NKT Aktie

Good morning, and welcome to the NKT Investor Day, 2026. We have been looking very much forward to today, and to welcoming you all here to Karlskrona. In the room today, we have representatives from both our analysts, investors. We also have banking relations and the media. And I would also like to extend a warm welcome to everyone listening in via the live webcast.

Just some practicalities before we start. I'll ask you all to pay a close attention to this disclaimer as the presentation and the related comments contain forward-looking statements.

And then on safety, at safety here at this facility, there are no planned fire drills for today. So that actually means if you hear an alarm, we need to evacuate, it will be through the doors and the lobby where you came in and the assembly point, it's just outside on the parking lot. From NKT, we will make sure to have both headcount and name on all of you so everyone stays safe in such a situation. Defibrillator is located right next to the main entrance in the lobby.

Just a brief look at the agenda for today. So we will start the morning here at Box, where we will have presentations both from an overall strategic from a business line and also from a financial perspective. And after lunch, we'll have buses taking us to the factory and where you, with your own eyes, will be able to see what is soon going to be the world's largest offshore high-voltage cable factory.

So let's dig into the content. But before that, we'll play a short video.

[Presentation]

Thank you. And with this, I'd like to introduce our first presenter, our CEO, Claes Westerlind.

Good morning, everybody. It's great to see you here. I was just talking to Kira, and it's so good to be in Karlskrona and to welcome you here, because if you choose to come here, that means you really want to talk to us because it's not easy to get to this place.

Ladies and gentlemen, I'm Claes Westerlind. I'm the CEO of NKT. I have the privilege to have served the industry for around 20 years, and I've been with NKT since 2017, when I joined over with the acquisition of high-voltage cables, ABB's high-voltage cables unit.

And it's my distinct privilege on behalf of NKT to welcome you to the Investor Day here in Karlskrona. And Karlskrona is really a special place. It's a special place for Sweden. It has a very rich history. It was established in the 17th century by King Karl XI, where he moved the Swedish Navy down from the icy and difficult Stockholm down to the beautiful almost Mediterranean region of Karlskrona with an ice-free harbor, but also a very difficult archipelago that helped us to protect it in Sweden.

It's a very special place for NKT. We have been present here, the cable factory has been present here for more than 30 years, and this is where a lot of the major innovations in the HVDC transmission industry has been made just on the island, not too far from here. And it's a very special place for me also personally and also emotional to welcome you here. This is a city where my kids were born. This is a city where they go to school, this is a city where my wife works and this is a city where I live. So ladies and gentlemen, welcome to my hometown and also welcome to the capital of high-voltage cables.

So you will hear today from a number of presenters, and we very much look forward to taking you through the day. As Jacob said, we will spend the morning with some presentations to give you some context, both on the strategic direction from my side. Then we will listen to the business line heads with Darren, with Raphael, with Denis, and Carlos, presenting the strategy from their perspective for respective business lines. And then we will hear from Michael Yong, our CFO, also summing this up from a financial perspective and also looking a little bit ahead.

And the key message we want to leave you with is relatively simple, actually. We are and have become a focused power cable solutions provider with a strong market position, with a record backlog, and also a clear path defined towards 2030 and beyond. But we also want to reflect about the opportunities out there from a market perspective and how we can use now the platform that we have built and that we are working with to also capture further opportunities also going in the future.

But with that, let me start by reflecting a little bit about the history. I should also mention perhaps on the previous slide that you will see here the business line heads presenting, but we also have the full GLT here with us today. And you met many of them, I'm sure, as you entered the premises here. And I just also want to say that what these people don't know about cables is not worth knowing. So everything that you've tried to ask me, Michael, and Jacob, and all the other representatives for NKT in the past, and we have been unable to answer, now make another try with these people because they will know the answer.

Reflecting about NKT's history. We are just like the place we are at now, Karlskrona, we have a rich history. We are about 130 years company that has a continuous develop from a technology perspective, from an industrial development perspective, and also from a number of strategic disciplined choices. You will see some of the technology milestones up here that have not only defined NKT as a company, but also the modern energy industry. The innovation of HVDC MI cables back in 1954, connecting the island of Gotland to the mainland of Sweden. HVDC XLPE cables, which were invented here on Velke, and again, was used for the first time in the world, also coincidentally on the island of Gotland, but then domestically on the island for that time.

And also 2020, when the first -- world's first 525 kV cables were commercialized with the award of the German Corridor projects following having been launched and invented. And you know the answer also here in Karlskrona back in 2014.

So there is a lot of technical innovation that stands as the foundation for what kind of company we are. It's also targeted investments both organic and inorganic, like the acquisition of the Cologne factory, like the acquisition of the Kladno plant, Velke Mezirici, and of course, perhaps the most prominent and recent large one, which was in 2017, the acquisition of ABB high-voltage cables. That lended then the capacity here, of course, but also the HVDC capabilities of NKT. And on top of this, also a lot of important installation assets and EPCI turnkey capability.

And thirdly, it's also been a journey of strategic focus, where we have transformed the company from being a diverse industrial conglomerate into a focused pure power cable systems provider. That's gone from a portfolio perspective. But to a certain extent, as you will hear, for example, Carlos speak about later, but perhaps also Darren to a certain extent, also focusing the factories inside of NKT to allow us to specialize and work on increased efficiency also inside NKT as a company among the factories.

And this journey and where we are today and the context for this day is that we have a clear strategic focus, and it goes without saying that this speaks into power cables. It speaks into the trends that I will come back to with electrification, with renewable transition, and also with grid modernization and digitalization of society. And the focus, as such is fundamental because it speaks also about how we use capital, how we use management focus, how we focus our technology development, how we work from an operational perspective. And all of this is focused on the power cable segment, also a segment that enjoys not a cyclical or a temporary tailwind, but structural demand across the coming decades. And I will also come back to that later.

So reflecting a little bit what is transformation and together with the strategic choices have enabled from just a financial perspective, I wanted to show you this.

Our financials, I think it is fair to say have been restored and also significantly improved over the last couple of years. If we take the measurement baseline of 2022, which is roughly when the last CMD was, our revenues at standard metal prices have nearly doubled during this time period from EUR 1.45 billion until what we're guiding now for this year, around about EUR 2.7 billion.

Our operational EBITDA, meanwhile, has more than doubled from EUR 155 million in 2022 to about EUR 400 million as we are guiding for this year.

And thirdly, looking into our order backlog for the transmission business line, we have gone from EUR 4.7 billion, and we are closing -- when we closed the second quarter, this has almost tripled to EUR 13.0 billion. So the key message here, ladies and gentlemen, is that we are now in a much, much stronger position as a company. And our financial foundation and what we have as a base for the years to come is significantly different with improved earnings and also with the strengthened financial base foundation for the company and also a very strong earnings visibility for the coming years.

And as you're well aware, a couple of years ago, and I spoke to some of you as we entered here today, in 2023, we launched a massive investment here. And over the last couple of years, we have launched a number of organic growth initiatives which is today something that we are labeling as the EUR 2 billion CapEx program from the period of '25 to '28.

And these investments, and you can see a selection of them here and at least one of these, you will see in very much detailed later today that I know that Darren and the team are very excited to show you about. These investments, they aim to improve our capacity and improve our capabilities from a high-voltage perspective to address these markets, but also to increase our capacity from a medium voltage perspective in the distribution segment.

The high-voltage factory in Karlskrona is the obvious example, which is a big, big one. We also have the expansion in Cologne ongoing, and they are both expected to become operational during 2027. And as you can see from the announcement this morning, we are now a little bit more articulate as to when the Karlskrona factory will come into operation. And this is something that Darren will come back to more later. But we remain firmly on track with these investments.

We are also expanding not only the cable manufacturing capacity and capabilities, but also our installation capacity and capabilities. And two good examples of that is NKT Eleonora and also our new subsea cable trencher, the T3600. And these will help us to deliver on a turnkey basis, the large projects in transmission. It's important from a risk management perspective and it's equally important from a value creation perspective.

If we then look further on into distribution, the business line there, we've also had a number of investment programs ongoing for a couple of years, where some of them now have been completed, which is the Falun investment and also the Velke Mezirici investment. They have been fully completed and ramped up. And the Asnaes investments, you will recall that we made a press release earlier this year in the end of Q2, where we have now completed this investment physically, and it's now ramping up in the coming months.

And then thirdly, for the SolidAl acquisition that we are now calling our Esposende site, also there, we acquired that business, but we also expanded the capacity. And this is something that is underway and will be completed towards the end of this year and thereafter it will ramp up.

Above this, above transmission, above distribution, we are also expanding capabilities in both the accessories business line and also grid solutions business line. And this is what you will hear more details from my colleagues during the course of the day.

And it is also clear that this investment program is a key enabler for us as a company. It's a key enabler also for the Charging Forward strategy. It is with these capacity and also capabilities that we will transform or transfer the market opportunity and also our backlog into revenues, into earnings and into cash. And of course, the ability to do so is also fundamental for the success of NKT in the coming years. But I also want to personally say also being here in Karlskrona and almost seeing the factory through the curtains over here that we are, and I am super proud and pleased with the team of what they have been able to achieve across all business lines.

Keep in mind, these investment products will be difficult to do if you only do this. But the team in front of you that you will meet today and also further on, on the site out here, this is a team that have operated at very high pace across the business lines for the last couple of years. And meanwhile, on top of this, carried out these investment projects. And on top of this, put the supply chain ready to support these investments, hire the people that is needed to run the investments, train the people and taking this into commissioning.

So I just want to recognize the tremendous performance, which is done by the team in getting to where we are. And it's obviously now as we come to the tail end of this, it is now about turning all this capacity into profitable growth and take it online in a successful way.

And it comes down to value creation. This is how it is. And here, just reflecting a little bit about that, we are -- cannot avoid to be pleased that it has been recognized by the market, the work that has been done over the last couple of years with the disciplined execution of the transformation, the selective triggering of large also organic investments, carrying out this and being able to also capture the market opportunity meanwhile.

Our market capitalization measured from January 2020 has almost 10-folded from EUR 0.7 billion to EUR 6.6 billion as we closed on last week. And meanwhile, our total shareholder return has been in excess of 600%. And I hope you can agree, ladies and gentlemen, that, that is significant value generation for our shareholders and something that we are proud of and also humble for the trust that you continue to show in us. So we are entering the next strategic phase in a much, much stronger and a different position than when we entered it with a stronger financial profile, with a transformed business as we have gone through, and also with significant investments already underway.

So then looking ahead a little bit as well based on this. Now it's about also reflecting what opportunities is out there and how do we, as a company, aim to also capture these opportunities.

So let me start, even though the business lines themselves will go into more detail in respective market for the business lines, I would like to just on a high level, reflect on the market outlook. And the market for NKT starts with one fundamental trend, and this trend is that the electricity demand continues to grow. This picture here shows the expected growth from where we are today and looking towards 2050.

There are many different data sources that you can look at, but I think they will all show you a similar direction. There is a fundamental growth expected in the coming decades from an electricity demand perspective. Our core market in Europe is expected to remain strong, but also to continue to grow. But also over and beyond where we are present today from a manufacturing perspective and the majority of our markets, also other markets show growth and show potential and opportunity. This includes, but is not limited to the Med region. It includes North America, and it also includes Asia.

And electrification and the growth in electricity demand, together with renewable energy transition, together with grid modernization aspect is, of course, pushing towards investments into the grids. And when we view that from a monetary perspective, then that's expected to grow from EUR 350 billion in annual investments up to EUR 850 billion. It's not all cables, unfortunately, in those numbers, but of course, it is a significant lever towards pushing more demand for the products that we are providing.

And for us, it matters just because the EUR 850 million, of course, does entail significant amount of both transmission and also distribution infrastructure. And this trend here, ladies and gentlemen, creates a durable demand across the markets we are active in, but also shows opportunity for further growth. And it reinforces the need of specialized players like NKT, who are able to supply both products, but also complex projects in a reliable, in a safe way, and also at scale with what's needed by society.

But if we take a look at what is driving the EUR 850 billion, there are three fundamental trends that I would just like to touch upon. And I'm sure none is unknown to you. First and foremost, the electrification, which is what you saw on the previous slide, where it is expected that this is to grow by 80% by 2050, so almost double in the next couple of decades. It's driven across society. It's driven by transportation, it's driven by industry, it's driven by buildings need of electricity, and of course, lately also data centers and AI becomes also not an insignificant driver, all pushing for more grid investments.

The energy transition as well on top of that, where today, the world is powered on roughly 34% of renewable energy sources. This is expected to grow to 80% over the coming decades, requiring these generation facilities to be connected to the grid, but also the grid itself to be reinforced to handle intermittency and also transfer capability between regions.

And last but not least, we as society have enjoyed our electricity grids for quite a while, and we have built up a debt to be paid from a maintenance perspective. I think you've heard the saying before that 40% of the distribution grids in Europe are more than 40 years old. And that's a debt that needs to be paid at the end of the day or we will face the music of blackouts and other topics. And of course, that creates also a demand for our products and systems.

And I'm sure this is not news to you. But I think it is important to state these trends also recognizing that these are not short term. They are not cyclical trends. These are structural multi-decade trends that we expect. And I think society as a whole expects to be there for the coming decades. And obviously, this supports ultimately also the long-term outlook and growth across our business lines, as to how we are formulated today as a company.

Then having established the fundamental megatrends or repeated them to yourselves, I also wanted to touch upon a couple of societal priorities and maybe the famous triangle as we sometimes call it, with sustainability, with security, and also affordability or competitiveness.

If you look to the right of this slide and you rewind the tape 5 to 10 years, sustainability was a rather uncontested societal priority. And I think this obviously creates a lot of opportunity still for the renewable energy transition as we touched upon the previous page. But this trend or priority has also now been complemented by security and also competitiveness, also creating challenges with respect to climate ambitions and offshore wind farms, rollouts and pace of that same and also what that can mean, especially in the short term and perhaps less so in the medium to long term.

We have the security aspect, both from a broader reliability perspective, we, as a society, are becoming very dependent on our electricity grids. We could see in the blackout in Portugal and Spain, I think most of us remember that and how the lack of a reliable energy system paralyzes the society and threatens also life in a way that perhaps didn't -- was not the case 50 to 100 years ago. But security is also an aspect sadly of the situation we have in the world with conflicts being present in Europe again, and also where we recognize that conflicts, for example, in the Middle East is putting a lot of emphasis on the dependence that Europe has on regions outside of Europe for our ability to supply ourselves with energy.

Fact is that 40% of the energy we consume in Europe is produced in Europe, meaning 60% is imported. Almost 100% of the oil is imported. Yes, some comes from Norway, but from the grand scheme of things, not a lot, and 90% of the gas. There is a general political consensus, at least verbally in Europe that, that energy autonomy has to improve. If that is to be improved significantly from 40%, let's say, to 60% or 80%, the cheapest way to generate electrons today is through renewable energy.

Solar comes first, onshore wind, offshore wind, and of course, also from a long-term perspective and large scale, you can think also about nuclear, from a clean perspective. All of that will push a good opportunity and an opportunity that lies over and beyond on the market estimates that we are projecting.

But at the same time, security is also being now, of course, siding sustainability and grid investments. We can see countries, of course, increasing public funding towards defense, and that money needs to come from somewhere. So that can also constitute a challenge.

And last but not least, also competitiveness. Following the Draghi report following also the situation we have in some countries in Europe with the auto industry in Germany as maybe the most prevalent example, also affordability has come to the top of mind of politicians and also societies in Europe. This could speak for industrial electrification to make energy since energy is an important part of competitiveness, then further electrification could be one of the solutions, giving an opportunity. But also from a challenge perspective, you can also look at slower grid build-outs, some countries reflecting about wouldn't it maybe be at least from an optical perspective, looks cheaper from the beginning to build an overhead line versus doing it with underground cables.

So I wanted to recognize these priorities and also to show this triangle to say that with this in mind, we remain confident about the long-term outlook for this company and for the markets that we see. And the strategy that we will discuss, I will go through it, but especially the business line also in even more detail, has taken this into account and also reflected upon this, what is necessary for us to be able to continue to compete effectively with this in mind.

And that, ladies and gentlemen, brings us into the strategy. The Charging Forward strategy. This strategy was launched last year and aims to guide us towards 2030, so towards the end of this decade. And as I've said now during this presentation, we have completed the transformation. We are now a pure-play cable solutions provider. And with this strategy now, our focus is shifting from this transformation and an accelerated organic capacity build-out into execution, into value creation, and also into efficiency, and also on top of this more selective growth. And the strategy aims to reinforce our position as a leading power cable solutions provider in Europe and also beyond.

And I want to come back and emphasize the word value creation. This is the mindset that this strategy has been built upon. And I hope that you will recognize the thesis of that throughout the day from the various presenters that you will meet.

Let me touch up on the strategy as such. It constitutes of 3 pillars, with the execute pillar being recognizing the biggest topic we have on the table for the moment and the utmost urgent priority we have. This is about executing our investment projects on time, on cost, on quality and being able to take this into operation. It's about continuing every day to translate the market opportunity into revenue, into earnings and into cash. And it's about every day, as you will hear Darren talk about later, also continue to deliver on our customer promises in the EUR 13 billion backlog that we are fortunate enough to have as a company.

The excel pillar is about how we operate as a company. And it's in essence here about continue to improve the way we deliver towards our customers, to improve the way we partner with our employees, with society in general, and ultimately, to extract more value from the assets that we have. So to seek and sift out more value.

And lastly, the evolve pillar is about two topics. One thing is to recognize what we are. And you heard me say it in the beginning, we are a technology company. We have always been, we are today, and we will continue to be. So the evolve pillar is to continue to invest in towards the technology discipline, but it's also given the market picture about recognizing the opportunities out there and continue to invest in those opportunities when that presents itself, exercising discipline but continue to invest. And these 3 pillars, they are not separate initiatives, but they are mutually reinforcing.

Our strong execution converts our backlog into revenue and earnings. Efficiency programs, operational efficiency and improving on the same, this strengthens our margins. Innovation and selective growth will help us to grow NKT even further as a company and will also continuously help us to protect the competitiveness of the company in 5 to 10 years.

And that, ladies and gentlemen, is how the outset of this and the overall situation aims to transform the platform we discussed about before into sustainable value creation for the coming years.

Going into pillar-by-pillar a little bit and reflecting here, as I said, execute is the most immediate priority. And it goes down to the backlog, and it goes down to the investments that we have. And here, it is very important, and we continue to focus every day on the fact that we are a product company. Our thesis is that we wake up worried and we spend the day to be able to go to bed calm and we repeat this every day. This is in the mantra of Darren and his team and the wider NKT. This is how we manage our investment programs, and this is also how we need to manage our products, and this is exactly what we're doing.

But with this, we are coming into a phase where we are coming towards the tail end of the expansion programs and then we shift focus into value realization. And when doing this, of course, quality becomes high on the agenda, and I will come back to this, reliability in general for us as a company and also discipline around our customer expectations, as I mentioned before. And risk management and disciplined product execution has always been a key for us as a company. It's been an area which we have continuously focused on and also continue to improve on. And this will be the same thing going forward as well.

And I want to recognize and Darren will take you through -- this is a picture from the Champlain project, and he will speak more about that later. But I think the Champlain project that we finalized in the second quarter stands as a good testament to what we, as a company, are able to bring from a technology perspective to society. It's also a good testament to what we are able to perform as a company, delivering a product in excess of EUR 1 billion ahead of plan, on budget and as per the quality, which is expected. And this, I want to give recognition and say that we are very proud of the teams that were able to do this and, at the same time, carry out the investment program, as I said before.

Then we come to the excel pillar, which goes back to the unlocking of value. And as I said, this relates to how we operate as a company. It relates to that we want to continue or start now more diligently on the back of the massive transformation and the big investment programs to focus more on value extraction from what we have invested. We owe this to ourselves, and we also owe it to the external market, improve productivity to strengthen our profitability, and ultimately increase the returns from the assets that we have now constructed.

Two examples of this supply chain excellence. You're well aware that material cost is a significant part of our cost base, and this is important from a supply security perspective. It's an important from a cost perspective. But having this under good control with long-term relationships is also imperative from a quality assurance perspective and also the way that we innovate and continuously innovate, both on our own, but also with our suppliers.

So taking two examples, and I see Will here in the room who's responsible for this area, KGHM and also the hydro agreements, which we have signed earlier this year and in recent times, are good examples where we manage to get closer to our suppliers and to extend the time frame that we operate together with them. It gives certainty for them, but it also gives certainty and significant benefits for us.

Then we have excellence programs. As I said, on the back of investment in heavy growth phases, it's also for us to continue to push the boundaries to extract more, to increase efficiency, to improve the quality aspect, to improve output of our factories. And there are parts of NKT, which has this written in the DNA, and there are parts of NKT that can do even more of this.

And as we grow as a company, it's also evident that scalable processes, harmonized way of working on things becomes even more important. With the size we are becoming, this is something which we are good at today, but we also recognize we want to continue to grow even more so in the future.

So the excel pillar, it's not about cost savings. It's about transforming the platform we have discussed, transforming the asset state into even stronger profitability, stronger cash flow generation, and greater returns, and doing this in a structured and planned way across NKT as a company over the coming years.

Then we come to the evolve pillar. And I talked about technology leadership, and this is a big part of NKT as a company and continues to be an imperative part of this pillar. And I'm looking for Anders, he's here, our CTO, which is managing this area. We are continuously making innovations with focus on higher power transfer in our cable, lower losses, looking for lower cost, looking for being able to entertain more adverse installation conditions from a resilience perspective, and also environmental scarring perspective, and looking for solutions that are more healthy from a sustainability perspective. And these attributes will continue to push boundaries for us as a company going forward.

Just calling out two examples. Superconductivity cables. Raphael will come back to that later on. It's one example. And at CIGRE this year, we also launched the XLPE DC 525 kV cable operating at 90 degrees. So it's significantly elevated temperature, adding also great benefits for our ability to put competitive products and system towards the market.

And another area is selective growth. And we talked about the opportunity before and what we can also do going forward. You hear us talk about discipline or you have heard of us talk about discipline quite a bit in the last couple of years, and I think you can expect to continue to hear that.

Nothing in this pillar and nothing in what we are telling you today will compromise the ongoing operations and the focus we have on the immediate and most urgent priorities, which is the execution pillar. So that comes first and foremost. But at the same time, we have a duty to ourselves with the money we have invested and also with the value we bring to the market and with the opportunity we see to continuously reflect on what can we do more and where can we do that.

Firstly, from an organic perspective, where there are different options that we can, for example, vertically integrate to a more extent than we have today. I can mention installation as one example of vertical integration possibilities. You saw tools. You saw vessels that can be also thought about in the wider perspective. We have built in, as Darren will explain, and I urge you to ask questions when you move around in the factory today, we have built in modularity in the expansion you see out there, so we can do an incremental expansion, should the structural demand or a mega project warrants for the same.

And of course, last but not least, it's also the opportunity of greenfield factories and building that, something that requires competence, of course, capital and also a fair amount of risk and discipline. But this ability NKT has -- and of course, again, coming back to the disciplined part will only be explored to the extent that the market demand warrants and can swallow on new capacity. Giving examples of an HVAC land cable factory, could be a sea cable factory or could be a factory in the distribution business line as well.

And then we have the inorganic option as well, where I think we have never not talked about it, but I think it's also fair to say that we have been a little bit more active talking about it lately, recognizing that NKT will in a couple of years, become a different company from a cash flow generation perspective, from an organizational strength perspective. And this gives us further opportunity also to start to reflect about also inorganic options in a more structured manner.

I was discussing with some of you out there and again, just reaffirmed the word discipline remains key also in this and that we want to underline. We will focus on power cable technologies and directly connected areas in reflecting about this. We will always seek to leverage our industrial and commercial capabilities when we look at M&A. And it's, of course, so that we will look for attractive segments and also geographies when we are entertaining these ideas. And any acquisition we do must strengthen our competitive position and of course, must support our long-term value creation.

So the Excel -- sorry, the Evolve pillar as such, while maybe less immediate and urgent than the other two, equally important for the future of NKT.

And that, ladies and gentlemen, brings us to me also being happy, especially in times like these, what we have the world around us that we with a firm hand we reconfirm the 2028 and the 2030 guidance. And you will hear it more, Michael, reflecting about the journey that we are taking towards '28 and 2030 later. But looking at 2030, we confirm the CAGR that we have guided you on, an average more than 7% up until 2030, we confirm the more than EUR 900 million of EBITDA in 2030, and we are also happy to confirm our ROCE target of more than 22%.

And I want to say that these are built on the CapEx program of EUR 2 billion. It also means if we look at the previous slide, if we are seeking further opportunity and make additional choices then these choices will come on top from a CapEx perspective, but they will also come on top from a nominal value generation perspective.

So that, ladies and gentlemen, brings us almost to the end of my part. And then let me just sum up what I hoped that I have said to you now through also reiterating our equity story. We are NKT purely pure power cable systems provider. And we are focused and of course, delivering critical infrastructure to a society in need with strong structural demand for the need of our products and systems, not for coming 2, 3 years but for the coming decades. We are happy to be differentiated by our technology stance. This is evidenced by just our market position if you take HVDC as an example, but you can also see a number of technical innovation in the last couple of years that also proves the same.

We enjoy a very solid order backlog that provides us with an operational strong visibility from a planning perspective, but also strong earnings perspective. So when we reflect about '28 and 2030 financial guidances, we do it from a different vantage point than many other companies. We are underpinned by a robust financial position. This provides us with security and comfort, but it also gives us flexibility when additional opportunities arise.

And as I've said, I don't know, enough times or maybe too many times, we have an organization that has done a formidable job in operating the assets we have over the last couple of years, improving these assets and meanwhile, also taking opportunities to grow organically further. To promise, hope and dream is one thing, but to carry out and deliver on plan, it's quite another one. And I hope that this also instills trust in whatever we do next, we have proved that we can do it and we can master this.

And last but not least, as you will hear from our distinguished CFO later on today. We also now have a clear capital allocation priority. Also sending the message here today that we are becoming a company that can continue to grow and also pay dividend at the same time.

So with that, ladies and gentlemen, thank you again for being here, and welcome to Karlskrona and look forward to spend the day together with you and show you the factory.

Thank you, Claes. We'll open up for a brief Q&A session now. [Operator Instructions] But we'll start here, up front. The microphone comes.

Claus Almer, from Nordea. So, Claes, good presentation. M&A, you are in a so strong position and you had a slide showing 2050, strong, strong growth on a global scale. Why are you not more precise on what you would like to acquire? Either in country, technology and so forth?

Yes. I think we have been, of course, your perspective, but I think we have been trying to be relatively clear around what opportunities we see and what geographies. We have reflected about the fact that NKT is a Northern European-focused company. We have reflected about further opportunity in the Med region. We have reflected also about the growth and need for Products and System in North America, and we have also reflected about opportunities in Asia, where I guess the two first, it is maybe those that are closest to home and should be perceived as obvious reflection from our side.

And when it comes to the Products and Systems, we say that we want to remain a focused power cable systems provider for directly adjacent areas. And that we are not more specific than that is also not to delimit ourselves or to create unfair expectations. So we want to look at this opportunistically, but I want to underline that M&A is not an objective, but it is an option for us.

But you also said less urgent, so...

I think less urgent than what we have from an execution perspective. The execution perspective, we have a EUR 13 billion backlog and EUR 2.5 billion of booking commitments. We have a factory that you will get an impression today is very close to completion, but still requires a lot of work. And we're less urgent, I also underline not less important, but the first mention thing is something where we cannot drop the ball. And we would do not go towards an M&A or an inorganic move with less than that we can feel 100% comfortable on the execution pillar.

Casper?

Casper Blom from Danske Bank. Actually, just a bit of follow-up to what Claus just talked about on the M&A agenda. Can you speak a little bit to the potential size of this? Is this something that if you were to go for M&A, do you want to finance it entirely on your own balance sheet now that you become cash flow generative? Or would you be willing to take a look at your debt targets, raise capital as you've done in the past, sort of your -- how far would you sort of stretch yourself?

Yes. I think we will remain disciplined. That's the key word, and it also applies to size and how we fund it, et cetera. You will see later when Michael goes through the capital allocation priorities that these priorities could be temporarily suspended with reference to organic or larger organic or inorganic purchase, which would suggest that at least we are not upfront limiting ourselves to only sticking with the capital allocation priorities and our internal ability to fund the same.

Akash?

It's Akash from JPMorgan. Thanks, Claes, for presentation. My question is more on organic investments. I think, when you presented like the growth opportunities and this year, we have seen high focus on energy security in Europe and sooner or later, some of these noise that we see in political circle will translate into actions. And when we look at your portfolio, you have growth opportunities across a broad range of products such as medium voltage, HVAC, HVDC. And these growth opportunities have different margin, different capital requirement.

So maybe if you can walk us through the process internally you have to evaluate how to invest, like what sort of KPI do you follow? Is it payback period so that you don't -- like one of the business units don't get disadvantaged over the others? And how do you see like further CapEx potential in all 3 broader categories, HVDC, HVAC and medium voltage in the next 3 years?

Yes. I think it is a question that we will enjoy, hopefully, more clarity also Akash in the afternoon as we go through with Michael Young. So I would hold maybe the detailed answer to it. But I will say that, obviously, we are prioritizing the capital allocation priority that you see here, there is also an internal variant of that, also where we evaluate ourselves to put up opportunities against one another, with the agenda and with the ability that we have.

And things like the ROCE, things like payback time, of course, are all part of that evaluation criteria and matrix when we decide what to go for and not to go for. I will, though, just add a small one that it's also about risk management. So some investments can also be to effectively manage our risks or to lower or limit our risks as well. So I don't want to take away that opportunity. But that's not the large part. The larger part is what you say, of course, growth and further profitability.

Any other questions? Other than that, I think it's time for first short break. Refreshments and coffee is served in the lobby, and we will continue at 10:00. So please be back in the room at that point in time. Thank you.

Thank you.

[Break]

Welcome back. We'll now continue with the business line presentation. But before that, we'll start, just a short video again. Please.

[Presentation]

Just before introducing the next presenter, I'll just say we have a photographer walking around. So if anyone don't want to be present at pictures, please raise your hand, and we'll take care of that. But then I'll introduce the next speaker, Darren Fennell, our Head of Transmission. Darren, please.

Good morning, everybody. My name is Darren Fennell. I'm Head of the Transmission business for NKT. I've been with the company since 2017 with the ABB acquisition. Claes said to me, as I was about to get up. He said to me, but you hardly have to say anything. Your slides are just so good. I said, maybe I need to add a little bit. But I also live in Karlskrona. I think you can hear by my Irish accent, I'm maybe not as local as Claes is, but my kids are basically Swedish now. So -- and it's a fantastic city to grow up.

Okay. I think it's important firstly, if we look back. From 2022, what we really focused and set out to do. That was about improved performance. It was about investing in the future regarding capabilities and capacity, and it was about increasing the backlog. I think you can see with what's reflected in these figures that we have achieved that.

Revenue more than doubled, EBITDA even more so, and the backlog 2.5x since where we stood in 2022. So much of this is down to our people, the skill and competence across engineering, manufacturing, installation, project execution. And to make it tangible outside of the financial figures, which I know are huge interest to people in this room is what does this actually mean in people's everyday lives.

By the time the projects now that we completed are in full operation, almost 8 million households will receive their energy through an NKT cable. From a society point of view, it really brings proudness of what we're doing. That reflects to about 18 million people in total.

The next slide really focuses on the key milestones of that strong performance hand-in-hand with investments. So as you can see here, from a footprint perspective, what we've achieved during this period. The second tower in Karlskrona has been put online. We're investing to increase the capacity in Cologne and also, as you'll see later today, a brand-new factory in Karlskrona.

Hand-in-hand with that is this turnkey philosophy, which is really in our hearts regarding both manufacturing and installation. That's why we invest so much money regarding NKT Eleonora, as an example. Also, NKT Isabella as a near-shore barge to facilitate those projects. And on top of all the assets that we already had in-house regarding burial as an example, we've added the Jet plough, which has now been in operation in a number of projects. And I hear from the market that it looks quite simple for you from the outside. These assets, you seem to put them online and they just work. But I can tell you behind it, the amount of work that goes into doing this is really enormous.

And then we have the T3600 trenching tool, which is about the size of an average size house, just to give you a feel of what we're talking about here. This is the most powerful tool on the market. It can bury cables to over 5.5 meter burial depth. Just to think of what that is regarding the length of this room, as an example.

From a project perspective, and I will go back on the technology later on, but I think it's important to emphasize just as Claes did, we are a technology company first and foremost. Innovation is really in our DNA. And as part of that is the investment we're doing in the test halls for the future, but also in the material lab that you will see today. It is really at the cutting edge regarding what's possible on the market.

And I'm really proud to say we do that everything on the left, while we have a record backlog, we have taken in one of the biggest projects ever to be awarded in the cable industry with the EGL3. We are performing very strongly regarding our execution, and we've completed the Champlain project, which is really a milestone project. That strong performance has really allowed us to build up the backlog that we have here.

What you can see in front of you is really projects either completed since 2022 or in our backlog that we're working on at the moment. And from a client selection point of view, I think it's a fantastic achievement from our point of view that clients are not only selecting NKT regarding competitiveness. We know we need to be competitive on the market. They're selecting us and they're giving us feedback because it's technology leadership, it's how we execute projects. And then quite honestly, as well, it's the relationship that we have with them.

Historically, we have been a global player regarding how we -- where we execute the projects. I think more recent years, you've seen that it's more focused around Northern Europe, which has also really held us in really good stead. That is where the core market has been.

But you can see over the last few years, we have also started to expand again. So Attica-Crete is a good example of our project in Greece. The Champlain project, connecting Canada and the U.S. is a good example. And on top of that, the project that we're carrying out right as we speak regarding vessels is Bay of Biscay in Biscay Gulf connecting Southern France to Spain. That has allowed us with that relationship with our clients to also build up a backlog.

Claes touched on it already. We have over EUR 13 billion with another EUR 2.5 billion in commitments. That really gives us long-term visibility regarding the future. Some of these projects, they reach out beyond 2030. That shows you what sort of view we have of the future.

On the right side, you can see the average annual addressable market. Our estimation is over EUR 10 billion on average per year. That's driven by electrification, grid modernization, and also items such as energy security. I think we can all see that short term, there is some challenges. Overhead lines in Germany is a good example of that. I think also in some cases, delayed permits coming is also another good example. But I think one of the fundamental items that we forget sometimes when we look at all these reports is that we're talking to our clients every day. We're talking about their plans for the future and what they want to do. It's our clients who are telling what projects they want to execute. And that's why we can say that we have a solid market in front of us.

The visibility, of course, becomes lower when you get beyond 2030. But I think the market dynamics, government ambitions, listening to our client plans for the future, it gives us confidence that it is a solid market to come. I think primarily, we will continue to be in Europe. But as you've seen with Champlain project, we will look at opportunities globally. That's for sure.

On top of that, which is more a wildcard is megaprojects. We have not included them in any market analysis or forecast for the future, but we do also keep an eye on them. And this just gives you an idea of what we mean by a megaproject to start with. So a megaproject for NKT, that's a project with over 1,000 kilometer route length of cable. These are massive projects. And there's a lot of them that have been discussed and talked about worldwide, as you can see.

NKT is one of the few companies in the world that can carry out these projects. Long-length cables, DC mature technology, been able to install them with the capabilities we have. There is not many that can do this. From a realization point of view, the probability of these projects happening is low. We acknowledge that. It is low, but we also want to be there if it does happen. If you go back 10, 12 years, the Champlain project, everybody talked about it, it was a megaproject at the time. Nobody thought it would happen. And here we are today with the project completed and actually energy flowing through it.

Now if we look at the strategy, again, if you think of the previous strategy, improve performance, increase the backlog, and invest in regarding capabilities for the future. Going forward, we're Charging Forward. It's around execution. It's around being competitive on the market and bringing long-term value creation to our clients.

As Claes mentioned, we do this under 3 pillars. Firstly, execute. Execute on the backlog we have. We need to ensure and not lose our focus that we actually are successful in completing that backlog and execute on the investments that we do hand-in-hand with that. And doing that with a disciplined approach, risk management and really competent project execution from an excel perspective.

When we talk about and listen to our clients regarding affordability, we frame that in a word called sustainable competitiveness for the future. That's around leadership regarding technology. It's around turnkey approach regarding installation and project execution excellence. It's partnership with our clients and more so than anything, it's ensuring we have a skilled competent workforce for the future.

And then if we look at evolve. Technology-wise, we will always continue to push the envelope regarding innovation, but it's not just cable that we talk about here. We also talk about innovation regarding AI. How do we use AI to benefit us for the future. We can already see and we have it in use regarding planning in the factories, predictive maintenance, seabed analysis, all things to cut down time for our people and take away the complexity. So what we hire them for is what they do and use their expertise and remove tasks that can be done by an AI support.

From an installation capability. Here, we have always said that where it makes market sense, we will continue to look at critical scopes to see if we should bring them in-house. We analyze that on a continuous basis to see does it make sense that we have it in-house or subcontracted. It also feeds into do we have the utilization for it. So things like cable A, you can see yes. Things like rock placement, maybe not. We maybe not do have enough scope for rock placement for it to be continuous all year round to keep our vessels busy.

And then to my pride and joy. So this will be the world's largest cable A factory when it's finished. I think Claes used really nice words. As far as we're concerned, this will be the capital of high-voltage cable manufacturing into the future. It is built with the future in mind. Long lens, bigger cross-sections, higher voltage levels, and done at a scale that makes it cost efficient for the future for our clients. It's not often that you get a chance of to make an investment in both a factory and a vessel at the same time and being able to optimize those two has been a huge benefit for the future.

From a point of view of commercial production, you hear Claes mentioned it earlier on, we're really happy and proud to say that this will come into commercial operation in Q2 2027. It will be controlled ramp up and sequenced with the 2 lines that we have. So not all machines come online at the same time. It's controlled from where we start production to when we run through the final completed cable before load out. And it's important to say, this modularity we talked about, the optionality to be able to add further investments is there in the Karlskrona factory for the future.

And then if we go from manufacturing, we then go over to the installment of this cable. And the critical asset in order to achieve that is NKT Eleonora. It's really building on the capabilities that we already had in Victoria. It has three turn tables, 23,000 tons of cable that can be carried, and it's ready regarding methanol for the future regarding sustainability.

If you just think what 23,000 tonnes of cable is regarding to get from here to Copenhagen, where a lot of people made the journey. You're talking almost that distance to be able to be carried and that's 2 cables for a route length of almost a distance to Copenhagen. It's really built, again, with the future in mind regarding long lengths, deep sea, and also configurations.

So in some cases, our clients want to have a metallic return. That's what the turntable is for, to be able to do that. So we can bundle 2, 3 cables during that installation. Exact same as what we did for Victoria, we've done for Eleonora, and we do for all our offshore assets is: first, we design how the case should be handled on board, how do we ensure the integrity of the cable. That's the first thing that we see on the drawings. After that, we design the vessel around it. So the vessel comes after. Everything that we do is around ensuring from design of the cable to manufacturing to installation is really a turnkey approach to ensure the integrity of the cable over its lifetime.

And then if we talk about -- you heard me say earlier, really when we talk about technology, it really is our core regarding innovation. And this gives you some picture of what we've achieved recently.

Firstly, it should not be forgotten about Claes talked about that we invented XLPE. We were also the first to manufacture 525 kV cables, and that was back in 2014. So that's 12 years ago. We also shortly afterwards, tested 640 kV land cable. So from our point of view, this is a mature technology that we've had around for quite a long time.

The 640 kV also allowed to show not only the innovation we have, but the robustness of this technology as a whole. It increases the capacity that's possible for transmission of our clients by over 65%. You add on top of that 90-degree cables that can either increase the capacity even further or what it can do is it can give us our clients flexibility regarding how they plan the route. These areas along the route there may be hotspots that create an issue for the cable. This means that they could use the cable that actually goes through there.

From a deepwater cable perspective, we have qualified cables DC to 2,000 meters. We've qualified AC cables 1,500 meters. And then when it comes to long lengths, Eleonora can produce -- the factory in Eleonora can lay cable that is at longer lengths, which means less transits for the vessels. It means less joints out on the site. Both of them reduce cost and they also reduce CO2 emissions regarding sustainability for the future.

And then ultimately, it's our clients that really judge us. We have changed our approach quite a lot with our clients over the last 4 years, where we went from a company that went more a singular approach of tender-to-tender, and we just basically reinvented the wheel every time we came to a client again and the relationship, to a much more partnership approach going forward. And I think that's evident by what you see behind me regarding what our clients think of us.

Technology-wise, what they think of us reliability-wise, what they think of us regarding our turnkey approach, and also how these assets operate when they're actually installed. With that, I'd like to listen -- for you to listen to a few words from Sandy Mactaggart, who's with SSE, who's one of our key clients.

[Presentation]

Thank you, Sandy. And then other than Sandy, following the wrong Football team, otherwise we get on really well.

Then we come to Champlain Hudson Power Express. This is a milestone project, not just for NKT. This is a milestone project for the industry as a whole. It spans 600 kilometers from Quebec in Canada down to the heart of New York City. It really is a true turnkey project. If we think about the route that this has taken on land from Quebec, it goes to Lake Champlain. It then goes on land and in the river through the Hudson River, through the Harlem River, connecting into that of New York City in Astoria.

It builds on the expertise and structures that we already have in place. What I think is important to say here is, what you see in front of you is not unique to the Champlain project. These are the structures and the aspects and discipline that we've put in place for all projects, and it's built on not the last 3 years of the Champlain project. This is built on decades of carrying out these complex projects, learnings that we've taken, sometimes painful ones in order to reach this point.

If we look at some of the aspects, complexity-wise, it is one of the most complex projects we have ever carried out with a route length that goes through rivers, there is a lot of stakeholders. There is a lot of authorities. There's really tight permit constrictions and there's a complex supply chain.

Technology-wise, it was the commercial industrialization of 400 kV cables. Installation-wise, the complexity varied so much. So if we talk about barges to be able to get the cable up to Lake Champlain, these barges were designed to millimeter accuracy to fit through the lock system in order to bring the cable up to the lake. We've had the river of the Hudson frozen over in the winter period. We have currents that make it extremely difficult, not just to place the cable on the seabed, but also to bury it. We need to ensure that we protect local wildlife. So we've had really tight restrictions in place on ourselves regarding Bald Eagles as an example. And we worked with the motto during all of this project that we will work with the river and not against it, in particular in the Hudson, because it is so sensitive.

From a risk management point of view, this is something that's very close to my heart because risk management basically decides the success of a project. How you manage the risks is really the measure will you succeed or not, both from a manufacturing point of view, a technical point of view, and an operational point of view.

And I'm glad to say here that we delivered the project on time and on cost and also not forgetting along the way that we had the small thing of also building a second tower in Karlskrona, while producing these cables. So it also really sends a signal both for ourselves and to you that what we're doing at the moment regarding these investments at the same time as the backlog, we will do it.

To finalize, we touched on the high order backlog and the solid market that we see of over EUR 10 billion a year until 2030 and the solid market that we see beyond with the added that we do not rely on it, but we will continue to keep an eye on these megaprojects for the future.

Significant investments in increasing our production and our installation capabilities and capacity going forward for the future. And regarding the aspect, technology leadership, we want to ensure that we're always pushing the envelope and at the forefront. Turnkey project execution, including installation aspects. And then as you heard me say, the risk management of these projects is really key to ensuring that. This is really to ensure that our clients, they come to NKT when they want the projects and they go nowhere else.

Thank you. With that, yes.

Good morning. My name is Raphael Goerner, and I'm heading Grid Solutions.

My name is Dennis Schuler, and I'm the Head of the Business line Accessories.

And let me start with a short recap of what we also built with Grid Solutions & Accessories as a basis also for our Charging Forward strategy and which is now live since beginning of the year with a new business line, Grid Solutions & Accessories.

We have built that on our legacy activities of the well-established service and accessories business line and have combined it with the majority of our high-voltage AC onshore project activities that were before positioned with solutions or the distribution part. By combining this, obviously, the rationale is straightforward. We have more and more customers that not just want an individual cable or an individual accessory, want a complete solution provider that is, as Darren already mentioned, their partner of choice across the full cable life cycle.

And obviously, Grid Solutions & Accessories brings a lot of opportunities and creates clear accountability, a streamlined customer interface and strengthen our ability to participate with a bigger market share in that growing market environment that Claes has already referred to.

So today, we want to show you a little bit more about Grid Solutions & Accessories, how it really creates value for our customers, but also for NKT with that integrated offering and the capabilities to execute product, project and service business moving forward.

If we look at that combined picture now, what we have created with Grid Solutions & Accessories, it's really the combination of the product focus, the service focus and the project focus. And mainly, as said, built on our existing legacy service and accessories activities. And there, we can see how much the products also benefit from that combined business line. So we have a direct feedback coming to our world-leading medium voltage, high-voltage AC, but also high-voltage DC product portfolio. And it's really benefiting from that close connection and direct feedback from the ongoing project execution.

For service, we have a strong capability, and we will touch on that later on a little bit more to deliver services and to provide security also to our customers to keep their asset healthy and in operation. And that combined and expanded to the project execution focus brings really these end-to-end capabilities that we can deliver now with Grid Solutions & Accessories for our high-voltage AC project and solutions opportunities. And that is really ensuring that we are as this new business line has been formed, are a fully integrated partner for our customers and really deliver with a very customer-centric approach to our ambitions.

This slide highlights the financial scale of Grid Solutions & Accessories. For 2025, the business line reports a revenue of EUR 461 million. This represents the combined contribution from products, project activities, and service capabilities.

The operational EBITDA in the same period is EUR 67 million. Relative to revenue, it represents an operational EBITDA margin of approximately 14.5%. Grid Solutions & Accessories is not only growing its market presence, but also translating our position into tangible financial value. This is further supported by a strong commercial momentum.

Over the past 12 months, we grew our order intake 30%, but also customer focus remains equally strong with a customer Net Promoter Score of 66 points, we're 23 points above the global industry benchmark.

Over the past 12 months, Grid Solutions & Accessories delivered strategic milestones, milestones in the area of footprint, products, projects, and lifecycle services. We have achieved a lot, and we would like to highlight the strategic milestones we're especially proud of.

In Alingsas, Sweden, our competence center and production facility for high-voltage accessories, we managed to complete our strategic footprint expansion. We added production capacity and production capabilities, and we opened a new test center for extra high-voltage tests, a test center catered for both HVDC and HVAC accessories.

Nordenham is NKT's competence center and production facility for medium-voltage accessories. In Nordenham, we managed to create a zero-carbon factory, the first zero-carbon factory within NKT. Its implementation already shows benefits when working with our customers that are focused on reducing their Scope 3 emissions.

Yes. Let's move to the product, second. Here, I would definitely like to highlight what we have done as world's first to deliver also at 400 kV AC voltage level, also a temporary site cable that helps to be utilized on grid restructuring and reinforcement projects in a very easy and simple way, because it comes as a preassembled solution with already the connectors being installed on the cable and with that reduces the implementation time on site significantly.

In addition, it's not just a onetime use. It can be reused also in different projects several times in different configurations. And with that also helps to increase the sustainability of the efforts of our customers.

Looking then on the project side, I could, of course, highlight several of the recently completed projects. But as a German citizen in these days, of course, I need to look to Munich, because Oktoberfest is ongoing there this week.

So we have signed beginning of the year, a Letter of Intent with the Stadtwerke Munchen, Munich to implement the first commercial superconductivity cable system. And that is really world's first then if we are coming to that operation. Starting already in 2001, we have seen in Claes's slides, the first pilot project had been installed. And since then, technology has further matured that we are now ready to also look forward to that first commercial operation.

And this will help Munich, obviously, to reconfigure its power grid, help also to save space, because instead of installing 5 cable systems, this cable system can transport the same amount of power and on the same time, also reduce losses. So it helps also to pay off very different aspects to strengthen the sustainable competitiveness also for our customers.

And last but not least, in these days, obviously, the repair capabilities are quite important, because we need to support our customers when there is extreme weather damaging a cable, when there is external threats, sabotage damaging a cable. So we need to help our customers to be prepared, and we are also preparing ourselves to be prepared to help our customers with these services. And there, just highlighting maybe the offshore wind repair with Beatrice, where we not just repaired our own cable, but also third-party cables. So it's also important to have the technology and the competence to work with different installed assets worldwide.

Now looking at what is supporting also the growth of Grid Solutions & Accessories and our ambition to grow further these activities on the AC side of life. And that is actually then again, referring to what Claes already said on electrification, on the energy transition, and the grid modernization.

Let me first start with the electricity demand. So of course, most obvious, I guess, some of you have come already with an electric car. So that's the most obvious change that we electrify our transportation. And that is not just relevant for our individual transportation, but also mass transportation, and commercial vehicles. So the installed capacity that is required for charging these vehicles is increasing and increasing. And with that, additional grid connection capacity needed.

Industrialization, where we also turn off fuel gas to be replaced with electricity. And the same obviously goes for data centers. We have heard already about AI. So that is also driving the overall electricity demand in Europe moving forward. And with that, also more and more cables being utilized for these activities.

Looking then at the energy transition, it's really not just the decade, it's the century of renewables. And we can see that, that trend is unbroken. So solar capacity being added more and more and the same goes for offshore and onshore wind activities. Also here, grid connections required and combined also with more energy storage systems being installed on a grid scale require high-voltage AC solutions being ready and being helpful to connect these assets to the grid.

And that, of course, then adds in the overall picture that is coming not from us, from external studies on the annual grid investments that will take up by 70% in the coming years from the base level of EUR 57 billion to around EUR 100 billion moving forward. And that, of course, will support our activities in the center of our operation in Europe. But as you can see, also the opportunities with the rest of the world with up to EUR 500 billion annual spend in investments in grid capacity should also trigger one or the other strategic activities that was already mentioned.

Looking at the overall capabilities that we provide as Grid Solutions & Accessories to our customers, what is it that we really can deliver end-to-end. And that goes really across the full cable life cycle, starting from design, planning, production, installation and commissioning, operation and maintenance, and end of life.

And we really engage early with our customers because we have heard, we are obviously a power cable expert. So we want to ensure that our capabilities, our competencies are integrated already into the project planning phase into the permitting phase. And with that, we help to optimize the solutions that our customers in the end, integrate into their grids.

Looking then at the installation and commissioning, I think that is really very important to not just think about the cable, to not just think about the market-leading accessories, but also think about the integration of that overall cable system into the power grids, into the asset base of our customers. And there, obviously, the close connection also from the projects benefits also the product development and evolution, and that is where we are ensuring that continuous improvement and continuous evolution of our offering by that close connection.

But yes, obviously, we don't stop after we have commissioned maybe with our own mobile test equipment then the cable system. We continue also into the operation and maintenance phase. There, we have built quite a portfolio of long-term service agreements to support our customers with spare parts, for example, but also with secured reaction times in case needed.

And of course, to execute not just the installation and commissioning, but also execute later on repairs, you need qualified, you need trained, you need educated and continuously qualified jointers to also execute these activities and all that is sitting with Grid Solutions & Accessories.

Looking then at the end of life, it's also important to recognize, as we have heard, the aging grid infrastructure and that we need to also consider together with our customers, how to replace these cable systems, how to also recycle it, how to also modernize the existing infrastructure.

How are we doing this? Also on a regional scale, we wanted to visualize here because I think you have heard now about our major factories in distribution and in transmission. And you will hear more from Carlos, obviously, about our assets there. And what is important is that we are relying on one side on our factory footprint on accessories space, but also utilizing our factory assets in transmission and distribution, looking here at that picture and being close to our customers.

For Grid Solutions & Accessories, we have created regional sales and execution centers really close to our customers, obviously, with quite a gravity in Europe, but also expanding into strategic markets like U.S., the United Emirates, India and Australia. And these are obviously markets that we are following quite closely and where we also consider how to further strengthen our presence. But being close to our customers, that is quite important because with that, we can ensure that we are really closely following the customer demands. But on the other side, that we can also rely on our global competence on the global organization to support also the execution of these projects of the service activities or the deliveries of our product portfolio.

And all that, obviously, again, is standing on the 3 pillars around execute, excel and evolve in line with our Charging Forward strategy. And again, let me start with the execute part. So here, first, it's really about delivering on our commitments also on the project, on the product, on the service side. Delivering on our customer commitments is the first priority, ensuring that we build the supply chain readiness also for the backlog that we have here to keep really the projects in focus and deliver them as also Darren alluded to, to deliver them on time, on budget, on quality and make sure that we really have there this customer-centric approach for our activities moving forward.

On the other side, it's really about the excellence part. Making sure that we are really positioning ourselves in a good spot with also key leadership positions -- with leadership positions in key segments like we have heard about superconductivity, where we really would like to see us moving forward with this first commercial project.

And then also about strategic partnerships, on one side with our customers, as we have heard already previously, but on the other side, also with our suppliers to ensure that we have also here on the cable side, on the product side, but also on the installation side, reliable partners moving forward in executing our strategy.

And the last pillar, it's about evolve making sure that we are ready with Grid Solutions & Accessories for the future to really consider what are relevant aspects to expand our footprint, what are relevant aspects also with the technical innovation and of course, what can we do to provide more sustainable offerings also to our customers.

And these are the 3 pillars that you will also see moving forward for Grid Solutions in execution. And in the end, it's not about the number of projects that we are executing, it's really about the overall value that we generate for our customers.

So our value proposition is centered around enabling reliable power grid performance. The first 2 elements cover our broad portfolio, with cable accessories, HVAC, onshore cable systems, and turnkey projects. This basically allows our customers to work with one trusted partner across voltage levels, applications and project phases.

Tailored solutions increase reliability, while reducing the project risks. In this element, our customers benefit from our engineering, testing and application expertise. We help our customers to solve complex technical and operational challenges.

The fourth element is our comprehensive service offering with end-to-end installations, maintenance and repair capabilities. Combined with our service level agreements, Grid Solutions & Accessories is a capable partner throughout the entire asset life cycle. But last but not least, we're a global business line. We're a global business line with customer proximity. We combine the strength of our European competence center with regional hubs, teams that understand local markets and our customers' needs.

Together, these values create a seamless offering that helps our customers to manage complexity while enabling reliable power grid performance. And of course, the voice of our customers brings our values to life. Statements like NKT is setting the benchmark in grid reconstruction. NKT is the partner for future-ready grids, and NKT provides rapid response when it matters most.

Our customers highlight three consistent reasons why they continue to choose us, our technical expertise, our strong partnership with them and the responsive support. But let's listen to Klaus Wewering on what he has to say on setting a new benchmark in grid reconstruction.

[Presentation]

Thank you, Klaus. Your feedback is highly appreciated. Let me summarize the key takeaways of today's presentation. We have an integrated lifecycle offering, a lifecycle offering throughout the full cable system lifecycle.

The second is our broad portfolio with power cable accessories, turnkey projects, and service capabilities. We are the trusted partner for our customers, a partner that allows our customers to work with us across voltage levels, applications throughout the full cable system life cycle. And we are a global business line with customer proximity. We combine the strength of our European competence center with our regional hubs. Our local teams support our customers where they are. And we are the trusted partner for our customers throughout the entire cable system life cycle. Thank you.

So good morning, everyone. I'm Carlos Fernandez. I'm leading the business line, distribution. For those of you looking for the next coffee break, I have good news. I'm the last business -- business line presenting. So I will try to be quick. But give you also an overview of what has been happening in distribution during the last years and what we are building for the future.

Just to give a bit of context, we are not a project-based business line. We are a pure cable producing business line, and we take care of all the power cables that are below 220 kVs. In NKT, we consider above 220 kV extra high voltage, and that is Darren's place. So we take care for all the -- what is the distribution network of the power.

Short overview of what has been happening in the last 4 years. And I think that this is a journey of growth in our business line. It has also a quick growth. We have been increasing our revenue 1.5x in this period of 4 years, going from EUR 550 million to EUR 850 million. But it's not only growth. It's also a healthy growth, because our profitability has been growing even more than the turnover.

So we have increased our profitability 3x in the same period of time from EUR 29 million EBITDA to EUR 89 million last year. So this growth is not only size and volume growth, it's also an increase of profitability in the business. And there has been some reasons for that, of course. And it's obvious to all of you that the market was there. But I always say that the market was there for everybody, also for our competitors.

There were 2 additional drivers to the market to do that. Our focus on efficiency, I would say that is a key strategical choice for distribution. We are a pure cable producer. So we need to be efficient. We need to be cost effective. We need to be on time. We set our internal target that we want year-on-year be at least generating 3% of operational efficiency, which is a number that is close to an average inflation rate that is growing. So we try to compensate that through a real efficiency projects. So that has been helping also in this increase of profitability.

And the last driver has also a strategical choice from our side. So we are a pure power cable business line. So we don't have data cables. And 70% of our portfolio is medium voltage. Then we have 30% of our portfolio that is the rest of the network, 1 kV and building wire. And we have also some kind of niche products like the power to antenna and some kind of a telecom application for that.

But mainly, our activity is to give a clear choice to put capacity in place for the medium voltage expansion. In those years, in these years, we have not only growing and delivering the profitability, we have also been investing. And we have been investing also to build a platform for the future.

I think the milestone, and Claes mentioned that before on this year was the acquisition of SolidAl, which is now our Portuguese affiliate. And there, we applied what we called our model of buy and build. So we not only took over the company, but also we invested to double the capacity there. This is the capacity that also Claes mentioned before, will come in place at the end of this year and then will be there starting 2027.

We have also, in terms of organic growth, investing in our factories: Velke Mezirici in Czech Republic, Falun in Sweden. We have been putting in place during these years additional medium-voltage capacity to support the growth and to support the demand from the market.

Asnaes as well, which is coming now into motion, into action. So the project was complete just before summer in terms of machinery installation. Now we are growing in terms of qualifications, in terms of ramp-up of the factory. So those investments are also bringing additional capacity to the business line to follow up our customers' demand and our frames with our utilities and our partners. Those investments are the main thing that we have been doing, investment in capacity, but not only there are additional also investments that we have done for strategical reasons.

There are two things on that: verticalization of our supply chain. This is a strategical choice. We want to secure some key raw materials. And one of them are the compounds, the compounds of our cables, especially flame retardant and fire-resistant compounds. There is a market demand, a market trend, which is moving from the traditional PVC cables to a more safe cables in the concept of fire-resistant and flame retardant. We want to be owners of the technology of that. We want to be the owners of our supply chain, because this is a key product.

So we have been investing to have these capabilities that we have now in our plants in Poland and in U.K. With SolidAl acquisition, we took also a step in this verticalization on the supply chain. SolidAl brought us the internal production of aluminum, which was a knowledge that we didn't have before as NKT, and now we have. And this is, again, a strategical advantage for us, which is not only from a technological point of view, but also for the supply point of view, where we have seen these years a lot of turbulence and disruptions on the Middle East. And that is also a factor that it is giving us a more stable platform.

With all of these investments, we have been positioning the business line to capture the growth that you have been already listening before. So I'm not going to repeat the same. But it's just about -- we are not talking about a short-term thing. We have a confluence, like we have the coincidence of many factors that are going to be here for some years.

The upgrade of the grids. So we need to really transport much more amount of electricity. That means that the cross-sections that are today in place are obsolete. We need bigger cross-sections, and we need longer grids and going to the grid to different places. So this grid expansion is really a huge thing coming in the future in the coming years. It's already happening, but it's here to stay.

Electricity demand, okay, you have more figures than me about that. So it's growing and will continue to grow. And then, of course, we have the thing now, which is the data centers. So everybody talks about the data centers. But it's a reality that the data centers is about data, of course, obvious, but it's about power.

So if there is not enough power in place to supply these data centers, that is a showstopper for the development. So it's about electricity again. Some figures about that. So it's planned to be the twice investment from EUR 36 billion to EUR 70 billion in the coming years. So all-in-all, we have been positioning the business line in order to capture this growth in the market and this increased demand.

How we want to do that? Of course, we're not going to bring in anything new. It could be surprising that I came with a different strategy than the rest of the business lines. So it's Charging Forward. It's about execute, excel and evolve.

What does it mean for us? Execute is simply get the things done. We have been investing. We have been putting capacity in place for our factories, doubling capacity in some places in Denmark and in Portugal. So now to get -- we need to get it done. We need to finish these investments, and we need to start to put the machine in motion. Of course, keeping the leadership on efficiency and service levels. I said before, we have a year-on-year target of efficiency, but this is not really a choice. This is our survival mode. So we have to compete and we have to be better year-on-year. Continuous improvement and being leaders on service level is what is giving us the success of these last years.

On the excel, it's about the same concept. We need to continue focusing in this supply chain verticalization. I truly believe that this is one strategical choice for us, and we need to continue growing that. And of course, the customer centricity, and we will talk a little bit more later on that.

The way that we build trust for our customers, the way that we generate business with them is to become a clear reliable partner. And we can only do that if we are close to the request of our customers. So customer centricity and the tools that we are developing for that is something that we will have a look later. But we don't want to stop there. So we have been building platform to capture. We have the tools to develop that.

But what's next? Because we cannot stop there. Because the rest of the world is not stopping. So we want to strengthen our position in medium-voltage even more. So we consider ourselves one of the market leaders. We can call three of them, and we are one of these three in Europe. We want to strengthen this position. We want to increase our market share because we have put more capacity in place, but also we want to grow. And we need to be selective on how to grow and how we go out or beyond our core markets.

Our core markets is Europe, Central Europe, it's Scandinavia. Now it's also South Europe with SolidAl. But we have a successful story with SolidAl moving to South Europe, moving to another geography that was not our backyard, let's say. We want to do more on that. And we need to be selective. We need to be smart. We need to find the way for our buy-and-build model, but we want to continue on that.

We have a footprint today that is placed to support the growth. I connect now with Raphael was saying before. So we are covering, I would say, in a decent way what is the European market. We have a good distribution now also covering the South part, very strong in Central Europe. Germany is the biggest market. The second one is France. So we are closing off to the most important markets.

In Europe, we have a traditional strong presence in Scandinavia. We have also one small plant in U.K. that is allowing us to access also this important market. Orange dots here are showing you the places where we have been investing in these 4 years, and you can see that it's almost everywhere. So it has been a challenging environment by growing the business, but investing a lot. And the message of these dots is that we are ready for the next.

These plants that we have seen before. They have been built on a concept of centers of excellence, meaning that we would like to specialize or we like to specialize our factories in different segments of cables. So we have the medium voltage specialty mainly in Czech Republic, and then we have capabilities here and there. We have a strong medium high-voltage capacity in Sweden and in Portugal. And these centers of excellence are giving us also the advantage to be more competitive in the products because we have more efficiency, we have more scale in those places.

All these range of products that we have in this -- we produce in this footprint are covering the end-to-end of the distribution network. And here, maybe some of you have seen or have listened in the cable world that there is now a sentence that says that there is no energy transition without transmission, and Darren knows that and Darren likes that. But I always add that there is also no supply solution without distribution, because you need to go to the end, you need to go to the users. And this is what we provide.

We provide from the connections to the grid, that is the part that you see here. So no matter what generation source there is, you need to connect to the grid. So we are there. And then we go, let's call it, down on the chain, reducing the voltages until the final user. And in a simple concept, the lower the voltage, the smaller the cable. So we go from high voltage, bigger cables, medium voltage to connect to the substations until the last mile, 1 kV and until the final user, which is the building wire. And we are covering this end-to-end. So that is our offer to the market that we can be a one-stop shop for the distribution part.

We deal with utilities and big DSOs, and we have frame contracts with them, but we also work with the wholesalers, which they resell to contractors. And we have, of course, on the developers and OEMs that they are also developing some projects. We don't do the project, but we supply the cables for those of them that have the capability to do it themselves.

Let's spend 1 minute on the data centers because it's the thing that everybody is talking about, right? So there is a boom really on the data centers. And probably you are more expert than me, but you see the speed in the U.S. market is much higher than in Europe. But also in Europe, we see that this demand is growing and growing. We have experience delivering projects in Sweden, in Denmark and Germany. And we see this demand something really, really strong and consistent.

We can debate a little bit about the speed. So the speed of execution can be faster or not that faster depending on permits, depending on discussions on water consumption or availability of the grid. But what is out of discussion is that this demand is going to grow a lot in the coming years. There is a lot to install and there is a lot of power to deliver. As I said before, we are a pure power player here. So we do not deliver optical cables. So let's say that half of the story is not for us. But for the other half, we are delivering the full package there. So we can deliver from the grid connections until the superstations, until the power to the rack. And we are also very close to our customers, looking at how we can develop better solutions on that.

It's not only about products. Products are extremely important, of course, but I mentioned it before that one of the strategical choices that we make is about the customer centricity. And what we are doing about that beyond to be close to our customers and meet them and listen to them and improve together. It's about to provide an environment where making business with NKT, making business with distribution has to be easy. And here, we need to go through digital tools that we can develop and offer to our customers.

We have developed the MyNKT. MyNKT is the interface that we offer to our customers to do business. They can find all the necessary information there about the cables, about the applications, about the technology that we are doing, but they have also the opportunity to place orders through the interface. So if somebody is developing digital commerce, we are ready for that. But we are not only on the screen side of the thing. So we are also developing tools that are beyond the screen.

So the Pin my Delivery or the Track my Drum, there are digital solutions that we offer to our customers that allows them, for example, to know exactly where is the drum in any moment of the delivery from the moment that is leaving the factory. And also the Track my Drum. And this is especially useful for the people that are doing installations on the field. You can position your drum exactly where do you have it and how much or how many cable remains in. If you have enough cable in the drum in that place in the middle of the mountains to finish the connection or you need to deliver a new one.

So all these digital tools are available and are a way -- they are a way that we can be closer to our customers provide easiness for the business. And also, we are busy with AI. We are busy with AI developing the tools that can allow us also to be present when AI will be a solution for the commerce. It's not happening yet, but it will be a moment where our customers will interact commercially also through AI, through agents or through different solutions.

We are developing also our site of the business that we are going to be ready to interact in this different way. So a lot of work about digitalization and developing tools for our customers.

And those customers, of course, they have an opinion about us. And we are happy that this opinion is in direction of this reliable partnership. So we want to be the one that they call, have some colleagues that are calling that we want to be the last call. So I know that the customers talk to everybody, but we want to be the last call. We want to have the last one. And this is what we consider a reliable partner.

We are going to listen now Ignacio Sanchez-Galan, which is the CPO of Iberdrola. I think you know Iberdrola is one of the biggest utilities in the world. And we are very close to them. We are very good partners to them. But Ignacio is not going to talk about only distribution business, he's going to talk about the partnership that Iberdrola has with NKT, because we are also having very important business on the transmission side. So it's a global partner for us that gives here a testimonial.

[Presentation]

Thanks, Ignacio. So key takeaways from distribution. We are a key player on the distribution network in Europe. We are a key player on growing the grid and partnership with our utilities and our customers. We have put more production in place to be ready to follow up the market demand. And we keep the customer centricity as a core focus to develop together market solutions for our customers.

So that's it. I promise to be brief and to hit on the coffee break. So thank you very much. And I invite now Jacob for the Q&A.

Thank you, Carlos. Just another Q&A session before coffee. So you're not the last one, but I'll ask the business line heads presenting, including Cleas to reenter the stage. And again, we do the same procedure as last time. [Operator Instructions] I think we start up here in the front row, Kristian.

Kristian Tornoe from SEB. On data centers, I follow your point of Europe being a bit slower than the U.S. But what we have seen recently is a pipeline in especially Sweden and Finland materializing quite nicely. I guess, Google's announcement build EUR 13 billion data center in Finland is a good example. So considering your sort of Nordic presence, can you elaborate what will that mean for you guys if that Nordic data center boom actually materializes?

Yes. Well, I mean it's clear that when this investment materialize, I understand that we have clarity about the time line and clarity about the locations of that and the power that is needed to be installed if we are talking about hyperscalers or more smaller data centers. For us, of course, will represent a situation of our plants, a demand to be there through basically our wholesaler markets because this is how it usually it's working in the Nordics. And then for us, it's representing a clear very, very exciting future about that. But we need to see what is the pace of the execution. So Google announced that for Finland. Now we need to continue looking into it and to see when it's happening.

Casper?

Casper Blom from Danske Bank. A question to Darren and maybe Claes, if he can't resist. The slide that we've now seen for the last couple of years about investments into high voltage, the plus EUR 10 billion per year out towards 2030. You continue to stop the slide at 2030, but you also speak to how investments will continue towards 2050. If you -- if one was to guesstimate how those columns would look beyond 2030, would it be fair to have an assumption that we would see sort of the same trajectory at least as we have for the general investments into transmission?

Do you want to go first? Yes, please.

I can start with saying, if you look at beyond 2030, you heard me say already the visibility is lower. We are talking to the clients a lot. So we have a pretty good idea of what their plans are. But in our view as well, at the moment and leaving megaprojects to the side, the supply and demand balance will be about right beyond 2030. So it will take either a trigger of a major project, such as a megaproject or a step change regarding backlog volume, at least before we'd make the decision on another investment. I don't know if you want to add more.

No, I think that basically covers it. So I think if you were to verbally project, there is nothing in what we see beyond 2030 that doesn't support the market expectation that we have up until 2030. What there is with reference to the third slide that I had on the market on the opportunity side, for example, energy autonomy, and maybe that's to your point as well, that opportunity going from something like 40% to 50% or 60%. If that -- if there is a significant political will that decides to take a strong step further there, then that can represent also a significant opportunity over and beyond the current estimates. But just I would also maybe like to just invite Michael, if you have any reflections so we can hear also from the real expert on the market side.

I don't know what I can really add to what you say. I think you hit the nail right on the head here. Obviously, visibility gets a little bit blurred when we look further out. We lack the real names of the projects, which we have on a shorter-term level. But then we look into the overall macro, the global trends. And we see nothing really that suggests that we should not maintain an activity level close to what we have seen in recent years and what we see towards 2030.

So I think that gives us some comfort. I will say we work a little bit with a trilemma, where we have three things that we always try to put in context. So we have sustainability has been there for quite some years. We have affordability and we have resilience. And what has happened in that triangle is that things have moved a little bit. So I would say affordability is very much at the agenda right now. And you've heard the people in the business lines say how they work a lot with sustainable competitiveness improving the basics.

So NKT continues to take its fair share of the market, whatever that market is. So I think that is a very important takeaway. And resilience is now also very much because of the geopolitical situation, a very important aspect. And we see that in the market discussions that TSOs and DSOs are looking on the activity level, not only say how much should they invest, but also where should they invest and how should they invest and what should their partners of choice be in the future. So I would say on the market side, yes, we do expect it to remain a very healthy market. We don't see any real dark clouds out there. But of course, it's also impossible to really predict if you go 10, 20 years ahead. There we need to look at macro trends.

Okay. Claus?

Claus Almer from Nordea. Darren, regarding your slide about the new factory, that should be fully operational in 2029. So I guess there will be no growth going into 2030, meaning that you should be able to reach your 2030 target already in 2029. Would that be a fair assumption?

When we said firstly that the factory will not be fully operational in '29, I would say what we're saying is it's steady state because it's also a full flow between the factory and the installation of those cables where you will see the full effect will be in '29 from that perspective. So it's not that the factory will continue bit-by-bit all the way up to '29 coming online. It will be up and running basically within '27.

Yes. Sorry. So the meaning is that if it is fully ramped up in 2029, not a lot will happen from '29 to 2030. So I guess if that's -- this minimum EUR 900 million EBITDA for 2030, if nothing happens between those 2 years, you should be able to do at least EUR 900 million already in 2029?

But remember, even though he's a very important part of NKT, he's not EUR 900 million out of NKT.

But still...

Yes, still he say, it's a very big part. And of course, you are correct from the perspective, we have said we will commence ramp-up next year. There will be a couple of months between the 2 factory flows, and you will see that later and hear people describe it. It takes time between feeding the dragon with copper in one end and get the ready cable, which is trenched more than 5 meters down to the sea bottom on the other end. Doing that 2 times with a couple of months between creates a ramp-up phase, which will stretch until '29, until we get full revenue generation.

Then as we are all well aware, EBITDA, of course, that's from a revenue perspective. EBITDA and to a certain extent, revenue depends on project mix, of course. It goes down to the cost absorption, and it also goes down to the margin mix as well of the projects. So this is why we are -- for the full company, we are looking at 2030 for the medium-term ambitions. And understanding where you come from, but we will not provide guidance for the year in between '28...

It's not a guidance I was looking for. It's just more about the building blocks.

Yes, yes. But from an operational perspective, the machines will turn, and we will have full utilization there from that perspective at '29 that we manifest with.

Akash?

Akash from JPMorgan. I had two questions from my end. One is for Darren. I think so far, we have seen organic growth strategy and plans. Can you talk about prospects for any inorganic growth that could happen in transmission segment? And secondly, I think it's for, I think, all the people on stage maybe is on DC export opportunities in the U.S. like we have heard the demand there is very high and local capacity is not enough. We see Asian companies are capitalizing on this opportunity, but we haven't heard from NKT on potential export opportunity in the U.S. So maybe if you can talk about what could be possible and what can't be possible. You are only talking about Europe, but maybe some color on U.S. as well.

You mean data center?

Data center, yes.

If we start with the first question. I think we've already said beyond 2030 that we see the balance really, particularly from a manufacturing perspective between supply and demand. So when it comes to organic growth, there is no plans beyond that regarding manufacturing. I think you could hear in my slides, when it comes to strategic investments on the installation side, I think we will continue to look again. There's no plans in place, but we'll continue to look at -- we look at the utilization and what we're spending across all sectors of installation. Where we see that it makes sense to take some of that in-house from either a criticality point of view, ensuring supply chain stability or that we can make money out of it, then we will look at doing it, and we'll take that discussion. But no plans are in place at the moment for that.

That is, in-house will be organic or inorganic or both?

It could be either.

Yes. And I think on the wider perspective, of course, on the transmission side, considering that we are a significant player in the industry, inorganic opportunities do not lend themselves perhaps as easy. But same with that with everything, we will stay just opportunistic, but also not to try to provide any expectations that inorganic move on the transmission side is the most obvious one that would be wrong from our side. I don't know, data center... [Technical Difficulty]

There also with the reputation of NKT on the Champlain project. So we are aware about the growth there, and it's a point of attention for us, and we are developing also technologically our cables to the U.S. standards.

And just to add, we are a Northern European focused kind of business where the majority of our customers are, the majority of our assets are. We buy the majority of our material there. And historically, we have also invested the majority of our capital in these regions. But with that, we also clearly wanted today to paint that there is further opportunity with our capabilities and with the performance and platform we have built in Southern Europe, but also in North America. So this is also something that we would like to recognize here today.

[Technical Difficulty]

[Technical Difficulty] It's more difficult to regard -- it gets further out in time looking at the backlog that we have to start with. We have a backlog, as you heard me say, that already stretches into 2030. But I think the market dynamics are there. There's huge discussions with the clients, not only on government ambitions, but also as we talked about things like energy security. So I think that will continue to be really prevalent and which goes across not only transmissions, but it goes across grids too, regarding sensors, regarding being able to monitor the cables and the protection of cables. I don't know if that fully answers the question.

[Technical Difficulty] We have seen the growth in overall grid investments over the years from EUR 60 billion to roughly EUR 100 billion annual spend. And there, obviously, a fair share should also end up on the cable side, cable systems side with that increase of 70%. And we see also that more and more projects, grid infrastructure projects are also seeing on the AC side, partial cabling aspects so also complete cable solutions. And with that as product supplier, project and service provider, obviously, we will be able to capture also a fair market... [Technical Difficulty]

[Technical Difficulty] Because that could be a little bit of crystal ball exercise. But the only thing I can say is that all the drivers of growth are there. And if we look on the last 5 years, how many things has happened. So COVID, Ukrainian war, Middle East disruption. And with all of this every year, the growth has been there, due to the demand. So I think that for the coming years, we should trust on a very stable growing scenario.

And figures for that, you have also supply from the experts, so.

[Technical Difficulty]

[Technical Difficulty] So only on half of the data center business. So we are not touching the optical part. So it's a little bit difficult when we look at the big figures of investment to translate that on a proportion to that because we should take out all of the optical part of it. It's mainly a business driven in Europe by wholesalers and contractors, and this is around 40% of our business. So inside this 40%, I think that a good relevant percentage of that could be related to the data centers and is a growing thing in the coming years.

And just if I may add [Audio Gap] around about 50 gigawatts. So it is a massive number for Europe, and it's a massive growth also from where it is today. [Audio Gap] I can start and then both Michael and Darren can also complement. And I think you're giving the ingredients for the answer there, where affordability, of course, continues to push on us. We need to invest. We need to do technical innovation to be able to deliver in a more affordable and competitive way.

We have always, with the market growth that we have seen for the last 10 years, and you can see the figures from Darren, which stipulated that basically the market in the transmission segment has five-folded across the last 10 years. And we have not multiplied our capacity by 5. So the expectancy that capacity has to come up, more players needs to come in has been with us for that entire time. And let's also remember together that in the last 3 to 5 years, we have seen a tremendous market pickup, but we have also seen a positive market sentiment in an environment where also cable contenders from Asia has been part of this.

So this is what we have seen and what we are seeing. And the example that you referred to, I don't think takes us with surprise, but it's something that we have expected. But of course, with what we are building and with what we are pushing and what we are presenting with you here today, you should also know that we feel comfortable in our ability to compete also going forward.

Coming to the security angle, I think there is a realization that critical infrastructure in Europe, while 10 years ago, you could buy it from anybody anywhere without concerns if I take it to a big extreme. That same situation, people today are much, much more vigilant. And that we can see from several TSOs in Europe where it is -- it can be contentious to buy something from very far away, both from just potential impact on the grid as such, but also from a maintainability, reliability and repairability perspective.

But looking at [Audio Gap].

When affordability started to really become a topic on the market over sustainability, we also have to have a discussion in the management team of Claes on what we stand for as a company and the core values we stand for and sustainability is one of them. So it is something we're committed to the future. And regarding affordability, we also understand that the TSOs, the governments, they also have the taxpayers that they need to come back to and report to who need to pay these bills at the end of the day. So from our perspective, we only help ourselves not also on win the projects, but making sure these projects are realized by the fact of really focusing on our competitiveness for the future. Michael, you want to add?

[Audio Gap] how important it is that we are competitive in the overall picture, and that goes without saying we have to be able to justify being chosen for this and that project. But I will say what has happened in recent years and maybe reinforced with what happened in 2022 with this so-called special operation in Ukraine is obviously that Europe as a continent has realized that being dependent upon external sourcing of energy is not a real long-term sustainable situation and something needs to be done about it.

And what we see now is there is a real fast emerging realization that security policy is also industry policy. I think NKT as a company has been quite open in explaining how we see also the competition from Asia, unfair competition. And that all ties in together with the security situation in Europe. And here, we would like to offer in NKT that we actually invest as a European company heavily into increasing the European supply chain. You've seen in the presentation, EUR 2 billion. I think we take our fair share of the responsibility in investing into the European supply chain. I think it's about 4 -- plus EUR 4 billion being invested. So I think you also see a company that is very mature and taking the responsibility to be offering for the future a reliable partner.

And reliability is very, very important. I think you've seen it in the presentation. It's a word that keeps coming back. It's of course, reliability in terms of the functionality of the electrical power transmission systems, Distribution systems, but it's also reliability in terms of being the partner of choice. I think we also heard that. So this is a theater we really play into. It's something that we think is going to be increasingly important going forward. And it ties into the so-called non-price criteria in an evaluation of a project. So all our clients are looking obviously at the price at the end of the day, but there's a whole sequence of things that they look through before the price becomes the decisive factor.

So therefore, we need to check all the boxes to be the right partner. And then we also need to be competitive on the price. I hope that tells you a little bit about how complex that whole theater is. And we try to play on all the keys of the piano.

[Audio Gap] actually aligned rather than conflicting from a certain perspective. I think there was mentioned here somewhere that politicians, we will translate that into meaningful plans. And I think this is what we, as a company is also waiting to happen. And if that happens as it's spoken, for example, by the Commission President before summer, then that can constitute a significant opportunity on top of the market that we were discussing here just a moment ago.

[Break]

Okay. Welcome back from a hopefully well-deserved coffee break. We are ready to continue with the agenda. So Ann, as we are -- you have seen several times, let's play a short video.

[Presentation]

And with this, I'd like to introduce the last presenter of this morning's program, our CFO, Michael Yong. Michael, please.

Thank you, Jacob, and good morning, everybody, from my side. I'm in a happy place this morning because I get to say hello to you, welcome you on our home turf. I've met some of you, quite a majority of you in your home turf at your bank in London, in Zurich and in Copenhagen, but a warm welcome from my side. For those who have not yet met me, my name is Michael Yong. I'm the Chief Financial Officer of the company since the 1st of April. I joined in 2021, and I was responsible for strategy and M&A. I've been in the industry since 2008, whether strictly with a cable maker or around the electrical substation. Today, I'll cover -- try to wrap up the good story that you heard from my colleagues on our on our journey until now on our growth journey and the growth journey that lies ahead to deliver our ambitions in 2028 and in 2030.

And as you heard Claes say, we are confirming those today. I will also give a little bit of color of what are the elements from the business lines that are stacking up to the quality of revenue and EBITDA. We'll cover how the backlog fits into that, what type of returns we are targeting with our ambition, the generation of cash, which will be important because we are becoming a different type of company and also give some qualitative comments about how we look at investments moving forward.

And last but not least, as Darren just said, core to our values, a brief update on our sustainability efforts this year. But let's start with the revenue line. And as you've already seen in previous slides, we've had a very strong growth. It predates 2022. So even comparing to 2020 when -- if you would take the full strategic period of the ReNews era there, we stand today 2.5x bigger on revenue at standard metal prices than we did at that time. But I will be using the '22 reference point, the last time we had a Capital Markets Day as the colleague slides have also included to show the relevance of the journey and the ambition. And if we look at 2030, we will be growing in this period from '22 at 13%.

This year, and we just updated by narrowing our guidance in August, we're guiding at EUR 2.65 billion to EUR 2.75 billion of turnover this year. You will notice that it is a relatively flat year in this multiple year picture. And we take a look at it as a consolidation of the investments that taken in the past.

So investments, opportunities, acquisitions that are not part of the EUR 2 billion investment program that the colleagues have already alluded to, you now see that we have reached an order of magnitude that have consolidated these investments, this capacity, this market presence, both on revenue, and I'll touch upon it in a moment in EBITDA, that now, as Claes has said, has strengthened us, has made us into a different type of company that can start looking at opportunities in a different way with more confidence, but possibly also more optionality. Looking at our ambition, taking the reference of 2024, we have the ambition of growing in the latter part of this period, still at a respectable 7% year-over-year on average.

Now let's take a look at EBITDA. And if our revenue story, our revenue journey was already quite strong, I would argue that our EBITDA is even a little bit stronger, a little bit more remarkable. What is interesting, and Carlos also mentioned it from a Distribution perspective, not only have we grown presence in volumes, but we've grown the quality of our EBITDA. We are delivering more value per unit of sales than in the past. We are now at a level that is almost 3x to 4x where we began at the beginning of the decade, almost 3x where we are from 2022 and still a little under halfway of our ambition of EUR 900 million by 2030.

What we're guiding on for this year, also updated in August, narrowed and also lifted is EUR 400 million to EUR 430 million of EBITDA. Now let's take a look at the -- at what is stacking up, both on the revenue and on the EBITDA side. What is the main driver. And it's been alluded to already by many colleagues. Claes, first of all, in the macro, a big part of the EUR 2 billion program. But also here, we have stacked up all of the investments across all of the business lines. And it's an impressive point of view.

And I just want to echo the words that Claes gave that there -- this is not an insignificant effort. You'll be hard-pressed to see a company in our sector that is doing so many investments at so many different places across so many parts of the portfolio. We are investing practically at every factory, not all of them, but practically. We are investing at the extra high-voltage level, the high-voltage level and the medium voltage level. We stop there because that is the focus of our strategic intent. We're adding assets. We're adding installation tools. We're adding labs and know-how. And we're even helping a partner do a greenfield on the other side of the world by licensing our know-how.

And more importantly, in this period, we're also adding 25% of the population, which is the basis of the know-how that's so important for the type of complex projects that we deliver. Now what you see besides the fact that we're doing a lot at the same time, we are going to see that the majority of these investments will come online in 2027. And as we have been discussing in different forms, 2027 really is going to be an inflection point for many reasons. And I'll come back on that and touch upon it in just a moment.

We heard about the Asnaes expansion and also the ones that have happened in Sweden and Czech already completed, already online and particularly the Danish one now ramping up. You heard Denis talk about in Alingsås, the high-voltage part coming on. Those are the ones that have been complete. And finally, just repeating what the colleagues have anticipated, the expansion that happened -- that is happening now in Esposende after the acquisition of SolidAl will come online by the end of the year and will ramp up in the first half of next year.

So these investments, as already mentioned by Claes, are part of a EUR 2 billion CapEx program. And if you look at the quality of the EUR 2 billion, the vast majority are the stackup of those growth investments that we just took a look at. Now there does remain a certain amount that is, let's say, the part that we need to continue to invest on the efficiency side, on the technology innovation side and includes buckets such as safety, R&D, maintenance, sustainability and IT. And when we pair this up the investment program with also our midterm ambition, then we are projecting that once the investment program is completed, we can assume that there's going to be more or less 4% of this type of base CapEx that you can count on as part of the financial simulations to remain in the company.

Now having looked at the investments, now let's revisit the revenue and see to what degree the investments are stacking up. When we look at the bridge between where we are guiding this year and our 2030 ambition, we see that all 3 business lines are contributing to the revenue line. This will be also the same story for EBITDA. And you see volume, volume, volume all across the board here. And the big reason is the investment program we had. This is growth adding to the economics of the business, to the revenue of the business.

But beyond that, we also have some other elements. There is an element of project mix on the transmission side. It's a bit more internalization of the installation scope, and it's the ability to deliver those projects in a good way. And when we see Grid Solutions and Accessories, as we heard from both Rafael and Denis, it is about being closer to the customer. It is also about having more reach with a broader sense of the full capabilities that we have of our portfolio along the cable service value chain that is allowing us to grow extra sales in customers that we already have and allows us to get better penetration also with the same customers and new markets.

And then if we're looking at Distribution, as we heard Carlos say, there's more capacity coming. But what he also mentioned in there, as we're bringing more capacity, we want to gain market share with existing customers, but we are qualifying products for close and adjacent markets, more customers in the U.K. and in Ireland and in more into the Distribution networks in countries like Spain, France that have been a little bit outside of the action radius of the past due to our capacity and the customer legacy.

So -- and very important to the revenue line here, certainly on the Transmission side, Grid Solutions also supported is the backlog picture. And the Transmission backlog that we have is, as Claes and Darren have attributed to stands at EUR 13 billion as of the 30th of June. You may recall that in the first quarter, we had EUR 4.2 billion of new orders, and that was a record quarter for NKT, and we stood also at a record balance of EUR 13.5 billion. So the EUR 13 billion is very close to that. And you see very well the development over years.

When we look at this EUR 13 billion backlog, we say -- when we look at, for example, the 2028 ambitions, we are very, very, very confident of being able to deliver on that, right? When we look at the 2030 ambitions, we're very confident, but we're not quite sold out. So there's still a little bit to top off there, but we have plenty of time to do so. And what this backlog also gives us is visibility that is starting to allow us to plan and to think about how to enter the next decade because the backlog also has turnkey projects well into 2034, as Darren has mentioned.

And not just on the revenue side, of course, this backlog gives us confidence on the execution side, like Claes also mentioned, and therefore, on the earnings side of the equation. If you look then at the quality of the EBITDA and the bridge again between '26 and 2030, then there are several other elements beyond just the volume and market approach that we saw on the revenue line. Here, we see some impacts that are transversal across all 3 business lines, all 3 business lines contributing to it.

But you see in this graph, obviously, that the Transmission business line has an order of magnitude, which is much higher than the others. And that is something that, obviously, we know we did with also with intention and is part of what is supporting the EUR 900 million. But if you look across all 3, the addition of capacity has a certain volume effect. We are also, as all 3 business lines reported, working under the Excel umbrella with a lot of excellence programs that help with the efficiency and managing our costs in a better way, making our costs more visible and planning to them. And the combination of these 2 things creates a lot of economies of scale. What is also inherent in how we have invested and chosen to invest it, and Carlos alluded to it, is that we are investing in our own factories and we are also getting within the economies of scale, economies at site.

So we have -- through also the way that we are focusing the portfolio in the factories, we are looking for a more limited part of the portfolio to have a higher degree of throughput through the same real estate that maybe we have had in the past, okay? All 3 of those effects contributing across the business lines. Then Darren also mentioned installation part. So Eleonora, not just the scale of her, but the capabilities of her transiting faster, loading faster, being able to bundle at times gives you not just a competitive advantage at the time of tender, but at the time of execution, the ability to be able to plan your operating days, your stages, your voyages to the point that you can find efficiency from the original sold plan, right?

So maybe we can cut down 10%, 20% of ship days. We can maybe compensate for weather events in a much better way, ultimately going to this concept that we live every day of how we manage risk. And the colleagues have mentioned that. It is in our philosophy. It's also in our works process. But it's also from a financial point of view, what we are managing in terms of looking at visibility towards what is the result that comes out of the projects. So it's our duty as a function to identify our worry is to put the data so that the worry can be conceptualized in a financial way. And then what are we going to do about it? What is going to compensate one effect with another? What are the opportunities that are going to outweigh the risk that unfortunately have passed into actual cost.

And this is the discussion not just that our function has, but that having more capabilities allows you to have a more broader type of optionality going on. Very important also, and Darren mentioned it, within our backlog, we also have a richer mix on the price side than maybe we've had in the past, having to do with the phenomenon that happened '23, '24 of an acceleration of the energy transition where we built our backlog and being ready with the capacity also allowed us to have a way of having an improved economic position at the time of the tendering.

So those are the effects there. Then if you also look for Grid Solutions and Accessories and Distribution on both for different reasons, the market expansion and the proximity to the customers we're seeing does translate into a bit more pricing power, a bit more selection of the planning of what products go to the customer to optimize over a cycle, the profitability of your assets.

Now let me turn to the returns that we've achieved and we are targeting. And this is a metric that as a CFO, I'm particularly pleased that we've had a laser focus on in recent years, and that's the return on capital employed. Let me take you to 2022. And at that time, we were delivering a return on capital of 7%, below our cost of capital. No one can be happy with that. But with the visibility that we had at that time, and at that time, we were at a Capital Markets Day, we were launching the ReNew BOOST strategy. And we said, okay, in the journey that we have ahead, we think we can target 12% return on capital for 2025.

Quite frankly, I think we've said it before, honestly, we didn't expect the energy transition acceleration on the transmission side for which we had plans for to have to be triggered so quickly. So I think that's a little bit the nature of having that ambition that today maybe doesn't look so lofty. But at that moment in time was -- that was the next step for us. And what I'm happy to say, report, and you see it here in the graph is the performance that we've had since. Not only did we already pass that target in the first year, but we also actually delivered 2x the target at 24%. Of course, you see also that we peaked here at 35%.

And I'll show in the next slide that has to do with the phenomenon of a heavy prepayment scheme where a few customers with long-term frame agreements leaned in to help what already Claes and Michael Hjorth mentioned, a way to help us lean in into the European acceleration of the supply chain for the energy transition. So that is a working capital phenomenon that we don't count on to be a recurring event. But what you'll see is that we, of course, are confirming above 20% ambition for 2028, above 22% ambition for 2030.

And for us, this is going back, I think, to one of the questions already posed, this is an indication of the type of business cases and the type of future return on capital that we want to target for the company. We have the effect here of the shape of the curve, and this is really now the EUR 2 billion investment program and the scale of that compared to the scale of the company where you see it visualize.

Again, with the working capital effect at the beginning and then a trough where a lot of investments in 2027 are going to come online. So therefore, on the fixed asset side, a lot of assets coming online and then with the required ramp-up that has to happen from the productivity and the returns then coming to a level of above 20%, 22%. Now let's take a look at the cash flow. And this is, I have to say, where going back to the comments of Claes, where we're becoming a stronger company from a cash flow point of view, we also have to say we're going to start soon a new chapter of cash generation for the company.

And that is excluding any other type of investments besides what we've already announced in part of the Charging Forward strategy. And let me walk you through why we say that. The green line represents EBITDA and the reasons, the target itself and the reasons behind it, I've already covered. The blue line is our CapEx with the bulge being the EUR 2 billion program. What you have here on the right side of your screen is the working capital profile, where we have been releasing cash from working capital for quite a long time, actually, for almost 6 years, which is in itself remarkable, and this is not something you should become accustomed to because we do need a healthy level of working capital to do so.

Now a big part of this has been part of us just getting fitter, particularly on the Distribution side, we've tightened our belts on the working capital side. But the order of magnitude and the effect here is really driven by the transmission business. And you've probably heard us say a lot on the working capital side, transmission, it really plays on the mix of the backlog, the mix of the projects in execution and the milestones that are -- they're in and how they may move. And every milestone is not the same scale.

So this is something that can be a bit choppy from a quarter-to-quarter perspective and over the years. But if you bring the working capital here into the effect and you say that we are at a generally healthy level moving forward, you will see that the big delta that is growing between our EBITDA is much higher than our CapEx. And this is where we see that we will be generating significantly more cash flow than we have been doing in the past in the periods ahead.

Now let's look at the discipline we will have in deploying capital and how we're going to address the additional free cash flow that we're going to see in the future. And as we released this morning, we are also today declaring 4 capital allocation priorities. And these for us are -- we look at these, that they have to be absolutely aligned with the strategic direction that we have to take in the company. So before I get into the details of this, we are, as Claes said, a pure cable -- power cable company with intention, with a focus to serve electrification of society with the 3 main fundamental economic drivers.

So if there is a trigger event on Darren's side, if there's another acceleration of the TSOs in Europe that are asking for more volumes, our first instinct will be to invest, yes. But as we look at the opportunity cost of investments and potentially also the M&A pipeline ahead of us, we will always start with the discipline of our capital structure. We are confirming and emphasizing target leverage to zero times debt over EBITDA. And we also will strive to maintain an investment grade perception with our banking partners. This is not a rating, but it is under the same exact considerations that go into a rating that we will stay within an investment grade level.

And we will continue to enjoy the strong balance sheet that we have today, a robust balance sheet to cater for the project business, potentially working capital swings that may come from them. Because even though we wake up worried and we manage risk and we -- let's say, we've learned to manage risk at a high level or a professional level, it remains a risky business. And so therefore, we don't want -- we want to have a strong economic foundation on which to stand for to have all operational options in front of us.

We will then look at value-enhancing investments, both organic and M&A. And here, I underline the words used by Claes, we will remain very disciplined. We will sell it before we build it. And we will be selective in the type of investments we will make. They have to have a clear earnings view, and we will favor those that have a strong cash or deleveraging profile. And if these investments stack up just a bit more than the 0 leverage we may have for the year or over a 2-year period, we will also look to take an exception from a capital structure as long as we have a very fast deleveraging profile and also with a level of relatively low risk perception from our side that will bring us back into the guardrails of our capital structure in a quick and swift way.

For those years, well, we feel that we are going to generate enough of free cash flow that now we have to look at reactivating our dividend policy. We will start so at a minimum of 20% and we will look for when we are generating meaningful free cash flow that under today's point of view can be as earliest as 2028. And in those years where maybe the stacking up of investments is maybe a bit lower than we would expect, and we have quite a bit of cash sitting on our accounts, we will look to give that cash, which is [indiscernible] back to shareholders but maintaining the [Audio Gap] or extraordinary dividends.

All this with yet another disclaimer that if we have a very, very large investment ahead of us, whether organic and the EUR 2 billion program, if you looked at the scale of NKT back rewind the tape to 2022 would fit the bill for that. And today, maybe a bigger number or if it's M&A, we will apply to that, but we will not neglect the opportunity only because of our principles here, okay? Now I mentioned M&A. So let me touch upon that just a little bit more. Opportunistic and discipline, 2 key words that Claes has mentioned, and that is the starting point. I will add, it has to also have a clear value creation path. It's not that Claes neglected to say, "they left me to say it with a little bit more emphasis." We will stay selective.

We will look at targets that allow us to deploy what we do best. in the heart of our portfolio, potentially a very close adjacency. Darren mentioned potentially installation. It could be in that area, somewhere where we can leverage our industrial prowess, our ability to add capacity to optimize capacity and chase efficiencies, like Carlos mentioned. And potentially, we're also looking at vertical integration. Again, there to better manage our end product and offering to our customers, but also to derisk and potentially also have better pricing and inflationary control on certain aspects of our supply chain cost.

Carlos mentioned the buy-and-build concept, of which SolidAl as an example, and I'll go into that in a second. We like that concept. It's worked for us. It can be another model that we pursue in growth. And one absolute must is harvesting synergies. With any M&A that we do, we will give the target, but we must deliver on that. That goes not just obviously to bring the economics here and preserve the long-term return on capital targets, but it will go to our credibility. And potentially, we may do more in M&A. And if we do that, then we have to deliver every time.

And lastly, we will look at target that will be a value to -- if that target can give us a platform for growth, can give us a pathway to meaningful market position. And this is something that also comes into the equation. Now a good example of applying these principles is the SolidAl acquisition. Let me touch upon that in just a few moments here. I think you've picked up by now, we're quite pleased with this acquisition.

SolidAl acquired in the summer of 2024 and fully integrated by the end of 2025. And it's now our Esposende site. Very strong strategic fit covered also by Carlos. It added medium voltage and high-voltage capacity at a moment that the grid demand was really growing, and it allowed us to activate the optionality of building it. That came in that we believed in the market. We know how to do it, but also it came because the good colleagues at SolidAl, we found were very good cable makers. So we've teamed up with actually very few people from NKT and many people from SolidAl to actually do this acquisition.

In a way, we came in a little bit as owners that said, we recognize your talent. We recognize the opportunity in the market. Let's trigger this expansion in a very quick way. Then on the performance, which I'm very pleased about. We gave ourselves a recurring EBITDA synergy target of EUR 7 million. By the end of this year, we will have accomplished EUR 9 million, and that EUR 9 million is what we expect now as a conclusion of the acquisition. That is a 29% improvement over our target.

Most importantly, if you look at the economics from the beginning to the end, including the buy side, and by the way, that came into the decision, the -- how we would approach this acquisition and the potential value potential of the acquisition, if you look at the buy-and-build, we acquired at 9.4x, as you may recall, an enterprise value of EUR 192 million. And we are now upon the ramp-up of the volume there per the business case is going to deliver 4.4x that enterprise value over the new EBITDA and the enterprise value adjusted for the cost of the investment. So a model that we practiced, we like, we may use in the future.

Now let me just take a few words on sustainability. And I think you all know that our purpose, and you see it in our logo, our purpose is that we connect a greener world. And that's very important for us. It's part of our values. And it's very important actually for being competitive in the work and labor market and the retention and having -- making sure that the good experience that we have in the company feel a sense of belonging because our people actually are our greatest assets, even though we don't quantify them on the balance sheet.

And we're also proud that we have a good performance today. We've been recognized by many of the certification bodies. But in 2026, we got also an extra special award from the Corporate Knights, an organization that is judging companies across the globe on their sustainability efforts. And not only do we make the top 100 list, but we made it on the position #13. And yes, we checked, we read through the list and see if we could recognize other names and maybe far down the list, there might have been another cable maker. So we're also very proud that in our industry, we are leading the way.

But on top of the rankings and recognitions, we have a meaningful progress in 2026, both on the handprint side and on the footprint side. And on the handprint side, maybe explain a little bit what we mean from that. It is the positive impact that is created by our cable systems and enabling green energy. And that is, for example, the Champlain Hudson Power Express that we mentioned several times connecting hydro power to a demand, which is New York City, offering 20% of those citizens hydropower.

The Dogger Bank wind farms, wind farms by its nature, renewable, but our export cables are bringing that to land and connecting it to the grid, enabling it to connect to 2.4 million U.K. households. The 7.7 million households, and I think you interpreted a population of people, and I Googled it last night, it's the population -- it's like if we had powered the Netherlands, Morocco or Malaysia, 1 of those 3 countries. That's how much our cable systems are leaving a handprint on the world.

On -- what is in our scope of responsibility of the value and supply chain? It is our footprint. And here, just stressing what Denis already introduced, we have a first zero carbon factory in Nordenham and the colleagues tease me because I say, "Well, why is this such a big deal? Because I had read it as net zero," that maybe we had covered our carbon footprint with other compensating measurements. But actually, this factory is producing 0 emissions itself, something that does hit the pride.

And as already mentioned by Claes, under the good labor of our procurement team under Will Hendrikx, we have secured meaningful long-term agreements where there is a strong decarbonization element to it. So all of our factories are now being fed with renewable energy. And a big part of our carbon -- of our copper and aluminum supply chain with our main partners also come from lower carbon sources.

So as I wrap up, I would like to offer some takeaways here. First and foremost, we are confirming our ambitions for 2030. This is 7% growth year-over-year starting in 2024 until 2030. We have the ambition of delivering more than EUR 900 million of EBITDA for NKT and achieve a return on capital of 22%. Our backlog gives us confidence, visibility in achieving this ambition. It gives us the ability to plan, the ability to execute and to plan also financially around the earnings.

And as it comes online, as I already mentioned, it will start a new chapter of cash generation for the company, one that we will now look at with more emphasis along the principles, the capital allocation principles that we published this morning, making sure that we fund growth in a disciplined way. We maintain a strong balance sheet and we reward shareholders with excess cash.

So finally, before I leave you, I want to touch again on the equity story that Claes introduced. And again, we are fully focused power cable systems company, serving the needs of society on electrification with a strong customer affinity, as we heard from the customer testimonials and with good long-term fundamentals with the need for more electrification adoption by society, the renewable of the grid and the rollout of renewable energy. We have a focused portfolio that is differentiated with technology and our project capability, including our way to install.

And the project capability is not just on the transmission side, as we heard also from Rafael and from Denis, the lean project approach at the substation at the grid on the high voltage and medium voltage portfolio makes a difference. We have a solid order backlog, giving us a lot of confidence. We sit on a robust financial position, as I've already mentioned. And more importantly, we're powered by more than 6,500 experienced, professional and risk-adverse colleagues. And also importantly, we build it and we deliver ongoing homework. So this is a company that can do both at the same time. And maybe we're particularly good at that, we deliver. And last but not least, with the discipline of a clear capital allocation policy.

All these points following under our Charging Forward strategy, so an aligned strategy and plan internally to deliver our 2030 ambitions. Clear, compelling and disciplined value creation. Thank you very much.

Thank you, Michael. We are ready for the final Q&A session. So I ask Claes also to reenter the stage. [Operator Instructions] I think we start with Christian up here.

Kristian Tornøe, SEB. Two questions. So the 22% target return on capital employed, does that also apply for your M&A targets? Or should we interpret it as a hurdle rate? And then the second question on potential vertical integration as part of your M&A strategy. Can you elaborate a bit on what areas makes the most sense?

I think the 22%, that is something that we look over the cycle, over a strategic period with the mix of investments. As you well know, by the nature of acquisitions, adding goodwill and the timing of cash flow that comes back from an acquisition, timing plays a big role on whether an acquisition can give to a certain return on capital target at a certain moment in time. So I would say that on a stand-alone basis, just looking at acquisitions and the typical synergy package, that's going to be tough to do. So we're not going to be limited by that. But we're not only going to do that. We will look for a package of investments, including M&A that should, on the cycle, give us that long-term return on capital.

And then on the -- on your second question on the vertical integration, I think we will look at -- well, I think we will look at where we can get the most meaningful economics, but also risk management, inflationary control power from the package. And I think metals is becoming much more interesting than in the past. So we're taking a look in that direction, but it can be something maybe smaller, maybe more critical to maybe a very specific technology that we already acquired, maybe part of the subcontracting world that installation is managing or even certain aspects in the Grid Solutions space. If you want to add anything?

Claus Almer from Nordea. Mike, I think you said dividends at early as 2028. Was that correct? I heard?

I did, yes.

You already met cash. So are you planning to do something big in '27?

Nice challenging question for [indiscernible]. Look, I think it's more directed at the discipline of our planning than anything else. Yes, we sit on cash today. But a lot of that cash that we sit on today is still owed to our projects. It's still, let's say, a working capital effect. And we're really guided by can we support CapEx profile moving forward with today's EBITDA and cash generation. And we won't get to that point until safely said 2028, right? Now 2028 dividend can be on the back of a 2027 results, right? So I think we're more months away than years away from that potential.

Okay. And then your 2028 and 2030 target, which is a minimum target, which means significant upside potential, obviously. What will be a triggering event for you being more precise on those targets than just an open-ended structure?

Also a good question. I think '28 is something that, obviously, when we're talking about guidance in a few months for 2027, I think we'll have to give a little bit more color to 2028 for you. But still today, with the confidence that you can expect that as the target at the minimum today. I think that's a good question. I think it really depends on the evolution of future backlog, the evolution of the delivery of the business lines. So while we're confident that we execute, it's still the first pillar of our strategy. It's still not '27.

So we need to see how we come out and how we ramp up the production along those lines. And I think getting confidence on that basis, we will then shore up our planning towards 2030 and then see what is meaningfully to give more color and upgrade than what we're seeing right now.

Akash from JPMorgan. A couple of questions from me. First one is just a follow-up of dividend question. I think you also talked about share buyback in today's press release. So given you are not going to pay dividend before 2028, could share buyback come before dividend? Or will it be after dividend?

Not likely. And the reason I refer to the capital allocation principles and priorities that we have. So we will first look to reinitiate our dividend and have it stable before we're going to look at extraordinary dividends or buybacks.

And secondly, maybe an update on this EUR 2 billion CapEx plan for 2025 to '28. If I recall correctly, there were some inflation issues back then, and I think you had some unexpected development on foundation and there was some extra need for CapEx in constructing this new tower. And now we see inflation coming back after this crisis in the Middle East and like some prices of diesel is going through the roof. So just focusing on this EUR 2 billion, is there any upside risk that for the same amount of machinery and like physical work, you might need to end up paying more than EUR 2 billion?

No, more than. We're at a stage right now of the developments of the projects themselves. of the procurement of what is required to address that spending. But I think we're very confident that, that EUR 2 billion is a ceiling for us on the capacities and ideas that are known to you today. I was smiling because our Head of Investment that you'll hear for in a second is in the room, and he might have a little bit of a different target, but...

I just want to confirm what you said and John and you can speak to him also as we go around. But of course, the EUR 2 billion CapEx program is more than only what we have here. But just looking at the majority of this, both are the projects looking at the Esposende expansion, but also on the Karlskrona expansion are in the states that the open ends of this from a planning perspective and the choices to be made do not speak for any extensions or different choices. This was part of the, let's say, up adjustment of the original investment as well.

And secondly, and I think this is what you said as well, from a contracting perspective, we are in a firm enough position and then the pace and the progress point of view right now so that the variation risk towards coming above the EUR 2 billion remains very small.

Casper Blom From Danske Bank. A question regarding working capital, Michael, as you showed, you had a lot of tailwind in the last couple of years from prepayments, especially. Now we look to you guys ramping up activity on all of these new investments. Should we expect that, that requires that you put some capital at work and that we should see negative working capital developments in the next couple of years? And related to this, the very large backlog that you have today, it's my impression that it's so big that it can almost be a little bit of a challenge from a commercial point of view to pick up sort of like shorter-term projects.

If the backlog was to come down to -- I'm looking at Claes now to maybe his sort of sweet spot in terms of having commercial agility, should we then sort of expect that there could also be a negative impact on the working capital here as prepayments are a smaller part of the balance sheet going forward?

I think the effects that you're suggesting with potential these developments commercially are happening, that is the reality that we have to manage. So that is -- that could happen. I don't exclude that. I think that's also part of why in our approach to the capital structure, we do have to cater for the flexibility that to win commercially, we may have to take different types of cash profile structures in the projects. So I think that's how I would comment on that. I think -- on the ramp-up of activity, which was the beginning of your question, I think if you would look at only our, for example, Carlos' investments on the Distribution, yes, as you ramp up activity and volume and you have to hold to be responsive to the customer a certain amount of inventory days, then there is a buildup of working capital.

Now if you're looking at it from the big picture of NKT, the order of magnitude now of the effects of the transmission business line and the working capital movements with those projects are such an order of magnitude that with all due respect, Carlos, the movements of working capital coming from the Distribution business, not only are they more manageable, but they're in sort of the zone of the flexibility that we anyways have to keep for the transmission business. So that doesn't move the needle. So it's really a story about how we're going to manage the working capital on the transmission side.

And while there could be a logic that customers really leaned in at the moment that they needed half a decade or more capacity to be locked in based on their own plans, and we saw this effect that there was leaning in to help us invest on the prepayments, it also doesn't suggest that it will go completely back to 0 or how it was in the previous decade. I think it really depends on -- and I think here's where the power of that we will be the first and last call because of our ability to deliver complex projects that maybe there will be still the possibility of a richer prepayment scheme there than one might expect.

And in responding to you, I'm also kind of giving a message to Darren to make sure they stay out. I don't know if you want to add anything?

No, no, I agree. And also under the control of Michael, of course, it is true that we are at times, victims to our own success in terms of order intake. With the backlog that we enjoy for the moment, also capacity is therefore also limited. And obviously, if that backlog comes down just in nominal terms before we get the next order intake, I think you could see an effect on net working capital along the lines that you said there, which is entailed into the comments by Michael.

But this is also a natural fluctuation. It goes up when you have order intake. We enjoy that in the first quarter. I think Michael was misquoted in the second quarter with the order drought for NKT in the second quarter. So of course, these are always the normal swings up and down.

And maybe the last question here is from the webcast. It's from [ Mark Moen ] from Nordea. And the question is, what is your view on the hybrid bond? Will it remain as part of the capital structure in the future?

That's a good question. The hybrid bond, if we're going to have over a long cycle, let's say, not as high investment program as we had very recently, then you would argue the hybrid bond doesn't make much sense. On the other hand, it is -- it gives us some flexibility in our planning overall. And it could also be a tool for potential a briefer strengthening of our capital structure. So we're not taking -- I'm not going to give you a very clear answer on it because we don't want to take a firm position on it because we preserve to keep the flexibility of some of the benefits that tool provides for us. But strictly speaking, it's not that we need it for the health of the company.

Thank you, Claes. Thank you, Michael. I think you're welcome to leave the stage now. I really take the honor. I think my job turns really now into the master of ceremony. But also, this also then concludes the Q&A. It actually also concludes this morning's presentation, and this also concludes the live webcast. So I'd like to thank every one of you who have listened in via the live webcast.

Welcome to NKT Interim Report for the First Half of 2026 Conference Call. [Operator Instructions] Today's call is being recorded.

I'll now hand it over to the speakers, CEO, Claes Westerlind; and CFO, Michael Yong. Please begin.

Good morning, everyone, and welcome to the presentation of NKT's Interim Report for the first half of 2026. My name is Claes Westerlind, the CEO; and here in the room together with me, I also have our CFO, Michael Yong. As usual, I will take you through the key developments, business highlights and performance for the second quarter and first half of the year. Then I will hand over to Michael, who will walk you through the financials, and we will conclude the call by looking at the updated outlook for the year and open up for Q&A.

Please turn to Slide #3. Before we begin, please take a moment to study this disclaimer concerning that the presentation and our related comments contain forward-looking statements, and actual development and results may differ from expectations due to uncertainties and risks, including factors which are beyond our control.

Now let's move on to the key messages for the quarter on Slide 4. Let me start with the key messages for the second quarter of 2026. Overall, Q2 was another quarter with solid financial and operational execution. Activity remained high across the business, and we continued the diligent execution of our strategic priorities under our new strategy, Charging Forward. This includes both execution of the product portfolio and the ongoing investment projects to expand capacity and capabilities.

As expected, organic growth was negative, driven by the Transmission business line. This was due to the lower revenue on the Champlain Hudson Power Express project, where we, in the second quarter last year, had a high activity level on the product, including subcontracted work. Despite this revenue development, operational EBITDA level was maintained at EUR 104 million, and the operational EBITDA margin improved to 15.7%.

A major milestone in the quarter was that the Champlain Hudson Power Express product reached commercial operation. This is an important achievement for NKT and for the energy transition in New York City. The cable system enables the transmission of hydropower from Canada to New York City, and can supply electricity equivalent to approximately 1 million households. We also maintained a high transmission order backlog, which stood at EUR 13 billion at the end of Q2, only slightly down from the record high level at the end of Q1, driven by product execution during the quarter. In parallel, the high-voltage expansions in Transmission remained on track to become operational in 2027, while the additional medium voltage capacity in Denmark was completed towards the end of the quarter.

Based on the performance so far in 2026 and our expectations for the remainder of the year, we have updated the financial outlook. Revenue at standard metal prices is now expected to be in the range of EUR 2.65 billion to EUR 2.75 billion and operational EBITDA is expected to be between EUR 400 million and EUR 430 million. We are narrowing the ranges for both revenue and operational EBITDA and we are also lifting the EBITDA range.

Let's turn to Slide #6 for a look at the overall financial performance in the quarter. Revenue at standard metal prices declined to EUR 657 million from EUR 723 million in the same quarter last year, corresponding to an organic growth of minus 9%. This negative development was expected and driven by Transmission, where revenues declined due to lower revenue from the Champlain Hudson Power Express project as it reached commercial operation during the quarter.

Operational EBITDA was stable at EUR 104 million compared to EUR 105 million in Q2 2025. This was a solid performance considering the lower revenue level, and the operational EBITDA margin improved to 15.7%, up from 14.5% in Q2 2025, supported by solid execution and a favorable product mix in Transmission and Grid Solutions & Accessories.

In Transmission, organic growth was minus 20%, while operational EBITDA increased to EUR 67 million. Grid Solutions & Accessories delivered strong organic growth of 15% and operational EBITDA of EUR 20 million, driven by high activity levels and satisfactory execution. Distribution delivered organic growth of 1% and operational EBITDA of EUR 27 million, supported by continued robust demand in the power distribution grid segment, although profitability was affected by higher material costs and ramp-up costs related to the capacity expansion in Denmark.

Now I will take a deeper look at each of the business lines, starting with Transmission on Slide #7. Looking at Transmission. The business line maintained a high activity level and had solid execution in Q2. As in Q1, revenue was lower relative to last year, where we had a high activity level in the Champlain project. Revenue at standard metal prices amounted to EUR 334 million, down from EUR 419 million in Q2 2025. This corresponds to an organic growth of negative 20%. As mentioned, the decline was driven by lower revenue in Champlain, including a lower level of subcontracted work compared to the relatively high level in Q2 last year, fully in line with our expectations.

Operational EBITDA increased to EUR 67 million from EUR 64 million Q2 2025, corresponding to an operational EBITDA margin of 20.2%, which is an historical high margin for the business line. The margin improvement was driven by solid execution across the portfolio, a slightly improved product mix and good utilization of our assets, including NKT Victoria. I'd like to remind that in the product business like Transmission, quarterly profitability will vary depending on the products and execution. And in this quarter, we benefited positively from this.

During the quarter, we continue to progress and execute on several large projects, including Biscay Golf, Hornsea 3, IJmuiden Ver, Spittal to Peterhead, SuedLink and SuedOstLink. In addition, Champlain Hudson Power Express reached commercial operation, marking a significant milestone after extensive engineering, manufacturing and installation work across both onshore and offshore environments.

Please go to the next slide and the Transmission market and order backlog. Market activity in Transmission remained at a high level during the first half of 2026. We estimate that around EUR 10 billion of projects were awarded in our addressable transmission power cable market during H1, with the majority based on DC technology. This underlines the continued strong demand for high-voltage production and installation capacity, where NKT remains well positioned.

At the end of Q2, the Transmission order backlog amounted to EUR 13 billion to be compared to EUR 13.5 billion reported at the end of Q1, driven by product execution during the quarter. The backlog remains at a high level, notably above the level from previous years, and continues to provide strong visibility for the business in the coming years. From a customer perspective, more than 95% of the backlog relates to European transmission system operators, while the remaining shares relate to other types of customers. From an application perspective, the backlog remains balanced across the long-term priorities in the market, with around 70% related to interconnectors and around 30% offshore wind projects.

Looking ahead, we continue to anticipate that our average addressable Transmission market will exceed EUR 10 billion per year between '24 and 2030. We still expect short-term variations given the volatile geopolitical and macroeconomic environment, but the overall supply and demand balance is expected to remain healthy throughout the decade. As the market approaches the 2030s, we, everything else equal, expect the high-voltage market to be more balanced.

Please turn to Slide 9 for Grid Solutions & Accessories. Turning to Grid Solutions & Accessories. The business line delivered a good quarter with growth in revenue and improved profitability. Revenue at standard metal prices amounted to EUR 129 million, an increase from EUR 112 million in Q2 2025, corresponding to an organic growth of 15%. The growth was driven by higher revenue in both Grid Solutions & Accessories.

In Grid Solutions, the activity level remained high and was supported by offshore repair projects, installation work and delivery of high-voltage AC onshore cable projects. In Accessories, revenue increased in both high- and medium-voltage accessories, supported by satisfactory order execution and continued ramp-up in additional production capacity.

Operational EBITDA increased to EUR 20 million compared to EUR 16 million in Q2 2025, and the operational EBITDA margin improved from 15.6% from -- to 15.6% from 15.0% last year. This reflects higher activity levels, satisfactory execution as profitability improved in both parts of the business line. Also worth highlighting is that the power cable accessory site in Nordenham became our first 0 carbon factory during the quarter. This is an important milestone for our sustainability agenda and supports our target of reaching 0 emission operations across our sites.

Let's go to Slide #10 and Distribution. Moving on to Distribution. The business line continued to benefit from robust demand in the power distribution grid segment. Revenue at standard metal prices reached EUR 239 million in Q2 2026 compared to EUR 234 million in Q2 2025, corresponding to an organic growth of 1%. The development was mainly driven by continued robust demand for medium voltage cables in the power distribution grid segment, where volumes and revenues increased relative to the same quarter last year. Revenue growth in the quarter was, however, limited by capacity constraints.

In the construction exposed segment, the development varied between segments and local markets, and it led to revenue being marginally down from Q2 2025. Operational EBITDA amounted to EUR 27 million relative to EUR 31 million in the strong Q2 last year. The decline was mainly due to increased cost of materials, which was only partly offset in the quarter, as well as costs related to the ramp-up of the additional capacity in Denmark. Despite these effects, the business line sustained a double-digit operational EBITDA margin of 11%, a sequential improvement compared to Q1.

The construction of the additional medium voltage capacity in Denmark was completed towards the end of the second quarter. This includes a new production hole, production machines and test facilities and improvements to the overall production flow. These assets will continue ramping up into Q3 and will contribute to organic growth in the coming quarters. The capacity expansion in Portugal also progressed according to plan and is still expected to become operational at the end of 2026.

Please turn to the next slide. Across the major capacity investment projects, execution continued according to plan during Q2. In Transmission, the new high voltage capacity in Karlskrona remains on track to become operational in 2027. During the quarter, installation and testing of machinery intensified in both the new extrusion tower and surrounding buildings.

NKT Eleonora also reached an important milestone during the quarter as the vessel was launched into the water in Romania. And during July, she started the journey to Norway, which was actually completed yesterday, where the final equipment, technical installation and onshore commissioning will be done. The vessel will strengthen our installation capabilities and is also expected to become operational in 2027.

In Cologne, the investment in additional high-voltage capacity and capabilities also progressed according to plan, with installation and testing of production machinery and test equipment continuing during the quarter.

In Distribution, the medium voltage expansion in Denmark was completed towards the end of Q2, as said, while the expansion in Portugal remains on track to become operational at the end of 2026.

Overall, we are satisfied with the continued execution of our major investment projects, which, as you know, are essential to support future growth and strengthen NKT's position in the market.

This concludes my part of the presentation, and I will now hand over the word to Michael, and he will walk you through the financials. Operators, please turn to Slide 12, and please go ahead, Michael.

Thank you, Claes, and good morning from me as well. On the next couple of slides, we'll take a closer look at the financial development in the quarter.

Let's start on Slide 13 with the income statement. In the quarter, profitability improved despite the expected lower revenue. Revenue at standard metal prices amounted to EUR 657 million in Q2 2026 compared to EUR 723 million in Q2 2025. This corresponds to a negative organic growth of minus 9%. As Claes described, this development was as expected and driven by the Champlain Hudson Power Express project reaching commercial operation compared to a high activity level in the comparison quarter.

Operational EBITDA of EUR 104 million was stable from Q2 2025. Despite the expected decline in revenue, the operational EBITDA margin improved to 15.7% from 14.5% in Q2 last year. The margin improvement was mainly driven by Transmission and Grid Solutions & Accessories, supported by solid execution and a slightly more favorable mix of projects and activities. Depreciation and amortization were basically flat relative to last year, and thereby, EBIT amounted to EUR 69 million compared to EUR 71 million in Q2 2025. Net financial items amounted to a cost of EUR 3 million, mainly driven by noncash exchange rate fluctuations. And thereby, the net result was EUR 52 million compared to EUR 54 million last year, with tax also slightly lower than last year. The average number of employees increased by more than 650 since Q2 2025 average, driven by high activity levels and the ongoing investments across the business.

Please turn to Slide 14 and the cash flow development. Cash flow from operating activities amounted to minus EUR 145 million in Q2 2026 compared to minus EUR 1 million in Q2 2025. The positive EBITDA contribution was more than offset by an outflow from changes in working capital, which amounted to minus EUR 225 million in the quarter. The working capital development was driven by phasing between milestone payments and project execution and transmission, but also an increase in inventories and trade receivables. Inventories rose slightly due to the strategic stock buildup of materials in response to the conflict in the Middle East, and trade receivables rose as a consequence of increased activity level. As we have mentioned previously, working capital will vary from quarter-to-quarter depending on the timing of customer payments and project execution across the high-voltage portfolio.

Cash flow from investing activities was minus EUR 104 million in Q2 2026 relative to minus EUR 174 million in the same quarter last year. Investments were driven by the ongoing investments to increase capacity and capabilities in Transmission and Distribution. Activity level across the investment programs remained high and continue to progress according to plan. The actual spend in the quarter was slightly lower than preceding quarters, but this was a result of timing of payments. As a result, free cash flow was minus EUR 249 million in Q2 2026 compared to minus EUR 175 million in Q2 2025. This reflects both the continued high investment level and the working capital development during the quarter.

Please go to the next slide where we will look at the balance sheet. Moving to the balance sheet. NKT maintained a robust financial position at the end of Q2 2026. Working capital remained negative at EUR 1.2 billion at the end of the quarter. This was lower than the 3 months ago, mainly driven by the phasing between milestone payments and project execution and transmission, but better than the working capital balance 1 year ago.

Capital employed increased to almost EUR 1.7 billion at the end of Q2 2026, up from EUR 1.4 billion at the end of Q1. This was driven by the working capital development and continued investments in capacity and capabilities. Return on capital employed was 20% at the end of Q2, down from 22% at the end of Q1.

The net cash position was reduced by EUR 251 million during the quarter, mainly reflecting the negative free cash flow development. At the end of Q2, the net cash position amounted to EUR 591 million compared to EUR 842 million at the end of Q1. Financial leverage was minus 1.5x operational EBITDA on a last 12-month basis.

Available liquidity reserves was more than EUR 1.3 billion at the end of the quarter. This provides NKT with a strong financial foundation as we continue to execute on our growth journey and deploy capital into the announced investment programs over the coming quarters.

Let's turn to Slide 16 and the updated outlook for 2026. Based on the solid financial performance so far in 2026 and the expectation for the remainder of the year, we have updated the outlook for the full year. Revenue at standard metal prices is now expected to be approximately EUR 2.65 billion to EUR 2.75 billion compared to previously EUR 2.63 billion to EUR 2.78 billion. And operational EBITDA is now expected to be approximately EUR 400 million to EUR 430 million from previously EUR 360 million to EUR 410 million.

With the update, we are narrowing the ranges from both revenue and operational EBITDA. The revenue range is now around the previous midpoint, while we are lifting the EBITDA range with the new top end being EUR 20 million above the previous range. The update is driven by the solid project execution as we have seen and expected to see in the remainder of the year. This is the case across the business lines, with the main contribution coming from Transmission and Grid Solutions & Accessories.

The underlying revenue expectations are unchanged. In Transmission, we still expect slightly lower revenue with an expected mid-single-digit percentage organic decline. This is due to a combination of a lower level of subcontracted revenue compared to 2025 and then an expected normal level of variation orders as production and installation capacity available in 2026 is unchanged from 2025.

Grid Solutions & Accessories is still expected to benefit 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 the second half of the year, Distribution is expected to benefit from the additional capacity coming online, mainly in Denmark, but also in Portugal towards the end of the year. In total, they are still expected to contribute with up to 10% growth to the business side, and unchanged, Distribution is expected also to contribute positively to the EBITDA development in 2026. The expected margin dilution of up to 2 percentage points from increased costs to support the ongoing investments and production ramp-up remains unchanged. The outlook continues to be based on several important assumptions, and they are listed on the right-hand side of the slide.

Please turn to Slide #17 now. Before we conclude the call, I will just briefly recap the key messages of the quarter. Q2 2026 was characterized by solid financial performance and continued diligent execution of our strategic priorities. Organic growth was negative, as expected, driven by the lower revenue in Transmission, following the commercial operation of Champlain Hudson Power Express, while our operational EBITDA remained stable at EUR 104 million. The Transmission order backlog remained at a high level at EUR 13 billion at the end of Q2, providing strong long-term visibility. Market activity also remained high during the first half of the year, and we continue to see a healthy demand environment for high-voltage power cable solutions.

In Transmission, the Champlain Hudson Power Express project reaching commercial operation was a major milestone for NKT and for the energy transition. The project demonstrates the role NKT plays in enabling renewable energy to be transported across regions and into major consumption centers such as New York City.

Our major capacity expansion projects continue to progress according to plan. The high-voltage expansions in transmission remain on track to become operational in 2027, and NKT Eleonora is now arriving in Norway for final installation. The medium voltage expansion in Denmark was completed towards the end of Q2, and the expansion in Portugal remains on track for completion at the end of this year.

Finally, we have updated the outlook for the year, as I just described. We are narrowing the ranges both for revenue and operational EBITDA. The outlook for revenue is narrowed around the previous middle point, while we are lifting the EBITDA range.

Let's go to the next slide. Before we move to Q&A, I would like to briefly remind you of our upcoming Investor Day, which will take place on 29 September in Karlskrona, Sweden. At the event, we will present our charging forward strategy in more detail, provide additional insights into the new business line structure that became effective on 1 January 2026. And you will also have the opportunity to meet the group leadership team of NKT. The day will also include a visit to our production facilities in Karlskrona, where participants will have the opportunity to see the progress on our high-voltage subsea cable expansion and gain a deeper understanding of the capabilities we are building for the future. If you're interested and have not yet registered for the day, further information is available on our Investor Relations website.

This concludes today's presentation. And I will now hand over the word to the operator, who will guide us through the Q&A session. Operator, please?

[Operator Instructions] And our first question will be from the line of Kristian Tornøe from SEB.

I have 3 questions. I'll just do them one by one. So first one goes to the Transmission margin in the quarter, which was above 20%. I understand that this can vary between quarters, but obviously, with your guidance upgrade, this was also better than you expected. So maybe if you can elaborate a bit on what more exactly went better than you had expected and whether the guidance upgrade for the Transmission part is predominantly a reflection of what happened in Q2 or whether it's also what you see into the second half of the year?

Kristian, Claes here. Thank you for your question. Not unexpected, of course. Well, I think you were pointing to part of the explanation for it. It was a solid execution and performance in Transmission in the second quarter. And I'll remind us all that the profitability in the Transmission business line is driven by a couple of factors. One thing is, of course, the absorption of our assets and our people. One aspect is the margin mix which has had in the incumbent quarter. A third component is the way we execute, meaning the way we manage both risk and opportunities. And temporarily for the moment, we have a fourth component, which is also the OpEx drag with the ramp-up that Michael talked earlier about.

And if we leave aside the last component, it is a good combination where all the 3 aforementioned components contributed positively to the margin in the given quarter. And that gives us then the overperformance versus our expectation, which also further then gives us some confidence and then upgrading the guidance. And -- but it's also the reason for why we are saying that the profitability will vary and we'd like more to talk about nominal earnings than the margin in itself. But it was a strong quarter indeed.

Understood. Second question is on the Champlain Hudson project. So you highlighted several times that it has reached commercial operation, but that doesn't necessarily mean it's fully completed from your side. So just some comments on the exposure you still have to the project, whether you still have provisions for this project and when sort of full completion on your side should be expected?

Yes. Yes. I -- we have physically completed, of course, obviously, most of the works to the extent that the product could go into commercial operation. Why we make the distinction is, of course, that there is also, let's say, a formal closure of all our projects. There can be some physical works remaining between COD and actual closer project. And of course, there can also be certain things to be worked out between ourselves, our subcontractors, but also ourselves and the customer. And that typically takes some time after the product has reached COD. As to how much or whether we have provisions left, et cetera, I think I'm unable to comment on a specific project, which I'm sure you understand.

Fair enough. But on the timing, I mean, when should we expect it to be fully closed?

I don't dare to give you an exact time line, but we are talking months instead of -- and not years.

That's clear. Excellent. Third and last question here is just on the EUR 2.5 billion in commitments, whether there is any update to when you expect that converted into firm orders?

Thank you. No fundamental major updates since last quarter. There has been plans, as you're well aware, when we booked this back in 2023. We have said previously that some of these projects have been slipping in time, also from that the boundary conditions are not available, that there are also ongoing discussions in Germany as to when, what will be built. But -- so we don't have any major update to give. We have said that part of that may be converted this year and may also slide into next year. So no big news since last quarter.

Our next question will be from the line of Claus Almer from Nordea.

The first -- a few questions from my side as well. The first question goes to the Transmission division. This 20% EBITDA margin you saw in Q2, how does that compare to the projects in the backlog you are going to deliver in the coming quarters? That will be the first one.

Thank you, Claus, and good morning. We have earlier said that over a couple of years and quarters, we will see a gradually improved project mix. And we will -- that is still the anticipation. That is what we saw. I think we also put that in writing in the report. That is what we saw from a couple of quarters ago now coming into Q2, and we can expect that journey to continue. But then you have to see it over a couple of quarters. So it's more difficult to promise anything from quarter-to-quarter because things can also vary in and out of the incumbent execution. So -- but seen over many quarters, the mix has improved since a couple of quarters ago, and will continue to improve a couple of quarters from now. And when we look at the more radical change in mix, we remain with our order communication that this will happen during 2027.

Sure. I just noticed that some of the projects you are working on in the quarter is some of the first ones in Germany, which, as I understand, didn't come with the most impressive margins. So that must have a very good read for the coming quarters when the mix is improving.

I think on the one side, of course, I understand the comment and the implied question. On the other side, also keep in mind that we don't give the, let's say, the size of exactly those mentioned projects in relation to the full mix executed. And also, I give reference to what I said earlier about what drives the profitability of the full business line. It is about cost absorption. It is about the margin mix. And the third component is not unimportant, also how well do we execute. And of course, there is something to be expected from execution. And then expectations can, of course, go below that or outcome can go below, but it can also come above. And I think we had a combination of 3 strong performance or strong outset in all of these 3 buckets in the second quarter, but also especially the last one.

That's fair. And then with the Karlskrona factory soon to be ready, does that mean you're more confident about your capacity rest of the decade? In other words, maybe your appetite for adding more projects is a little bit higher than it was maybe 1 year ago. Is that a fair way to look at it?

I think in general, confidence grows as we progress towards the completion of the project. I think this is the right way to look at it. Of course, we use, let's say, deterministic planning. So either we have the capacity or we don't. And then it is a matter of risk taking in some cases. But we would not do, let's say, an overbooking, feeling comfortable that we will be able to resolve that as we go. But if we see that we have the capacity, and we don't include, of course, float in that, then we acquire a project. If we don't, we don't capture it. The closer we come, I think, to your point, obviously, when we have also finally made up our mind for when these assets will go into operation, then we will have to calibrate the available capacity at that point in time.

Okay. That makes a lot of sense. And then my final question is as to the guidance upgrade. Once again, that's a very impressive long tail of guidance or upgrades. Looking at the second half of this year, have you still included some -- being conservative as to things that are not building as hoped for. So if you do a smooth execution like you did in the first half, there could be additional upside to 2026.

Let me try to tackle that question, Claus, and good morning to you. This is Michael. Yes, I think it's -- what you should read it in our guidance is obviously the confidence that we have based on how the year has progressed and how the operational performance and high activity level in both Transmission and Grid Solutions is expected to develop. But we will remain with the same perspective of caution, of diligence and managing our risks and opportunities, and that is part of the guidance.

So just to be sure, so that is you are doing your guidance as you always do. So if a smooth execution, it could be better than even the high end of the range, right? That's how I should understand your reply?

Yes. I think also, let me just confirm what Michael said there. I think there is, of course, always room for variability of performance also within the guidance. There is an expectancy from our side how we will end, and that is clearly within the guidance. But there can also be variance in that performance, both up and down. And still, we end up within the guidance, so to speak.

And then it's a question about magnitude. Can we rule out that we could perform even so much better, so we could come out the guidance, I don't think we can say that we -- that there is no chance for that. But with the best visibility we have of our performance and of the outlook for the remainder of the year, we estimate that from an EBITDA perspective, it is EUR 400 million to EUR 430 million that we believe will be the range where NKT ends up.

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

I have a couple of questions, but I'll ask them one at a time. The first one is just to follow up on some of these topics about clarifying the guidance. I'm just asking you about it. I think last quarter, you've mentioned that Transmission for the year, you saw it down mid-single digits, if I'm not mistaken. And obviously, you declined a bit more now. But I just wanted to clarify, within your revenue guidance, that expectation is still mid-single-digit decline in Transmission and so a stronger pickup in the second half. And is that what then drives your higher confidence on margin? Or should we ascribe a higher confidence on margin to the other divisions as well?

Daniela, let me tackle this question. I think you are leaning into the answer. It is -- there's no change in the revenue profile for the Transmission business. So that mid-single-digit year-over-year decline remains constant. So it's also to indicate there has been no material change of mix of the projects that were planned and part of the execution profile of the year. I think what you need to read into it is that with now 7 months behind us, the activity level and the execution level is at a very high level that gives us looking towards the end of the year and lower risk and contingency profile for the projects that were -- if you compare what you view at the beginning of the year. As you progress through the projects, you reach certain milestones, you reach a certain amount of completion that then, that risk is behind you. I think this is how you have to read our indication here.

That's very clear. And then I wanted to ask you a little bit about how do you see -- it's kind of a 2-part question, but do you think backlog is -- will grow in '26 and '27? How are you seeing the tendering pipeline right now? Some of your competitors talk about the restart of like another wave of contracts in '27 on the HVDC side. And from another side, we saw yesterday another player, which is not 1 of the normal 3, gaining a large HVDC contract. Is the competitive environment, if we have these extra ways, different than it was perhaps before? How are you viewing this changing in environment?

Thank you, Daniela. Claus here. We continue to see high market activity. And I think the first half is also a testament to that in accordance with what I said earlier, with around about EUR 10 billion in awarded orders. The tender activity also remains on a satisfactory level, and we can see that there are good prospects also for the coming years.

I would not maybe go as far as to say that there is another round or another big activity level. And I do so not out of disbelief, but just out of caution from timing effects. And this is also one of the reasons where we started to talk about average market volumes instead of talking about individual years. But we have a strong expectation on the market also going forward and remain, in essence, with the statements and opinions that we came out also from the first quarter, with some short-term volatility also being imposed in some markets, some positive and also some -- maybe a little bit more constructive discussions.

To your point about the award yesterday also, we, of course, note the same, and then I think this is nothing that has surprised us, if we put it like that. And the market has grown significantly over the years, measuring over a 10-year period. The established players have added capacity. And also, we have had some established players on the AC now with the announcement yesterday also taking a step into the DC territory. And that is well in line with the expectations, and it does not materially change our view on the supply/demand and [indiscernible] situation of the market.

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

Yes. And also from me, congrats with the spectacular quarter. First, a household question on Slide 9 for Grid Solutions & Accessories. You mentioned that you had a 15.0% margin in Q2 last year. If I take EUR 16 million on a EUR 112 million revenue, I get 14.3%. So I wonder how you derive 15%? And a related question, of course, is if my math is correct and you have 130 bp margin expansion despite startup cost, then -- okay, that's, of course, not here, but 130 bps margin expansion, is that sustainable or just a quarterly [ blip ]?

Lars, I had not done the math like you did just for the moment, looking to my CFO, who is, I think, also looking at that for the moment. But what I will say is that Grid Solutions & Accessories did have a strong quarter. We had a strong quarter with high activity levels across, let's say, what you would -- the running business, so to speak, so the expected business, both in HVAC onshore projects and the delivery of the same in the planned maintenance engagements that we have, but also in the Accessories business, both across HVDC, HVAC and also the medium voltage plant in Nordenham. But also what added the group progression, what's the mix of repairs that we were able to attain during the quarter, and that put some uplift on the profitability. So I think that is what you need to keep in mind, this last component as we reflect about the profitability in coming quarters. That is something which is not a given one every quarter.

Then a follow-up from the previous question about the contract won by Hellenic Cables yesterday. They also got a certification for 525 kV HVDC a couple of weeks ago. Why is it that you don't see that changing the competitive landscape? Is it because you anticipated it? Or is it because you are convinced the CSOs that are your core customers will still focus on track record and then still select you themselves [indiscernible] and makes sense?

Very relevant and good question, Lars. I think it's twofold, the answer. Number one, I think you can read into it that it's not unexpected. So that's the first part of the answer. And number two, you should read in to our confidence about our own abilities to secure orders and our own ability to compete effectively. So I think these 2 things, both in combination, makes us comfortable that this will not, to a major extent, change the supply-demand balance as far as NKT is concerned.

That's really clear, Claes. Then a question on the change in project mix. So if I look from Q1 to Q2, I think the notable thing is that Spittal Peterhead comes in as a project you execute on. And if I look at what you say, the contract value relative to the cable length, this has, by far, the highest value of any project you won. How much of the margin expansion is a function of that specific project coming in?

It's a relevant question, and I think I could guess that you also would guess how much detailed answer you will get here. So I think it's difficult for us to give the exact component of an individual project. But I -- what I can say is 2 things. Number one, as you start a project, you can expect that the revenues are not large in the beginning. Often, when you start something -- you're talking about engineering efforts in the beginning and hours spent by people and less so manufacturing or installation or other aspects.

I would also like just to comment on the value, let's say, per kilometer and then draw your attention to -- and as you well know, Lars, a lot depends, of course, what conductor material you use, but also the level of installation complexities, landfalls, burial types, et cetera. So we should not reduce the pricing, so to speak, is the only metric that makes the value change from project to project. But I know you know, but I just want to mention it anyway.

That's fair enough. One final question from me is on the current tender activity and the likelihood of major projects being awarded next year. So are you aware or can you confirm that tenders are ongoing for [ EGL ] 6 and 7 and LionLink?

I don't think I can confirm actually because the tenders we partake in, a lot of it is also under NDA. But I don't think it's a secret that there are products like LionLink and EGL 5 and 6. But I would avoid to confirm whether active or nonactive, et cetera.

But in view -- your view, Claes, is it realistic these projects become contracts to you or someone else in 2027?

I think it's realistic with a high market activity culminating in large orders in 2027, yes.

Our next question will be from the line of Chris Leonard from UBS.

Hopefully you can hear me. Can I just follow up on the Transmission segment and maybe trying to speak through Q2 in terms of the negative impacts that you spoke to, to Champlain Hudson in the quarter? And then whether or not there was any sort of further negative impact from variation orders because I think there was a harder comp coming in from last year. And if not, should we expect variation orders to be more of a headwind into the second half of the year? So that's the first question.

And then the second question would just be to elaborate on the ramp-up costs that you experienced for the Karlskrona expansion, whether or not those are visible and material in Q2 at sort of the average you've spoken to of 200 basis points for the year? Or should we expect actually that those accelerate into the second half?

Thank you. Let me at least try, and then will also allow, of course, the CFO, to comment further. If we start with the Transmission revenue, just to give you a couple of the moving components and I mean you are also having the answer basically yourself. The second quarter, when you look at the comparison period last year, then we had significant volume on top of, let's say, the steady state normal volume coming from the Champlain project which we did not have in the second quarter of this year.

On top of that, we will all remember that we were also speaking about extraordinary variation orders during the first half, if my memory is correct, last year, that also added to that comparison period. For the second quarter, you can note on our revenue guidance that's being narrowed, but not lifted. Also implying a more normalized level of variation orders and that we are basically executing from a revenue perspective as planned. So I think these are the 2 components when it comes to how revenue is shifting and also how the organic growth has taken place in the second quarter for Transmission.

To your second question about ramp-up costs, last year, we talked about roughly 1 percentage point of OpEx drag on group level. And we have said for this year that this will further continue to ramp up during the year to culminate around 2 percentage points for the full year. And here, we have not given components -- discrete components, how much in what quarter, and also not exactly how much per business line, but I think it's known by all of you where we are conducting the expansions. The primary part of the expansions is in Transmission, and then there is a smaller part of expansion being carried out in Distribution. And we left last year with 1 percentage point drag. We will end this year with around 2 percentage point drag. So I think based on these data points, you should be able to estimate a little bit or make reasonable estimates for your analysis.

Yes, I would just add. We're in that journey, it's between the 1 and the 2. And also, I think it remains a relevant data point, considering that the revenue guidance is narrowed but on the same middle point. So the frame of reference is still the same.

Actually, if I can just ask an additional question on Distribution. Second half of the year with Portugal coming online, should we be expecting that, that is helpful into the margins? Or you see that as you saw in Q2, you've got to absorb some of these ramp-up costs? But equally, hopefully, you will also have some of the raw material inflation sort of being passed on. So can you speak to the drivers of what you're seeing in the distribution segment for the second half of this year, at least. That will be super helpful.

Sure. I'll take that question, Chris. If you look at the growth that will happen in the second half for the Distribution segment, it is going to come primarily out of the Asnaes capacity that of which the project has just been completed in the second quarter. So while the Esposende project will complete and come online towards the end of the year, obviously, from a volume point of view, it's going to be a lot less meaningful to the total picture than the one coming online right now.

In terms of the ramp-up costs associated with both of these projects, they are overlapping. We are -- we have been ramping this up in Denmark, and we are also ramping them up now. So we are more or less at a peak point of that combination of ramp-up costs. But as the volume comes online, then obviously the contribution from these volumes will start improving the margin.

That said, I think it also qualify that at the moment, there is a bit of extra cost in the Distribution segment from some of the Middle East supply chain costs that we've had to absorb, that will be mitigated to a certain extent -- to a large extent in the second half of the year through also pushing this down also towards the customers. But I would caution in taking specific margin of the quarter and doing an extrapolation for that because it will be recovering and absorbing the costs. So I think with those data points, that's how I would color the evolution of Distribution in the second half of the year.

The next question will be from the line of Lucas Ferhani from Jefferies.

I have a few as well, if you can take them one at a time. The first one is just on free cash flow. The Transmission part, I just wanted to confirm, did you get downpayments for kind of EGL MLCC orders this year? And do they come without downpayment and so kind of targets to solve that you have an improvement in performance? And just on working capital, more generally, where do you see that setting towards year-end?

Lucas, yes, good question on the prepayments, and I think we had also a question last quarter, particularly about the awards that we got in the first quarter. We can confirm that we have received a prepayment on EGL 3. Of course, I won't comment as we won't ever comment on any specific amounts for contracts. So there is a prepayment that's come into the planned flow of the working capital development for the transmission line in the second quarter.

That said, it was within plan and the evolution of the working capital is also as expected. And so it's more what's driving the negative working capital or the -- yes, the negative evolution of the working capital in the quarter is -- has to do with the phasing of -- it's a timing topic, the phasing of milestones, of costs and of incoming cash on receivables. So I would say nominal.

If your question is also asking for an indication towards the end of the year, I think where we're ending the first half of the quarter, we are on our operational plan. So I would expect that we will land at a similar level towards the end of the year. So that would be the indication we give today. And that is also an indication, not just for the transmission line, but in general for the company.

Similar level to Q2?

Similar level to Q2? [ Similar ] balance than Q2.

Yes. Okay, perfect. And then the second one was just on Distribution. I just wanted to confirm if there was a change of language or not. I think now it was up to 10% growth in Distribution. I think before, had something more around, I mean, it's minor. But just -- the point is, was this very kind of H2-weighted ramp-up expected or maybe a bit more slightly delayed in seeing the volumes coming through?

Yes. Thank you, Lucas. I think the -- I don't know if you perceive the different tonality then it's not intentional from our side. We remain with our earlier opinion, and it's more that things are, of course, always approximate as you look into a potential revenue growth for a year. And also with that, of course, also when we look at in operation taking of a plan and of an asset that has been invested in, there is also a lot of moving parts that there will always be a natural variance. Of course, looking at a plant like Asnaes, machinery installation plays into it, capabilities build up, product qualification, output optimization, planning of the commercial volumes into the factory, et cetera. So there is some variability there. And while we could have maybe expected even more volumes in Q2, from a full year perspective, we remain with the expectation that the organic growth in the business line will be 10% or up to 10% depending on the uncertainties, of course, that always exists.

Perfect. Can you -- sorry, the last one was just on coming back on cables and potential changes in the competitive environment. And the first question I had was one, if you do a project with 320 or 400 kV, let's say, XLPE HVDC versus going to 525 kV, in your opinion, is there a kind of meaningful step-up in complexity or changes in the way you approach the project that kind of would brand issue for a player to kind of move up the valuation? And also maybe how do you think about owning the vessel? How does that brands -- and so doing more scope in now installation and at sea, how does that kind of bring an advantage or not for you versus a player that maybe doesn't have those capabilities in source?

Thank you. The highly relevant, both observation and question. So if you look at the technology initially, and if I put it in the perspective of NKT's history, we invented the HVDC XLPE cables back in the '90s. Started at 80 kV, gradually increased. I remember the EWIC project between Ireland and U.K. of 200 kV coming through the 320 kV projects in the German territorial waters. Now here we are somewhere around 2014 or so, and then launching the 525 kV in '14, commercializing it initially on land in 2020. So you can see it's a long period of stepwise technology improvements.

And I will say that we have learned a lot on that journey, where every step in voltage, every step in terms of conducting material, sizes, every specific product circumstance gives you learnings, caution and reflections for the future. And there is a significant step-up, both from 150 to 320 and also from 320 to 525, both from a dielectric perspective, from a material compatibility perspective, from a production cleanliness perspective and many, many other aspects.

And I think our hopes are and Michael was doing some commercial for our Investor Day is also to take you through that journey of a large factory in terms of QA/QC. The importance of that, the importance of having diligent and long history of doing these kind of things in order to be able to produce and deliver successfully these projects.

And a big part of the delivery of these projects is also the EPCI concept as -- in reference to your second part of the question. And here, I imagine it is -- it's different perspectives. And I think our journey that I just described, it goes even back to the 50s, if you include MI cables, it has taught us that the right way from both the value creation and a risk management perspective, is to have the EPCI breadth, including also full control over your vessels, both from, let's say, technical compatibility perspective, but also from an execution certainty perspective. And we remain with that opinion. But we also respect different views, of course, how this should be done. But we will -- we have our view and our setup for a good reason, and we will remain with that. I hope that was a little bit helpful, Lucas.

I'll now hand it back to the speakers for any closing remarks.

Thank you, and thank you, everybody, for calling in and showing interest in the second quarter results. It's results that we are proud of, needless to say. And I think it is a result that is yet another testament to where we are as a company and also where we are heading, both next year, but primarily towards our guidance in '28 and also 2030. So with those words, I thank you for the attention, and I wish everybody a good weekend when you get there.

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.