NKT Aktie

Welcome to NKT Financial Presentation for the First Quarter of 2026. [Operator Instructions] I will now hand the call to your speaker, President and CEO, Claes Westerlind and CFO, Michael Yong. Please begin.

Good morning, and welcome to this conference call following the release of our interim report for the first quarter of 2026. I'm Claes Westerlind, the CEO. And for today's call, I'm happy to be joined by our new CFO, Michael Yong. As usual, I will begin by taking you through the key developments in the quarter, focusing on the main messages, the operational performance, commercial highlights and the market dynamics. I will then hand over to Michael for a deeper look into the financials. We will conclude with the outlook and open the line for questions.

As you are aware, Q1 2026 is the first quarter where we present and comment on the business in our new business line structure, Transmission, Grid Solutions and Accessories and Distribution, which became effective from 1st of January this year to support our Charging Forward strategy. With that, please turn to Slide 3. Before we begin, I'd like to highlight that today's presentation and related comments, including forward-looking statements. These statements are subject to risks and uncertainties, many of which are beyond NKT's control, and actual results may therefore differ from expectations. I will ask all of you to read this disclaimer carefully.

Now let's move to the key messages for the quarter on Slide 4. Q1 2026 was a solid start to the year with a combination of record order backlog, a record first quarter result, continued progress on our investments and disciplined operational execution. Our new business line structure is now live and operational, supporting the Charging Forward strategy. This is an important step because it reflects how we engage with customers, execute projects and build scalable capabilities in the organization.

From a commercial perspective, we had a historically strong quarter. During Q1, we secured order intake exceeding EUR 4.2 billion, driven by the Eastern Green Link 3 project and the 2 SSE projects in Scotland. This resulted in a record high transmission order backlog of EUR 13.5 billion at the end of the quarter. This provides extended visibility for the coming years and supports our execution planning and long-term value creation. We also continue to progress on our major capacity expansion projects, all of them according to plan. The high-voltage capacity expansion in transmission remains on track to become operational from 2027 and the additional medium voltage capacity in distribution is coming online during 2026.

Financially, we delivered organic growth of minus 4% and operational EBITDA of EUR 97 million in Q1. The negative growth was as expected and linked to a specific product ramp down in transmission, but profitability improved. And finally, we maintain our financial outlook for 2026 with revenue at standard metal prices expected to be EUR 2.63 billion to EUR 2.78 billion and operational EBITDA expected to be between EUR 360 million and EUR 410 million.

Let's turn to Slide 6 for a look at the overall financial performance in the quarter. The development in Q1 was largely as expected. Revenue at standard metal prices declined from EUR 630 million to EUR 610 million, corresponding to organic growth of minus 4%. This was driven by the ramp down of the Champlain Hudson Power Express project, including subcontracted work compared with a relatively high level in Q1 last year. Despite the revenue decline, operational EBITDA increased from EUR 81 million to EUR 97 million, and the margin improved from 12.9% to 16%. This reflects improved profitability across all 3 business lines and satisfactory operational execution.

The Transmission business line was the driver behind the negative organic growth for the quarter. But excluding the effect from Champlain project, the activity level remained high, and we continue to execute on our high-voltage order backlog with several projects being active during the quarter. Grid Solutions and Accessories delivered organic growth of 2% and slightly improved operational EBITDA compared to the same quarter last year. This was supported by high activity levels and satisfactory execution and mainly driven by accessories. The positive development was maintained in distribution, driven by continued robust demand in the power distribution grid segment. The business line reported 3% organic growth and an improved operational EBITDA.

Let's turn to the next slide for a deeper look at each of the business lines, starting with Transmission. Transmission delivered a quarter with high activity levels and satisfactory execution, but with lower revenue compared to last year, exactly in line with expectations, as the Champlain project is ramping down. Revenue at standard metal prices was EUR 331 million, down from EUR 360 million in Q1 2025, corresponding to an organic growth of minus 8%. The decline was driven by the mentioned ramp down, including a lower level of subcontracted revenue compared to the relatively high levels in Q1 2025.

Operational EBITDA was EUR 50 million, slightly lower than the EUR 52 million reported last year, but margin improved to 15.1%, up from 14.4%, demonstrating improved profitability despite the lower revenue base. From an execution perspective, we continue to progress a broad portfolio of high-voltage projects throughout varying stages of execution, including Biscay Gulf, Hornsea 3, SuedLink, SuedOstLink and Champlain Hudson Power Express.

As always in the product business, quarterly phasings can influence both revenue and margins, and we remain focused on disciplined project and risk management across the portfolio. In parallel, our transmission investment programs progressed according to plan with additional high-voltage capacity still expected to be operational from 2027. In Karlskrona, we saw the expected progress with installation of machinery and selected commissioning tests ongoing.

Let's move to Slide 8 for an update on the market and our backlog. Q1 was a strong commercial quarter for NKT. Market activity remained high, and we saw historically strong order intake for the company within a single quarter. NKT estimates that the value of projects awarded in our addressable transmission power cable market was around EUR 7 billion in Q1, with the majority based on DC technology, reinforcing the structural shift towards large-scale HVDC projects where our capabilities are strong. In the quarter, our transmission order backlog increased to EUR 13.5 billion, supported by 2 significant announcements: the conversion of booking commitments into firm orders with SSE, adding around EUR 2 billion to the backlog.

And the firm order for Eastern Green Link 3 valued at more than EUR 2.2 billion, representing the largest contract for a single cable project in our history. From a backlog composition perspective, more than 95% is with European TSOs and on application, roughly 70% is interconnectors and around 30% offshore wind. Looking forward, we continue to anticipate that our average addressable transmission market will exceed EUR 10 billion per year between '24 and 2030. Naturally, there can be short-term volatility driven by geopolitical and economical conditions, but we expect the supply-demand balance to remain healthy throughout the decade, gradually moving towards a more balanced market in the 2030s.

With the record backlog, our commercial focus remains disciplined, prioritizing the right projects to optimize the mix of production and installation, balance risk and long-term earnings quality. Let's move to Slide 9 for Grid Solutions and Accessories. The new business line, Grid Solutions and Accessories delivered a solid quarter with positive organic growth and increased profitability, supported by high activity levels and satisfactory execution. Revenue at standard metal prices amounted to EUR 113 million, up from EUR 109 million in Q1 2025, corresponding to organic growth of 2%.

The development was mainly driven by the accessories business area with growth across both high and medium-voltage accessories. Operational EBITDA was EUR 19 million, up from EUR 18 million last year, and the margin improved to 16.8%, reflecting improved profitability and solid execution. Activity levels were high across the business line. In Grid Solutions, we executed repair and installation work, including offshore repair projects, while accessories benefited from continued strong demand and good operational performance. Overall, this is a good illustration of how the combination of services, onshore projects and accessories support stable profitability and resilience in the group, and it's a key reason behind the creation of this business line.

Let's turn to the next slide and Distribution. Distribution continued to perform well with growth driven by the Power Distribution Grid segment and improved earnings. Revenue at standard metal price was EUR 212 million compared to EUR 203 million last year, corresponding to organic growth of 3%. The increase was driven by continued robust demand in the Power Distribution Grid segment, and we also noticed a gradual improvement in the Construction segment. Operational EBITDA increased to EUR 22 million from EUR 18 million last year, and the margin improved to 10.5% from 8.9%, reflecting the higher revenue level and improved profitability.

On investments, we continue to progress the planned capacity expansions. The additional capacity in Denmark is ramping up here during the first half of the year and the capacity expansion in Portugal remains expected to become operational at the end of 2026. Let's move to Slide 11 for an update on our major capacity investment projects. Let me provide a brief update on our major investment projects across the group. As highlighted earlier, our capacity expansion projects progressed as planned in Q1. In transmission, the high-voltage capacity expansion remains on track with a key asset expected to become operational for commercial perspective from 2027.

The slide highlights the key sites and projects. The construction of our second cable lay vessel NKT Eleonora progressed during the quarter, and she has now been launched into water in Romania, as you can see in the picture. She is a beauty. Isn't she? During the coming months, she will be transported to Norway for final installation and technical equipment -- of technical equipment and commissioning activities. In Karlskrona, the installation of machinery continued during the quarter as planned and the expansion of the harbor showed visible progress.

Our medium voltage expansions in Denmark and Portugal progressed in line with plan and time lines are unchanged. In Denmark, we are currently ramping up production, while we are entering the final construction stages in Portugal. Our investments remain central enablers for our growth journey. They expand capacity and strengthen capabilities, allowing us to execute on the growing backlog and capture attractive long-term demand.

With that, I've concluded my part of the presentation. Please turn to Slide 13 as we transition to the financials. And I will hand over the word to our new CFO, Michael. Welcome, Michael, and please go ahead.

Thank you, Claes, and good morning from me as well. We'll now take a closer look at the financial development in the first quarter of 2026. I will start out with the income statement. Q1 2026 showed an improvement in profitability, despite a slightly lower revenue level. Revenue was EUR 864 million reported and EUR 610 million at standard metal prices, reflecting organic growth of minus 4%. As Claes described, this negative organic growth was driven by the ramp down of the Champlain Hudson Power Express project in transmission.

Operational EBITDA increased by EUR 16 million versus Q1 2025 to EUR 97 million, and the group EBITDA margin improved to 16%, up from 12.9%. This improvement reflects increased margins across all 3 business lines. Financial items were an income of EUR 15 million compared to EUR 25 million last year, mainly driven by foreign exchange gains relating to the strengthening of the Swedish krona and interest income on the net cash position. The average number of employees increased by 650 compared to Q1 last year, reflecting the continued high activity levels and ongoing investments. NKT is now more than 6,500 colleagues strong. Overall, the income statement underlines improved earnings quality and margin development, which is important, as we continue to execute on backlog and investments.

Let's turn to cash flow on Slide 14. Free cash flow was negative EUR 92 million, reflecting that EBITDA was more than offset by continued high investment level during the quarter. Cash flow from operating activities for the quarter amounted to EUR 52 million (sic) [ EUR 54 million ], an improvement compared to minus EUR 141 million in Q1 2025. Changes in working capital were an outflow of EUR 17 million, impacted by normal phasing of milestone payments and project execution in transmission. This is in line with the typical movements we see in the project-based business. In the quarter, we had tax payments of EUR 45 million, reflecting the increased earning level.

Cash outflow from investing activities was EUR 144 million (sic) [ EUR 146 million ] compared to EUR 160 million (sic) [ EUR 167 million ] last year. The investments were driven by our ongoing programs to increase capacity and capabilities in transmission and distribution. We expect the investment level to remain high throughout the year. So overall, the cash flow profile is what we expect at this stage based on continued high investments and normal working capital phasing.

Let's turn to the balance sheet on Slide 15. The working capital position stood at EUR 1.5 billion at the end of the quarter, stable compared to the end of 2025, reflecting milestone payment phasing and transmission execution. Capital employed increased during the quarter, driven primarily by the continued investment program. This had a slight negative effect on return on capital employed, which was 22%, down from 24% at the end of Q4. Looking ahead, return on capital employed will continue to fluctuate between quarters, influenced by operational earnings, customer payment timing and the growing asset base from our investment programs, which will ramp up over the coming years.

Our net cash position was reduced by EUR 121 million to EUR 842 million as a result of the negative free cash flow in Q1. We continue to maintain strong liquidity. Available liquidity reserves were EUR 1.5 billion, comprising EUR 1.1 billion in cash and cash equivalents and EUR 400 million in undrawn credit facilities. Finally, during the quarter, the green hybrid security of EUR 150 million was successfully refinanced at favorable rates, supporting our overall capital structure and financial flexibility.

Let's turn to Slide 16 and the outlook for 2026. On the back of the development here in the first quarter and our expectations for the rest of the year, we maintain our financial outlook for 2026. Revenue at standard metal prices is still expected to be in the range of EUR 2.63 billion to EUR 2.78 billion and operational EBITDA expected between EUR 360 million and EUR 410 million. Transmission. Unchanged, we expect slightly lower revenue level in transmission with an expected mid-single-digit percentage organic decline. Production and installation capacity available in 2026 is unchanged from 2025. And thereby, the negative development is driven by a combination of a lower level of subcontracted revenue compared to 2025 and an expected normal level of variation orders.

The development throughout the year depends on execution and timing of specific operations in different projects. In 2026, we will continue to execute on our backlog, mainly on projects awarded in the 2020 to 2022 period. The expected margin dilution of around 2 percentage points from increased costs to support the ongoing investment and production ramp-up is also unchanged. Grid Solutions and Accessories is expected to see positive effects from the general high activity level in the market. But as always, the development is dependent on the amount of offshore repair jobs, which is difficult to predict.

Distribution. Distribution is still expected to contribute positively to the revenue and EBITDA development in 2026. The additional medium voltage capacity in Denmark will ramp up during the first half of the year and in Portugal by the end of the year. In total, these are expected to contribute with up to 10% growth to the business line. As usual, the outlook is based on several assumptions as outlined on the slide. Please note that we have updated the assumption for supply chain to reflect the development seen in the Middle East.

In Q1, we saw no material adverse financial effect. But depending on the duration and evolution of the conflict, cost increases are expected in the coming quarters. We have solid processes in place with long-standing relations with both suppliers and customers. We are working to minimize the financial impact, and we confirm our outlook for the year. Please turn to Slide #17. Before we conclude, let me briefly recap the key messages from the first quarter. Q1 2026 represents a solid start of the year, both operationally and commercially. We delivered a record high order intake, driven by major project awards, which increased our transmission order backlog to EUR 13.5 billion.

This enhances our visibility and provides a solid foundation for execution in the coming years. At the same time, we continue to execute at a high level across the business. Although revenue declined in transmission, the development was fully expected as the Champlain project ramped down. Importantly, the underlying activity level remained high, and we delivered record high operational EBITDA for our first quarter with improved margins across all 3 business lines. We also maintained discipline in executing our investment programs with capacity expansion projects progressing according to plan.

These investments are essential enablers for capturing the strong structural demand we see in the market and for supporting our growth trajectory towards 2027 and beyond. Finally, the Charging Forward strategy is now fully operational, supported by the new business line structure, which strengthens our ability to execute on the backlog, optimize our operations and continue to deliver value for our customers and shareholders. Please turn to the next slide. As you are probably aware, we will host an Investor Day on 29th September 2026 in Karlskrona, Sweden. On the day, we will present the Charging Forward strategy in greater detail, including views from the business lines.

Just as important, you will also get the opportunity to see the production site in Karlskrona, both the existing areas and areas we are currently expanding. We invite you to sign up for the day at our investor website, if you would like to attend. With this, we have concluded the presentation, and I will now hand over the word to the operator for the Q&A session. Operator, if you would kindly take over.

[Operator Instructions] Our first question comes from Lars Topholm from DNB Carnegie.

Michael, first of all, welcome on board to you. Looking forward to that. A couple of questions from me. The first one goes to what you just commented on and what you also wrote in the report that you expect some cost increases in the coming quarters. So that triggers 2 questions. A, how significant increases do you expect? And b, since your guidance is unchanged, does that mean the other moving parts that have gone better than expected? Or are you seeing yourself move down, but within the guidance range, so to speak?

Then a second question is to the ramp-up costs for Karlskrona. And of course, I know what it is on full year. But on the quarter, can you comment on the ramp-up drag to the transmission margin, both in Q1 this year and in Q1 last year?

Thank you, Lars. And thank you for the questions. Let me start to provide some answers to them and you repeat if something is unclear. So if we start with the significance of the increases, as I'm sure you're aware, there is a lot of volatility, a lot of uncertainty. So we did not see a material impact in Q1. As Michael was explaining there, we do expect to see increases, and we already see increases going forward. These increases are primarily related to the distribution business line. That's where we can expect to see them materialize.

And -- but it is also on that note that we are reiterating the guidance for the full year. But of course, again, everything is with the perspective that we have today. The increases as such, if I was to call out one material or one component in our cost base, it would be around plastics. So I think I will stop there with that comment. Then on the financial outlook, what you said there, as I said, it is on this basis and what we see today in terms of cost increases to date, also assuming that the supply chains are not interrupted to the extent so we cannot secure material that we are reiterating the guidance. So then it should be entailed within that guidance. And our performance in Q1 also further gives confidence for the guidance that we are maintaining.

On the ramp-up drag for Q1, there I will be, to your disappointment, a little bit vague. I would just say that we did say about a year ago that we had roughly 1 percentage point of OpEx situation. I think that's what you can use as an approximate for the first quarter of 2025. And this year, we have said that we will move from that 1% up to 2% during the year. So at least if I was to use any proxy for the first quarter, I would use slightly more than 1 percentage point then.

And this is on group level, correct?

That's correct, Lars. Yes.

Yes. Then I have one final question just because you made the comment that the projects you're executing on in transmission were mainly projects won in 2020 to 2022, i.e., before prices improved. Can you be more specific on which proportion of transmission revenue is from those projects?

I don't think we can be so much more specific. But as Michael said, I mean, the majority of the projects relate to that time period. But it is also clear, and as we have said, it's not only a constant pricing '20 to '22 and then a totally different pricing from '23 and onwards. It is a gradual change also over time. And as I think you have heard us say, there is also a gradual improvement in the product mix. It goes a little bit quarter-to-quarter. But overall, seen over a couple of quarters, we continue to see that improvement, and that's also what we expect for this year.

And then one final question, if I may, and that's more on the revenue effect from the ramp down of Champlains, if that ramp-down effect is going to be the same in the coming quarters as in Q1 or if it will sort of gradually disappear over the coming quarters?

I think we can see it to a certain extent also in the period to come because both Q2 and Q3 will for the transmission business line, have a tough comparison period. And by that, I think, we will see exactly what you're out there for a little bit. But following that, then -- of course, then it has phased out. So the year-on-year comparison will then be excluding the Champlain project.

The next question comes from the line of Lucas Ferhani from Jefferies.

I have a first question on transmission. Obviously, it's a very good order intake and backlog level. If we look at the win, I mean, EGL3 or what your Italian competitor won, some of these projects were expected last year and moved to this year. So really the pipeline and the tenders for maybe 2026 haven't really materialized yet. So how do you see the pipeline there? And do you -- could we see the backlog growing further from here?

And a relevant question, Lucas. We have said -- if I start on the top level on the market side, we continue to estimate that the addressable transmission market from our perspective will be in excess but an average of EUR 10 billion for that time period of '24 to 2030. We could see a market last year that was weaker than what that average number was. We have seen now we are closing the books on Q1 with an estimate from our side that the addressable market has been EUR 7 billion, which evidences a very strong and high activity level in the first quarter.

Also, I think that leads us together with the outlook for the year to believe that this -- I mean, evidently will be a much stronger year than last year, but can also be a year that hits the EUR 10 billion or even above that mark. The particular projects and markets, we will decline to do too much of detailed comments also with the uncertainty that always is connected to these big projects. But if I was point to a couple of regions and countries, I will point to Germany, Netherlands potentially, U.K. and also the Med region. Those would be the regions that we expect some activity from this year. Some for award potentially, but also some at least for initiation of activities.

If you look at NKT more specifically, we had a historic quarter in Q1. And of course, with that, also earnings visibility that is basically loading is also very high now. And of course, that in itself translates to struggles at times to bid on all projects and deliver them on time. So I would also be modest in our ability to entertain projects, which has a short delivery time period.

Perfect. And then just a word on the press release regarding the expansion in the U.S. I think it was related to cable joints specifically. So can you talk a little bit about how do you approach this market, your ability to kind of reach clients there and how sizable could that business be in a few years?

That's a very relevant question, also considering the Charging Forward strategy where we -- if I am to summarize and just in essence, what the strategy mean, it's about reinforcing our strong and leading position in Europe but also to reach for opportunities beyond. And of course, U.S. is a good example of that and the IEEE qualification of the accessories that you mentioned in that press release is also one stepping stone for that. So we -- as you know, we have been active in the U.S. also back in time, latest with the Champlain project. We are -- we have a small activity in the U.S. from a distribution perspective.

With the qualification of these accessories, we also take a careful step in from an accessory perspective. And then when you sum it all, I think you should read an interest from NKT side for the North American market and also a strong belief that the value we bring to the European grid development is a value that may benefit also the North American market. And exactly in what way and how we will do this, this is something we will have to come back with and potentially also can reflect on more during the Investor Day.

The next question comes from the line of Akash Gupta from JPMorgan.

I got a few as well. The first one is coming back on growth opportunities in Americas and particularly data centers. I mean we saw one of your European competitor acquired a business in the U.S., which could serve them as a platform to cross-sell to data centers. The question is that what tools do you have at your disposal to address this opportunity given you have both low and medium voltage portfolio. Can you do it organically? Or is this something where you made a partner? And maybe when we look at partnership, you had a partnership in Taiwan for subsea cables. So could this model be replicated in the U.S. to address the opportunity? So the question is, is data center growth, which is quite exponential for time being? And what are you working on at the moment to address that? That's the first one.

Thank you, Akash. Thanks for the question, a relevant one. Well, if I just reflect on data centers to start with, I think I and also we agree on the potential of data centers that shows the potential globally also in the U.S. I will just emphasize the fact that we are a power cable solutions provider. So of course, we are not in the communications part of it. And we are also less in specialty cables, so meaning perhaps inside data centers when it comes to the low-voltage aspect or shielded cables, et cetera. So therefore, from the current standpoint, it will be more from a power grid connection to data centers perspective.

This is a small part of NKT's current operations and our current market. But obviously, it's something that we are looking closely at and also reflecting about how can we also be part of serving this growing segment going forward. That is in Europe, but it also includes U.S. as a potential end market. And then to your second question then how would we do it? I think this is something which we will have to come back on a little bit how we think about the U.S., how and if we would enter the U.S. market. And if so, in what segments and in what ways.

But I will say, in general, that we don't exclude anything from that opportunity palette, neither do we exclude partnerships, do we exclude organic growth or even inorganic growth. So we will be open to good opportunities when we look at other growth areas than Europe.

And then a question on transmission. Can you say where you are in installing machinery in the new production line in Karlskrona? And have you started already the test production for cable, which you needed for certification purposes before starting serial production? Or how far are you from starting production for testing and certification?

Thank you, Akash. I can also -- for sure, I can speak a little bit around it, and we are very much looking forward to showing it also in the Investor Day. So I just want to emphasize what Michael said before, and it lies very close to my heart. And having been in Karlskrona just 2 weeks ago and seeing it there, it is massively impressive to see the progress we are doing. We are not in all places, but in absolute majority of the places of this product, we are above ground.

I commented on the harbor, which is one aspect, which is still where we're doing some piling work on the quayside. But for the rest of the project, with some exclusions, we are in deep into the construction of the buildings, the ancillary systems and for many of the machines, they are installed either in part or in full. And for quite a few of them, we are also in commissioning mode of these machines. I will not go in exactly to whether we have produced test cables and to what extent and what part of the testing cycles we are in. But I can say that we are trailing well aligned with the time schedule and the plan that we have. And this -- for now, you will hear me speak about it, you will hear Michael speak about it. Occasionally, you will see a picture from us in the road shows, but we will show it live in September, how this stands is.

The next one I have is on Grid Solutions and Accessories segment. So on similar revenues that you had in Q1, in Q4, you had single-digit margin. And then in Q1 of last year, you had equally strong 16% plus EBITDA margin. So maybe if you can talk about if there is any particular seasonality in the business or maybe any mix impact? I mean, normally, historically, your margins were high when you had a big repair job, but it doesn't look like that was the case in Q1. So any color on how shall we think about the margin for the rest of the year in Grid Solutions and Accessories segment?

Yes. If I look at the margins for the first quarter in this year, it's -- like you said, Akash, it's very similar to what we saw in Q1 in 2025. I would say that -- and I think we have also written it in the report that the accessories business line is a big contributor to the performance that we can see in Q1 this year from a revenue perspective and also profitability perspective, but I will also say that we have had some repair activity also in Q1 for this year. So -- so by that, if you take away that, let's say, less structural aspect, then we should have that in mind when we look forward into Q2 and Q3.

And as far as seasonality goes, I think leaving the offshore repairs to the side, obviously, this business line will also not perhaps so much in the accessory side, but indeed in the Grid Solutions side of it, show some seasonality tendencies as well because of just installation of projects, winter periods, et cetera. So I think I would leave the comment there.

Lastly, a housekeeping question on non-allocated cost. I think it moved up quite a lot versus last year. So you had like plus EUR 6 million versus minus EUR 7 million in last year. So any color on what is driving that? And how should we expect non-allocated cost for the remainder of the year?

Let me jump in on that one. Indeed, we see a EUR 13 million swing due to the negative EUR 7 million of the first quarter of 2025 and a positive EUR 6 million in this quarter. And it's mainly attributed to foreign exchange hedges, eliminations in the business. And what we've seen in the past quarters, we generally look at this as a potential swing of plus or minus EUR 5 million in a quarter. And I would actually make reference, if you look at the last 2 years, the last 8 quarters, you actually have half of those quarters that have a positive swing and half of those quarters that have a negative swing. So of course, we're pleased that it contributes to the good start to the year result of the company, but this is also not something that we're necessarily counting on quarter-over-quarter. So I think you have to look at it over the cycle.

Just to clarify, so you are basically treating these FX hedge elimination as an operating line and not like kind of one-off because these -- some of the numbers will always be there. So just to understand correctly that you are treating these as an operational line and not one-off below the line item...

That's correct. They're not one-off. They're operational in nature. They're part of the hedge accounting. It goes also into inventory revaluations and this sort of thing. So I won't get into the detail of it. But in fact, it is operational. So what you could also say another way of repositioning my answer is if we look at the business without this effect, you're looking at a year-over-year comparison where in 2025, the business delivered EUR 88 million of EBITDA in the quarter. And this year, we're EUR 3 million ahead with the EUR 91 million EBITDA quarter. So just to reemphasize the strong quarter -- the satisfactory quarter remarks that Claes has made.

[Operator Instructions] The next question comes from the line of Chris Leonard from UBS.

Maybe I've got 2 or 3 questions from my end. So to start with, can you just speak on the competitive landscape you're seeing at the moment in transmission? Obviously, you spoke about the potential for new orders this year across some different regions in Europe. But how are you seeing those new entrants on the supply side scaling up this year? And have you seen any sort of change in dynamics on pricing conditions in the market? I'll start there.

Thank you, Chris. Yes. Well, if I start with the market dynamics, I wouldn't be able to say based on the sample size that we have that we have seen a difference in the market sentiment or in the climate for the moment. It continues to be a healthy dialogue between suppliers and customers. So I think that's the simple answer on the second part of the question.

On the first part, I wouldn't have also any evidence to say that we have seen a dramatic change from a competitive perspective now in the beginning of the year. I think the players we have seen that are present and want to compete are basically consistent with what we saw last year and also the players that are able to compete, which is not necessarily the same, I think also remains constant, if I just compare to last year.

Okay. That's really helpful. And the second question on sort of transmission contracts or the down payments. I'm just trying to understand that the free cash flow burn in Q1, particularly when you book such a high level of orders. Is it the case that you're looking now to secure sort of lower percentage of down payments on contracts to then help -- potentially help out year margins on the projects? Just any color there would be helpful.

Let me take that one, Chris. I would be very hesitant to read anything into the down payments into the first quarter. We have a record quarter, of course, from an order intake and backlog point of view. But the EUR 2 billion of the 2 cables that were secured under the Scottish Southern contract were conversions of the pre-bookings that we had. So there's no prepayment effect that one can consider from those. And for the EGL3 project, while I won't comment into the details of prepayments, they are within, let's say, a customary range that we would see.

We also won't comment on what approaches we may take in terms of next awards and prepayment positioning and this sort of thing. But it is one of the levers we have in terms of managing a stable cash flow for the company.

Sure. Super helpful. And the last one for me is just thinking about the outlook for profitability in transmission this year, given you're kind of sitting flat on margins between Q4 of last year and Q1 this year. And you sort of alluded to maybe further ramp-up costs coming through the year, as you go towards a 2 percentage point headwind versus just above 1 percentage point at the moment. And can you talk to us in terms of what could push you to deliver higher margins maybe in Q1 or Q4 last year by the end of '26, if legacy contracts still staying in that sort of 2020 to 2022 year range?

Thank you, Chris. With the risk of disappointing a little bit with the answer here, as you are well aware, we are not guiding on the business line, neither do we do it year-on-year nor quarter-on-quarter. But with that, I can say that, of course, the trend that we have seen and are seeing, we expect to continue. And this is that the project mix will change from legacy projects to more recently won projects. This is a transition that is ongoing.

This is being held back to a certain extent by the OpEx drag or the OpEx increase in preparations for taking the new investments into operation. But the latter is not outweighing the former. So then, of course, things can shift quarter-to-quarter a little bit as well from a profitability perspective. But measured over a couple of quarters, we should also see the margins continue to increase. But I will say also that I would also -- as you have heard us say many times, just not being too focused on the margin as such, but the nominal earnings when it comes to transmission. That is what we are focusing on. That's also how we are guiding on group level. That's also how we are guiding for '28 and also 2030.

This concludes the Q&A. And I will now hand it back to Claes Westerlind for concluding remarks.

Yes. Thank you for calling in today and for joining us to close the book on this, in our opinion, successful quarter. And I will just reiterate again the extra welcome to Michael Yong as the new CFO of the company and also to what he said about the Investor Day in September. We are super proud and super humble for what we are carrying out in Karlskrona and very, very keen to show you all the status and progress of that. And with those words, I wish you a good week and a good weekend when it comes. Thank you.

Welcome to NKT's Annual Report 2025. [Operator Instructions] This call is being recorded.

I will now hand it over to your speakers, President and CEO, Claes Westerlind; and CFO, Line Andrea Fandrup. Speakers, please begin.

Good morning, and welcome to NKT's conference call following the release of our annual report for 2025. I'm Claes Westerlind, the CEO, and with me today is our CFO, Line Fandrup. As always, I will take you through the strategic, operational and market developments that shaped 2025 before handing over to Line for the financial review. We will then conclude with the outlook and open the line for questions.

It's worth noting that we, from 1st of January this year, have changed the scopes and names of our business lines. Solutions has become Transmission, Applications has become Distribution and Service & Accessories, Grid Solutions & Accessories. Throughout this call, we will keep to the previous structure and business lines to match the communication in our annual report.

Let's turn to Slide #3. Before we begin, I'd like to highlight that today's presentation includes forward-looking statements. Actual outcomes may differ from expectations, and I therefore ask you all to pay close attention to this disclaimer.

With that, let's move on to our key messages for the year. Please turn to Slide #4. 2025 was another defining year for NKT. It was a year where the work we initiated several years ago, strengthening capabilities, expanding capacity and transforming the company, began to consolidate into a stronger, more resilient NKT.

It was a year of disciplined execution, financial strength and important progress on our investments. And it was a year where we took decisive steps towards the next phase of our journey as we introduced our Charging Forward strategy.

From a financial perspective, it was another year of continued solid progress for NKT. We delivered record high standard metal price revenue of EUR 2.7 billion and operational EBITDA of EUR 390 million, in the upper end of the latest guided ranges as expected. Organic growth was 6%, reflecting healthy activity level across all business lines and continued solid execution according to plans.

We maintained a high-voltage order backlog of EUR 10.2 billion at the year-end, supported by robust market dynamics and several significant awards. This backlog gives us visibility and predictability well into the coming years.

On top of the firm backlog at the end of last year, we added another EUR 2 billion to the backlog during January 2026 by converting the booking commitments with SSEN through a firm order.

In November, we launched our new corporate strategy, Charging Forward, leading our way towards 2030, complemented by new medium-term financial ambitions for the same year. It builds on the foundation created through our transformation over recent years and shifts our focus to execution and value creation, reinforcing NKT's position as a leading pure-play power cable solutions provider.

An important enabler of the future value creation is the investments we are currently executing to expand capacity, and they all progressed according to plan during 2025, including in the fourth quarter.

Machinery installation and commissioning as well as expansion of the harbor in Karlskrona are ongoing. We advanced the capacity expansion in Cologne. And the new medium-voltage capacity in Denmark will ramp up during the first half of this year. And expansion in Portugal will become operational at the end of this year.

Now let's have a look at the financial performance in the fourth quarter. Please turn to Slide 6. In Q4 of 2025, the revenue development was negative, fully as expected and organically it declined by 8%. This was explained by the development in Solutions, where the execution on the Champlain project in the U.S. ramped down during the quarter, leading to lower revenue. For comparison, we had a relatively high activity level, including subcontracted work in the same quarter last year.

Despite the negative revenue development, the operational EBITDA margin improved to 13.2% compared to 13% in Q4 2024. Excluding the effect of the Champlain project, the activity level in Solutions remained at a high level, and we continue to execute on our high-voltage order backlog with several projects being active during the quarter.

In Applications, the high activity level was maintained. And as in the previous quarters, it was driven by the power distribution grid segment with continued robust demand. Supported by the additional capacity that came online at the beginning of the year, the business line continued to deliver solid organic growth rates and improved operational EBITDA.

The high market activity levels also had a positive effect on the Service & Accessories business line as we have seen throughout the year. Here in Q4, it resulted in a more than 30% organic growth and an improvement in operational EBITDA. This was driven by both segments of the business line.

Let's turn to the next slide for a deeper look at each of the business lines, starting with Solutions. In the fourth quarter of 2025, revenue in Solutions amounted to EUR 409 million, a reduction compared to the EUR 469 million reported in the same quarter of 2024. This development was fully in line with expectations and driven by the ramp down of activities in the Champlain Hudson Power Express project in the U.S. Here, we are also comparing to a base in Q4 2024 where we had a high execution level on the project, including subcontracted work.

With the risk of repeating myself, excluding the Champlain project, we continue to see a high activity level, and we progressed with the execution of high-voltage order backlog with overall satisfactory project execution. Again, in this quarter, installation activities were at a high level and our cable lay vessel, NKT Victoria, was well utilized.

Operational EBITDA came in at EUR 61 million for the quarter and was, therefore, EUR 6 million lower than the same quarter last year, driven by the development on the Champlain project as just described. The margin landed at 15.2% and thus improved by almost 1 percentage point compared to Q4 2024. This was the result of sustained high activity levels and a slightly improved mix among the orders and execution.

Overall, the quarter confirms the trajectory NKT is on towards 2030. But I would also like to remind all of you that in a project-based business like ours, quarterly margins may fluctuate depending on the phasing and progress of individual projects.

During the quarter, we saw progress across several projects at different stages of execution. Key contributors for the quarter included Champlain Hudson Power Express, Hornsea 3, Hertel, East Anglia 3, Bayer Biscay, SuedLink and SuedOstLink. Our investment programs to expand capacity continued their consistent development during the quarter and progressed according to plan. This goes for the production sites in Karlskrona and Cologne as well as our second cable lay vessel, NKT Eleonora. All are on track to become operational from 2027.

Please go to Slide #8 for an update on the market and our backlog. The activity level in the high-voltage market remained high. Firm awards in our addressable market amounted to an estimated EUR 4 billion in 2025. This is obviously lower than what we have seen in previous years, but it's also an effect of timing.

In January 2026, we converted booking commitments with SSEN in Scotland to firm orders with a value of around EUR 2 billion. We also remain selected preferred supplier on Eastern Green Link 3, which we expect to convert into a firm order during Q1. The projects are clearly increasing in size. This is affecting all processes involved and they often depend on permits and political decisions. Therefore, the actual award can easily shift between quarters or even years.

Our high-voltage order backlog stood at EUR 10.2 billion at the end of 2025, a slight reduction compared to Q3, reflecting the execution in the quarter. If we add the SSEN order awarded here in January, the EGL 3 preferred supplier agreement and our booking commitments, they in total provide strong visibility into the coming years and supports our medium-term financial ambitions.

It gives us the opportunity to focus on long-term development. And while we remain highly active in commercial activities, we can maintain a disciplined approach and focus on optimizing utilization, risk and profitability.

The composition of our backlog gives that around 95% of the backlog is with European TSOs. And from an Application point of view, interconnectors make up more than 55%, while offshore wind accounts for around 40% of our orders.

While there are many moving parts in the general market development, there are no changes to our overall view. And for the period 2024 to 2030, we continue to expect awards in our addressable markets to exceed EUR 10 billion on average. We are, on an ongoing basis, evaluating the situation and are recognizing both positive and negative sentiments across our markets, which we follow closely.

With this said, we remain confident in a healthy supply-demand balance throughout this decade. And when looking further into the 2030s, our expectation of a market moving into a more balanced territory is also unchanged.

Please turn to the next slide for a look at Applications. Applications maintained its positive development in the fourth quarter, where revenue amounted to EUR 197 million, corresponding to 9% organic growth. Like in the previous quarters, growth was driven by continued robust demand in the power distribution grid segment, supported by the additional capacity that came online in the Czech Republic and Sweden earlier in 2025.

In the construction-exposed segment, the overall development remained subdued, but it varied between markets and subsegments. Revenue in this segment saw an improvement sequentially compared to Q3, but it remained below the level from last year.

Operational EBITDA increased to EUR 18 million compared to EUR 13 million in the same quarter last year, driven by higher demand and revenue in the power distribution grid segment. The margin improved to 9.1% compared to 7.8% last year.

During the fourth quarter, we were also able to conclude the integration of SolidAl, which we acquired in June 2024. The business in Portugal now operates as a fully integrated unit in NKT and the business case is fully confirmed, all concluding work well done by the Applications and wider NKT team. We, therefore, also expect to harvest the full effect of the synergies of EUR 7 million in 2026.

As mentioned, the demand for medium-voltage cables remains robust, driven by upgrades, enhancements and strengthening of the European power distribution grids. In 2025, we have been able to meet this demand with our added capacity, and the additional capacity we are ramping up here in Denmark during the first half of the year is also expected to positively contribute to the organic growth development.

Please turn to Slide 10 for an update on Service & Accessories. Service & Accessories continued its positive development in the fourth quarter. Revenue amounted to EUR 79 million, EUR 20 million higher than the same quarter last year, corresponding to 31% organic growth. The growth was driven by both business segments as they experienced a high activity level in their respective markets.

In Service, we performed repair jobs, mainly onshore as well as installation and maintenance work, while the high activity level in Accessories was driven by demand for both high and medium-voltage accessories. Our Service business benefited from ongoing maintenance, repair and installation work, and Accessories continued to realize strong demand across both medium and high-voltage segments. In addition, the high-voltage projects currently in execution also contributed positively to the development. According to the -- across the business line, operational execution was satisfactory.

Operational EBITDA increased to EUR 10 million, up from EUR 6 million in the same quarter last year. The margin for the quarter was 12.5% compared to 11.1% in Q4 2024, mainly driven by improved profitability in the Accessories segment.

Please turn to the next slide, where I will provide a status update on our ongoing investments. We maintained a solid progress on our ongoing investment projects to expand capacity. And again, here in the fourth quarter, all projects developed in line with plans. We had a high activity level in Q4, and we confirm our expectation of accumulated CapEx of approximately EUR 2 billion for the period '25 to '28.

In Karlskrona, machine installation continued across the new buildings. And during the same quarter, we initiated the first commissioning test of new machine lines. Simultaneously, we progressed on the construction of the remaining buildings as well as the expansion of the harbor, further improving the infrastructure and layout of the site. All in all, the additional capacity is expected to be operational from 2027. The same goes for the expansion of the high-voltage capacity in Cologne also in progress.

The construction of our second cable lay vessel, NKT Eleonora, also progressed as planned during the fourth quarter. The different sections of the hull are now joined together, as you can see from the picture on the slide. With solid progress on the different work streams, NKT Eleonora continues to be expected to be operational from 2027.

In Asnaes here in Denmark, we have completed the construction of the additional medium-voltage capacity as planned. It will ramp up during the first half of 2026 and contribute to the revenue development in Applications. Construction at our site in Portugal is also progressing and the additional capacity is expected to come online towards the end of 2026.

Please turn to Slide 12, where I will share some thoughts on NKT's contribution to net zero. Power cables and thereby NKT are key enablers of the energy transition and general electrification of societies. And our ambition is clear and at the same time twofold. We focus on maximizing our contribution to the decarbonization of societies by facilitating clean electricity in the grids through our cable solutions. This is our handprint.

Just as importantly, we are focusing on reducing our own emissions and achieving net zero across our value chain by 2050 at the latest. This is our footprint. We are constantly evolving on these topics. And despite our emissions going up as a consequence of our growth, it is mainly a function of the lifetime power losses from the cables until clean energy sources are utilized to a greater extent.

On the handprint, we have several tangible examples of progress. A very good case is the Champlain Hudson Power Express project in the U.S., which will make a substantial contribution to our handprint. When the Transmission line is operational, it will supply up to 20% of the electricity needs in New York City with clean and reliable energy.

When you look at the total projects we have installed from 2019 to 2025, they will facilitate or enable 27 terawatt hours of clean energy in 2030. This number is equal to more than twice the number of households in Denmark. It is calculated using a transparent and conservative methodology developed and vetted externally, and it is based on internationally recognized sources.

With this, I've concluded my part of the presentation, and I will now, sadly for the last time, hand over to Line, who will take us through the financials. Slide 13, please.

Thank you, Claes, and good morning from me as well. I'll now walk you through the financial highlights for Q4 and the full year 2025, and I'll start out with the income statement on Slide 14.

Revenue in the fourth quarter amounted to EUR 643 million, EUR 50 million lower than in the same quarter last year, equaling a negative organic development of minus 6%. This was fully as expected and was driven by the ramp down of activity on the Champlain Hudson project in the U.S., leading to a lower revenue in Solutions. Excluding this specific project, the underlying activity level remained high, and both Applications and Services & Accessories continued to report solid positive growth rates.

Operational EBITDA for the quarter was EUR 85 million, which was EUR 5 million lower compared to Q4 2024 due to the mentioned development in Solutions. The EBITDA margin improved slightly from 13% to 13.2% with all business lines contributing to the development. The margin reflects a temporary dilution by around 1 percentage point, which stems from a higher cost level for the capacity ramp-ups.

We thereby completed the full year 2025 with revenues of EUR 2.722 billion and an EBITDA of EUR 390 million. Both numbers landed in the upper end of our latest financial outlook for the year.

As seen in the last quarters, depreciation and amortization increased, reflecting the ongoing investments. For the full year, costs were EUR 37 million compared to EUR 30 million last year. Financial items net were an income of EUR 12 million. This was mainly driven by currency gains and interest income on our cash position. Tax for the quarter was an income of EUR 37 million as we increased the capitalization of our German tax asset due to improved operational performance.

For the full year, tax costs were EUR 9 million, corresponding to an effective tax rate of 6%. This leaves us with a net result of EUR 97 million for the quarter compared to EUR 56 million in Q4 2024. For the full year 2025, the net result amounted to EUR 275 million.

Our employee headcount continued to grow, reflecting our ongoing expansion and investments. On average, more than 6,300 people were employed at NKT during the fourth quarter of 2025.

Let us now turn to the next slide to look at the cash flow development. From a cash flow perspective, we ended the year on a strong note with free cash flow in the fourth quarter of EUR 341 million. The positive cash flow was driven by a positive contribution from changes in working capital and EBITDA of EUR 85 million. Despite the positive development in the fourth quarter, free cash flow for the full year was a negative EUR 244 million, fully as expected, as we invested almost EUR 750 million, mainly in increased capacity.

Changes in working capital resulted in an inflow of EUR 527 million in Q4 2025. This was a result of prepayment related to order awards achieved mainly in Q3 and the normal phasing between milestone payments and solutions. The working capital position at the end of the year also benefited positively from timing effects.

Investments amounted to EUR 232 million in the fourth quarter, reflecting the high activity level across our investment programs. Investments for the full year were EUR 743 million. The level in the quarter was slightly higher than in previous quarters, mainly as a result of timing, but we expect the investments to remain elevated also in the coming quarters.

Net cash flow for the quarter was EUR 337 million and was negative at EUR 302 million for the full year 2025.

Let's turn to the next slide for a look at the balance sheet. We ended the year with a negative working capital position of EUR 1.5 billion. This was an improvement of EUR 441 million compared to the position at the end of Q3. As mentioned when I presented the cash flow development, this was driven by prepayments, timing of milestone payments and supplemented by a favorable timing effect at the year-end.

Capital employed amount to EUR 1.2 billion at the end of the year and thereby decreased by EUR 158 million during the fourth quarter. This was driven by the improvement of working capital more than offsetting the investments during the quarter.

So ROCE declined to 24% from 27% at the end of Q3 as EBIT for the last 12 months declined slightly. Looking ahead, ROCE will continue to fluctuate between quarters, influenced by operational earnings, customer payment timing and a growing asset base from our investment programs, which will ramp up over the coming years.

Our net cash position improved and was at approximately EUR 1.2 billion at the end of the year. We thereby maintained a robust financial position. This strong position is essential for funding our investments and supporting NKT's continued growth journey in the years ahead.

Please turn to the next slide for a look at the outlook for 2026. For 2026, we expect revenue in standard metal prices in the range of EUR 2.63 billion to EUR 2.78 billion, and operational EBITDA between EUR 360 million and EUR 410 million. The outlook for '26 reflects an expectation of a slightly lower revenue level in Solutions.

As we have discussed previously, production and installation capacity available in 2026 will be the same as in 2025. In combination with a lower level of subcontracted revenue compared to 2025 and an expected normal level of variation orders, revenue in Solutions could be slightly lower in 2026 with a mid-single digit percentage organic decline. This is depending on execution and timing of specific operations in different projects. We will, in 2026, continue to execute on our backlog, mainly on projects awarded in 2020 to 2022.

To support the ongoing investments, production ramp-up and value creation, we are currently operating with a higher cost base. This diluted group margin by around 1 percentage point in 2025. As the actual ramp-up is nearing, this temporary dilution is expected to increase in 2026 to around 2 percentage point. This is reflected in the EBITDA outlook.

Application is expected to contribute positively to the revenue and EBITDA development in 2026. The additional medium-voltage capacity in Denmark will ramp up during the first half of the year and in Portugal by the end of the year. In total, these are expected to contribute up to 10% growth to the business line.

Service & Accessories is expected to see positive effects from the general high activity level in the market. But as always, the development is dependent on the amount of offshore repair jobs, which is difficult to predict.

In 2026, we will continue the execution of our investment programs and the investment level is expected to remain elevated during the year, but lower than the spend of EUR 743 million that we had in 2025.

As always, the outlook rests on several assumptions. First of all, satisfactory execution of our higher voltage investments and projects along with satisfactory operational execution across business lines. Market conditions for our Distribution, Service & Accessories businesses are expected to be stable, including normalized offshore power cable repair work activity. We assume limited supply chain disruptions with access to required labor, materials and services, and stable development in the global economy, foreign currency and metal prices.

Let's turn to the next slide. With the financial and operational performance in 2025, we have further strengthened the foundation for the growth journey that lies ahead of us. The steady execution on our capacity expansion investments during the year is an important enabler of the future development.

We are making clear progress towards our 2030 financial ambition, which we presented in November. In 2030, we will have a significantly higher revenue base with more than 7% organic revenue growth CAGR from 2024 to 2030 and an operational EBITDA of more than EUR 900 million. And just as is important, we expect to generate a ROCE of at least 22%, reflecting the improved earnings level and a solid return on our investments.

Let me recap the main highlights of 2025 on the next slide. Our financial performance improved during 2025, where we delivered 6% organic growth and a record high EBITDA of EUR 390 million. We made solid progress on our investments to expand capacity across both Solutions and Applications. In Solutions, the additional capacity is unchanged, expected to become operational in 2027, while the additional medium-voltage capacity in Denmark will ramp up during the first half of 2026.

Our high-voltage order backlog amounted to EUR 10.2 billion at the end of the year, and this position was supplemented by the EUR 2 billion conversion of booking commitments with SSEN in January. And last but not least, our new corporate strategy, Charging Forward, which was launched in Q4, is now operational. With the strategy, we also provided medium-term financial ambitions, which I just went through on the previous slide.

Let's turn to the next slide. Before opening up for the Q&A session, I'll ask you to save the day on the 29th of September, where we will invite you to an Investor Day in Karlskrona. On the day, we will, in greater detail, present the Charging Forward strategy, including views from the updated business lines. Just as important, you'll also get the opportunity to see the production site in Karlskrona, both the existing areas and the areas we are currently expanding.

From Q1, we will start to report in the new structure with the updated business lines. In due time, before the release of the Q1 report, we will provide restated historic financials for the new business lines.

As this is my last call as CFO of NKT, I would like to use the opportunity to thank you all for the great discussions and interactions over the past 6 years. I look forward to meeting many of you on the upcoming road shows.

And with that, we conclude the presentation. I'll now hand over to the operator to guide us through the Q&A session. Operator, please.

[Operator Instructions] The first question is from the line of Claus Almer from Nordea.

First of all, congratulations with a strong Q4 and on the 2025 performance. The first question goes to the 2026 guidance. So we have seen a number of guidance upgrades over the last couple of years. The assumptions behind the guidance for next year, is that the same? Or are you changing or being less conservative at year-start? That would be the first one.

Claus, let me jump into that. I think I took you through a bit what is the assumption we actually put in there, but let me just go through to be very specific. For Solutions, we did have a higher activity level, including a higher-than-normal level of variation orders in '25. This we are not planning for '26 on a similar level as it was above and beyond the normal. We also had the Champlain Hudson project in the U.S. with a high level of subcontracted work, and this is also not an effect we will see in 2026.

So this will be the headwinds of '26. And then executing throughout the year on the portfolio, we will see less of a probable improvement in the project mix than you could expect. It does take us time to come through the backlog as earlier communicated, and it is primarily the orders won in 2020 to 2022, we have in execution.

I think you can -- on Solutions here, just answering your questions, whether you feel this is conservative or not, I will not comment on. But in reality, this is how the outlook constructed when we look at the Solutions division.

When we look at the Applications, we do expect robust development in power distribution grid to continue. And we do expect the construction-exposed segment to be flat or positively minor improvements.

What we do see, of course, is our medium-voltage capacity coming online or coming -- ramping up fully in the first half of the year in Denmark. And then a bit on the timing, Portugal may come online also at the end of the year. I think this is also pre, let's say, particular data points into how we have constructed the outlook around Applications. And again, I think we have discussed before, the view on Application, and we saw it also early in '25 can change if sentiments change. And I think that's, of course, something we keep in mind here.

And then on Services & Accessories, it was a good year. What we look at in '26 is, of course, how will the markets turn out and you can predict as well as we can or at least on offshore repair works, what is this eventually by the end of the year, that will be hard to say. So we work here with a normalized level, which is, let's say, maybe 1, 2 repair jobs, but at a different level than you saw in '25. And I think, again, time will show if this in your book would be conservative or not, but that's at least the assumptions going into the outlook.

Thank you for this in-depth explanation. I was more talking about the EBITDA level, which is more difficult from the outside to judge, so to speak. And normally or in the past, you have put in a reservation for possible projects that is going not maybe wrong, but not smooth execution at least. So that's just what I'm trying to understand whether the assumptions behind the profitability is the same method as you did 1 year ago or 2 years ago.

Maybe I can comment on it. I think Line covered the big cornerstones of it. I think with respect to the expectation on the project portfolio, and there you're absolutely right, Claus. I mean we have the expected production cost. And of course, we have risk and contingency connected to discrete risks that is expected to mature during the year and also contingency, which in more general should support the various stages of the projects. I think the expectations on our portfolio with respect to using risk and contingency is similar to what we had also the last year.

But I will also say that, of course, and as you're well aware, things can swing to the positive and then, of course, also in the opposite direction depending on how successful we are in managing and mitigating the risks that are due to mature during the year to come.

Fair enough. I had to ask. And then the second question, and I know you don't give guidance on 2027. So I will start saying sorry about this question. But with the new factory coming online maybe later in 2026 and thereby somewhat fully operational in '27 or part of '27, should we think '27 as something in between '26 and '28? That will be my final question.

Okay. I will start with the first part of that question. I can say that there is no -- or I assess the opportunity as very limited to almost non-existing that the new factory will commence operations during this year, just to put that out there. The previous discussions we have had where we have also showed a positive spirit and sentiment remains. We remain with the same kind of feeling this time around for how that investment project is going and what that also potentially could mean for the operation taking. But it's not earlier to the extent that we could see revenues coming already in 2026.

Then going to your second question also here, Line can complement, but I think it depends, and we cannot give you an absolute guiding answer on that. Of course, the year of '26 and then compared to '28 and looking at '27, it lies in between. And it is correct to the extent that Solutions or Transmissions in the future now will continue or start to grow from new capacity coming online in '27, but of course, will continue to grow both in '28 and also in '29. So in that regard, it lies in between the 2 years.

On the profitability aspect, we have also before said that '27 is an important injunction from 2 perspectives. One, it is the year where we -- if we are to point to any given year where we expect to see a more radical shift in the project mix in terms of profitability. That's number one. And number two is, of course, also that we are then taking new capacity online. So we start to generate revenues and also contribution margin on solely non-legacy projects. But in addition to that, we also start to get cost absorption for, of course, the costs that we are carrying and are also finally ramping up this year towards next year. So also there from a profitability perspective, I don't think I'm overstating if I say that we expect more from '27 than what we see in '26.

The next question is from the line of Chris Leonard from UBS.

Just 2 questions from me to start with, please. But on working capital looking into 2026, I think the '25 picture was previously presented that you would maybe expect some working capital outflows through the year that that didn't happen. You obviously got a healthy inflow. And now looking into '26, you also guide to Q1 having the National Grid contract closed. I just wonder if there's any view that you could give us as to how we should think about working capital for the year of 2026.

And the second question would be looking at the Solutions guidance. And just to be clear, the comments there were to see mid-single digit organic decline, presumably mostly linked to the subcontracted work and variation orders. I wonder if you would be able to split how important both of those 2 drivers are? And equally, I wondered if you were able to give a guidance or view as to what the profitability -- sorry, the revenue growth would be without those 2 negative factors in 2026 for the Solutions business?

Chris, let me start here on the net working capital. And you are right that the early 2025, we commented that we -- where we expect it to land, and we did come out a bit more positive than that, now in the negative space of EUR 1.5 billion. That was due to the very favorable development in Q4 of 2025. So a bit dependent on timing of actual payments also that we had some phasing of what we expected to be Q1 milestones in our project that came into Q4 2025. This year may turn out slightly different. Right now, we're looking at a level that could be around minus EUR 1.2 billion to minus EUR 1.3 billion in net working capital. But as you know, a lot can change and it's highly dependent also on possible awards and milestone shifts on the project we execute on.

And then to your second question, thanks, Chris. On the guidance, we don't guide on business lines, but on the directional comments from Line, we would decline to isolate out how big is the VOs and how big is the subcontracted part of what happened last year.

If I then turn to the second part of that question, what would the growth be if we would have not had it? Well, I think the only help I could give you there is the fact that organically, our revenue generation capacity, meaning the amount of machines and machine hours, has been constant '24, '25 and also '26. So with that said, if you look at just from all things else equals, mix equal, margins equal, then we would not have an organic growth.

Of course, I would maybe defer to comment exactly on the mix, but we have also been consistent in saying that we have a gradual, albeit maybe slower, pace change in the mix going from legacy to non-legacy projects. But that, of course, also is there. So there, I think you could expect maybe a small organic growth driven by that mix change. That goes from a revenue perspective. Keep in mind, again, from a profitability perspective, that profitability is being impacted by the OpEx drag, as Line just said, that has grown from -- or is expected to grow from last year into this year.

That's really helpful. And actually, just a clarification question, please. But I think during the prepared remarks, it was commented on Applications that the new capacity coming online in Denmark and also in Portugal could contribute 10% of revenue growth. I assume that was -- I caught that correctly, and that's just in reference to Applications, that's not on a group level in terms of the revenue growth for '26.

Confirm that. Thank you.

The next question is from the line of Lars Topholm from DNB Carnegie.

Line, I know you're going to miss us a lot, but it is what it is. I do have a couple of questions also. One is on the depreciation level, both in 2026 and beyond, if you can put some comments on how we should expect, a, the full year level; and b, also the progression over the quarters.

Then a second question goes to the tax capitalization you had in Germany. Since you have not flagged this, did anything happen in Germany that took you by a pleasant surprise? I think I'll start with those 2 questions.

Thank you, Lars. And for sure, I will miss you. On the depreciation, I think I'll refrain on the quarters because as you can imagine, and just going back to Claes' answer on when the factory will actually come online, then that also will determine when the depreciation steps up. But I can share that when you look ahead in for 2026 at least, that we're going to be at a level that is more around EUR 150 million. So a step-up, obviously, from the investments coming online this year. And then when we come into the further years, I think we have set on a landing point around '28. With everything online, we're going to come closer to the EUR 200 million. So there is a step-up there.

On the tax part, I think it is a very positive on the Q4. The way we have run the quarters, we have not been as positive on the German tax losses carry forward in Germany during the year. Of course, we do an extra assessment in Q4, and that was very positive why you see this consolization of the deferred tax asset carry forward positively contributing. Yes, I think that's what I would keep it at. I think for next year, you should expect a tax rate in the low 20s. That would be the effective tax rate expected, and that's including also any German effects related to this Q4 effect.

The next question is from the line of Daniela Costa from Goldman Sachs.

I have 2. The first one, I just wanted to ask you if you could round up when we think about free cash flow for 2026, given what you said sort of on profitability and on CapEx. Do you think it would be possible to break even or be positive in '26? Or this is more sort of something later on? And then the second question is regarding -- you mentioned a better utilization on Karlskrona in 2027. But can you guide us to like when you open a plant of this size, what type of utilization should we expect in year one and sort of in the subsequent years?

Daniela, let me take the first question on free cash flow. And for sure, as seen in 2025 also, a lot depends on milestones on the projects. But based on where we are now and how we look at 2026, we have the EBITDA guidance of EUR 360 million to EUR 410 million. Then we have now put the year of the highest investment level behind us with 2025. And that means the trajectory we earlier communicated on that '25 would be the highest, '26 would come down and then further down in '27, investment levels will be at a lower level expectedly.

And then I shared a bit on the working capital, which you could hear was maybe not as favorable as we closed out 2025. So all in all, though we don't guide specifically, when we add things up, we do still see a negative free cash flow in 2026. We will continue to have a substantial cash balance throughout 2026. But I think also the year has to kind of -- we will also get wiser when we get halfway through the year how everything pans out.

And then if you allow me, Daniela, to make a comment on your second question there on the -- taken in the Karlskrona plant into operation. I can just give a little bit of a qualitative reflection around it. It is basically 2 machine flows in that factory. And I think our comment has been that these will go into operation during 2027. I think the first comment is that there will be a couple of months in between them coming into operation. And then, of course, when you take a machine flow into operation, and we all, I think, are at least relatively familiar with the cable production process, you start to feed the dragon with copper in one end, being the conductor stranding, and then it goes to extrusion, heat treatment, sheeting, armoring and then getting loaded out and tested on turn tables, whereafter it's going to be loaded onto the vessel, vessel sales, then, of course, you have the burial operations, the ancillary operations together with that and then high-voltage testing and completed.

And the process from starting to feed the dragon to when the cable is finally buried on the seabed, this will take time. So this is something depending on, of course -- and I'm not speaking now specifically about the Karlskrona commissioning plan, but more in general terms -- is at least between 1 and 2 years. And then you need to do that 2 times for 2 separate flows. And that will give you then at least a base feeling of what are the process to achieve full revenue generation from these assets because, of course, it's only when all of these steps are completely full that we will achieve full revenue generation.

The next question is from the line of Casper Blom from Danske Bank.

Two questions from my side, please. Claes, over the last years or almost since you started as a CEO, there's been a discussion on the whole market outlook and electrification of especially Europe. And you guys have been talking about this expectation of market awards in your addressable market of EUR 10 billion at least per year on average.

Having gone through 2025 and the continued focus on grids and being self-sufficient in Europe, have you changed your sort of confidence in how long this market can remain favorable for NKT? I know it's difficult to look 20 or 30 years ahead. But would you say comparing now to 12 months ago that you are more or less confident in the long-term outlook?

And then a second question, a bit of a household one on Applications. Given that we've now seen a couple of years with subdued activity within building wires, could you give an update to how much of the division is now made up for by mid-voltage and grid cables?

Thank you, Casper. If I start maybe with the second question that perhaps is the easiest and there, if we just reflect on the fourth quarter, and that also goes very much in general, we have roughly a 20% dependency from a revenue perspective on the construction-related market. And this is the 1 kV copper cable and also the building wires. So that is, I think, the answer on that question. And of course, this will also be further reduced by us taking our investments gradually into operation, both for Denmark and also for Esposende, because the investments are solely made into the medium voltage and power distribution segment space. That's for the second question.

And for the first question, that is a more -- maybe a longer answer one. But I think your question is, are we more or less confident on the long-term projections of this market? And there, my very simple answer will be that, at least I personally, I think also NKT, we are, if anything, more confident in the long-term outlook of this market. But with that, I will also say, looking at the short-term development of the market, I think that's where we see the larger variances. We can see developments where offshore wind auctions are unsuccessful and being reshaped and then being successful. We can see, for example, the French state recently also announced a new energy plan, reducing targets for renewable energy, taking offshore wind, as an example, from 18 to 15 gigawatt.

But we also have the examples of the opposite. We had the North Sea Summit where the North Sea states came together pledging towards the 300 gigawatt until 2050. We see also the 15 gigawatt per year up until 2040 being pledged. And we can see strong developments in the U.K. market, both within AR7, and all the highest ever awarded in terms of offshore wind amounts, and then large interconnectors being contracted or being in the process of being contracted.

If I then -- so I think that introduces more short-term volatility or at least both positive and negative sentiment, as I said before. But why I say what I do for the long-term perspective, also, if you look at the big picture where Europe's energy generation today, we are able to sustain by 40% of the -- for domestic production. So 60% is imported into Europe today. And with what you also insinuated there, security concerns and questions around that, how will Europe continue to increase that? Currently, we have a debate around affordability versus the green or clean transition and the grid build-outs. And of course, the 60% that we are importing, if you look at oil, almost 100% is imported. If you look at gas, around 90% is imported. Both these sources are being supplied by, for example, the U.S., but also very much from the Middle East, historically by Russia, less so today, maybe none in the future and then some countries in Asia. And it's obvious that if we want to get more or strive towards energy sovereignty, we need to start to become independent and build out more energy generation sources here in Europe.

And then the next question is, what's the cheapest way to build large-scale generation and especially do it in a fast pace. First is solar. Secondly is onshore wind. Thirdly is offshore wind. And of course, there are other aspects as well like nuclear, which maybe also be part of the mix. I think solar, at least for the northern parts of Europe, as you well know, Casper, maybe is not the baseload alternative at least. So I think that shows that offshore wind and also grid connections in general to also handle the natural intermittency of these power sources is a necessity. And then what's logically right and what's politically decided is not always consistent. So I think also there, there needs to be a process maybe to come into that realization. But at least that narrative makes us and me confident, even more confident today than 2 years ago about the long-term prospects of this industry. Very long answer to your question.

Much appreciated, Claes. And if you may allow me to follow up, could you couple those reflections to your considerations concerning additional high-voltage capacity, i.e., a new Karlskrona-like project at some point? And when and what would it take for you to feel confident about such a decision?

Yes, also a very relevant question. And I think the answer will be very similar to what you have heard us say before. We have taken a stance where we want to be very disciplined on our expansions. And that means that we not only need to see the prospects of a strong market, but we need to have confirmed volumes and being convinced that that capacity can also be saturated in the long term. Because as I also just mentioned, this short-term volatility also creates uncertainty, why I think the North Sea Summit served as a good calming element, so to speak. But like I also said, our view of the market in the -- at least short to medium term remains, and that is more than EUR 10 billion in average up until 2030. And then into the 2030s, it appears to move into a more balanced territory. So just by looking at that, I think we will be hesitant to add more capacity organically.

There are -- could be exceptions to that and one exception could be if there are very, very big projects that would be bookable or that will be ready to commit to capacity. And as you know, and I think we all on this call are aware, there are a couple of them out there that I think independently could warrant for a discussion to add capacity also on the short term. But with everything said, we are right now and we continue to be very occupied with the expansion, both in Cologne and also in Karlskrona. So any of those decisions, if made and when they would be made, will not be made so that they would come even close to compromising the process we are in towards '27 and also '28.

The next question is from the line of Lucas Ferhani from Jefferies.

So I have a few, maybe we'll take them one by one. Just the first one is on the shape of 2026, H1 versus H2. Just wondering on Solutions specifically, should we expect there should be more decline in the first half versus the second half, obviously, with that Q4? And does that Q4 kind of minus 13% organic growth is kind of roughly what we should expect into the first half? So that would be my first question.

I think maybe I start here and Claes can complement. I think we will not be very detailed on Solution quarters here. I think as you can also see from '25 execution, a lot of things can happen in terms of variation order, but we also, we optimize the factory every day in the projects to get the best execution possible for NKT.

And then with that said, of course, weather can actually have an impact, of course, on installation works. So winter could be lower than summer quarters. And then a little bit based on the portfolio, you could also see towards end year, probably a larger share, though I will tone this down, but newer awarded project at different margins than earlier. So you have these different mix components in there that I would mention at least.

Perfect. And the second one is on Application. Just in the power grid segment, obviously, we're seeing more and more frame agreements be announced longer period, extension period on top of that. I'm just wondering what is happening in terms of price in those kind of new frame agreements. And the 10% growth you mentioned in Application mobile division, I would assume that is kind of volume and then you could have price on top of that. Is that fair to say?

Yes, I think the 10% growth is what we talk about to try to guide you what the new assets will generate for this year. So I think that covers the total revenue that we could expect for this year coming out of the 2 investments that we just mentioned. On the frame agreement and the more long term and the situation in general in the power distribution segment, I can only confirm what you're implying that, of course, a higher demand and also a more robust demand picture into the future. So longer term and higher visibility all contributes to that the pricing remains in a sustainable level. There is competition out there. So I also want to add that. But as you can see from also the performance in Applications, even in a subdued construction environment, we are able to get sustainable pricing. But we are also continuously, of course, pushing ourselves as well on efficiencies to also be able to realize higher margins. So it all comes together.

And then the last one was just on the high-voltage kind of tender environment. Obviously, '25 was where we're seeing this extended backlogs still. How are your maybe more recent discussion with customers? Could we have another '26 that is maybe kind of at lower levels than the average? And maybe as we get closer to those slots that are available, maybe there's a bit more pressure on customers to come in. So how would you see '26 versus '25 in terms of awards?

First, I would to just remind the reason that we are talking about these more than EUR 10 billion in average over a period of years is to somehow try to get away from looking at just individual years because of the unpredictability and how difficult it is also with the projects becoming larger and larger to actually predict will it be EUR 6 billion, will it be EUR 10 billion or will it be EUR 14 billion. So I just want to put that out there in the first place and say that our comments are more directional across a couple of years.

Now with that said, there is also some projects that I think we all were originally believing that would be awarded last year that now, not unlikely, will be awarded this year. So of course, that will -- could give 2026 a good start and could also put us at or even above the average number. But I think these are comments that are more just reflective comments and that we don't want to be held to because it is difficult to predict permits and governance and other topics.

And the next question is from the line of Akash Gupta from JPMorgan.

I have a few as well. The first one is on offshore wind, especially Netherlands and Germany. So you have a couple of projects in each of these countries in your backlog. And if you look at the progress on these auctions, we have not seen anything in the last couple of years. And we are hearing in press that the German offshore auction might get pushed out to next year as they look forward to move to CFD type structure.

So the question I have is that, is there any risk to execution of these projects because your PSO customer might decide that they may need to adapt the timeline given that the projects are not coming in the timeline that was agreed before? And if that scenario materialize, do you have any contractual protection like in terms of like any compensation from customers that you might get in such scenario? So that's the first one.

Thank you, Akash. Also thanks for a relevant question. I would be ignorant if I say that there is no risk, also not knowing, of course, what decisions are taking around auctions and also what that could replicate into in terms of decisions by TSOs. What I can say is that we very rarely, if ever, see TSOs pushing or delaying on projects. Secondly, if we do, then -- and I think this we have been relatively firm around in the past -- we do not book and allocate manufacturing capacity when less than a strong commercial commitment in return from the customer. That goes if the customer wants to terminate or cancel. And it also, of course, goes if there is a significant shift in the delivery time and therefore, also asset utilization. But exactly how those constructs look like, that I'm sure you appreciate that we are unable to share.

My second one is a follow-up to Daniela's earlier question on '27, '28 utilization. And it is more focused on vessel because you will be getting new vessel next year. And I think it will take some time for you to produce the cable before you can utilize that vessel. So when it comes to utilization, is it fair to say that vessel utilization and new vessel utilization would be almost 100% in 2028, while debt ratio may not be 100% for 2027, just theoretically?

Yes, it's a good -- I guess, theoretically, you're right, all things equal, but I don't think we will give you exactly vessel utilization periods. But what I would draw your attention to is the fact that also historically, we have produced cables, which we have not installed with our own assets, if we take Champlain as an example, where we had capacity and we only had one vessel. Now we get one vessel more. So you could also just by those mechanics, count that, that we could have utilization for Eleonora even though we don't have the cables fully produced by the factory.

Vessel utilization also, it goes up and it goes down, that's a natural variation. And ultimately, also us deciding to go for an in-house vessel or an external vessel depends on the suitability, but also the ability for NKT to compete effectively. So it's all -- we cannot directly project the utilization of a single asset into the financial result of the business line or NKT. There are many underlying factors that could impact that.

And then I have a couple of housekeeping questions for Line. The first one is on intersegment elimination in revenues. So when I look at 2025, you had a big step-up of EUR 143 million for the year versus EUR 55 million for the year before. In my understanding, your businesses are quite independent. So I was wondering, can you talk about and give us more color on what is driving this? And when we look forward for 2026, what kind of figure should we assume for this intersegmental elimination revenue line?

So you're fully right. It's a quite large step-up, and it says something, of course, about the internal sales between our business lines, accessories and installations, primarily with the Solutions into, yes, the new Transmission business line. There's a limited impact of also some sales between now our new Distribution business line into what's going to become the grid segment also. So this will continue. And I don't think I'm going to comment on exactly the level. Again, it's really about which projects we execute on, but I think you should assume that this is -- it's a new level for the company as long as we have the large DC projects, which is closely related into the Accessories and the new grid business lines also.

And the final one is on contract balances. So when I look at your net contract liability, it increased by over EUR 200 million in 2025, while your backlog, including frame agreement, was largely stable or maybe down slightly. So maybe can you talk about what was the driver behind the favorable development in contract balances? And I think earlier, you said there were some milestone-based payments in Q4. So were they originally expected in Q4? Or was there any pull forward of those milestones from '26 to '25?

Yes. So there were some pull forwards of milestones from '26 into '25. And now I'm just looking at our contract assets and contract liabilities, and the assets are substantially lower than the liabilities. I think if you go even further back in 2025, you actually saw higher levels on these, which was also a part of how we execute projects. We cannot kind of commit to that it's going to be flat over the quarters or to the [Indiscernible] and doesn't always represent, let's say, a logic of what is the risk exposure. It's simply by the nature of the execution on the project. If you look at it at the end of Q4, and we also monitor, of course, and relative to revenue, I think you're going to find that it's a level comparable to when we ended the year, and then you should expect fluctuations between quarters.

So there is no pull forward of milestone from, let's say, '26 to '25?

Yes, there is some from '26 Q1 into '25.

As we are running very short on time, unfortunately we won't be able to take any more questions. I'll now hand it back to the speakers for any closing remarks.

Yes. Thank you from our side on behalf of NKT for listening in to both Q4, but also 2025 in general. And just want to reiterate again what I said there, sad to see Line go, but also happy for you, and we will be able to meet and you will see Line one last time in the coming road shows. So with that, thanks to all of you, and thanks to Line.

Welcome to NKT Interim Report for Q3 2023 Presentation. Today's call is being recorded [Operator Instructions] I would now like to introduce President and CEO, Claes Westerlind; and CFO, Line Andrea Fandrup. Please begin.

Good morning, everybody, and welcome to this conference call following the release of our interim report for the first 3 quarters of this year. My name is Claes Westerlind. I'm the CEO, and with me today is our CFO, Line Fandrup. In today's call, in addition to the regularly quarterly presentation, we will also introduce our new Charging Forward strategy, including our financial ambitions for 2030. I'll cover the strategic direction and business development, while Line will take you through the financials.

Let's turn to Slide #3. Before we dive into the presentation, I'd like to draw your attention to the disclaimer. Please note, this presentation and comments may contain forward-looking statements. Now let's move on to our key messages for the quarter.

Please turn to Slide #4. The financial performance in the third quarter of '25 was solid. Activity levels remained high across all 3 business lines, and we maintained double-digit organic growth driven primarily by applications and service and accessories, but also solutions. Operational EBITDA improved across the businesses and reached EUR 119 million for the quarter, marking another record high level for NKT and underscoring the solid development shown to date.

Commercially, the quarter was also a success with 2 important announcements. First, we secured a firm order for the interconnector between the Bornholm Energy Island and Zealand in Denmark. Secondly, we were selected as preferred bidder for the Eastern Green Link 3 interconnector in the U.K. We will take a closer look at both projects later on in the presentation.

Our investment products to expand capacity in both solutions and applications continued to progress according to plan and across all sites. We saw solid advancement with the projects taking -- tracking well against both budget and time line. Last but certainly not least, we are launching our new company strategy, Charging Forward to guide our direction and continued growth and value creation towards 2030.

We have been through an impressive transformation and made significant progression. The focus shift to execution and value extraction reinforcing NKT's position as a leading pure-play power cable solutions provider. Alongside the strategy, we are also introducing new financial ambitions for 2030, targeting continued growth and further improvements in operational EBITDA and also ROCE. Before we dive into the short-term development for the quarter, let's take a moment to explore the new strategy.

Please turn to Slide #6. Throughout 2025, we've been running a strategic review process as our current strategy, ReNew BOOST, concludes at the end of the year. I'm therefore excited to announce our new strategy, Charging Forward, which will guide our journey towards 2030. NKT has undergone an impressive transformation under both ReNew and ReNew BOOST strategies.

We have delivered strong financial results, launched major capacity expansion projects, significantly increased our high-voltage order backlog and complemented a strategic transformation -- completed the strategic transformation of the company. Our new strategy, Charging Forward is designed to further strengthen our position as the leading pure-play power cable solutions provider.

We will focus on executing our substantial order backlog, ensuring we capture further high-value business while delivering on the capacity expansions already underway. At the same time, we will enhance our sustainable competitiveness to further differentiate NKT as a reliable partner and technology leader. The name Charging Forward reflects both identity and also our ambition.

Charging speaks to the energy flowing through our cables, powering societies and driving the energy transition. It also captures the passion and determination of our people to deliver on our commitments. Forward signals progress, building on a decade of transformation to take the next decisive step toward a future defined by reliability, sustainability and innovation. Together, Charging Forward symbolizes momentum, ambition and purpose as we pioneer the energy transition and connect a greener world.

Please turn to Slide #7. Our strategy is built around 3 pillars: execute, excel and evolve. These pillars form the foundation for our development and value creation as we move toward 2030. The first pillar, execute, it's about delivering on our substantial backlog and capacity expansions by effectively managing projects and resources. Execution will be a key focus area, ensuring we successfully deliver the investment projects that will add additional high and medium voltage capacity and execute on our high-voltage backlog. The emphasis will shift from investing in new capacity to executing on what's already in motion, ensuring we extract the highest value from these investments.

The second pillar, excel, is about being a reliable partner for our customers, employees and society and generating greater value from our existing strengths and assets. We will focus on enhancing our competitiveness and unlocking the full potential of our current capabilities, both internally but also in external pursuits. The third pillar, evolve. It's about driving continuous innovation and developing the next generation of technology. It also includes pursuing selective growth opportunities that align with our long-term ambitions. This could potentially also include inorganic options.

Please turn to the next slide where I'll walk you through our financial ambitions. With the launch of our new strategy, we are also introducing updated financial ambitions for 2030. The energy transition and broader electrification of European societies and beyond are expected to continue driving strong demand for power cable solutions. In the latter part of this decade, we will be well positioned to support this development through the additional capacity we are bringing to the market from 2027.

As communicated in December last year when we updated our '28 ambitions, the full contribution from our high-voltage investments was not expected to be realized by '28. The new 2030 ambition now reflects that full contribution. Our financial ambitions for 2028 remain unchanged and based on the progress we have seen in 2025. Operationally, commercially and financially, we are well on track to deliver on those targets.

While the 2028 ambitions are still valid, our forward-looking communication will now focus on 2030 to better illustrate NKT's long-term financial potential and value creation. These new ambitions reflect the full impact of our investments and the expected continued demand for power cable solutions. The financial KPIs remain unchanged, but we are adjusting the base year for organic revenue CAGR to 2024 as it's our latest reported financial year.

Our new financial ambitions for 2030 are organic revenue CAGR from '24 to 2030 of more than 7%, operational EBITDA of more than EUR 900 million, return on capital employed, ROCE of more than 22%. The improvement from '28 is expected primarily to be driven by solutions as the full potential of our capacity investment is realized. However, all business lines are expected to contribute to this development. We are not updating our CapEx expectations beyond '28. But unlike this period, there are no -- currently no major investments planned beyond 2028.

Please turn to Slide 9 for a look at the expected CapEx development. When we updated our medium-term financial ambitions for '28 last December, we also outlined our expected CapEx plans for the period leading up to '28. These are the years in which we will execute our major investment to expand capacity, not only in solutions, but also in applications. For the period of 2025 to 2028, we expect total accumulated CapEx of approximately EUR 2 billion.

We have executed according to plan during '25 and the phasing of CapEx remains unchanged. This year is expected to be the peak in terms of spend with '26 also at an elevated level. From '27 onwards, CapEx is expected to gradually decline. However, there may be fluctuations between quarters and years depending on the timing of actual payments.

Looking beyond '28, our major CapEx expansion projects will be finalized. At this point, we do not have any major investments planned for '29 and 2030. In the absence of these investments, repair and maintenance is expected to amount around 4% of group revenue measured in standard prices. That said, we will continue to support the business with necessary investments to strengthen and develop our operations further.

Please turn to the next slide. In order to secure the best possible execution of the strategy and unlock the growth opportunities in the market, we are changing our organizational structure. This will strengthen our market position and differentiated power cables offering. We will sharpen our focus and secure to have strong capabilities within large turnkey projects across our high-voltage factories.

Customers will remain at the center as we build on close relationships and through local product teams in our core markets, we secure proximity to our customers and responsiveness to ensure dedicated go-to-market focus. We will target growth opportunities where it will have impact. We will deliver on our high-voltage order backlog and finalize the current capacity expansion projects, both in our high and medium voltage factories.

We will increase our local product capabilities to enhance the focus on grid renewal and expansion projects. Over the last years, we have expanded capacity across several sites. And in the coming strategy period, we will enhance focus on increasing our efficiency and competitiveness. Through a dedicated center of excellence approach and a strong link between local product teams and centralized engineering and production, we will drive this approach. At the same time, a central aspect of our strategy is sustainable competitiveness.

And with the changes to the organization, we will maintain a high focus on quality and speed to remain competitive in the market. To reflect the company's strategic priorities, we are updating the business lines, focuses and also names. Going forward, these will be transmission, grid solutions and accessories and distribution.

Please go to the next slide where we will take a closer look at the changes. With this illustration, we show the changes to our business line structure. Solutions becomes transmission. With the projects we have won in recent years and orders we thereby are going to execute in the coming years, the Solutions business line has shifted towards a strong mix of extra high-voltage projects. These projects are best defined as transmission.

Compared to the current solutions business line, the only difference is that high-voltage AC projects moves to grid solutions and accessories. We are establishing a new business line where we combine the HVAC projects, both from solutions and applications with the current service and accessories business line. In this strategy, onshore extra high voltage and high-voltage AC has been identified as key growth segments where we see potential within our core markets.

This is driven by strong electrification, renewable grid adaptation and renewal trends. Therefore, we establish grid solutions and accessories that can differentiate itself as an efficient and reliable turnkey cable provider across the European markets. The combination of high-voltage AC service and installation and accessories competencies will form a business line with turnkey capabilities and clear focus on realizing the growth opportunities in this important market segment.

Following a strategic alignment of our industrial footprint to establish focused center of excellence, the applications business line becomes distribution. This underlines the business lines' focus on medium voltage cables in the power distribution grid segment while continuing the activities within low-voltage cables and building wires. Distribution has focused expertise in power cables for electrical grids, renewable power generation, data centers and industrial networks.

The change to the business lines will be implemented from 1st of January 2026, and the reporting in the new structure will commence by the Q1 2026 interim report in May. In September 26, we are excited to be able to invite you to an Investor Day in Karlskrona. Here, we will present the details of the Charging Forward strategy and provide status for each of the updated business lines.

On the day, you will also have the opportunity to see the new high-voltage factory with your own eyes. We are looking forward to hopefully seeing many of you in Karlskrona to show the world's largest sea cable factory. Let us now turn our focus to the third quarter developments. And with that, please turn to Slide 13. In Q3, activity levels in solutions remained high, and we continue to execute on our high-voltage order backlog. Several projects were active during the quarter and operational execution was overall satisfactory.

Operational EBITDA improved compared to the same period last year. Applications also experienced high activity driven by continued robust demand in the power distribution grid segment, combined with the additional medium voltage capacity that came online earlier this year, Applications delivered double-digit organic growth and improvement in operational EBITDA.

Service and Accessories continued the strong momentum we have seen throughout '25, delivering an impressive 61% organic growth and a significant increase in operational EBITDA. This was primarily driven by a large offshore repair job executing the quarter, supported by high activity levels across both segments and solid execution.

Let's turn to the next slide for a deeper look at each of the business lines, starting with Solutions. In the third quarter of '25, revenue in Solutions amounted to EUR 459 million, up from EUR 429 million in the same quarter last year. corresponding to organic growth of 8%. This growth was driven by continued high activity levels as we progressed through our high-voltage order backlog with overall satisfactory product execution.

Once again, installation activities were at a high level and our cable-laying vessel, NKT Victoria was well utilized. Operational EBITDA reached EUR 74 million in the quarter, an improvement compared to Q3 in '24. The margin landed at 16%, up from 15.5% in the same quarter last year and also improved sequentially compared to Q2 this year. This was driven by sustained high activity levels and a slightly improved product mix among the orders in execution.

As a reminder, in the product business like NKT, quarterly margins may fluctuate depending on the phasing of the projects. However, the overall trajectory towards our 2028 ambitions and now 2030 is confirmed by this performance. During the quarter, we saw progress across several different projects, including Champlain Hudson Power Express,

Hornsea 3, East Anglia 3, Bay of Biscay, SuedLink, and SuedOstLink.

At our sites in Karlskrona and Cologne, the investment programs to expand high-voltage capacity progressed as planned. The same applies to our second cable-laying vessel, NKT Eleonora. I will return to the status of these individual projects later on in the presentation, but the key message is that all remain on track to become operational from '27.

Please turn to Slide 15 for an update on the high-voltage market and our backlog. Firm orders awarded across our addressable market amounted to an estimated EUR 4 billion in the first 3 quarters of '25. And as in previous years, this was primarily driven by DC technology. In addition to these firm orders, preferred supplier agreements such as the one we entered in for EGL3 add further commercial momentum.

While the total awarded volume is lower than what we saw last year, it remains high in a historical context and underscores the structural demand in the market. Projects are increasing in size, which impact both investment and governance processes. These projects often depend on permits and political decisions, meaning that awards can shift between quarters or even years.

Our high-voltage order backlog increased to EUR 10.4 billion, up from EUR 10.1 billion at the end of the first half. This was mainly driven by the firm award of the interconnector to Bornholm Energy Island in Denmark, supplemented by small orders for AC technology. In addition to the firm backlog, we have booking commitments from customers expected to convert into firm orders over the coming years.

These commitments amount to more than EUR 3.5 billion. Importantly, the preferred supplier agreement for Eastern Green Link 3 is not included in any of these figures. It will be added to the backlog once a firm contract is signed. The composition of the backlog remains unchanged. Over 90% of our orders are with European TSOs. In terms of application, around 55% relate to interconnector projects and approximately 40% to offshore wind.

Together with booking commitments and the EGL 3 agreement, our backlog provides strong visibility into the coming years and supports our medium-term financial ambitions for both '28 and 2030. NKT is well positioned to focus on long-term development, and we remain highly active in commercial pursuits, maintaining a disciplined approach to optimize utilization, risk and profitability across our production and installation assets. Our view on market development remains unchanged.

For the period '24 to 2030, we expect awards in our addressable markets to average more than EUR 10 billion annually. While short-term fluctuations are natural due to product timing and size, we remain confident in a healthy supply-demand balance throughout the decade. Our expectation that the market will move into a more balanced territory in the 2030s also remain unchanged.

Please turn to the next slide for a look at our commercial announcements in the third quarter. During the third quarter, we made 2 important commercial announcements. First, in early September, we were awarded the high-voltage direct current interconnector between Bornholm Energy Island and Zealand in Denmark. The project with a total route length of 217 kilometers represents a key step forward for key infrastructure in Denmark, Germany and also Europe.

We will design, manufacture and install the power cable system, which is expected to be commissioned in 2032. The contract value is approximately EUR 650 million, and this award follows the 2023 award of the connection from Bornholm to Germany, which was a part of a broader framework agreement with the German TSO 50Hertz. A few weeks later, we announced that we have been selected as the preferred bidder for Eastern Green Link 3 in the U.K.

This project is a joint venture between Scottish and English TSOs, SSEN and National Grid. It's a key component of the U.K.'s major investment program to upgrade the electricity transmission network and deliver clean, reliable energy through a resilient and efficient grid. For EGL 3, NKT will also design, manufacture and install the cable system, which will span a total route length of 680 kilometers, linking the power grids in Scotland and England. Negotiations towards a firm contract are progressing as expected.

Please turn to Slide 17 for a look at applications. Revenue in the Applications business line amounted to EUR 208 million in the third quarter of '25, corresponding to 12% organic growth, maintaining the positive momentum from the first half of the year. Growth was driven by continued robust demand in the power distribution grid segment, supported by the additional capacity coming online in the Czech Republic and Sweden earlier this year.

Development in the construction exposed segment remained subdued overall, though performance varied across markets and subsegments. Revenue in this area was lower than in the same quarter last year, but stable compared to Q2 this year. Operational EBITDA increased to EUR 22 million, up from EUR 14 million in Q3 '24, driven by high demand and revenue in the power distribution grid segment.

The margin improved to 10.7% compared to 7.6% last year, which was negatively impacted by reoccurring costs related to inventory reevaluation in SolidAl. As mentioned, demand for medium voltage cables remains robust, driven by local European TSOs and DSOs enhancing, upgrading and strengthening their power distribution grids. With the additional capacity added this year, we have been able to meet this demand and support continued organic growth.

Please turn to Slide 18 for an update on Service & Accessories. Service & Accessories continued its strong development in the third quarter. Revenue reached EUR 98 million, EUR 38 million higher than the same quarter last year, corresponding to an impressive 61% organic growth. This growth was primarily driven by a large offshore repair job of the Beatrice wind farm in Scotland, which was successfully executed and completed during the quarter.

Both the Service & Accessories segments maintained high activity levels and beyond the major repair job, service benefited from ongoing maintenance, repair and installation work, all executed satisfactory. In accessories, demand remained strong across both medium and high-voltage segments. Projects currently in execution within our high-voltage order backlog also contributed positively. Operational execution was solid, supporting increased profitability for the quarter.

Our new test hall in Alingsas, Sweden is now operational and the additional capacity is ramping up. It's expected to be fully phased in during the fourth quarter of this year. Operational EBITDA increased to EUR 23 million, a significant improvement from EUR 8 million in Q3 last year. The margin reached 23.4%, up from 7.1% last year. This was mainly driven by improved profitability in the accessories segment and the large offshore repair projects mentioned earlier.

Please turn to the next slide, where I will provide a status overview of our investment projects. We continue to make solid progress on our ongoing investment programs to expand capacity, and all projects are progressing according to their individual plans. As a result, our expectation of accumulated CapEx of approximately EUR 2 billion for the period '25 to '28 remains unchanged. In Karlskrona, multiple activities are ongoing simultaneously across various locations.

Machine installations are underway in the tower and other buildings, including stranding lines and conductor carousels. A clear visual sign of progress is the removal of external cranes and equipment on the tower. Dredging of the harbor to increase water depth for NKT Eleonora also progressed as shown in the top left image.

With all plans on track, the new capacity is still expected to be operational from 2027. The construction of our second cable-laying vessel, NKT Eleonora, is also progressing as planned. The individual sections of the hull are coming together piece by piece. The aft section construction separately at another shipyard has now reached completion and has been towed to the main shipyard where it will be joined with the front and superstructure.

Final outfitting of the vessel will take place in Norway during '26. And in parallel with the factory expansion, NKT Eleonora is expected to be operational from 2027. In Cologne, progress on expanding high-voltage capacity also continued in line with expectations. Machinery and equipment installations are advancing and the additional capacity is likewise expected to be operational from 2027.

In applications, the construction of additional medium voltage capacity in Asnæs in Denmark is entering its final stages. The new facility is now visibly taking shape, as shown in the bottom right image. Following machinery installation, testing will be conducted before capacity comes online in 2026.

Construction at the site in Esposende, Portugal is progressing as planned and the full additional capacity is expected to be operational in 2027. This, ladies and gentlemen, concludes my part of the presentation, and I will now hand over to Line, who will take you through the financials. Please turn to Slide 20.

Thank you, Claes, and good morning from me as well. I'll now walk you through the financial highlights for Q3 2025. I'll start out with the income statement on Slide 21. Revenue in the third quarter amounted to EUR 726 million, up from EUR 657 million in the same quarter last year. Organic growth was 13%, driven by high activity levels across all 3 business lines, each reporting solid positive growth rates.

Operational EBITDA for the quarter was EUR 119 million, an increase of EUR 26 million compared to Q3 2024. This marks another quarterly record high result for NKT. The EBITDA margin improved to 16.4%, up from 14.2% in the same quarter last year, with margin improvements seen across all business lines supported by strong activity levels. Depreciation and amortization increased by EUR 5 million to EUR 32 million. This is reflecting our ongoing investments. EBIT landed at EUR 88 million, up from EUR 71 million last year at the same time.

Financial items for the quarter amounted to an income of EUR 1 million, mainly driven by interest income and our cash position. Tax for the quarter was EUR 21 million, up from EUR 14 million in the same period last year due to the higher earnings level. The effective tax rate for Q3 2025 was 24%. This leaves us with a net result of EUR 67 million for the quarter compared to EUR 57 million in Q3 2024. For the first 9 months of 2025, net result amounted to EUR 178 million. Our employee headcount continued to grow, reflecting our ongoing expansions and investments. On average, more than 6,200 people were employed at NKT during the third quarter of 2025.

Let's now turn to the next slide to look at the cash flow development. Free cash flow in the third quarter was negative EUR 102 million, primarily driven by a negative impact from changes in working capital and continued investments during the quarter. Changes in working capital resulted in an outflow of EUR 51 million, reflecting the phasing of specific milestone payments in the Solutions business line. This development only partially offset the positive contribution from operational EBITDA.

Investments during the quarter amounted to EUR 170 million. This is consistent with the high activity level across our investment program. The level of investments is in line with previous quarters, and we expect elevated levels to continue in the coming quarters. Net cash flow for the quarter was negative EUR 118 million.

Let's turn to Slide 23 for a look at the balance sheet. At the end of the third quarter, our working capital position stood at negative EUR 1.1 billion. This represents a slight worsening of the position of EUR 39 million compared to the end of the first half, primarily due to phasing of specific milestone payments in the solutions business line, as previously mentioned in the cash flow discussion.

Capital employed increased by EUR 192 million during the quarter, reaching nearly EUR 1.4 billion. This was mainly driven by our ongoing investments as well as the slightly negative working capital position. Compared to the same period last year, capital employed has nearly doubled. Despite the increase in EBIT, ROCE declined to 27%, down from 30% at the end of Q2.

Looking ahead to be mindful of, ROCE will continue to fluctuate between the quarters. This is influenced by operational earnings, customer payment timing and the growing asset base from our investment programs, which will ramp up over the coming years. Our net cash position declined slightly and stood at approximately EUR 650 million at the end of the quarter, and we are thereby maintaining a robust financial position. This position is essential for funding our investments and supporting NKT's continued growth journey in the years ahead.

Please turn to the next slide for a look at the outlook of the year. Based on our financial performance in the first 3 quarters of 2025 and our expectation for the remainder of the year, we are maintaining our financial outlook for 2025. However, we now expect to conclude the year at the upper end of the previously communicated ranges. Revenue is expected to be in the range of EUR 2.65 billion to EUR 2.75 billion.

Operational EBITDA is expected to be in the range of EUR 360 million to EUR 390 million. The financial development in Q2 was in line with expectation and the underlying assumptions communicated in August remain unchanged. This also includes the higher cost base in solutions to support the ongoing investments and production ramp-up.

The dilution on group margin in 2025 from these costs is still expected to be slightly higher than the around 1 percentage point in 2024. This dilution will remain or even slightly increase into 2026 as we're actually nearing the ramp-up. Looking explicitly at Q4, we don't expect to be able to maintain the EBITDA level seen in the last quarters. There are a couple of things you need to take into consideration.

The Champlain project is nearing completion and the activity level in Solutions will thereby be lower. In Service & Accessories, we do not expect we can repeat a very good quarter, and we do not expect to have a repair job like the one we had in Q3. And lastly, execution always plays an important role and has -- and doesn't have an insignificant influence on profitability in an individual quarter.

As always, it is important to consider the assumptions behind the outlook. These include a satisfactory execution of high-voltage investment and projects across all business lines, stable market conditions for Applications and Services & Accessories, a stable supply chain with limited disruptions, continued access to required labor, materials and services.

As a project-based company, NKT is increasingly exposed to production and installation risks, particularly within the Solutions business. We continuously monitor these risks, which could impact financial performance also right to the end of the year.

Please turn to the next slide. Before we conclude the presentation and hand over to the operator for the Q&A session, let me briefly recap the key messages. The financial performance in Q3 2025 was solid. We delivered 13% organic growth and reported a new quarterly record high operational EBITDA of EUR 119 million. We made 2 important commercial announcements.

In Denmark, we were awarded the interconnector between the Bornholm Energy Island and Zealand. And in the U.K., we were selected as preferred supplier for the Eastern Green Link 3 interconnector. We continue to make solid progress on our investment projects to expand capacity in both solutions and applications. The new high-voltage capacity in Karlskrona and Cologne remains on track to be operational from 2027 and the additional capacity in application is expected to come online during 2026 and 2027.

Last but certainly not least, we launched our new strategy, Charging Forward, which will guide NKT towards 2030. Alongside this, we introduced new medium-term financial ambitions for 2030, including organic revenue growth CAGR of more than 7% from 2024 to 2030, operational EBITDA of more than EUR 900 million and ROCE above 22%. With that, we conclude the presentation, and I'll now hand over to the operator to guide us through the Q&A session.

[Operator Instructions] The first question is from the line of Claus Almer from Nordea.

First of all, congratulations on a very strong [Technical Difficulty] I hope you can hear my voice. There's been a lot of issues with the connection at East. So first of all, can you hear me?

We can hear you. Not perfect, but we hear you.

Okay. So the first question goes to the whole pipeline, these conditional orders. When should we expect those as some of these being converted to a firm orders? And I guess earlier this year, you're more optimistic about happening this. Is that still the case? That would be very [ strong. ]

Thank you, Claus, if you allow me to answer that. And with the pipeline, I interpret that you referred to the slot commitments, the 3.5 billion -- more than EUR 3.5 billion and also the -- perhaps the supplier agreement or the selection in EGL 3. Initially, when we went into this year, I think the original plan was that part of the EUR 3.5 billion would be converted during this year. We did earlier this year also communicate that, that may not be the case, and that was referencing to natural delays, including lack of soil information actually to make that clear conversion.

So for now, we expect parts of that to be converted during next year. EGL 3, as we have said also in the announcement, and I think I also presented earlier now, their negotiations go as planned. But whether those will culminate in the end of this year or beginning of next year, it's difficult to say.

Giving the backlog, you're in no hurry anyway. My second question goes to new 2030 ambitions. If you look at the ROCE target of minimum 22%, you did 27% Q3 and above 30% year-to-date, and I know there will be OpEx coming on. But minimum 22%, doesn't that sound a bit conservatively?

Thank you for the question, Claus. I think fair to say that 22 -- a ROCE above 22%, we actually consider a very strong level in terms of returns on capital employed for this kind of business also, I think that's a good benchmark. What we will look into for 2030 and the years here is, of course, that we will secure that we do investments that they are value accretive to the ROCE.

But it's also clear that when we come to a certain level and we continue to invest in both safety and sustainability for the company as well as other that there will be choices which may not support an even higher ROCE than the one we now have an ambition around. So I think it's the balancing act on that. But we do expect a very solid return, and I do think we can be proud to say that we will be above 22%.

Okay. And then just a final question going to Service division. Yes, very, very strong Q3 and Q2 as well was strong. If we start to put into our estimates that maybe once a year, you have these high activity level repair jobs? Or how do you see the outlook for this integration?

Thank you for the question, Claus. It is -- I think we have also communicated previously, and you are also personally well aware that, of course, the service business line is driven from a revenue and EBITDA perspective out of 2 different dimensions. And now I put the accessories business line to the side.

One is the sustainable business coming from topics like service level agreements, inventory spare parts topics and similar aspects, including also providing support to the solutions business line when it comes to jointing services. This is something which -- where you can have plans, ambitions and realize them in a structured manner over time.

What is more delicate and less easy to plan is, of course, then the -- especially the emergency repairs, that come and goes. We have had years with 0 offshore repairs, and we have had years with an unusual high amount or an unusual potentially complex repairs also then boosting both revenue and EBITDA.

I think with the fact that a lot of more cables are being installed in Europe and around the world, the number of accidental repairs, I guess, can also be expected to go up. But this is not something that we are planning with firmly. This is yet to be seen. So we have a normal expectancy of a repair rate as we move into a year, and it's fair to say that '25 has surpassed those expectations.

But given the -- which was not your own, does it mean that you actually are maybe not superior, but top of the top when it comes to repairs or about available capacity?

You're asking me, and I'm highly biased, Claus, of course. So I would indeed say that we have a strong offering and also strong ability when it comes to executing repairs that goes for our own cables, but also from -- for cables provided by others. But of course, it's a combination. It's a combination between having the ability and also having the availability to conduct repairs. But typically, this is something where at least we believe that we are strong, yes.

The next question is from Lars Topholm from DNB Carnegie.

Yes, a couple of questions from me, and I apologize if you have already answered them, but the sound quality isn't that good. Looking at your '28 outlook and just doing very simple math on both the 7% minimum growth and the EUR 900 million minimum EBITDA, that gives me a 2030 margin of 24%. And of course, I know this is not a margin guidance, but can you at least confirm you're looking in margin well above 20%? And is it also fair to assume that solutions will be accretive to that group margin? That's my first question.

Thank you for the question, Lars. And I think you -- doing the math, I think you would arrive to something like that. So we are looking into a strong backlog and awards of the recent years that would take us into a very solid space. And that also means that it is yes to the question you have on the solution margins because it is a strong contribution into that level for sure.

So we are talking a solutions margin of 20% or higher. Is that a reasonable...

Yes. So we are not guiding on the business line is particularly right. And what we have said earlier, which still stands is that all business lines will be double-digit EBITDA margin is our expectation. But we really want to, let's say, draw the attention to the absolute contributions on EBITDA and that also goes for solutions that will be in a high level. So I will not confirm your number, but I will also not correct you on it.

Okay. That's fair, Line. And a bit in line with this. So if I look at your '28 targets, which still stands minimum EUR 700 million in EBITDA. So from EUR 700 million to EUR 900 million, so take that as a EUR 200 million increase from 2028 to 2030 or should I take it that the EUR 900 million for 2030, I'm not based where you expect to be 2028? This question makes sense. But I should assume EUR 200 million in incremental EBITDA between '27 -- sorry, 2028 and '30.

I think, Lars, we are not fully sure if we understand the question. But I think as the targets are stipulated, I think that's the right conclusion. More than EUR 700 million, more than EUR 900 million, obviously deducing the difference of EUR 200 million.

But I think maybe you're alluding to where do we think we really are, how much above the EUR 700 million are we in our own expectations. So if that's what you're alluding to and to compare with more than EUR 900 million. And there, I think as you -- I'm sure you understand, we would defer commenting on that, just ratifying the math that you did just now.

That's perfectly fair. Then I did reverse engineering on your full year outlook for this year. So assume you reach the high end of both revenue and EBITDA, it would [ technically ] imply EUR 671 million in revenue and EBITDA margin of 12.2%, both would be the lowest level for many quarters. Is there something I'm missing that I should be aware of leading to underperforming all these 7 quarters? Or is it simply an illustration of you guys preferring to be a bit conservative?

Thank you for the question, Lars. And I think there's something very obvious. There's a difference between Q4 last year and this year, and that is the subcontracted scope and Champlain.

And I think this was one of the key elements going into '25 guidance, and it still is for Q4 also a part that you cannot neglect in trying to understand how is solutions going to end up in Q4 '25. So I don't think it's attributable to our style of communication, but truly to underlying business activities.

Okay. Then a final question. So you mentioned the ramping up costs in Karlskrona and that hurt margins by 100 bps right now on group level, which just means 150 bps illusions, you also mentioned [indiscernible] and also, how should I think of this looking into 2026?

It's a super good question and happy to answer on that. As you pick it up, as we also communicated it. And I think without being numerically specific for '26, it's very important for us to highlight that, of course, depending on the exact timing that the factories eventually come online, and we have more expansions in -- both in Denmark and in Portugal and Karlskrona ongoing, right? We will make sure that we have the operational employees in place and trained beforehand. And that is not -- that is expected to temporarily dilute the margin in 2026 with a bearing on the EBITDA. And I think it's really important to take note of this element.

And perhaps if I just allow to complement that comment also with the fact that we talk about 1% around about in the report for this year, but we can expect that to increase going into 2026. So I think it is an important aspect that you put the finger on, Lars there that we want to get out into the ether.

Congratulations to the amazing quarter.

The next is from the line of Akash Gupta from JPMorgan.

Sorry, my audio quality is also not that crystal. Apologies if you have answered my question earlier, And the 2 questions from me. The first one is on '28 visibility like if you get the revenue and EBITDA [Technical Difficulty] plus in your plan, can you talk about -- because you have a fixed number of the capacity [Technical Difficulty] visibility like any number on this [ backlog ] and some of the framework agreements like the preferred bid. Can you give us some indication on what sort of visibility do you have for 2030? And then for Line, what's the base case for D&A in 2030 and we can then calculate what would be the underlying profit in 2030?

Thank you, Akash. And indeed, as you said, the sound quality is not great. But what I understood from your question, and you correct me now, Akash, if I misunderstood it, it's about visibility for 2030 drawing upon our backlog, our order commitments and EGL 3.

And the response on that from my side would be that -- and I will not give you a percentage number here, but what I can say is when I look at the period up to and including 2030 and in that, I include the backlog, the EUR 10.4 billion, we add the EUR 3.5 billion or in excess of as order commitments and on top of that, EGL 3. I would allow myself to use that we have good visibility in terms of both loading and earnings up until 2030. We are not fully loaded with projects. We still have to win further projects, but we have a good visibility.

And then I can continue on the D&A. And I think what we have said earlier, Akash, is that at least we have confirmed that a number coming closer to EUR 200 million D&A in 2028 was around the level you could expect. And then what you know also is that we are running a large CapEx program towards '28 and with some tools also coming in. So towards 2030, it will gradually increase somewhat also. So I think you need to model a little bit here from that angle.

And a follow-up on 2028. So I think there was expectations and that you migrate your 2028 target given one of your competitor in transmission business. At last time you gave your 2028 outlook guidance seem to 18% margin and now guide for 20% margin. So question is in 2028, how do you see potential like 2028? Do you think this is already incorporating a solid execution? Or would there be upside on how you deliver on the capacity expansion will come online in the next 18 months?

It's again, I think the sound is an issue for us, Akash. But I think with respect to the '28 targets, we will commit to what we have in writing and what has been in writing in the past. On your questions, could there be upsides? I think it is also we have talked about the solutions perimeter varying from quarter-to-quarter also, of course, being impacted by execution that can have a positive impact and can also have the opposite impact.

So I think there can indeed be an impact. Another impact could be, as we have also flagged before, if we were to be able to prepone the commissioning of some of the assets currently under investment, this could also provide an upside. So I think there can be upsides, but our commitment here today remains as it was yesterday with the written targets that are out there.

The next question is from Kristian Tornøe from SEB.

Two questions from my side. So Claes, in your remarks to start with, I think you said that even behind your 2030 is that it assumes full contribution from your capacity investment. So maybe just exactly you could clarify that. And also, does that mean when we think about years beyond 2030 that in order for you continue sort of meaningful earnings growth, you need investments?

Thank you, Kristian, for the question. And the answer is yes. In 2030, we assume full utilization of the assets which are currently under investment. Beyond 2028, the added utilization or revenue growth will be primarily coming from the solutions perimeter. Now having said that, of course, as we've said, there are no major investment projects planned beyond 2028, but that's also not the commitment that it won't happen, either organically or inorganically, but that is something that we would have to come back to.

But I would also underline that there are, of course, also still ways of increasing our value extraction or value creation and that by means and measures of, for example, efficiencies, which is something that we are pursuing today, and we will also keep pursuing into the future. There is the aspect of the more supply-demand situation with the market, if it's more favorable, less favorable, that could also have, of course, also an impact on the earnings beyond 2030.

Understood. Very clear. Then my second question goes to 2026. I guess your visibility for next year be pretty good. You added just previously that we should expect a higher dilution from the ramp-up cost. What -- I mean, I know I'm not going to get to guide for '26, but are there other building blocks mix composition of the backlog like that we should be aware of in sort of doing our '26 estimates?

Yes. Line, both, I think, will comment. I think we wanted to draw your attention to the OpEx drag that we feel is highly vital to be taken into account when trying to look at the Solutions divisions from '24. Now we are in '25 and then going into '26 before the investment starts to turn in '27.

Another piece of information that I would draw your attention to is the margin mix, where there is also perhaps an expectancy that there will be a quicker transition from legacy products into more recently won projects. And I think we have communicated this in the past, but I just want to underline that again that the significant transition from legacy products into more recently won projects will be done in 2027. So I think that's what I would add to the OpEx drag point.

Yes. I don't have any further.

So just to clarify, you're saying that when you sort of look at consensus numbers really assuming a bit too fast a conversion of the backlog to higher-margin projects?

I think I wouldn't comment on the consensus, but I think to a large degree, you really have to listen into what we try to say now and make sure that the EBITDA when you look at the total group relative to revenue next year also that you count in this OpEx drag. I think that's really what we want to make sure.

Next up, we have Xin Wang Wan from Barclays.

I have one on Q3 and one on the new midterm target. My first question around solutions. Did you have any written contingency release in the quarter aided margin in Q3 because some of the projects that I think very close to delivery are still, for instance, having significant price in the presentation. So I assume no release in Q3.

Thank you for the question. Yes. If I just answer on that, I think you know us well enough now to know we don't comment on the project specifics. I think how you should look at solutions execution is overall satisfactory execution of the whole portfolio. And with that also not saying anything about special releases or others. It's a good quarter in that sense.

Okay. That's fine. Maybe also an update on variation orders. So you get more variation orders in Q3 for this year. I just want to get a sense of whether the guide implied Q4 revenue is not skewed by additional variation orders.

No, we can confirm it's not. And I think also just to be a little bit more specific, I think we discussed and gave some transparency on variation orders after Q2 because there was a, let's say, over normal level and thereby also creating the financial as you saw them. We are more back to usual levels. We will not have always a very far visibility to variation orders. So of course, things can change. But right now, we don't sit with something we want to make sure you know about Q4 in this regard.

Clear. On the midterm targets, I think you kept the leverage ratio below 0. I think obviously, this continues to reflect management risk awareness. But with a different backlog and free cash flow generation profile, would you think net cash is still appropriate by then?

Just to say a few points as to the choice of the leverage below 0, it is important for NKT at current and also while we undergo this large investment program to have a conservative capital structure. It's about making sure we have the cash available for the investments, but it's really also in an intense growth period, which started already back in '23 making sure we have the facilities we need to tender and execute on the project and solutions.

This means access to significant levels of guarantee lines and financial derivatives. We need to have a very solid capital structure and thereby the ambition as we laid it forward. We do also have net working capital swings that are not insignificant to our cash position, though quarter-over-quarter, we see it rather stable, but this is also important.

So for now, that's the ambition level we have. And then, of course, in the future, it's obvious with an EBITDA above EUR 900 million in 2030 and not a communication as of this day of a large investment program coming, you can do the math and you can see that the cash generation out there will be at a completely different level compared to where we are now.

And the last question for this call will be from Chris Leonard from UBS.

Hope you can hear me. Looking into Q4 and actually probably more into '26, you speak about, obviously, the ramp-up costs sort of intensifying. I wonder, can that be mitigated by the reduction in variation orders that you're likely to in H1 next year, which obviously carry, as you said previously, a lower margin and a mix headwind too. So could those 2 factors of the ramp-ups and the variation orders cancel each other out? What's the outlook there for '26?

Yes. Thank you for the question, Chris. I think if I got it right, you're reflecting about whether maybe any kind of margin dilution from '25 on variation orders would then be the contrary effect year-over-year with the possible ramp-up costs. I don't think that's how you should look at it. When you look at 2026 in your spreadsheet, I would just be stressing again what we said a couple of times, be very mindful about the ramp-up. That's very important. How variation orders are going to pan out in '26, let's see. I understand your attempt on a logic, but I don't think we can draw the -- we want -- we don't want to lead you to draw that conclusion.

Okay. I think with that, ladies and gentlemen, we are at 11:00, and we want to thank everybody for listening in and for the good questions. And we hopefully will see many of you in the coming days. Thank you for today.

Welcome to NKT's presentation of the interim report for the first half of 2025. [Operator Instructions]

This call is being recorded. Today's speakers are President and CEO, Claes Westerlind; and CFO, Line Andrea Fandrup. Please begin your meeting.

Thank you. Good morning, everybody, and welcome to this conference call covering our interim report for the first half of 2025. My name is Claes Westerlind, and I'm the CEO. And as usual, I'm joined by our CFO, Line Fandrup, for today's call. In the first part of the presentation, I will cover the overall and business lines development, while Line afterwards will go through the financials for the first half of the year and the second quarter.

Let's move on to Slide 3. Before going into the presentation, I will ask you all to pay close attention to this disclaimer as the presentation may contain forward-looking statements. Now let's move on to our key messages for the quarter. The positive development was maintained in the second quarter of 2025. The stringent focus on execution, both of our backlog and the investments to increase capacity across the businesses was maintained. Throughout the quarter, the activity was high across all 3 business lines. And again, here in Q2, we delivered double-digit organic growth.

On the earnings side, for the first time in company history, our operational EBITDA exceeded EUR 100 million, which is up 22% compared to last year. This is a remarkable achievement, a notable milestone for us as a company, and it's also a testament to the hard work by all our employees. The improvement compared to Q2 in last year was primarily driven by the performance in Applications and Service and Accessories. We also had a high activity level on our capacity expansion programs, where the strong focus on executing with sufficient quality at cost and within the time frame continued. Across all investments, the progress was as planned during the quarter. The new high-voltage factory in Karlskrona, the second cable-lay vessel, NKT Eleonora and the capacity expansions at our application sites in Asnaes, Denmark and also in Esposcende in Portugal.

Based on the solid financial performance so far in 2025 and the expectations for the rest of the year, we are updating our financial outlook. We now expect revenue in standard metal prices of approximately EUR 2.65 billion to EUR 2.75 billion compared to previously approximately EUR 2.33 billion to EUR 2.52 billion, and operational EBITDA of approximately EUR 360 million to EUR 390 million compared to previously EUR 330 million to EUR 380 million.

Let's turn to Slide #6 to take a look at the overall financial performance for the second quarter. The solid financial performance was maintained in the second quarter of 2025, where the organic growth landed at 13% and operational EBITDA amounted to EUR 105 million. The high activity level across the business line was the driver behind the organic growth with positive contributions from all 3 business lines. From an operational EBITDA perspective, the improvement was driven by the Applications and Service and Accessories business lines. We also saw a margin improvement reaching 14.5% compared to 14.2% in the second quarter of 2024.

In Q2, the high activity level in Solutions was maintained as the execution of the high-voltage order backlog continued. In addition, organic growth was supported by specific variation orders and operational execution was overall satisfactory. Operational EBITDA was largely unchanged compared to the same period last year. The high revenue and improved operational EBITDA in Applications were driven by the contribution from the acquisition of Solidal and the additional capacity coming online in Q1.

Volumes in the Power Distribution Grid segment remained healthy with a robust demand for medium-voltage cables. The construction-related segment is still subdued, but we did see a slight improvement during the quarter, but volumes and prices remained below the second quarter of '24. Service and Accessories had a strong quarter. Activity level was high in both segments, leading to a positive organic growth and with satisfactory execution, operational EBITDA more than doubled. Margins improved in both Service and Accessories.

Let's turn to the next slide for a deeper look at each of the business lines, starting with Solutions. Solutions revenue amounted to EUR 450 million in the second quarter of 2025, up from EUR 379 million in the same quarter last year. This corresponded to an organic growth of 18%. The positive development was driven by a continued high activity level as we progressed on our high-voltage order backlog with overall satisfactory product execution.

In the quarter, we also had a positive revenue contribution from specific variation orders. Again, in this quarter, installation activities were high and our installation vessel, NKT Victoria was well utilized. Operational EBITDA was EUR 66 million and thereby basically unchanged compared to the same quarter last year. The margin for the quarter was 14.7%, unchanged from the first quarter, but a reduction compared to last year. This was due to a less favorable product mix and the margin dilution from certain variation orders executed at lower margins.

We wish to remind you that in a product business like NKT, quarterly margins will vary between quarters depending on the phasing of projects and execution, but the larger trajectory leading towards '28 and beyond is confirmed by the performance in the second quarter. We saw progress on several projects in the backlog being at different stages of execution during the quarter. Main contribution came from Champlain, Hornsea 3, East Anglia 3, SuedLink and SuedOstLink.

In July, we shipped the last segment of the offshore cables from Karlskrona to the Champlain Hudson project, and focus is now on continued installation of both the onshore and offshore parts. At the site, both in Karlskrona and Cologne, the investment programs to expand high-voltage capacity progress as planned. The same goes for our second cable-lay vessel, NKT Eleonora. I will later in the presentation reflect on the status of the individual projects, but the main point is that all are on track to become operational from 2027.

Please go to Slide 8 for an update on the high-voltage market and our backlog. In the first half of 2025, the estimated project award across our addressable market amounted to around EUR 3 billion. Like the last couple of years, the awards were mainly driven by the DC technology. This is lower than what we saw in the first half of the year -- of last year, but it's still a high figure in a historical context, and we continue to see healthy tender activity. As the individual projects are getting larger in size and the investment process are affected by governance processes, permits and other political decisions, the short-term numbers could easily vary.

Our high-voltage order backlog ended the quarter at EUR 10.1 billion. This is slightly lower than the level from the previous couple of quarters as we have executed on the orders in the backlog. Unchanged since at the end of 2024, we, on the top of the order backlog have booking commitments from our customers of more than EUR 3.5 billion. We expect these bookings commitments to be converted to firm orders over the next couple of years. The composition of the backlog has changed slightly, and now more than 90% of the orders are within -- are with European TSOs. With regards to use applications, the view is unchanged with around 55% being interconnected projects and around 40% offshore wind.

Together with the booking commitments, the backlog gives us good visibility for the coming years and thereby also into our medium-term financial ambitions for 2028, which gives us the opportunity to focus on the long-term development of the company. We remain highly active in commercial pursuits, abiding to our disciplined approach to optimize utilization, risk and profitability across our production installation assets. On an ongoing basis, we are also assessing the expected market development. Our view is unchanged and for the period of '24 to 2030, where we expect our addressable market to remain on average more than EUR 10 billion annually. As also seen here in the first half, the short-term development always comes with some uncertainty, but with that being said, we remain confident in the expectation of a healthy supply-demand balance throughout this decade. Our view of the market appearing to move into more balanced territory when looking into the 2030s also remains unchanged.

Please turn to Slide #9 for a look at the Applications business line. Revenue in the Applications business line increased to EUR 234 million in the second quarter of '25. This was driven by the contribution from the acquisition of Solidal and 11% organic growth. The additional medium voltage capacity that we have added in the Czech Republic and Sweden were fully operational in the quarter. The Construction exposed segment continued to be subdued with both volumes and prices below last year, although a slight incremental improvement compared to Q1 was observed during the quarter. Operational EBITDA increased to EUR 31 million compared to EUR 21 million in the same quarter last year, driven by the Solidal acquisition and the additional medium voltage revenue. The margin improved to 13% from 11.8%.

This positive development was driven by Solidal and also the increased revenue in the Power Distribution Grid segment. From a market perspective, we observed a slight incremental improvement during the quarter. The demand for medium voltage cables remained robust, especially driven by European DSOs, upgrading and strengthening the Power Distribution Grids. With our increased capacity, we were able to meet this demand. And during the quarter, we saw a slight easing of the increased competitive environment in selected markets that we mentioned in Q1. As said, also the Construction-related segment remained subdued, but during the quarter, we saw a slight improvement due to a modest increase in construction activity.

Please go to Slide 10 for Service and Accessories. Service and Accessories continued a strong development. Revenue of EUR 70 million was EUR 6 million higher than last year, and organic growth was 7%. The growth came from Accessories segment as organic growth in Service was slightly negative due to the high comparison base from the second quarter in '24, where we executed large offshore repair work. Both segments enjoyed a high activity level in the quarter. Service benefited from a variety of different activities, including repair jobs, maintenance projects and also installation works. Execution was satisfactory and thereby also positively benefiting profitability.

The demand for accessories continued to increase, driven by both medium and high-voltage accessories. The projects in our high-voltage order backlog also contributed positively to the development and execution in the quarter was satisfactory. To support the positive development, the construction of a new test hall in Alingsas in Sweden was, as expected, completing during the quarter and the facility is undergoing a gradual ramp-up. Operational EBITDA more than doubled to EUR 14 million in the quarter compared to EUR 5 million in the second quarter of '24 with the margin landing at a satisfactory 20.2% compared to 7.1%. Profitability in both segments improved and the positive development was driven by higher revenue and improved operational performance.

Please turn to the next slide, where I will give a status of our investment projects. We made solid progress on our investment programs, and they all followed their individual plans. This also means that the expectation of an accumulated CapEx of around EUR 2 billion for the period of '25 to '28 is unchanged. In Karlskrona, Q2 was characterized by a lot of construction activities going on simultaneously at many different locations.

Within the tower, we have progressed with installing both ancillary and machine equipment and across the site, installation of machinery progressed. The first building was completed as we inaugurated the new logistics center and took it into operation. All necessary permits for the expansion of the harbor has been granted and construction started in early August. Following a public competition, the 200-meter extrusion tower was named NKT Crown alongside its sister Lighthouse and Anchor. We are following the plans and the factory is still expected to be operational from 2027, the latest.

The construction of our second cable-lay vessel, NKT Eleonora, is also progressing according to plan. The completion of the individual sections of the hull are progressing, as you can tell from the illustration on the slide. The final outfitting of the vessel will be done in Norway during next year, and the planning of this part of the construction was initiated also during the second quarter. In parallel with the factory, NKT Eleonora will also be operational from 2027. In Cologne, where we also add additional high-voltage capacity, the progress was also in line with plan. We initiated the installation of the new extrusion line and installation of additional equipment progressed. The additional capacity in Cologne is also expected to be operational from 2027.

Lastly, in Applications, the construction in Asnaes progressed with the completion of civil work, including foundation cast and construction of the new extrusion tower. The installation of equipment has been initiated and the new capacity is still expected to come online from 2026. At our Esposcende site in Portugal, we are seeing clear progress in the construction as illustrated on the picture to the bottom right. The additional capacity is still expected to be operational in 2027.

This, ladies and gentlemen, concludes my part of the presentation, and I will hand the word over to Line to take a look at the financials. Please turn to Slide 12.

Thank you, Claes, and good morning from me as well. Let's start by going into the income statement for NKT's financial highlights of Q2. Revenue in Q2 amounted to EUR 723 million, up from EUR 605 million in the same period last year. Organic growth of 13% was driven by positive contributions from all 3 business lines, which saw also high activity levels. In addition, the Solidal acquisition contributed to the revenue. And as we now have owned the company for 12 months, this business will contribute to the organic development going forward.

Operational EBITDA for the quarter was EUR 105 million, an increase of 22% compared to last year. The first time in the company history, EBITDA exceeds the EUR 100 million mark. The margin was 14.5%, a slight improvement compared to 14.2% reported in the second quarter of 2024. As Claes went through in his presentation, Applications and Services and Accessories contributed positively to the improvement, while the EBITDA in Solutions was on par with last year, mainly due to a less favorable project mix.

Depreciations and amortizations are up by EUR 10 million to EUR 34 million, driven by our investments and the Solidal acquisition. EBIT, thereby amounted to EUR 71 million compared to EUR 61 million last year. Financial items net was a cost of EUR 1 million as interest income on our cash position was more than offset by costs related to fluctuations of foreign exchange rate. In Q2 2024, the income of EUR 16 million was a result of income from both interest and FX fluctuations. Tax for the quarter amounted to EUR 16 million, equal to an effective tax rate of 23%. The low tax cost of EUR 2 million in Q2 2024 was impacted by regulation of German tax assets. All in all, this leaves us with a net result of EUR 54 million compared to EUR 75 million from continuing operations last year.

The net result in Q2 2024 was positively affected by EUR 104 million related to the divestment of NKT Photonics. Our employee headcount continued to increase, reflecting our growth journey and our investments to support this development. On average, more than 6,000 people were employed at NKT during the second quarter.

Let us turn to the next slide to look at the cash flow development. Free cash flow for the second quarter was negative minus EUR 175 million, driven by a combination of a negative effect from changes in working capital and the investments conducted during the quarter. Changes in working capital was an outflow of EUR 82 million, and it reflected the phasing of specific milestone payments in the Solutions business line. This development offset the positive operational EBITDA. Investments in the second quarter amounted to EUR 174 million, reflecting the higher activity level across our investment programs, mainly in Solutions, but also in Applications. This level was almost a doubling compared to Q2 2024 and the high level is expected for the remainder of the year. Net cash flow for the quarter was negative EUR 198 million.

Let's turn to Slide 15 for a look at the balance sheet. The working capital position stood at negative EUR 1.1 billion at the end of the second quarter. This reflects an increase of EUR 52 million compared to at the end of our first quarter and is unchanged relative to a year ago. These movements are due to the phasing of specific milestones in Solutions as described on the previous slide. Capital employed increased by EUR 163 million during the quarter due to investments and a less negative working capital position. Compared to a year ago, capital employed has more than doubled, but this effect has been offset by an increased earnings level, leaving RoCE unchanged at 30%. Over the coming years, RoCE will continue to vary between the quarters as it depends on earnings from operations, timing of payments from customers, and not least, a higher asset base from the ongoing investments, which will ramp up during the years.

The net cash position was around EUR 750 million at the end of the first half, providing a robust financial position. This is a requirement both to fund our investments and also to continue progressing on the growth journey that lies ahead of us in the coming years. During the second quarter, we also refinanced our revolving credit facility.

Let's go to the next slide for our outlook -- for update on the outlook for '25. So based on the financial performance so far in 2025 and our expectations for the rest of the year, we have updated the financial outlook for the full year. We now expect revenue at standard metal prices in the range of EUR 2.65 billion to EUR 2.75 billion compared to previously EUR 2.37 billion to EUR 2.52 billion. Operational EBITDA is now expected to be between EUR 360 million and EUR 390 million compared to our previous outlook of EUR 330 million to EUR 380 million. The update is driven by the Solutions and Services and Accessories business lines. In the first half of the year, we reported double-digit organic growth driven by the high activity level across the business, including specific variation orders and a high level of subcontracted revenue in Solutions. This is expected to be lower in the second half of the year, but we expect the revenue growth in Solutions business line to be slightly positive for the full year.

Throughout the year, we continue to execute mainly on projects awarded in 2020 to 2022. Looking at the projects planned for execution in the second half of the year, the project mix appears to be slightly more favorable compared to the first half. Unchanged from previously, we have a higher cost base in Solutions as we support the ongoing investments and production ramp-up. The dilution on group margin in 2025 from these costs is still expected to be slightly higher than they're around 1 percentage point in 2024. We expect Service and Accessories to maintain a high activity level for the rest of the year, driven by the overall demand in the market and contribution from repair jobs. We, therefore, expect a higher contribution from Services and Accessories on both revenue and EBITDA compared to our initial outlook. Unchanged, we expect Applications to contribute positively to the revenue and EBITDA development in 2025. All other assumptions presented in the annual report 2024 are unchanged and listed on the right-hand side of the slide.

Please turn to Slide 17. We have a strong foundation for the growth journey that lies ahead of us. With the results achieved and the execution on our capacity expansion investments in the first half of the year, we made clear progress towards our financial ambitions for 2028. At that point in time, we will have a significantly higher revenue base with more than 14% organic revenue growth CAGR from 2021 to 2028 and an operational EBITDA of more than EUR 700 million. And just as important, we expect to generate a RoCE of at least 20%, reflecting the improved earnings levels and a solid return on our investments.

Now let me just recap the main highlights of the quarter on Slide 18. We maintained a positive development in the second quarter of 2025 with continued stringent focus on execution of our high-voltage order backlog and our investments to expand capacity. We delivered 13% organic growth with positive contributions from all 3 business lines. And our operational EBITDA amounted to EUR 105 million, up by 22%, and it exceeded the EUR 100 million mark for the first time in company history.

All capacity expansion programs followed the plant across both Solutions and Application, we saw the expected progress. Last but not least, we updated our financial outlook for 2025 based on solid financial performance we have seen so far in the year and our expectations for the rest of the year. We now expect revenue in the range of EUR 2.65 billion to EUR 2.75 billion, and operational EBITDA between EUR 360 million and EUR 390 million.

With this, we have concluded the presentation, and we will now hand over the word to the operator to guide us through the Q&A session.

[Operator Instructions] The first question is from the line of Claus Almer from Nordea.

Yes, I will start out with a few questions. The first is about the whole margin trend within Solutions. As I understand, part of the revenue and the surprisingly strong revenue comes from variation orders that may only be more or less a pass-through of third-party work. So maybe you could give some more color to how did this part of the revenue impact margins both in Q2 and maybe also how it impacts the full year guidance? That would be the first question.

Claus, can you please repeat your question again?

Yes. Can you hear me?

Go ahead.

Yes. So it seems like you didn't hear my question. So I'll try again. A question to you, Claes, is about the Solutions division. As I understand, part of the very strong revenue trend is given based on variation orders, which is partly driven by third-party work, where you only will add a small margin. So could you put more color to how does this third-party works impact your margins, both in the Q2, but also on the full year guidance? That will be the first question.

How much color I can give to that question, to be honest. But what we were drawing to on the Solutions margin for the second quarter were 2 aspects of it. The first one was the product mix. And let me also add that, that the product mix, of course, is a part of both the margin in the actual projects. And then the second one is also obviously the absorption of the assets that we have. So that's the first one. And the second one was also the reference to the variation orders, as you rightfully bring up now. Now the only thing we wouldn't have said that unless it was not an immaterial impact on the margin overall for the business line.

Variation orders typically is -- it is always good news from a nominal perspective for NKT. So it's the right thing to execute those. It is giving us return without increasing our capital employed. So I want to start by saying that. Having said that, if it is more complex scope, obviously, the variation orders will carry inherently better margin. If it has been foreseen from the beginning, it would also typically carry better margin. If it is more low complex scope, it will carry a percentage-wise, a lower margin, or if it has not been envisaged from the beginning, it would also potentially be a cost-plus situation. But as for the total impact on the business line, I think it's difficult for me to give further guidance than this, Claus.

Okay. But it would be very helpful. It is so difficult to figuring out how is the margins trending in Solutions. So maybe trying in a different way, if you look at the guidance upgrade, and I know this is on group level, but is the higher revenue more about these variation orders with very little profitability impact and then the profitability or EBITDA upgrade is more about execution. Would that be a fair assumption? Or how should we think about the guidance upgrade then?

Yes, I think that's a good way maybe to ask the question. If I start on the revenue part of the reason looking backwards for us now, all else changed looking forward to increase the outlook, from a revenue perspective, this is pertaining to Solutions and also primarily Service and Accessories seen what has happened in the first half year. And this is in Solutions, it is pertaining to installation, the traction in installation and also variation orders that have been acquired. And for Service and Accessories, it's primarily connected to the fact that we have had a higher amount of discrete work, meaning repairs and maintenance products than what we foresaw from the beginning of the year. So that's the revenue perspective. If you look at the EBITDA perspective, then there is a less EBITDA impact coming from this revenue increase. And there, it goes back to the VOs from the variation orders, which are primarily executed with subcontractors, but also the fact that applications had a relatively low Q1 from a margin perspective, which is necessarily not possible to compensate in the second.

Okay. A little bit more -- now that I understand a little bit better at least. Then my second question goes to the pipeline conversion. And so as you mentioned that these conditional orders of EUR 3.5 billion will be converted over the next couple of years. But you also have the National Grid frame agreement and others. Maybe you could -- little bit more precise on what should we expect for the second half this year and maybe what will be for the next year? What are you seeing, so to speak?

Yes, absolutely. If I start with the EUR 3.5 billion that you referred to as basically the order commitments maybe on top of the backlog, so to speak. And there, we don't expect any conversion of that to backlog for the remainder of this year, but as we said, in the coming years, and that also includes potential conversion next year. But then without going further into the details of that, then for the rest of the spot markets or frames, we have seen in the first half year around EUR 3 billion, as I said, initially being awarded. We can see that there is a fair amount of activity on the market for the moment, and we do expect some larger awards to be made in the coming months. That's now I'm refraining from speculating as to whether NKT will win or not, but I can confirm that we see that it's likely that there will be some major awards in the coming months.

And the next question is from the line of Lucas Ferhani from Jefferies.

My first question was again on Solutions. Is there a part of the kind of higher revenues that's maybe a bit more pricing on the backlog? Or this is solely kind of those variation orders? I'm just asking that question again as we think into 2026, if excluding even variation orders, there's still some positive impact from pricing as you move project mix?

No, I wouldn't say, not to a material extent in the second quarter. It's -- of course, you can discuss the churn of the backlog. I think we have talked about that before, and that will be a gradual churn over the next couple of years. But the material impact from a change from legacy to more recent projects will come in '27, both for the existing assets in operation today, but of course, also with us taking the new assets into operation. Then again, this will vary from quarter-to-quarter. But if anything, I think the composition, as we also alluded to in the presentation, was perhaps less favorable in the second quarter.

Perfect. And the second one is on Applications. If you can talk around -- firstly, in Power Grid, it seems the contribution from Solidal is kind of similar to what we've seen before, but the margin has really rebounded versus kind of Q3, Q4, Q1 that we've seen this last 12 months. So is it just that the pricing environment is better? Is there also some seasonality? Q2 is usually a bigger quarter, so you can speak around that. And just to confirm on the improvement in low voltage in Construction, it's not something you have seen in Q2. So it doesn't necessarily have a positive impact in that Q2 number? Or is it still better kind of year-on-year? And do you expect kind of Q3, Q4 to be better in the low-voltage Construction segment?

There was many questions here. So you have to correct me now if I miss anything of it, but I will try to shed some color on the profitability in Applications. And you're right, it was very strong quarter for Applications. So from a margin perspective, the 13% margin is a record for that business line. So that we are definitely satisfied with. If we try to put it into a little bit of context, if I start with the segments, so the Power Distribution segment, meaning then primarily the medium voltage cables, but also part of the 1 kV cables. Here, we were benefiting in the second quarter from assets that we took into operation in the first quarter. And this is in Sweden and Czech, particularly following those investments that we've earlier said that on a full year base may imply a 5% to 10% revenue increase. That allowed us to recognize more revenues. And because of the strong market, there was also loading to do the same, and that also contributed to the earnings.

And on top of that, of course, also Solidal had an aspect in that as well into that very segment. Secondly, if you look at the Construction-based segment, there -- this remains subdued. So that means both prices and volumes on a year-on-year comparison was lower in the second quarter versus the same quarter last year, although we did towards the end of the second quarter, note a slight improvement in the demand for construction-related cables. And we maintain our pessimism around this segment for the full year of '25. But of course, it was not bad news that we did see a slight improvement at the end of the second quarter. So that's a little bit from a segment perspective. If I then take the perspective of Q1 to Q2 development, you will recollect the discussions we had also in this forum, where we explained the profitability in the first quarter referencing to 3 different areas.

We talked about the mix in Applications, especially in the medium voltage to Power Distribution segment. we talked about selected pockets of competition, and we talked about the Construction segment. I think the Construction segment I just described. And if I then go to the mix, we noted a positive development of more favorable mix enjoyed by the Applications business line during the second quarter, which contributed also to increased earnings. And finally, the selected pockets of competition, I think we labeled as we saw an easement of that in the second quarter. We are humble and competition will always be there and will always be there, but at least the impact of that was less in the second quarter. I hope that sheds some light, Lucas. Now you can enlighten me if I forgot any aspect of your question.

That's all super clear. No further question. And just to Line, congrats and wish you the best for your next adventure.

Thank you very much.

So to -- maybe just to add one last thing, reminding what you said there, seasonality, yes, Q2 is a strong quarter typically for the Applications business line, and that needs to be kept in mind also when extrapolating further. And especially Q4 is typically a fairly weak quarter for the Applications business line. So just leave you with that reflection. And I don't know if congratulations is in order, actually. That's not how it feels to me, but we take your comments.

The next question is from the line of Akash Gupta from JPMorgan.

I got a couple of questions as well. I'm sorry, I got disconnected earlier from calls, so apologies if I ask them again. But my first one is on Solutions. So I think -- I mean, if you look at the full year or second half expectations, I mean, Line, you mentioned in your prepared remarks that for the full year, you are still guiding for slight growth, if I'm not wrong, and that would imply double-digit decline in the second half. So maybe if you can clarify if that math is correct or anything that you would like to add to that calculation?

I think what we say about rest of year or we say about the outlook in general is that we have a higher installation scope than we expected when going into the year, and that's due to this, especially driven by specific variation orders and we see a high activity level to be continued. And then we see also Service and Accessories having a higher activity level related to repair works. And these are difficult to predict. But based on what we know now, this is what we have included in the outlook. And then Application is more or less in line with expectations. So that's on the revenue side.

My question was more specifically on Solutions. So if I recall correctly, you said slightly positive for the year. Is that revenue outlook still hold? Or how do you see solution revenues for the full year?

Yes. Okay. So now -- so we don't guide on the business lines. So I think what we said back in early this year was the expectations. Then variations orders will come in and can change the picture. And this is also what you are seeing here in the first half, and you will see in the second half as a part of why we changed the outlook for the year also.

Okay. So basically, you're expecting some impact of variation orders also in the second half as well?

Well, variation orders by nature also come at different kind of times and not to be predicted linearly. But yes, definitely, that's what we execute on, and we could see rest of year variation orders is a part of that.

My second one is on competition in medium voltage. I think in Q1, you commented about competition in some countries. Where do we stand on competition when we look at various countries exposure you have in medium voltage space? And has there been any change in Q2 versus Q1?

Thanks, Akash, for your question. And I will repeat the question a little bit or the answer from earlier there that you're right, we talked about selected pockets of increased competition in the first quarter. And what we could note during the second quarter was an ease in that pressure. So that means a sequential improvement versus Q1.

The next question is from the line of Xin Wang from Barclays.

Very strong execution there. Congratulations. My first question may be a follow-up on the high-voltage order momentum there. So you said you will likely see larger tenders coming to the market over the second half. Can you maybe give us more color on what region looks more promising or which TSO have potential tenders that they will launch on to the market?

Thank you. I know we are a little bit apprehensive of being too specific around exactly what tenders are out there, but I think we can repeat what we have said before, just first clarifying that it's not only tenders coming to the market, it was when I was referring to activity, I was referring also to tenders being firmly awarded to the market. So meaning being converted into backlog with any of the suppliers. And we have historically said that we expect U.K. to be a strong market this year. And I think I would leave it with that. And then I think it's -- you will be able to guess what could be the case.

Yes, indeed. And then my second question is on applications. So in the regions where you encounter or foresee higher competition from local suppliers, do you see opportunity to consolidate them, which will help you take out competition and also improve your mix in the segment and you did execute the Solidal consolidation very well.

Thank you. And a good question, a strategic one. We can -- if just reflecting in the wider perspective, the Applications segment also in the medium voltage space is much more diversified and fragmented, if you will, than what it is in the high voltage. So just by that aspect, of course, the opportunities of consolidation presents themselves, so to speak. And we have also seen historically that consolidation has occurred. You mentioned one of the examples now, and there are others. Our growth strategy has primarily been and still is organic, where we are investing our money if we want to grow primarily towards opportunities that would allow us to support our 20% RoCE ambition. So that goes to the first or if there are strategic relevance to those organic investments. But secondly, it would also, of course, be an opportunity for M&A. This is more opportunistic and not something which is a fundamental part of our strategy. So we will let logic lead us. If there is good business logic to do something like that, then we would absolutely not take it off the table.

And next up, we have Chris Leonard from UBS.

Quite a few actually. Maybe I'll go in turn, but just to start, really strong beat in applications. And obviously, you've spoken about some of the drivers already. And clearly, competition was slightly more favorable, which helped on pricing with the new capacity. But should we expect into the second half that margins are kind of staying at that first half level of sort of 11% EBITDA, or actually now with medium voltage maybe coming up in the mix more? Could you actually raise those levels into the second half in terms of margin? That would be really helpful.

I think there are a couple of different aspects to the question, but I think you were also pointing at some good topics. The fact that we are investing and growing organically, of course, in applications in the medium voltage segment, which is a healthy segment in that business line should have not only a positive impact, of course, on the revenues, but also on the earnings as such, also from a relative perspective. I would just like to remind ourselves that we have had discussions also in this forum as to whether we expect firmly a double-digit profitability from this business line. And me and Line, we have been hesitant to commit to that.

And here we are with a record high margin, but to commit to even higher margin, I think that, that will be a little bit too early. But the other aspects that I want to draw your attention to is also the seasonality aspect that we talked about earlier, which -- where Q2 is a strong quarter. And then we have to keep in mind that, for example, the third quarter includes a summer month, where people typically go on vacation for a bit. And then we have the winter quarter, which also includes frozen grounds in the Nordics, et cetera, with the implication that, that has. And obviously, the profitability will vary also based on seasonal topics. But from a business perspective, we have modest expectations on the Construction segment for the rest of this year, and we continue to believe strongly in the medium voltage segment.

The next question is from the line of Daniela Costa from Goldman Sachs.

I have 2 questions. One was more -- I know this is not a question about the quarter. It's just to understand the business more in general through the years. When you look at sort of what you execute on a year, can you give us an idea of like how significant variation orders tend to be? And is it 10, 20, 30 sort of like how should we think about looking beyond your backlog of what you might execute just on a long-run steady state? And then I'll ask the second one after this.

Maybe I can start and Claes can -- I think in general, we say that coming into a year, we have approximately EUR 100 million orders coming in, in the year or close to the year this book-to-bill. And that's still some of the uncertainty when we communicate the outlook for the year to you and some that can create also changes during the year. So there's not a -- this is probably the normal and then there can be other things happening also.

Yes. And I would just -- I think I would confirm that and also say that, that also means that we have a certain level of anticipation of VOs in the base case for any given year. And us drawing your attention to VOs for the first half of the year also is a pretty clear statement that it's not immaterial. So it goes beyond what we expected in the first place. The delicacy, of course, is, if you ask what can we expect for the second half or going into next year. We will have our base assumptions, but VOs, of course, comes from unexpected things happening only that needs to be carried out in the projects. And by that, it is also very, very difficult to see. Will it be bad weather or will it not? Will the soil be amenable to the operations which are planned, will it not? Is -- or permits delayed or they're not? So there are a couple of variables that are difficult to foresee whether we can expect a VO or not.

Got it. And then my second question more relating how to -- how should we think about free cash flow trajectory into the second half? Maybe if you could talk a little bit second half in 2026 in terms of the CapEx phasing, given where you are on your expansion plans and also the working capital situation given what you've said that you expect hopefully some more orders into the second half. Can you help us think about the deviation or not versus normal seasonality this year and into '26?

Okay. And I think on a high level, nothing has really changed compared to what we have said earlier, but let me just kind of repeat that messaging also because now we are halfway through the year. I think just double-clicking on the CapEx, right, you see really a pickup in the execution. And this is, as Claes also said, we are on plan and progressing as expected. We expect this pace to continue rest of the year, and that should give you a pretty good indication of where CapEx could end. On net working capital, we do expect -- usually, you have a more favorable Q4 or pattern in Q4 than rest of year. We have earlier said that landing in around minus 1.2 to minus 1.3 on net working capital is kind of what we expect.

And then quite quickly, and I think that's also what you see here in Q2, there can be timing effects for specific projects that can actually move the net working capital EUR 100 million. That's not unusual. And that also goes a little bit into your question on new orders, what could happen there, where down payments on new orders would, of course, also change our net working capital position, and that could be within a range of this EUR 100 million. So on the free cash flow I should just maybe sum it up, sorry, Daniela, and say we still expect a negative net working -- sorry, free cash flow generation for the year due to the -- simply also the pace of this year on the CapEx program.

Just on variation orders on what you mentioned just right now, do they command normal advance levels? Or are they just mainly in-for-out and so that advanced linking doesn't really matter so much here?

If you repeat that question, actually, I didn't understand it.

Just on the variation orders, make sure I understand your last point. Do they command -- are they normally in-for-out orders? Or do they might be for a couple of quarters and command a normal profile of advances?

No. So it's very much kind of in-for-out orders and then in association with the projects we execute on, of course.

[Operator Instructions] I have a follow-up question now from Chris Leonard from UBS.

Sorry, I got cut off. Hopefully, you can hear me. Just following up and looking again at the upgraded guidance for 2025, the new revenue range obviously is implying a lower EBITDA margin to previous. And you've highlighted that Service and Accessories is going well in those applications. But just to be clear, it looks to me like it's implying a sort of 100 basis point reduction in Solutions margin against consensus for 2025. And can we just maybe split out for us, but is it purely due to variation orders? Or are you thinking that second half is also going to see maybe slightly lower sort of capacity utilization on your side that would mean that the margin is weaker?

Yes. So I'm going to repeat a little bit what Claes said earlier on, that second half, it's -- what we expect there is that the variation orders in Solutions is a part of the full year outlook, right, and they carry a relatively lower margin and thereby also diluting the overall margin. What then is the second part that we, of course, also still have in the books for the year is the Applications Q1, which came in lower on the margin. For second year on Solutions -- second half of the year on Solutions, we do still see this project mix, right, that we talk about in terms of how can each quarter pan out. And we do still see also the load on the EBITDA margin from ramping up resources for capacity expansions. But we also see a good or satisfactory execution. So I think we are on plan as expected. And yes, it is around the variation orders when you see a margin changing a bit in Solutions here.

Okay. And then looking at the targets for '28, staying in place for above EUR 700 million of EBITDA. Just thinking at the starting point of where you might land in 2025 for Solutions on profitability, it's implying a very steep step-up in margins. Obviously, we know backlog pricing has been improving, but we're going to need to ramp the facility as well at Karlskrona, but it implies a sort of 6 percentage points or higher increase in margins to 2028 from '25 levels. And I think other players in the space at Prysmian will be looking at a 2 to 3 percentage point increase in their guide. So just can you give us comfort as to why that much higher?

So not commenting specifically on the, let's say, the comparison base to our competitors. But for sure, your assumption around '27, I would say, and then '28 about a margin step-up is correct. And I think what Claes alluded to in terms of, let's say, the new orders coming in to the new factory, but also to the existing factory, that's really kind of the bias in earning relative to revenue you will see in those years.

And maybe just to add from my side as well. I think there is -- there are 3 factors that come on top of each other. I mean, now in the period up until that point, we are carrying excessive costs, as Line mentioned before, which is impacting, of course, the Solutions margin as well. We have the existing assets executing on perhaps more legacy orders than the really fresh orders, and this will be a gradual churn, but it will -- the real fundamental change occurs in '27. So that's the second aspect. And then you have the third aspect of these new assets coming online based not on 0 legacy products, but only new projects. And of course, these 3 things in combination will enable that there will be a significant step-up in earnings also relative wise.

And the last question we have on the line is from Lucian Cawthron from CapeView Capital.

It' Lucian Cawthron. Claes and Line, hello and congrats on the results. A few questions and they're kind of along the lines of some of them have already been asked. But just Line, in terms of your prepared remarks on kind of revenue outlook for the full year, can you just go through them again with respect to the kind of, [ obviously ] the upgrade in revenue guidance because like, as Akash said, Solutions, I think you said slightly positive. And then like, obviously, we're trying to then link it to the overall revenue.

Yes. So Solutions, it's driven by a higher installation scope than we expected going into the year. So that's part of the upgrade of what we now communicate on the revenue, but also the variation orders received during the year. And this is back to what we -- the question also from Daniela, around these orders that we get, which, of course, some we assume and then on the variation orders, but sometimes, of course, they differ from that assumption, and that's what we are seeing here. So we do expect that the Solution revenue for the full year to be higher than that of 2024. And then in the Services and Accessories business line, we've seen a higher activity level so far related to both onshore and offshore repair works. And these activities are difficult to predict when we stand in front of the year. And of course, we have assumptions in there. But any difference to that will change the view on the year. So this is higher than we expected. And then the applications, more or less in line with the outlook that we started the year with on revenues.

And just in terms of the applications, let's say, from the start of the year, what was that kind of outlook for the full year?

We don't guide on the business lines by themselves, right? We give these indications. And I think on group level, we came into the year seeing that revenues would be flattish and that included, let's say, the expectations on the group. But then we also added that we have new capacity coming online already in Q1, there was an effect on applications of 2 factories expanding their medium voltage capacity. And I think we said for the Application business line in a total, that would be -- could be around 8 to 10 percentage revenue increase. And this is a part of what you're now seeing us execute on. And then just for the record also, we have capacity in our Danish factory in application coming online also in 2026. So that's also going to be a part of the applications picture ahead of us.

Got it. And sorry, just Solutions, I know you're not going by division, but I'm going to try my best. And so just if we're thinking kind of like H2 last year and therefore, the outlook for H2 this year or even just -- yes, H2 last year to this year.

So you were asking about the change in Solutions revenue...

Yes. I mean, Solutions is flat year-on-year revenue line. So it's kind of like trying to understand what the kind of full year outlook is for Solutions. You said like kind of high activity in kind of H1, but it's like what does that mean for -- like how should we be thinking about H2? Because if it was high in H2, should we be thinking that revenue is more going to be like H2 last year? Or are you kind of thinking it's more going to be in line with H1, even though you just said it's kind of like there were some specific activities that led to that?

Yes. I can just say Line can provide more comments to it. But what I can say is the underlying mechanics, something that we drew your attention to last year was the Champlain project and the amount of subcontracted revenue that we enjoyed last year and that we have enjoyed also parts of this year. Now this is expected to gradually come down also. So I would just like to add that sentiment. And then you have the seasonality aspect also in Solutions, especially in Q4. So that is some of the underlying mechanics.

Yes. Let's keep it at that.

Well, no -- I'll follow up. I'm seeing you next week, so I'm going to follow up then and with a few others. Then maybe just in terms of the upgrade of the guidance. I mean, if we look at kind of the midpoint, you've gone from a sort of EUR 255 million revenue increase and a EUR 20 million EBITDA. So that's kind of implied an 8% margin, which is obviously very weak. So could you just explain maybe what some of the moving parts were? Obviously, you might not be midpoint to midpoint, but just help us there.

So in terms of the midpoint margin being different from the outlook from the start of the year, this is a part of the mentioned variation orders with a profitability that is not, say, contributing to the margin improvement more on the other hand. And then it is really applications with the Q1 margin being lower than expected. And this, we don't expect in the Q1 outlook to be able to catch up. So those 2 effects gives you this midpoint margin change.

Got it. And then one final question, if I may, to Claes, on a comment on the backlog. Just in terms of the EUR 3.5 billion that's not in the backlog, were you saying that you don't expect that to come into the backlog this year?

Yes, correct.

As there are no further questions, I'll hand it back to the speakers for any closing remarks.

Yes. Thank you, and thank you for calling in today. As we said in the initiation of the call, it's a historic quarter for NKT showing a different kind of scale with an excess of EUR 100 million of EBITDA. So we leave you with that positive note, and thank you for your attendance, and have a nice weekend.