Kongsberg Gruppen

Investor Presentation • Feb 14, 2019

INVESTOR PRESENTATION

Q4 2018 14/02/2019

Geir Håøy, President & CEO Gyrid Skalleberg Ingerø, CFO

CHALLENGES ADDRESSED IN 2018

	2018 ACQUISITION OF RRCM AND AIM NORWAY		2018 CONTINUED STRONG MARGIN IN DEFENCE
GROWTH	GROWTH IN MARITIME AFTER THREE YEARS OF DECLINE	MARGINS	UNDERLYING MARGIN IN MARITIME AT 9.3 %
	2018 ORDER BACKLOG IMPROVED 11 % SECURED FRAMEWORK

AGREEMENTS WITH I.E. OTH AND CROWS

ORDERS

MOU'S WITH QATAR

AN EXTREMELY EVENTFUL YEAR

AWARDS MASSTERLY GRIMALDI DIGITAL TWIN

KDI

CAPITAL INCREASE

AIM NORWAY MOST ATTRACTIVE

YARA BIRKELAND

JOHAN SVERDRUP

FASE ONE & TWO AWILCO

KDA

OTH CONTRACT NSM CROWS FOLLOW ON JSM TEST

WORLD CLASS WORLD CLASS –– Through people, technology and dedication Through people, technology and dedication KONGSBERG PROPRIETARY KONGSBERG PROPRIETARY - See Statement of Proprietary information - See Statement of Proprietary information Q4 INTRODUCTION - FEBRUARY 14, 2019

HIGHLIGHTS Q4

GROUP:

• Solid quarter throughout the organization
• Secured RRCM financing through rights issue and bond placement

DEFENCE:

• Acquisition of AIM Norway
• Secured MNOK 805 CROWS order

MARITIME:

• Strongest revenues since Q4 2016
• Preparations for RRCM integration on plan

DIGITAL:

• Strongest revenues since Q1 2016
• Order backlog improved by 38% from strong H2 order intake

4 148	3 859	520	12.5 %
REVENUES	NEW ORDERS	EBITDA	EBITDA MARGIN

FINANCIAL STATUS

2018

REVENUES KM MNOK 7 545 (7 429) KDA MNOK 6 104 (6 333)

1 394 MNOK (1 279)

14 381 MNOK (14 490)

EBITDA MARGIN KM 7.9 % (7.9 %) KDA 14.1 % (9.7 %)

KM MNOK 594 (589) KDA MNOK 863 (612)

EBITDA

9.7% (8.8%)

16 574 MNOK (13 430)

ORDER INTAKE KM MNOK 8 884 (7 336) KDA MNOK 6 885 (5 376)

ROLLING LTM

UNDERLYING/REPORTED PERFORMANCE

KDA

Adjustments include: =<2017: Released provisions, impairment and restructuring, >=2018: acquisition costs, integration costs

14,1 %

0% 2% 4% 6% 8% 10% 12% 14% 16%

LTM Revenues LTM EBITDA % LTM Underlying EBITDA %

REVENUES Q4

REVENUES UP 10.4% YoY

KM revenues up 8.7% YoY

KDA revenues up 12.8% YoY

EBITDA Q4

12.5 % OVERALL MARGIN (12.2%)

MNOK 85 integration costs included in Q4 2018

STRONG KDA QUARTER

Project mix, project milestones, volume

11.0 % UNDERLYING EBITDA MARGIN IN KM Project execution, high utilization, volume

Q4 FINANCES - FEBRUARY 14, 2019

NEW ORDERS Q4

2018 BOOK/BILL 1.15, 0.93 IN Q4 MNOK 17 283 total order backlog

KM BOOK/BILL 0.91

Order backlog grew 19.5 % in 2018 MNOK 700 more secured in backlog for delivery in 2019 compared to 2018

KDA BOOK/BILL 0.93 Order backlog grew 7.9 % in 2018 MNOK 805 order for CROWS

NEW ORDERS KONGSBERG MARITIME

2018: MNOK 8 884

Q4: MNOK 1 853

NEW ORDERS KONGSBERG DEFENCE AND AEROSPACE

2018 MNOK 6 885

Q4 MNOK 1 770

WORLD CLASS – Through people, technology and dedication KONGSBERG PROPRIETARY - See Statement of Proprietary information KONGSBERG PROPRIETARY - See Statement of Proprietary information Q4 FINANCES - FEBRUARY 14, 2019

DEVELOPMENT IN CASH AND SHORT TERM DEPOSITS

Share issue: amount is net received after capital costs

Reduced investments in R&D/PPE in all areas, compared to 2017 (down MNOK 116)

Q4 2018 Q3 2018 2017 Gross interest bearing debt 4 020 3 019 3 340 Cash and short-term deposits 10 038 2 990 2 956 Net interest bearing debt -5 706 336 384 Equity ratio 45.7 % 35.5 % 35.6 % ROACE 12.5 % 10.7 % 9.0 %

STRONG BALANCE SHEET

DEBT POSITION

HEALTHY MATURITY PROFILE

	2016	2017	2018*
Total dividends	MNOK 450	MNOK 450	MNOK 450
Payout ratio	68.9 %	81.2 %	64.2 %
			* Proposal for 2018 AGM

127,1 %

DIVIDEND

THE BOARD PROPOSES FOR THE ANNUAL GENERAL MEETING ON 14 MAY 2019 A DIVIDEND OF NOK 2,50 PER SHARE FOR FY 2018

Dividends shall over time constitute between 40 and 50 per cent of the company's ordinary net profit after tax, future capital requirements taken into account

WORLD CLASS – Through people, technology and dedication KONGSBERG PROPRIETARY - See Statement of Proprietary information

STATUS INTEGRATION ROLLS-ROYCE COMMERCIAL MARINE

ACTIONS AND TIMELINE

Close to 6 000 actions to be completed prior to closing

Largest external costs related to IT, legal, and harmonization and separation actions.

Closing expected to take place 1st april, 2019

Presentation of integration plans and short term targets to be presented on 1st quarter presentation 10th may.

STATUS INTEGRATION ROLLS-ROYCE COMMERCIAL MARINE

KEY AREAS OF POTENTIAL COST SYNERGIES

Estimated annual run-rate synergies:

MNOK 200

MNOK 200

MNOK 100

BUSINESS UPDATE

BUSINESS UPDATE KONGSBERG DEFENCE & AEROSPACE

Strong quarter with solid margins

• Revenue increase from ramp-up of new projects and F35
• Favorable project mix and milestones
• Solid project execution

Acquisition of AIM Norway

• Strengthens position as Norwegian armed forces' strategic partner for operative requirements

Order backlog increased 7.9 % in 2018

• MNOK 805 contract for CROWS program in Q4
• Ongoing negotiations on several large programs

1 898 / 6 104	1 770 / 6 885	371 / 863	19.5% / 14.1%
REVENUES	NEW ORDERS	EBITDA	EBITDA-MARGIN

AIM NORWAY

A MAJOR ACTOR IN AVIATION INDUSTRY SINCE 1916

Strengthens KONGSBERGs role as a strategic partner for the Norwegian armed force's operative requirements, both as a supplier of equipment and for maintenance

Closing expected within H1 2019

EMPLOYEES / 440 OFFICES/ 3

MECHANICS

AVIATION

ELECTRONICS

ENGINES & COMPONENTS

BUSINESS UPDATE KONGSBERG MARITIME Revenue improvement,

margins impacted by integration costs

• High utilization and good development in operations
• Margins impacted by MNOK 85 integration costs

Delivering operational excellence

• Our customers have first priority, at the same time we are preparing the largest integration in the company's history

Order backlog increased 19.1 % in 2018

• Integrated concepts
• Johan Sverdrup
• LNG
• PAX
• Marine robotics

SOLID AND DIVERSIFIED ORDER INTAKE KM 30%

TOTAL ORDER INTAKE 2017: MNOK 7 336 TOTAL ORDER INTAKE 2018: MNOK 8 884

BUSINESS UPDATE KONGSBERG DIGITAL & PATRIA

KDI

HIGHEST REVENUES SINCE Q1 16 AND 1.13 BOOK/BILL IN Q4

Order backlog grew 38% in 2018

Continued focus on further developing positions within digitalization of core areas such as oil&gas, wind and merchant marine.

PATRIA

2018 REVENUES AT MEUR 476, UP 1.8%

5.7 % decline in Q4 YoY,

Growth in Systems-division related to Hamina-contract signed early 2018. Good development within maintenance areas, no major land business (vehicles) opportunities concluded

KONGSBERG's share of net profit was MNOK 65 in Q4 and MNOK 80 in 2018

FOCUS FORWARD

OPERATIONAL EXCELLENCE PROFITABILITY

KM

Successful integration RRCM

Secure orders

KDA

Successful integration of AIM NORWAY

Secure orders

KDI

Secure scaling

Continue positive development for Maritime Simulation

2019 OUTLOOK

KM

Integration of RRCM will impact overall profitability

Good order intake in 2018 and some improvement in lifecycle business founds some revenue increase

KDA

Due to sizable contracts in negotiation, time of signing might influence this years' revenues

Current backlog indicates some growth independent of new contracting

KDI

Continued focus on further development of the area

25 % increased order intake in 2018 founds growth

Q&A