Good morning, everyone, and welcome to the presentation of Kongsberg's Q3 2023 results. Today's results will be presented to you by President and Chief Executive Officer, Geir Håøy, as well as Executive Vice President and Chief Financial Officer, Mette Toft Bjørgen. This is a webcast-only presentation, but you may submit questions through the link you find on your screen. Please also include your name in the question. With that, I'll leave the floor to our President and Chief Executive, Geir Håøy.
Thank you, Jan Erik, and good morning, everyone. I want to start off this Q3 presentation by thanking good colleagues and all, all around the world for their extraordinary efforts and support. Based on a period with strong performance, the board of directors have decided to pay out an extraordinary appreciation to all employees in Q4. I would also like to thank customer, partners, and all other stakeholders for the trust in us on our mission towards a safer and more sustainable planet. As you all know, we are living in a time of unprecedented change. Russia continued its warfare against Ukraine. We see political tension and economic challenges globally. We see technological advances transforming the way we live and work.
Global value chains are being disrupted, sustainability is higher up on the agenda than ever, and we all experience the power of climate change in terms of warmer and wilder climate. It is challenging out there, but I am confident, convinced, that Kongsberg has the right engagement, focus, and proven record to navigate and to play an important role also going forward. We have delivered what I would describe as yet another strong quarter. We have beaten several Kongsberg records, both on revenues, EBIT and contract sizes. That said, even though the consolidated level is solid, there are also issues to be addressed, and we are doing our utmost every day to have a balanced focus between exploiting the new opportunities, delivering on existing contracts, as well as improving internal operation. But as I said, the consolidated Kongsberg is very strong.
All our business areas delivered strong growth in Q3, ranging from 21% to 41%. To deliver on future growth, this requires investments, both in human capital as well as in facilities. In September, we were awarded a contract worth approximately NOK 16 billion by the Polish Ministry of National Defence to deliver four NSM Coastal Defence System Squadrons. Poland was also the first nation to acquire NSM coastal defense systems capability in 2008, and they added an additional Squadron in 2014. The recent contract award builds on more than a decade of successful cooperation between Kongsberg, the Polish government, and also the Polish industry. This contract is also the largest single contract in the history of Kongsberg and is an important milestone in our more than 200-year-long history.
With the changed security situation in Europe, Poland is firm in its commitment to ensure important defense capabilities, and for Kongsberg, as an industry partner, this ensures predictability to invest and continue to build capacity to deliver on these needs. And, as you might have noticed already, the contract is not included in the Q3 order intake. We have a policy in Kongsberg not to include orders in the backlog before they become effective. Accordingly, the contract will be taken in the backlog as soon as the financing agreement is signed between the parties. As I have touched upon several times in the past, we are exposed to the major trends related to sustainability, security, and digitalization. We are currently experiencing stronger demand than ever in all our four business areas, and I can assure you that the entire organization aim to deliver.
Kongsberg Maritime delivers yet another solid quarter, with strong revenue growth and NOK 5.5 billion in order intake. Order backlog at the end of September is close to NOK 20 billion, corresponding to an increase of 28% over the past year and 21% so far in 2023. The contracting in the quarter has been solid, both from the aftermarket and the new build, new building segment. We have already secured NOK 9.5 billion worth of order to be delivered next year. In comparison, a year ago, we had NOK 6.7 billion for delivery the coming year, confirming our maritime growth path.... The new build order intake on a year-to-date basis is showcased in the pie chart, and our order intake continues to be diversified and comes from several ship segments.
The LNG carrier market has been strong for a while, and this has also continued in Q3. We also saw a good ordering from the traditional seaborne and also the tug market. One change, though, compared to the previous years, is that we now also see more orders for vessel series as opposed to the single vessel orders. As of end of September, we saw a total of 1,350 vessels being contracted in the market, and this is 200 more than what we saw a year ago. It is important to mention that these figures have a lag, meaning it is too early to conclude, but where we saw a relatively weak ordering with regards to the number of vessels the H1 year, this seems to have picked up over the summer.
As for the after market, we see a continuous strong phase coming, especially from the emission reduction upgrades, but also the spares. This trend has become more visible throughout 2023, and I believe it will continue as ship owners across the world are determined to cut costs and also to comply with the new emission and ESG standards. Kongsberg Defence & Aerospace has delivered another strong quarter, with order intake of NOK 4.6 billion, corresponding to a book-to-bill of 1.28. And this is before the Coastal Defence System contract, to Poland, is taking into the backlog. But those of you that have followed us for a longer period will remember the booming deliveries we had, to the US CROWS program around 2010.
We are not delivering at previous record levels today, but it pleases me to see that once again, CROWS is the one single project that has contributed with the highest revenue during this quarter. Furthermore, we have secured several other large contracts during the quarter. Among them, a NOK 1.2 billion contract with Lockheed Martin for continued deliveries of components to the F-35 program, and also a NOK 1 billion contract under CROWS 5 framework agreement. Both these contracts are continuations on program where we have been a sole supplier for approximately 15 years. We have seen a strong backlog growth over the past years, and our product portfolio are in a higher demand and more relevant than ever.
The total order backlog is now 45.7 billion, whereof 14.1 billion is for delivery already next year. At the same time last year, we had NOK 11.5 billion worth of deliveries for 2023. We are also currently involved in several international sales campaigns, both for the NSM and JSM missile, the NASAM air defense system, as well as other product lines. During my 30 years in Kongsberg, I have never seen such a strong momentum and demand for our portfolio. The strong growth requires capacity, both with regards to facilities, machinery, people and also competence. The last year, we have had increase. We have increased the number of employees with 10%, and we are continuously investing in the training and also competence.
Last year, we also started the construction of our new production facilities for missiles in the city of Kongsberg, and when ready next summer, I believe this will be the world's most modern and efficient facility of its kind. We are also setting up a new F-35 depot at Rygge in Norway, where we will maintain airframes on the Norwegian F-35 aircraft. Mette will come back to some more figures on our investments. Kongsberg Discovery had an order intake of NOK 1.1 billion and a book-to-bill of 1.19 this quarter. The largest order in Q3 was the order for an extensive package containing mapping, communication, and positioning technology for two large U.S. research vessels.
A contract like this will normally cover a broad range of Kongsberg Discovery's offerings and firms the value of the business area's technologies in towards a growing research segment. The total contract value was more than NOK 150 million. In addition, we also signed a contract for another HUGIN Superior in Q3. In general, Kongsberg Discovery's order backlog has a quicker turnover compared to the previous two business areas. However, over, over the past couple of years, this business has increased order intake with regards to larger scope contract with longer delivery time, which increases the long-term backlog. That said, the business area has and will continue to secure a major part of their revenues from orders signed during the delivery year... This means that I am comfortable with the level of coverage we have, now.
Kongsberg Discovery's unique position within energy, fisheries, research, security, and surveillance give an exciting outlook for the years to come, and we see increased demand and interest for the solution we are offering. The need for a sustainable ocean management is an important driver for the business area going forward, and this entails seabed mapping, surveillance of the various deep sea installation, biomass management, and monitoring of water quality, and also other environmental parameters in the ocean space. We also experience growing demand for solutions that can provide increased effectiveness and security in the marine operations. We are seeing numerous prospects, both for our HUGIN family, as well as for the remaining portfolio going forward. In other words, the outlooks remain positive.
Kongsberg Digital is also continuing its growth path and are delivering growth on all the KPIs we are monitoring. Their revenue grew 37% year-on-year, and recurring revenue accounted for 54% of the total revenue during the quarter. As you can see from the slide, we continue to get new CogniTwins rolled out, and by the end of the quarter, we had more than 30 twins up and running. I'm also happy to see the number of users connected to our systems are growing by large number, and there are now 2,000 more users connected to CogniTwin compared to last quarter. With regards to Vessel Insight, we are continuously selling the solution to new users.
The number of applications available with the platform is also growing and increasing both the value as well as the experience for the user. The largest single contract on the Vessel Insight solution was signed with a Mediterranean Shipping Company, MSC, in Q2 2022, when they signed up for the solution on 500 of their vessels. After the initial contract, MSC has come back to us twice to increase the number of vessels to be included. Lastly, now in Q3, when they expanded the contract to cover another 120 vessels from their fleet. This gives comfort that we are delivering a solution which has an attractive value proposition for the vessel owner. So with that, I leave the floor to Mette to take us through the financial status.
Thank you, Geir. Good morning. And thank you for attending our Q3 2023 presentation. Geir has already shown you that we delivered another solid quarter, and I will now give you some more details on the figures. We grew revenues by 29% from Q3 last year to nearly NOK 10 billion, which is the highest revenue we've ever delivered in one single quarter. As you see from the charts, all our business areas delivered strong growth. In nominal figures, the growth is driven by the two largest areas, Kongsberg Maritime and Kongsberg Defence and Aerospace, which grew 21% and 41%, corresponding to an absolute NOK 2 billion in revenue growth in total. In Kongsberg Maritime, the growth comes after strong order intake in the past years in the new building segment, as well as high activity in the aftermarket.
In the aftermarket, we see several reactivation projects related to previously laid-up offshore vessels going back into operations. In addition, the aftermarket has enjoyed high levels of spare sales during the quarter. When we sell into a new project, we do not consider the project done until the vessel is taken out of service, which may be 20-30 years later. During the lifetime of a vessel, we work closely with our customers to assist them on maintenance lifecycle planning. In Kongsberg Defence & Aerospace, we continue to see high growth related to our missile deliveries. This quarter, we also see solid contribution to growth from land systems. This is especially driven by deliveries to the CROWS program, which was the single largest revenue contributor among the projects Kongsberg Defence & Aerospace is delivering on.
Kongsberg Discovery grew by 35% year-on-year, while Kongsberg Digital grew by 37%, whereof a good portion of the growth came from recurring revenues. In Discovery, growth is driven by deliveries to research projects, as well as technology deliveries towards the fisheries industry. In Kongsberg Digital, the growth is driven by more assets in operation and more users on the systems. For the first three quarters of the year, we delivered NOK 28.7 billion in revenues, up from NOK 22.4 billion the corresponding period last year. The operating results for the group came in at NOK 1.27 billion for the quarter. This is a solid improvement from last year, and the highest EBIT ever reported for a single quarter from Kongsberg.
The operating results reflect strong operation and project execution, and are not affected by any major one-offs in the period. The absolute EBIT level is also driven by our two largest business areas. Kongsberg Maritime came in at NOK 615 million, corresponding to an EBIT margin of 12.3%. The margin is up 0.5% from the corresponding quarter last year. This shows that we have been able to adjust to the inflation and scale with our growth. Due to the periodization effects, Q3 is typically the strongest quarter during a year when we look at margins. This is also likely to be the case in 2023. In Maritime, as well as in the other business areas, margins reported in individual quarters are impacted by project mix and can fluctuate.
Operating results in Kongsberg Defence & Aerospace came in at NOK 594 million, corresponding to a margin of 15.1%. The margins benefit from a favorable project mix and strong project execution. At our Q2 presentation in July, I emphasized that we now have entered a period where the project mix is about to change. We have started to see lower margins in the project mix, but at the same time, we're able to take out scale benefits from the growth. We will continue to deliver strong margins from Defence going forward, but we expect the margins to normalize towards our previously announced targets. Kongsberg Discovery delivers NOK 149 million in operating results, corresponding to a 16.1% EBIT margin. We currently have significant development projects ongoing in the area.
Kongsberg Digital continues to scale the business, both with regards to sale as well as general capacity. This will continue to affect the EBIT, which is according to our plan for the business area. The operating results year to date came in at NOK 3.327 billion, corresponding to 11.6% EBIT margin, which is 1.6 percentage points higher than the first three quarters last year. Earnings per share came in at 5.93, up from 4.97 in Q3 last year, and we delivered net earnings of NOK 1.043 billion for the quarter. Year to date, we have delivered earnings per share of 14.53, and total net earnings of NOK 2.559 billion. Kongsberg is growing in all our four business areas.
The growth has come in a period where the supply chain has been a challenge for many companies. Working capital has high attention across the group, but as we have said several times, it will fluctuate between quarters. Looking at the development this year, we have seen an increase driven by three key effects. The first is related to growth. So far this year, we have grown revenues with 28%, and we have signed new orders worth NOK 34 billion. Preparing to deliver our NOK 69.2 billion order backlog impacts working capital. Secondly, in Kongsberg Defence & Aerospace, we have progressed with our deliveries without any major payment milestone in the quarter. Only in Q3, this has impacted the business area's working capital with approximately NOK 1 billion.
Thirdly, within Kongsberg Maritime and Kongsberg Discovery, we have, during the pandemic, increased our stock of long-lead materials to meet supply chain challenges and also customer expectations. Over the summer, we have seen the pressure on supply chain decrease. We expect working capital to develop in a positive direction in Q4. We had NOK 2,112 million in cash and cash equivalents at the end of Q3, compared to NOK 2,757 million at the end of the Q2. This is a reduction of NOK 645 million during the quarter. The main drivers for the reduced cash is the increased working capital that I commented on the previous slide, and high level of investments that I will come back to in a moment. This is partly offset by an increase in short-term interest-bearing debt.
Now, Geir mentioned earlier that we are investing for future growth. The majority of the investments are in the new missile facility that we are currently setting up in Kongsberg. So far this year, we have invested more than NOK 600 million in this, and the level of investments will continue going into 2024. In addition, we have invested NOK 150 million in a new logistics hub serving the manufacturing activities at Kongsberg. We have also invested around NOK 150 million in upgraded and new facilities in Ulsteinvik and Rygge, and are about to start on a new maintenance facility, also at Rygge. This means that the level of investments in property, plant, and equipment is expected to stay at a high level also going into 2024. Our two largest associated companies are Kongsberg Satellite Services and Patria.
Kongsberg Satellite Services continued the positive path from previous years and reports a revenue growth of 21%, both in the quarter and year to date, and a steady growth in EBIT as well. KSAT has had a strong quarter with regards to revenues and profitability, and is capitalizing on the significant order backlog. We expect KSAT to deliver solid growth in both revenues and EBIT for the year. Patria delivered 23% growth compared to the previous year, with about EUR 167 million in revenues for the Q3 of 2023. Patria has positive contribution on revenues and EBIT from good progress in the global divisions due to new contracts. The backlog from our associated companies is not recognized in Kongsberg's reported backlog, and the contribution to Kongsberg from associated companies is recognized as income from associates in the P&L.
On our Capital Markets Day in June last year, we launched our 2025 targets. The targets were focused on growth and profitability. We already now see that our growth targets are within range next year. Since we've entered 2022, we have almost secured NOK 80 billion worth of orders, and we have experienced strong project execution. In addition to this, we have also had a situation with high inflation and the impact of a weak Norwegian kroner. However, the main reason for growth is still excellent operation and execution. We plan on hosting our next Capital Markets Day in June next year, and we will provide an update on the targets. That said, with the current strong pace, strong backlog coverage, as well as solid operations, it seems like we should deliver on our growth target one year ahead of the original plan.
With that, I'll leave the floor for Geir to comment on the outlook.
Thank you, Mette. I think we already have touched on the most important outlooks for the business during the presentation, so I will not spend too much time on this outlook. But I think in total, we do see strong growth prospects in all our business areas in the short to medium term. Growth in 2023 is already more or less secured. In general, we see a strong demand throughout our portfolio. The maritime contracting, contracting at the shipyard seems slightly better now than it has done earlier this year. We have a solid prospects for continuing strong ordering in defense, and Discovery has a very advantageous position in growing markets, and the digital is moving in the right direction, meaning I believe we will grow our backlog even further.
To sum up, all in all, I'm confident that we will continue our sustainable growth path, the remaining of 2023 and also into 2024. I think we can open for the Q&A session.
Yes, we do have a few questions from the viewers. The first one goes on the employee appreciation mentioned in the beginning of the presentation. Could you quantify a little bit around that?
Yes, I can quantify. Yes, the board has decided to give the employees an extraordinary appreciation that will be paid out in Q4, and we estimate approximately NOK 120 million to impact the figures in our Q4 results.
Thank you. Then a question from Hans-Erik Jacobsen, Nordea. Within Kongsberg Maritime, a big portion of the growth is related to the aftermarket. Can you comment a little bit around the development in the aftermarket, as well as the margin development for that part of the Kongsberg Maritime business?
As I said, the aftermarket has been growing steadily over the past years. I think what we see, as I mentioned in my presentation also, that the need for upgrades, especially within emissions, to reduce the emissions and also increase the energy efficiency for the vessels. Of course, also the ship owners see that it's possible to cut costs. So that I believe that will continue to be a strong market for us going forward. We also see that even rather new vessels actually comes out and requires an upgrade to meet the new regulations and also the targets, the new targets set by IMO earlier this year.
Thank you, and a follow-up on the employee appreciation question in the beginning from Ole-Petter Sjøvold, Sparebanken. With regards to this, to the fixed amount per for the business areas, is it okay to assume that it will be distributed between the business areas as cost?
Yes, that's okay to assume.
Thank you. Other than that, it seemed very clear. So, that was the final question from the webcast.
Okay. Then, thank you very much for joining us this morning, and I wish you all a good weekend when that time times come, and hope to see you soon. Thank you.
Thank you.