Welcome to Norbit's fourth quarter and full year 2024 presentation. Today it's exactly o ne day before we can celebrate Norbit 30th birthday. On February 14th, 1995, NOK 154,000 was deposited on a bank account in Surnadal SpareBank as share capital. It's been a very interesting journey. It's a lot of revealing stuff to think about. We cannot dwell on the past having so much exciting and opportunities in front of us. In addition to presenting the results for last year, we will also give you insight today on our ambitions for 2025.
The end of last year was a very good end, so it was a new record. Being a company with ambitions of consistent growth, we need to have records many quarters. A 40% increase from Q4 in 2023 is satisfying and it's good to see that this comes from strong underlying growth in all business segments. We also saw a good margin improvement. Having a 26% EBIT margin giving us then a record high EBIT on NOK 145 million is satisfying.
For the full year, w e have shown all years since we were listed in 2019 here. Coming to concluding 2024 with NOK 1,751 million, that's with an EBIT margin of 20% giving a consolidated EBIT of NOK 342 million. The earnings per share is close to NOK 4, exactly NOK 3.93. That's a 27% increase from last year. In the board meeting yesterday, our board d eclared that it will propose to the general meeting to pay a dividend according to the dividend policy.
The policy says that 30%-50% the net profit should be paid out. It also says that we have an intention of paying out excess capital as extraordinary dividend. It is for the 2024 closing proposed ordinary dividend of NOK 2 and extraordinary dividend NOK 0.1, y ielding in total more than NOK 3 per share. Going into the segments. Oceans had a very strong. We saw a very good traction in Q4. It's impressive to see the organization's ability to deliver more and more and even more.
Nearly NOK 270 million in revenues with close to. I've been complaining a bit. It was lacking NOK 1 million, should have been NOK 100 million. So it's NOK 99 million in EBIT, 37% margin. As you know we did for us very good acquisition last year Innomar. If we adjust for that acquisition, we still see a growth of 36% quarter-over-quarter. Also worth mentioning, we have a big project we announced last year in the security part of the oceans yielding NOK 75 million in revenues. It was announced in September. I n these numbers t here is no revenue recognition on that due to some postponement of the project.
Yeah. For the full year Oceans m ade NOK 745 million in revenues which is an increase of 24%. The annual EBIT margin ended at 29%. Showing the split for the last three years on the different product lines. As you see, t he strong growth is mainly from what we call other sonars. It is the iWBMS sonar family where we continue to tailor for specific user applications and by that opening up market so we can continue to grow. The Winghead is more or less the same level as it was in 2023 and you see that we have sub-bottom profilers on top of this, which was not part of 2023. This comes from the acquisition of Innomar.
As I mentioned, we continue to tailor to broaden the product offering and growing through that at some examples. It's j ust a few. This is only two out of a range of examples what we've invested R&D funds into. But we've launched a new iWBMS X. This is a new platform based on the iWBMS we had in the past. The new thing in this is that we on this platform have the ability to allow clients to pick what kind of features they'd like. It opens up for us to do a different business model.
You can buy then iWBMS X with base functionality and you can choose to upgrade as you need additional functionality. It opens up for more business development and a wider range of business models. In addition, one example, more long range version of the i80S. With this long range i80S we allows clients to have a wider swath angle so that they could do a more efficient survey when mapping the seafloor.
In connectivity, it was also a good quarter. It is the second best in the history for connectivity. When I say it's good, it's because we was expecting this to be a new record. NOK 20 million in revenues on enforcement modules was pushed into Q1 due to some constraints on supply chain issues. Revenues NOK 153 million and EBIT of NOK 44 million representing a 29% margin. Total of the year for Connectivity ended at NOK 516 million. This is a small decline from 2023. This is mainly, as you see, explained by lower activity on On-Board Units. That's the standard tolling tags we're supplying, where we had a very, very strong first half year, 2023.
It is satisfying to see that we have good growth on all our product lines. All in all, we find 2023 to be a good year also for Connectivity. In the R&D, as we said that for Oceans we're tailoring new functionality, new features and broadening the product offering. As we've announced in the past, we're doing for Norbit big steps making a new product. It's a satellite-based tolling On-Board Unit for use in commercial vehicles and the first deliveries is under a contract NOK 160 million announced July. Announced last year to start in July this year where it's our client Toll4Europe.
The development on this continues with full force. It's a lot of activity going on. Sourcing of components. Preparation for high volume production is well underway. A new robotic line will be installed in our Røros factory during April. Final segment product innovation and realization. For those that have followed us for a while, you know that in Oceans and Connectivity we are doing Norbit branding technology out to a global market. It's our own technology and of course the margins are then g ood.
60% approximately of our manufacturing capacity is used to make own products. Remaining capacity is sold on contract manufacturing terms to selected industrial clients. We've seen a good quarter in Q4 also in this contract manufacturing that's d riven by increased demand in the defense and security sector. Nearly NOK 150 million in revenues in the quarter with NOK 20 million in EBIT yielding 14%. I think in a contract manufacturing term that's a very strong EBIT margin.
For the full year we saw revenues of NOK 543 million. That's 32% up from 2023 and it's a good margin improvement for the full year, i t's 10% compared to 8. Yeah. As you see, out of the 543, 460 nearly comes from contract manufacturing. On top of that, it is some R&D services and some products that we have been supplying to some industrial clients under some private branding for them since many, many years. With that I leave the floor to Per Kristian to go through some financial figures.
Thank you, Per Jørgen. I will spend some minutes walking you through the financial highlights of the quarter and the full year results. Financial performance in the last three months of 2024 was strong across the board. Revenues in the fourth quarter amounted to NOK 556.1 million, an increase of 40% from the corresponding quarter of 2023. Adjusted for Innomar, which we acquired 1st of July last year, the growth rate was still an acceptable 33% for the full year. Revenues ended at NOK 1,751,000,000, up 15% from 2023 with growth driven by segments Oceans and PIR, while Connectivity saw a 5 percentage point decline on rescheduling of On-Board Units.
EBITDA for the quarter ended at NOK 182.4 million representing a margin of 33% and this compares to NOK 92.1 million at a 23% margin reported in fourth quarter of 2023. For the full year EBITDA ended at NOK 474 million, up 21% from that of 2023, representing a margin of 27%. Operating profit was NOK 145 million in the quarter translating to a margin of 26% and the quarter was impacted by our divestment of underwater lighting products to the aquaculture market.
In total, this reduced operating profit by NOK 7 million through obsoletes of inventory and NOK 3.4 million in impairment. For the full year, operating profit was NOK 341.7 million, up 20% from 2023 and representing a margin of 20%. Net finance expenses were negative NOK 9.4 million, primarily explained by net interest expenses of NOK 9.9 million. Tax expenses was NOK 29.6 million while net income for the period was NOK 105.9 million and NOK 243.3 million for the full year.
In the fourth quarter Oceans delivered strong growth of 52% year-over-year and 36% adjusted for Innomar. Organic growth was primarily driven by strong sonar sales, in particular for Winghead sonars supported by the introduction of two new sonars which mentioned by Per Jørgen. The gross margin was largely flat while payroll expenses increased as NOK 11.3 million, of which Innomar explains NOK 7.3 million. Depreciation, amortization and impairment expenses increased to NOK 8.5 million following amortization of R&D and the mentioned impairment of NOK 3.4 million.
The EBIT ended at NOK 98.7 million, giving a margin of 37% and adjusted for the divestment of lighting products, the EBIT margin was 4.40%. Connectivity saw a 31% revenue increase year-over-year on higher sales of On-Board Units. Gross margin was 63% flat from that of fourth quarter 2023. Operating expenses rose as fourth quarter in 2023 saw a reversal of provisions made for credit losses of NOK 3 million. The EBIT for the quarter was NOK 43.9 million with a margin of 29%.
PIR reported a solid quarter with revenues increasing 33% on strong demand from industrial clients within contract manufacturing, in particular from the defense and security sectors. Gross margin in the fourth quarter was 44% in line with the margin reported over the last six months reflecting a normalization following a weak first quarter of 2024 and a weak fourth quarter of 2023. Both quarters were impacted by sale of inventory and delivery on a low margin project. As a result, EBIT for the quarter ended at NOK 20.4 million giving a margin of 14%.
Next, balance sheet and our financial position. Property, plant and equipment including rights of use assets increased NOK 5.5 million in the quarter following investments in machinery, equipment and lease, additions of new production equipment, net of depreciations. Intangible assets rose NOK 16.1 million explained by R&D investments with high activity on the GNSS OBU project in the quarter. Trade receivables were up NOK 79.6 million in the quarter explained by Ocean's quarterly revenue growth and intra-quarter effects as sales in Oceans were back end loaded.
Inventories increased NOK 38.2 million in the quarter while trade payables increased NOK 31.5 million. Net interest bearing debt stood at NOK 254 million at the end of December, a decrease from NOK 352.4 million at the end of September. Our equity ratio was 53%. That's up from 51% at the end of third quarter. Our working capital efficiency continued to improve in the fourth quarter to 23% based on last 12 months revenues or 18% fourth quarter annualized.
The reduction in inventory has been the main driver behind the improvement in 2024. In 2024 we have reduced inventory with more than NOK 130 million in a period of growth which is a result of improved inventory management and adapting purchasing strategies to a more normalized component market. We have previously highlighted that inventory turnover has been high on the strategic agenda and I'm pleased to see that we have delivered results in 2024.
H eading into 2025, w e expect that the working capital will show large fluctuations from quarter to quarter, particularly concerning our inventory which is expected to show a build up in the first half of the year ahead of the GNSS OBU deliveries as well as preparing for large volume deliveries in the PIR segment. Our long term ambition however remains clear to maintain high working capital efficiency in order to make the business more capital light without compromising Norbit's core value n umber one, we deliver.
In the fourth quarter net interest bearing debt to EBITDA stood at 0.7 times and our liquidity position was NOK 743 million at the end of the quarter. Our balance sheet continues to remain rock solid and provides for a strong financial platform to deliver on our capital allocation framework and the ambition plans that we have set out. As for the recommended dividend by the Board of Directors, you will see that we are currently below our long term target range of the financial policy and thus an extraordinary dividend is proposed by the board to adjust our leverage position to the lower end of the range.
Lastly, cash flow for the quarter. Cash flow from operations was NOK 143.7 million, explained by an EBITDA of NOK 182.4 million, a net decrease in working capital of NOK 18 million, taxes paid of NOK 47.4 million, and NOK 9.4 million in net interest expenses. We invested NOK 50.4 million in the quarter, explained by NOK 36.8 million in R&D investments and NOK 13.6 million in investments in machinery and equipment for 2025.
We expect our R&D investments to end up around NOK 100 million with high activity in the first half t o complete the GNSS OBU, investments in fixed assets are expected to be NOK 110 million in 2025 to support continued growth. Cash outflow from finance activities was NOK 16.1 million in the quarter, mostly explained by NOK 28.1 million in debt repayments and for leases partly offset by the share issuance to our employees participating in the annual incentive program. With that my part of the presentation is completed. I will give the floor back to Per Jørgen who will give you the outlook section and some additional information regarding our investment program for 2025.
Thank you, Per Kristian. So l ooking into the future is always more exciting than explaining the past. I am happy to lay out our ambition for 2025. Our revenue target for 2025 is in a range between NOK 2,200 million-NOK 2,300 million, w hich marks a next step for us towards our 2027 ambition. We target to improve our EBIT margin compared to the 20% reported in 2024. In addition to this, we continue to explore value accretive acquisitions to add on to the organic growth.
The more short term outlook. As you know, first quarter is normally a weak quarter in Oceans. Oceans is the segment that historically have had the highest seasonality in our business. The quarter has started with high activity and we are happy to announce that we expect a strong growth in revenues in first quarter 2024 compared to what we had last year. We expect revenues in the first quarter to be in excess of NOK 200 million. In this we have not included any recognition of the previous mentioned security project for the NOK 75 million.
First quarter. In connectivity we expect in the range of NOK 140 million-NOK 150 million. And in the PIR segment we expect to take step upwards to between NOK 170 million and NOK 180 million d riven by increased demand and continued increased demand in the defense and security sector. Reppe mentioned the investments, so approximately NOK 100 million in R&D and NOK 100 million in property, plant and equipment. Behind this, as Per Kristian also mentioned, in the R&D, a good portion of the budget is on the GNSS On-Board Unit.
There is a lot of things also in the Oceans part that takes a good piece of that budget. In the property, plant and equipment, we have a new robotic assembly line for the GNSS On-Board Unit, as I mentioned, that will be installed in April. We have invested in some new s pecialized prototype SMT lines for making more rapid prototypes, speeding up R&D but also freeing capacity for the volume production at the Serbia factory.
We take a big step in the Røros factory and nearly doubling the capacity of that factory by both upgrading existing lines and installing new lines. In April we will start a line that currently is on the boat from Japan to Norway. This line is, as we experience, going to be Europe's fastest SMT line. And for those not being fully into the terminology, surface mount technology, that's c omponents that is assembled on a printed circuit board. Very highly robotized in this regard.
In addition to this, we're very happy to see that we're able to expand the Serbia factory. We'll increase the floor capacity by 70%. This is done through a lease from the municipality. They have decided that they will build a new expansion of our factory to us and we will lease that on for us good terms. Reminding you of the 2027 ambition where we plan to do more than NOK 2,750 million in revenues, and as mentioned, our 2025 ambition is a good next step towards that.
The EBIT margin, w e said that for 2025 the ambition is to have it higher than 20. So a good way on the journey for the long term ambition and also the return on capital employed. As Per Kristian showed you, we have a very active relation to our balance sheet and on our working capital. So we want to have good return on the capital. With that we're open for questions, if there should be any.
Okay, first question is from Jeppe at Arctic. Does the 20 25 revenue target include the NOK 75 million GuardPoint project?
As we have t alked about that, it's been some postponement now and no revenue recognition so far. So we don't rely on doing revenue recognition on that to reach our target.
Could you provide a segment breakdown of your full year revenue targets? We haven't provided any split for that, but as a general remark and what we have stated in the report is that we expect a solid growth in all of the three business units and that will be supportive towards the target in 2025. You mentioned a strong start to the year within Oceans. What products are driving the year-over-year growth?
We haven't given any split on that either, and I think. I would like to remind that in the ocean segment we are continuously broadening the product offering but s till t he products inside this is low volumes. But all product lines have a good contribution margin. S o I'm not going to give any accurate split on that today. So what I can mention is that t he mentioned iWBMS X which we introduced lately has had a very good start, better than expected.
What's your expectations for enforcement modules for tachographs in 2025?
Yes, maybe you would comment on that.
No, I mean. So b ased on what we're currently seeing, we do expect that enforcement modules will increase in 2025 compared to 2024. The primary effect of that is due to the fact that the regulations of the EU has either been implemented to replace all the tachographs or is in a transition period to be replaced. So what we're currently seeing in the market is a very s trong growth, at least for the first half of this year. That should be supportive for also the full year target that we are announcing for the group given the prospects that we see on that product line itself.
And probably also it's fair to say that we did expect higher revenues on that last year. It was some postponements, but as we e xperience t hese postponements was for all the big players in the market. So it's not. So we expect that over prime client still remains the same market share. So then it's postponements and not that losing market share.
A final question, how scalable is the ocean segment?
The scalability is good. And so, I mean, for. I mean that's proven in the numbers you've seen that the revenues has increased more than the salary expenses relatively. And I think we have good scalability in operations. We will need to continue to staff the organization, but we have a very good setup now that is capable of absorbing more people. And it's been amazing to see when we've been out to recruit people into this part of the business. Also that it's a lot of good qualified people that want to work with us and work on these products.
Question regarding Ping DSP, which we acquired in October 23rd, 2023. How has this integration into Norbit's organization impacted Ping DSP sales and opportunities so far?
Glad to get that question because that's a very satisfying story. What we've seen is that bringing Ping into the Norbit family has h elped to get traction on the product in the market. So Ping, being a fairly small company, had limited market resources. Being standalone, now being plugged into our global sales and distribution network, we see that it's been satisfying with a good growth.
And just to comment on that as well, I think this is a very good example of how we can utilize our own market and distribution network to accelerate and create synergies within the company that we acquire. And I think Ping DSP has outperformed well above expectations since the acquisition was made. So I think the growth story is d efinitely there.
It's good to see that after a while. We do need support on the operational part, and I think that's how we want to do integration. Also, it should be when the company we acquire sees a need for support. If you can generate the momentum in the market and then they need support on other parts, we should be ready, and it's a good way of integrating.
What insights have you gained from partnership with companies such as Bedrock and Cellula who's developing these autonomous underwater vehicles?
I think for Norbit it's very important to work closely with players in the underwater vehicle domain. We strongly believe that for many applications we will see an increase in autonomous mapping. So both underwater and surface with u nmanned vessels w ill need a lot of instrumentation. And for Norbit, we want to be the technology partner. To be able to be a relevant technology partner, we need to work closely with them to understand their needs and then going back to our laboratory to tailor functionality that fits into those needs.
Can you elaborate on the software services Norbit offers? How big percentage of your customers end up using your software revenue potential?
So I think as of today i t's i n the connectivity part we have some subscription based revenues. Apart from that, most of our revenues when it relates to software is in the way where software is a sales enabler rather than being the product. But with this iWBMS X, as we recently introduced, we will then have a price tag on different software function so that you could choose to upgrade y our sonar prior to doing a new survey. But still mainly software as a sales enabler.
What is your production capacity for your sonars?
The production capacity for sonars is good and t he scalability is also good. The number of sonars is not that many. I mean the high volumes is in the other two segments. There is some manual processes that requires clever hands in the manufacturing. But as I mentioned earlier, we've been able to staff up and expand and w e're not cautious or not afraid that it should be any limitation in that regard.
Also another question relating to oceans. Are you seeing further increased interest in the ocean security sector? Is there an opportunity in pipeline monitoring?
It's a lot of interests. I think t he world has realized that we do need to take more care what's going on underwater. It's a lot of critical infrastructure underwater that has been without any kind of surveillance. That being said, pipeline monitoring, that's challenging because it's very, very, very long pipes. But w e do expect that some of these suppliers of unmanned autonomous underwater vehicles will succeed in making applications for underwater pipeline surveying. But y ou need to do it quite differently than it's been done until today.
Okay. Same topic. Do you see long-term growth in the defense manufacturing divisions? Are the good results in this area, new products from customers or a general lack of capacity in the sector across Europe creating an opportunity for Norbit?
I think generally when it comes to s ecurity and defense related technology, t he demand, or generally also any kind of technology that is needed that Europe needs, it's a strong demand to have made in Europe. I think we've talked about it before, that made in Europe, made in Norway, the demand is increasing for that. Yeah, so I'm not going to comment on what kind of products and what kind of clients we have in that domain, but we see a good demand in long term for that also.
Question from Marcus at Pareto. Could you provide some color on how you think about a round 20% EBIT margin target for 2027 now that you have done and will likely continue to do margin accretive M& A. So I think with respect to the margin, I think what we have stated is that we have an organic plan. So we are building the margin target out of the business that came out of 2023 and Innomar is an addition to that.
So obviously the margin, what they will end up in 2027 is a combination of what we will deliver on the organic part but also a contribution from MA which we will continue to also look for i nto this year and also moving forward. Okay. Question with regards to GuardPoint Security Oceans, how does the sales process for GuardPoint differ from that of your other sonar products?
It differs in the way that it's completely different. So t he other sonar products are mainly sold as standalone systems where underwater surveillance system we deliver GuardPoint is more a system solution or a more complete solution offering. The sales process is very different. In some occasions it's more like a typical tendering process and it's some portion of engineering linked to it.
Then a question w ith regards to again Innomar, are you taking an initiative to position Innomar towards the unmanned vehicle market?
So we explore more in all of our product lines and tailoring technology to fit into and fit in line with the trends we see.
So h ow do you see the long-term growth potential for connectivity?
So for connectivity it was important milestone to get this contract on the GNSS on-board unit to broaden and going forward I think it's important in the connectivity to continue to broaden the product offering and also continue to broaden the customer base. In connectivity we're very strong in microwave c ommunication, secure communication. When broadening the product offering we really are open to explore more without giving any comment to what that could mean, but it's in our DNA to see how can we broaden this even more. I think the name connectivity c ould have a wider meaning.
Okay. There are some questions regarding pricing of the sonars. I don't think we will be very detailed on that. So I think with that there's no further questions.
Okay, so then, thank you for taking the time and following this presentation, and hope you will continue to follow us also on the next 30 years of our journey. Thank you.