years, you will be at NOK 120 billion - have a NOK 120 billion revenue. .
And I think lots of people in the audience, and me included, also reflect upon how will this load. Then it will give you lots of opportunities, both to secure more people and to secure more of the planet, but you also will have a big load of cash on hand if you reach that goal. And how will that be distributed?
Well, I think I said today that our capital allocation principles remain stable. So we will remain a solid financial situation, as well. And we are also increasing our investments into capacity and production in the medium term. That means that we will invest organically in production capacity, like we have done here in Norway, but also outside of Norway. We're also increasing our investments into R&D, both customer-financed and self-financed R&D. So from... We have been around 12%-13% into these investments previously, and now we're increasing to 15% in the medium term. So that's the area where we see the increase. Our shareholder remuneration remains stable, and we'll always look at our capacity to pay out extraordinary dividend in addition to share buybacks.
And we have a solid, shareholder remuneration policy, where we remain stable or increasing dividends over time. So I think that, you know, with these plans, and we're always also going to look to, strategic M&A opportunities, that, you know, we continuously scan for all our business areas as well.
Thank you very much. Then, Eirik, let me turn to you. First of all, congratulations. The announcement of the selection of the Joint Strike Missile by the U.S. Air Force is a milestone, not only for you, but also for Kongsberg and for the whole industry. But can you please elaborate to us what it means, practically, that you are chosen by one of the world's largest air force?
... Yes, I think I said to me that it was a good timing, just before capital market day. Now, I answered it in two ways. The easiest way is that, when U.S. Air Force selected, now selected JSM, U.S. Air Force is by far the biggest user of F-35. JSM is dedicated to be put the only missile of that category, to be put into the bomb bay of F-35. So for us, to get access to the, kind of, the biggest user of F-35 is very important. But then I answer it a little bit differently, because NSM and JSM, both missiles were developed, when nobody else developed this type of missiles. So they are unique on this market.
When we, I look at JSM and U.S. Air Force connection, equally important as when U.S. Navy selected NSM, that was a really big achievement. And after that, with everything, now we have 14 users of Naval Strike Missile. So taking that into account with many F-35 users, it's potential for us, we have now Norway, Japan, and U.S. Air Force, so we hope to expand the user community also on JSM.
Thank you. We are seeing defense budgets increasing all over the part of the world that we resemble, and also in NATO. As we have been told today, that means something for Kongsberg. But for how long do you see this trend going?
Yeah, it's a little bit tricky to give a precise answer to. But I think it was quite important when I stated that Europe is in the third investment phase.
Yeah.
By that, I mean, now we see the budget in different countries are increasing. This is much more long-term than just putting money on the table to get some immediate weapon systems. I normally say that we since we now see this all over the world, that it's a ten-year cycle plus, at least.
Thank you. And, as you all mentioned, you are, in some way or another, a stable factor in an unstable world. That's why you have to plan ahead and be accountable. And, the world in 2014 compete between the deep fake year and the year of unstableness. And, in this world, you are navigating. And, Lisa, your part of the company is feeling this very strongly exactly now, because, in your field, you can really see if the Norwegian politicians also feel that sustainability is or unstableness, and to make sure that this is that to show that they are in it for the long term. And you also mentioned in your presentation, the offshore oil and gas.
How dependent are you on the stable, political environment in Norway to make sure that you will reach your goal? I think you said, reach as high number as possible.
Of course, the rules and regulation kind of form a framework for us to operate within, in, and most importantly, also for the customers. So, if we see an unstable political situation, that will also influence us. But I, I think you said something important, it's all about being robust and resilient, and being, capable of actually adjusting to this market that will be shifting. And I think what is truly the benefit in Kongsberg Maritime today, is that we have our truly global footprint.
Being able to navigate through crisis by utilizing our broad global footprint and adjust accordingly, to have the robustness that is needed, both when it comes to competence, being capable of attracting competence, but also being capable of having access to the necessary supply chains, and not also the raw materials, which I think is going to be critical for us.
Thank you, very much. And, Mette, you talked about, predictable access, access to capital. And, and it's-- and in the same sentence, you mentioned also offshore wind. And, Eirik, you said that you were planning 10 years ahead, and the long-term plan for defense is 12 years. How... I can maybe open the floor, how dependent are you that the, the Norwegian politicians actually stick to the 12-year plan?
I think, we are, of course, dependent on, you know, long-term. When we set a long-term ambition, we need to base that on something, both on the regulation side, on the political decisions. So we are depending on also that the politics that is behind the industry are long-term. Obviously, we see that that is not necessarily all the time the case. Then we have to adapt, and we have to make new plans or adjust our plans. And I think that's how Kongsberg has been, well, both adaptable and resilient towards this. But we hope for long-term political views also from Norway and also from other nations, of course.
Thank you. And, back to you... Oh, sorry, Eirik.
No, maybe I could add on,
Of course.
At least on the defense and security side, what we see is that I think the last 30 years, nations have built on their capacity when it comes to defense. And to realize, to uproot that and get a kind of a readiness level that each country can, you know, be so that they can use correct readiness level. I think that's why we say a long-term shift is in the defense side here. It needs to be. You need to get up to the correct readiness level, no matter what happens geopolitically.
Speaking about geopolitical, since you have the word, I'll turn to you, Lisa, in just one second, but I'd like to ask you, well, in this new geopolitical situation, and there's a coming up election in our most important ally, how do you plan for that? What kind of shifts do you plan for after the American election?
Well, I think, you know, it's difficult to interpret what—who will be the winner there. But I think the trends are quite the same in the sense that we have to be present in U.S. We need to have a supply chain, which is in U.S., and we need to be more, maybe put more production capacity in U.S. I think that's kind of the same driver, at least, in the defense side, but I also think that's for the commercial side as well. So, that is one element. How this will affect the world situation is a little bit difficult to interpret, but I think we just need to continue the way we have strategically positioned ourself and depend on the products we have and the improvements there.
I think that's a good path we have there.
Mm-hmm. Absolutely. At the end of the day, the only one you can trust is your own work. And, Lisa?
Yeah.
So, you were talking about how important it is to you to have good allies, but also that the customers are also good allies and how you operate as a partner to them-
Yes
and with them. How is the Norwegian defense as a partner?
For us, the Norwegian defense, but also the European defense, represent good partnerships. We are working on several research developments through also defense, European Defense Fundings, where we are taking, and making new green propulsions, for example. And this is a good way also of combining our commercial knowledge with the defense knowledge, and try to bring more affordable product offerings into the defense market. Because we know, that it will be a focus, an increased focus, actually, on to get more for your money, actually, in the time to come, because every nation need to ramp up in order to meet their national security, and it needs to happen quickly.
Mm-hmm.
you were talking about stable frameworks coming from the political side. I think the political side have an important role here to play also. Making sure that we are utilizing our position here in Norway also to innovate and further and more, perhaps even more importantly, to make it an export article in the end, because there are great opportunities now coming from on the backside of a very negative war.
Absolutely. And, I would like to turn to you, Martin. There's nothing to say about the ambitions for Kongsberg Discovery as well. That's what you have in common. What are the important measures to plan for in a situation where an external impact may enable that growth for you?
I think that, when we make a strategy, one thing is that you plan for everything that you know about, and you have all these plans and, realization and all of these things. But you also need to plan for what you don't know, because the future will not move in a linear way. So we are working on how we can make our strategy even more resilient, meaning that today we are quite heavily focused on product development in Norway, for example.
Mm.
That will continue to be important into the future. But also, we need to have more of that same capability in other regions of the world, together with supply chains, as Eirik also mentioned, so that we can be more resilient in the events that probably will happen, but we don't know what is.
That reminds me, I met a soldier whose work was to demolish bombs that he didn't made himself or was unknown bombs in external countries. And I asked him if he wasn't afraid, and he said, "Afraid? I'm not afraid. I've planned.
Mm.
So that's exactly what you are doing. But what partnerships do you rely on for enabling development of the products that you showed us earlier today?
Yeah, I mentioned that partnerships have been really important for the development of Kongsberg Discovery until now, and it will continue to be into the future. And it's by-
But what part of--
Yeah.
What, what partnership? What, what are the most important?
Yeah, and that's, that's what I'm coming to.
Oh, okay. Cliffhanger. Sorry.
The important is to have the right partnerships, the right customers that are actually pushing the boundaries of what they are trying to achieve.
Mm.
Because if you have a tight partnership with one of those customers, you know that you will develop the right technology that is probably likely to be relevant for more of the market than only those customers. So, so for us, we have partners both in Norway. As I said, FFI has been really important for us for the development of the HUGIN AUV range, and also partners in the rest of the world.
Thank you. Yeah?
But I think also, Martin, that which you mentioned in your presentation is the partnership internally in Kongsberg. I mean, if you combine the competence and the technology backbone in the entire group-
... I think we are good, but I think we can even become better. And I think that is also one important part which is going to take us to this ambition that we have put on ourself, is a further focus on cross-combination of competence, technology, and market access. So internal partnership is also extremely important.
Absolutely. Martin, when I heard both you and Shane, I'll turn to you in just a second, speaking about the use of artificial intelligence, how frustrated are you when you meet the public and listen to speeches like this is something new? You have been using this tool for so many years now.
Yeah, I mean, I think it is new to the public, but as you say, I mean, we have had it included, embedded into our products for quite a while. I could use our latest development, the drone radar, for example.
Yeah.
That is already capable of distinguishing a bird from a drone, from a helicopter, or certain different type of birds, actually.
Mm.
So this technology has been with us for a while, but it's with the new language models where it kind of just takes a big step in a different level. And I think that we will see much more internal efficiencies, and improvements coming out of that part of AI. And I think that was what you alluded to as well.
Yeah, I think, I think that's a very good point that you're making there, that we have been using kind of more, you can call them deterministic or probabilistic, you know, models internally, machine learning side. But what's new is these large language models. And, and you've already rolling this out internally inside Kongsberg Discovery and KM and so forth, to get efficiency inside, not just together with our customers. And I think that's the, that's the new bit, and that- that's why we focused on that part, the generative AI part, because that is relatively new, at least from an industrial point of view. From a consumer point of view, it's been out there. You know, Google Translate is built on a large language model. If you flew anywhere in the last couple of days, weeks, large language models have been presenting your seat, your duty-free tax.
You know, it's been there, but ChatGPT really just lifted a lid on what that was. And then it's up to us, as Kongsberg, to kind of curate how to use that in an industrial sense or in together with our various industries or products. I think that's, that's kind of interesting, and it's really about being faster, being really, really fast. Not just talking about it, but actually showing what Stein Roar demoed today, real use of this technology.
Speaking about speed, Lisa, maybe I can ask you this-
Mm.
- because, it's not only about producing, it's not only about delivering, but sometimes it's also about being first.
Yes.
Delivering the technology that you have to the world. I know that you have the technology, you're ready. Are there any obstacles that are standing in the way for you to make sure that we get as much out of the speed as possible?
Of course, there will always be obstacles. But I need to go back to what Geir addressed about... It's so impressive also for me to see what kind of technology we have available within the Kongsberg Group.
Mm.
Let's, for example, address today, we have talked a lot about digitalization, and we are now touching into AI, we are touching into big data and analytics, and we are also talking about autonomy, for example, and you talk about being a front runner. KD has been a really good front runner here when it comes to the AUVs, and see also what Kongsberg Maritime is doing around autonomy, and remote and autonomy, to be more precise. Because it is not fully autonomous yet, even though some people believe it, but it is not. But it I think it really showcase what we are capable of doing, because we have and for years actually been working with all these kind of technologies.
Mm.
What is truly also essential in this world, where we are talking about security and national security, is also to add a layer of cybersecurity on top of it. Extremely important. That is truly difficult. We are also in the forefront when it comes to that, and that is also difficult for others to copy. Building on the strong heritage that we are having, utilizing those technologies across the group, is what are going to keep us being also in the forefront in the years to come.
Thank you. Shane, I don't know if you, if you are familiar with a very important part of Norwegian culture called the skoledag bok.
Yeah.
It was very important for all girls in the end of the eighties and the nineties. It's like a diary-
Diary
... that you bring, you bring to school, and there was quotes, and then your friends can write in it.
Yeah.
In mine, it said, "Always be yourself, unless you can be a unicorn. Then be a unicorn." And someone told me that you're actually a unicorn. Can you elaborate that?
We're half a unicorn.
Okay.
No, you almost be a unicorn, yeah. We actually have a picture inside the office, "Always be yourself, unless you can be Batman." But I suppose that's for the boys. Yeah, I mean, you're alluding to the valuation that we got last year. Yeah, it was a very good valuation. Of course, we're very proud of that. And for us, I suppose becoming a unicorn is just another milestone. It's this magical number or milestone that tech companies want to reach. But our focus really is just get the job done, create the value, put in the work that grows the value internally inside Kongsberg for our customers, that will just-...
achieve that milestone, it'll just be something we see go by and keep growing and growing, so we can really meaningfully contribute to this NOK 120 billion that we've set ourselves over the next 10 years. But of course, it's a nice thing to celebrate. We should, we should celebrate more. We often just focus on achieving our tasks, and yeah, it would be magic to achieve that status at some point.
Great. You're also talking about twin technology, and you mentioned digital twins, as Yara in your presentation.
Correct.
As far as I know, the domain knowledge on fertilizers are limited in Kongsberg.
Yeah.
Could you elaborate more on the impact of that?
No, it's a very good point. We talked about our core competencies being maritime and energy. Of course, this is a brand-new vertical for us. So I suppose you got to look at that in two dimensions in a way. First of all, does the technology scale from our core industries? Yes, absolutely, and we've tested this in many industries. This is just one of the more recently announced partnerships. And then, does a pump on an oil and gas facility resemble a pump in a fertilizer facility? Absolutely. It's the processes. So our knowledge is very much down into the process of our customers. We understand their operational and maintenance challenges. And that's something that transfers and scales, in fact. So, yeah, absolutely.
We may not know, you know, how it's made, but we know the process around that supports how it's made.
Thank you. Geir?
Yeah, but we are fast learners.
I have a few more questions, but I'll also open the floor if there's anyone who would like to ask the panel any questions? Yeah.
I can kick it off. There are a lot of viewers on the webcast as well, and I received a few emails, so I can start with one of the questions from Haakon Amundsen in ABG. Could you please put some color on how the revenue growth and the margin expansion trajectory will be in the nearer term versus the average development to reach your new 2033 ambition?
I can start, I think. Looking at our order backlog, that has been commented several times today, I think it gives us a kind of broad picture in the near term, near term. Some of the project, some of the backlog is on the shorter term, but I think what you can see now that looking into the, let's say, the future, is more, what they call it, visible today, than it has been in many years in Kongsberg. Both on the civilian side, we have a longer backlog view, definitely in the defense. It goes beyond 10 years in some of the programs.
So I think that in itself gives a confidence that you're going to see a solid growth also in the nearer term than the ten years term. So-
Yeah, I can, I can just,
Agree?
Agree with what you're saying.
The Russians.
With some base. With some base as well. You know, we are on a trajectory to reach our targets in 10 years. Of course, you know, we are working, and we are developing towards the announced targets. We will see, because we're doing capacity investments, we're doing expansions in our portfolio, that there will be fluctuations both on the growth rates and on the margin rates. But overall, we're on the trajectory, and therefore, we're not going to give the short-term targets as well.
Did you have any other questions in your inbox, or should we open the floor for the physical questions? Yeah.
Hans-Erik Jacobsen, Nordea. To [continue] the margins, you have given us guidance for where you expect to be in 2033. Over the next 10 years, you're going to expand a lot, and I guess that on one side, that will give you a lot of economies of scale. On the other hand, you, as you said, you're going to expand the business a lot. You have to hire a lot of people. You have to build new plants and so on. Can you explain a little bit the positives and the negatives of the next 10 years in order to reach the margin of 15%?
Yeah, I can start. Yes, on the positive side, we are building scale. What we see right now, and it also shows in our current order backlog. Eirik showed you that he had NOK 65 billion in secured volumes, around NOK 35 billion-NOK 40 billion is on the missile side. A lot is in the NSM, and we are building a new factory that will more than double the volumes, the production volumes, that we will produce at peak capacity here in Kongsberg. Just from that, with the continuous going down the cost curve and pushing down production unit cost, it will give a significant cost of scale and also be margin expansive for us. And then, of course, we have to... You know, our markets are expanding. There will be strong competition.
We do see that we are in an environment at the moment with really good currency exposure for our NOK operations, and that's a negative to our margin development. So of course, we are following that picture, and that's also going to be a decisive factor where we expand, and that's also in our global footprint. But, you know, these type of fluctuations and changes are going to be challenges for us. We're keeping a very strict eye on that, and of course, always hunting for economies of scale within the different areas. That's the short answer.
That's been very clear.
Yeah. Okay, so everything's clear. Well, Geir, in Shane's presentation, he repeated several times that he has everything he needs to succeed. Do you?
I have these guys and the rest of the guys. Yeah, I think we have. As I say, it's an ambitious goal that we have set. It's 10 years. We have the technology of today, but we are also looking at keeping a very close watch on, you know, the upcoming technologies. And I think one thing which this Kongsberg is very good at is not only to innovate on technology, but actually to utilize available technology when it comes online. And I think that's have made us in the forefront of, and being able to serve the clients, whether that is in the civilian side or the defense side, with the latest and greatest capabilities. And that is our ambition to go forward as well.
We have 13,500 employees around the world. I think Lisa said, and, mentioned that we also... or Martin, that we need to, let's say, engage even, maybe, others more than we do today, internationally. There was one wise man saying that there might be some clever people outside Norway as well, and I think we need to listen to that. As I say, we have really, let's say, the trends that need to be addressed by technology. It's no way around solving these challenges without applying the latest and greatest technology. And that gives us a fantastic, let's say, solid foundation to continue to grow this company going forward.
Thank you very much. I don't see... Oh, yeah, here's a hand.
Fabian Jørgensen from Carnegie. Also contributing a lot to earnings is your associates. You haven't stated anything, what you expect from them going forward, but you have exposure to the defense industry there also. Can you give some comments on what you expect there? Are there any capital needs there, expansion projects, and so on?
Thank you.
Maybe I could start on the defense side.
Sure.
I think we have two main companies. We have, for instance, the Kongsberg Satellite Services, KSAT, related to the space sector. They are on a growth path, and they're constantly investing into new downloading antennas, and that is kind of a part of their business model. So that will continue. But we expect a good growth and really good margin level in that business, because what you see is that the space sector, and now space is also more and more relevant for defense side, that the combination there will increase KSAT potential. So that is one thing. And then we have Patria in Finland. I think they're very relevant for the maintenance, repair, overhaul services business.
But because of the situation geopolitically now, we see a expansion and, and a ramp-up, drastic ramp-up for vehicles, because they have also, also a vehicle producer by 6x6 and 8x8, is, is the term they used. So they are expanding production, capacity to, produce quite high number of vehicles going forward. And this, this is a long-term, position also. So I think the trajectory for Patria is also good, especially because of the vehicle, business. Maybe that was partially answered? Yeah.
That's, I think that's mainly answered-
That-
Actually, because there are two main associated companies, so I think that that's a good answer.
Thank you. Yeah.
Henrik Vad from C WorldWide Asset Management. My question is a little bit more holistic. It is, how are you getting young talent on board and people? Because, we are also in process of getting young people, and they demand something else compared when I started in this industry for many years ago.
Can I just ask you before I open the panel, what do they demand?
You have some views regarding ESG, and you have a lot of a little bit. It's another ballgame compared to the 1980s and 1990s.
Mm-hmm.
And now it's first time I'm in Kongsberg here. I could imagine... I'm born in ways down in southern part of Jutland. You have a big company called Danfoss, who's making thermostats, and it's a small town called Sønderborg. There's 12,000 people working there, and they desperately need engineers and, et cetera. So it's more a little bit, how are you getting the young people on board?
Yeah.
Maybe I can start, and I think it's. I think what young people want, and I think also some older people want, is a purpose. Why do we go to work? What do we do that, you know, we want to spend most of our time attending to? And so purpose is gonna be an important factor. And then it's also, I would say for Kongsberg, it is, of course, you have to be, you know, interested in technology and to come up with new ideas on old problems, perhaps. So we need to focus on really telling what Kongsberg are doing. It's sometimes, I think, outside our own organization, it's difficult to understand what Kongsberg is actually doing.
So that is for us to communicate, you know, the exciting workday that you can get in Kongsberg. Not only here in Kongsberg, but the rest of the rest of Norway and the rest of the world. We are working on some fundamental challenges in today's world, and I think that is a key message for the younger people. Luckily, we see just now, we got recently the Universum release. At least there are a lot of the engineers that really find Kongsberg very attractive. So, but we need more than engineers. So I think, again, we have to work with how we communicate, what Kongsberg is all about and what we contribute with.
Lisa, I'm not saying that, your departmet is, like a youth recruitment department.
I hope it is.
But have you experience that how you have been working with the new vehicles on the fleet after that the politicians are also has been talking about? Is that kind of a sign that it's not just a word on a board? It's something that's hardcore within your industry to make sure that the planet actually is a better place, as Geir said, after you've been there than before.
Yeah, and I talk about our vision of shaping the maritime future. And I really repeat this again and again, it's based on three equally important anchors. It's how we, at all times, should be the customer's first choice. It's how we are going to deliver technology for zero emission, and also, it's about the people, the people who feel a strong purpose of protecting the oceans. And I think that is so important. Because in order to meet the IMO targets, and it was an important signal sent by IMO in July last year, we are heading towards zero emission. And in order to do that, we cannot just sell new vessels and put new vessels into the market. We also need to do something with existing fleet.
Just what we have done, I've mentioned a couple of examples today, but I would like to mention one more. With Hurtigruten, I think most of you are Norwegians, you know Hurtigruten. They have vessels that are almost 30 years old, and by upgrading those vessels, we have actually been capable of reducing the emissions with 23%. I think that's remarkable, and that's truly how we are making an impact. And if that isn't purpose, I don't know what is.
Eirik?
Yeah. No, I think everything is almost said there.
Okay.
But, I think just short, it's purpose-driven, it's just about sustainability, it's about security, and it's about how you communicate to younger people. And I see also, one thing that has not been mentioned, I think, here, is that we try to engage younger people, students in summer students programs, huge summer student programs, and that kind of become an ecosystem that kind of attracts each other. So I think we you need to be active with younger people and even start younger, I think.
In kindergarten?
Yeah, I think everything said here is quite good, but we also have this hybrid way of working, and a lot of younger people, I don't know what it's called now, but below the millennials, they want to be able to work from home sometimes, and they want the flexibility to be able to come into the office. And it goes back to what Geir said as well. It's not just... We have to take a holistic approach to hiring talent. It's not just in Norway. We're very international and global companies. You know, you're talking about the U.S. and expanding. We need to have that flexibility to be able to hire talent from the U.S., from Asia.
During COVID, it really helped us, I would say, mentally flip and say: Yeah, we can actually have people sitting at home and still producing at a very, very high level. We're a little bit different. We're not in factories; we ship code, you know, we write code, and it's a little bit easier for us in digital to have these remote hubs, people working from home. But we have to remember, it puts a bigger, I would say, more pressure on the middle management of organizations to actually handle and build a culture, because culture is built by people meeting people. So we have to allow that flexibility. We have to rethink our HR, how we handle people working from a remote point of view, and then just be open to it, you know?
And then we've seen huge opportunity for hiring people from South Africa, from Australia, from the U.S., and some eventually end up coming to Norway. I'm one of those people that eventually came to Norway. But right now, it's just allowed that funnel to be filled up with talent, wherever they sit.
Thank you very much. Our time is up. It's been a pleasure to spend the day with you, and also thank you very much for the panel and the great discussion here. Thank you for the good questions, and the discussion can continue on the train. There's a shuttle outside the 10 minute pass, but I'll leave the word to you for some final remarks, Geir, and thank you very much for an interesting day.
Yes. Thank you, everyone, both all of you joining us here at the campus, and also those of you have been with us on online. We truly appreciate that you spend the day with us. I hope you had got some more insights of both what we are doing and what we plan to do, and that you can trust that Kongsberg will continue to grow sustainable also in the future, and also make a a difference for the planet and the people. So, by that, I would like to say also thank you to you, Jette. Thank you for helping us this last part of the Capital Market Day. A very small appreciation from us.
Thank you very much, Geir.
Thank you so much.
Thank you.
Have a safe trip home, everyone, and we look forward to see you again soon. Thank you.