Petter Stordalen om 2024, Aker-sjefen om Solstad og kursras i seismikk

Good morning and welcome to the stock exchange here at Finansavisen, live from an annual conference on this Tuesday, January 9. My name is Marius Lunden, together with stock commentator Karl Johan Mones here at Oslo Spektrum. The problems for Boeing's Max aircraft continue; the stock fell 8.8% yesterday and now United has found loose bolts on the Max 9 model. We have received profit warnings from Samsung, PGS and TGS are out with quarterly updates, and Apple announces that they will launch their new smart glasses Vision Pro from February 2. The question is whether they can succeed where Google failed and Meta is trying. We will talk to Aker's CEO Øyvind Eriksen later in the broadcast, and we will also have Strawberry owner and top travel industry leader Petter Stordalen today. In addition to the Enos annual conference, we have unemployment figures from the eurozone coming later in the day, and US trade balance. On Oslo Børs, an opening rise of between 0.4 and 0.6% is expected. We saw a fall of 1.1% yesterday with a sharp drop in oil prices of around 4% after news of price cuts from Saudi Arabia. Equinor fell 4.5%, while American stocks avoided a decline of 1.7%. We also saw a divergence in shipping stocks like Frontline, which rose over 1%, Golden Ocean down almost 3%. Oil prices are now just over $76, having recovered somewhat after yesterday's fall. On Wall Street, the 10-year yield fell back below 4%, and Atlanta Fed President Raphael Bostic said inflation has fallen as expected. Dow Jones -0.6%, S&P 500 -1.4%, Nasdaq -2.2%. We saw several of the Magnificent 7 stocks rising well over 2%, including Apple. Now I will say good morning to you, Karl Johan.

Yes, and there is that merger going on with TGS and PGS, and the figures they are presenting now should not be taken too seriously because they are affected by the formalities around the merger and both organizations are preparing for the merger. But the merger is also happening because of a new balance; it is late in the cycle. And while seismic is perhaps the Nesquick you make when you need quick chocolate milk, after a while there is enough cake for everyone, and then there is not so much interest in seismic. They have a challenge because the growth in oil production is on land in the Permian Basin and deep water off Ghana, Brazil, and West Africa. That is not the best for TGS. The best for TGS is high activity in the Gulf of Mexico and small fields to sell a lot to many. When the big elephants go for large heavy investments on land and deep water, that is not the best. So they have a challenge. Now they say this is the best they have seen in 40 years, but that is not true and everyone knew that when it came out, you just had to go back to 2014. So they have challenges and they really need to work together to produce good profitability because we are entering a tough world.

Yes, I see that TGS revenue grew 14% in 2023, but disappointed on late sales in the fourth quarter, says Kristian Johansen, TGS CEO. He also points out that the oil companies seem to be preoccupied with something else. It's due to imbalance; they need to consolidate to reduce the supply side. There is enough cake for everyone, and then seismic is not in demand. Seismic is the fastest way to spend money if you need to do something; it's the quickest return on investment both in time and money when you really need to. But not now. The phase we are in now is perhaps the only phase where seismic struggles. It's rare.

It's because of imbalance. They need to consolidate to reduce the supply side. There is enough cake for everyone, and then seismic is not in demand. Seismic is the fastest way to spend money if you need to do something; it's the quickest return on investment both in time and money when you really need to. But not now. The phase we are in now is perhaps the only phase where seismic struggles. It's rare.

I thought it was interesting that PGS delivered better than expected. When the merger was announced, many perceived PGS as being rescued because they have a lot of debt maturing, while TGS is very capital-light with little or no gearing. But again, they are going into a merger. It would be very strange if TGS came with stunning results and PGS with terrible results, risking the merger. So I think you have to take that into account as well. They want the merger to happen, so there is no reason for TGS to deliver great results now, and PGS should deliver a bit better than they actually are.

But again, they are going into a merger. It would be very strange if TGS came with stunning results and PGS with terrible results, risking the merger. So I think you have to take that into account as well. They want the merger to happen, so there is no reason for TGS to deliver great results now, and PGS should deliver a bit better than they actually are.

But I would guess that some people sitting and working on a potential IPO are following the share price development here. PGS is up almost 6%, TGS is up over 12%. Yes, but that was not the one I would have bought into. Saudi Arabia, look at oil stocks on Oslo Børs this year. Vår Energi down 5%, Aker BP down 4%, Vår Energi down 4%. American oil stocks down, big merger in natural gas. Oil has had a tough start to the year. But TGS is a very well-run company and they will certainly be able to show PGS some tricks on how to operate more capital-lightly. So they might be able to sell even more PGS ships and come out with a different model. TGS has been a fantastically well-run company with capital returns of 40%, on par with Apple, and it has been fantastic returns for a long time. That's the model they need to show PGS. We'll see if we can find someone in management there. We are going to the oil conference in Sandefjord.

Saudi Arabia, look at oil stocks on Oslo Børs this year. Vår Energi down 5%, Aker BP down 4%, Vår Energi down 4%. American oil stocks down, big merger in natural gas. Oil has had a tough start to the year. But TGS is a very well-run company and they will certainly be able to show PGS some tricks on how to operate more capital-lightly. So they might be able to sell even more PGS ships and come out with a different model. TGS has been a fantastically well-run company with capital returns of 40%, on par with Apple, and it has been fantastic returns for a long time. That's the model they need to show PGS. We'll see if we can find someone in management there. We are going to the oil conference in Sandefjord.

Yes, we had a visit from Kid, which was surprisingly optimistic, and now they are delivering like-for-like growth of 99.3% if you look at Kid and Hemtex. It seems they are consistently delivering better growth than inflation. People want to spend money on their home and have it cozy. It's not just the cold; it's the troubled times. People prioritize that, and there are many older people who stay home a lot, so there is a lot of pillows and fine curtains, tablecloths, making it nice and cozy, the right color of candle, enough tea lights, all that makes it better in a rather unpleasant war situation in Western Europe. We'll ask Petter Stordalen later if he sees any signs of consumers tightening up, but it didn't seem that way in the fourth quarter for Kid. The test for the consumer might come in the first half of the year.

Yes, but we get interest rate hikes from DNB, and all of them are phased in towards Easter. Norwegian hotels are in a special situation. Think of all the snow we have and all the rain in Central Europe, so they fly up here and test the alpine slopes in Kvitfjell. There were people from the office who had been there on the weekend. It was just foreigners on the slopes. So Norwegian hotels have many foreign customers. We have snow, and they don't in Central Europe. You see biathlon in rain, ski jumping in rain, it's not the same. But anyway, rain or sun, I don't know if you have a smart phone from Samsung, but they issued a profit warning. It was last night, our time, warning of an expected 35% drop in fourth-quarter earnings, weaker than expected, but the stock is not reacting much, only down 2%. There are two reasons: it helps to have a cheap stock, P/E just over 10, and also South Korea is one of the markets that is not being sold in this, net money is going into emerging markets, and some still consider South Korea an emerging market even though it is a very developed economy. So it helps to have a cheap stock and be in a country that is relatively popular.

I was thinking otherwise, quite a big swing. We see Norwegian out with passenger numbers today. The planes were 71% full versus 61% in December compared to last year, so that's positive. No news on the timeline for the strategic review, but we have seen a lot from the other side of the pond with United and Alaska with these Max planes grounded. Not the same type as Norwegian has, but Boeing down 8% yesterday. But this is serious because it's about one of Boeing's subcontractors, Spirit in Wichita, Kansas. They are having a tough time. This is back to the time when the General Electric leaders took over Boeing and started outsourcing everything. Boeing has had problems, and it's a question of whether they need to go back to scratch and do things themselves to get control. If you don't get enough quality from your subcontractors and you get a door delivered where you don't have control over which bolts are screwed into the door, that's not good enough. You can't fly like that. It wasn't that they didn't know the problem with the plane; they knew about it. They said it was not allowed to fly over water, as if that would help. If it went down over water, they would lose everything. So they knew the problem. And that means there is a shortage of planes. That's very good for Norwegian because they have planes and charter leases. So it's good. And as we have learned, there are also agreements that are not inflation-adjusted. The expenses over the last couple of years, at least last year. We'll see.

Yes, but it's serious because it's about one of Boeing's subcontractors, Spirit in Wichita, Kansas. They are having a tough time. This is back to the time when the General Electric leaders took over Boeing and started outsourcing everything. Boeing has had problems, and it's a question of whether they need to go back to scratch and do things themselves to get control. If you don't get enough quality from your subcontractors and you get a door delivered where you don't have control over which bolts are screwed into the door, that's not good enough. You can't fly like that. It wasn't that they didn't know the problem with the plane; they knew about it. They said it was not allowed to fly over water, as if that would help. If it went down over water, they would lose everything. So they knew the problem. And that means there is a shortage of planes. That's very good for Norwegian because they have planes and charter leases. So it's good.

So that means there is a shortage of planes. That's very good for Norwegian because they have planes and charter leases. So it's good. And as we have learned, there are also agreements that are not inflation-adjusted. The expenses over the last couple of years, at least last year. We'll see. Very good, Karl Johan. We are going to be at the conference and talk to many people throughout the day. Yes, I just wanted to mention that the stock exchange is barely up today, 0.05% at 1304 points. Oil spot price at 7670. It looks like it will be a really bad day for TGS and PGS. PGS is down 11.3%, TGS down almost 14%, most traded on Oslo Børs. We also see Kid doing very well, up 7.2% after their quarterly update showing solid sales growth in the Christmas quarter. We must add that with TGS, in any crisis, TGS always comes back very strongly from the bottom. So we just have to wait patiently for things to bottom out. TGS always has an incredible ability to come back strong, but it has to go down first, and you have to absorb PGS, restructure it, and get it in place. The new marriage partners, we'll try not to say that because it's the best result in 40 years, but because TGS is good at running things. Find Kristian Johansen in Sandefjord next week. Thank you, Karl Johan. We'll be right back with Aker's CEO Øyvind Eriksen. I also wanted to mention we'll have Petter Stordalen later.

So join us here in the stock exchange. My relationship with cars is very emotional now, I notice. You start with sustainability, sustainability, sustainability. What is the last price? People get really annoyed, even though it's obvious that there are three categories: those who know everything and don't need to read anything, those who don't want to learn, and those who learn for life. PS is a similar case in Europe, red and standard color, priced roughly the same. This Gunnar, no one knows what sustainability is anymore. More sustainability, I say. So here we are with one of the country's leading business leaders, who is at the conference this year again. Happy New Year and welcome, good morning, Øyvind Eriksen, CEO of Aker.

So here we are with one of the country's leading business leaders, who is at the conference this year again. Happy New Year and welcome, good morning, Øyvind Eriksen, CEO of Aker.

But I think I have to start with the situation at Solstad Offshore, an offshore company that you have been involved in for many years. First during the oil downturn and the bottom of the previous cycle before the pandemic, you gathered many shipping companies into what is Solstad today. Last autumn, the rescue package or restructuring that many had been waiting for came, with fresh capital from you, new ships in the fleet, and a restructuring of the company itself. Then a rather heated conflict suddenly arose. How do you see the status as of now, mid-January 2024?

There has been a rather heated conflict that many of us have followed between Kjell Inge Røkke on one side and Christen Sveaas on the other. There are allegations of equal treatment and differential treatment. Are you willing to meet Kistefos and see if you can come to an agreement?

Are you willing to let more people into this new Newco company? How many ships are moved into the system?

Just to finish on this point, there was supposed to be an extraordinary general meeting that was postponed in agreement with Kistefos. As you mentioned, there is a maturity already in March. Competitor DOF has already restructured and listed last spring. How urgent is it to get Solstad going so that you can stop thinking about debt and balance sheet and focus on the market and commercial aspects?

Let's talk a bit about renewable energy. You are not only big in oil and gas, Øyvind Eriksen. You are very big in renewables and have set up this Aker Horizons company as a kind of umbrella for this effort. How does 2024 look now? We have seen several, including both you and others in the renewables industry, struggle. Projects that were supposed to be sanctioned have not been sanctioned, costs have increased, profitability has been squeezed. Does it look a bit brighter in 2024?

I have read with some interest. If you look at the financial statements of Aker and Aker Horizons, it is usually Aker that has the fattest wallet. But if you look at what I call the liquidity war chest plus available credit, it was at the end of the third quarter 6.9 billion for Aker, 9.1 for Aker Horizons. So they actually had a couple of billion more in cash on hand. Could we see structural changes, acquisitions, or other things from Horizons during the year to at least maybe start to see a little more light in 2025?

One of the most current issues will be what to do with the Norwegian sea when we proceed with the first phase of Sørlige Nordsjø II, where you have applied for pre-qualification in the system. How do you see that now? I hear from other players in the pre-qualification that they are not sure they will bid in the auction given the current terms.

Tell us a bit about your investment in Cognite AI. It's one of the big topics here. I know Cognite is working on it, and they have built up to become a quite interesting player in industrial digitalization over the last few years. Many AI-related stocks in the stock market went like a rocket last year. Will you be able to capitalize on that trend in Cognite this year?

Will Cognite remain an in-house, private ownership this year, together with the shareholders, or is the much-discussed stock exchange listing more relevant in 2024?

The last thing I would like to ask you, Øyvind Eriksen, is about Aker BP, which we can call the crown jewel in Aker's system. This oil company that provides enormous income to Aker and has grown phenomenally over the last 10 years. We don't know what the oil price will be this year, but what I was wondering is when we now see so much consolidation in the industry. We have seen British Harbour come in with a former CFO from Aker BP in the leadership team, they came in and bought Vintershall. We see many transactions, also globally, in the USA. Could Aker BP become part of something bigger this year?

Øyvind Eriksen, CEO of Aker, thank you for the conversation. Happy New Year and good luck at the conference today.

How you make money is really about avoiding the bad companies. Schadenfreude is the only true joy, or so they say. And then I have to say that it is too high to be sustainable, and that the workers get a weight that is too high, and we see that across the board. But it's tough mentally. You just want to stay in bed and wait for the next time it gets dark. Finansavisen should have a financial on that, it was maybe time. A bit like, so to speak, made a booking here. And then we are here with one of the undisputed leaders in the energy sector in Norwegian business. Petter Stordalen, owner of the Strawberry group. Good morning and welcome.

Thank you very much.

Now that we have you here, we have talked to Øyvind Eriksen, CEO of Aker, about renewables and oil and artificial intelligence. We have the king of travel here. I have to ask you: what do you think about 2024? Will people fly as much, travel and stay in hotels as much despite inflation and high price growth and perhaps tougher times?

I think at least one thing most people will agree on is that 2024 will be better than 2023. We have left behind one of the years with the most interest rate hikes in many decades. We have seen inflation go to levels that you may never have experienced in your entire history. It's about an inflation where you would estimate 1.9 or 2.1, and suddenly it shoots up and becomes 2. Interest rates just went up. You thought that money would almost be free. Now we return in 2024 to something that is perhaps more normal. We won't go back to the interest rate levels we had, but we will come down from where we are, and inflation will get under control. A bit of the problem with inflation now is most likely the somewhat weak or very weak Norwegian krone. If you look at Denmark, which came in with inflation stall, they have control of it, and the Danish krone is pegged to the euro, which is relatively much stronger than the Norwegian. Swedish inflation is falling, Norwegian inflation is falling. 2024 will be better for most of us.

But what about the consumer? Do you have any feel in Strawberry about whether people have flown and traveled a lot? Is it a post-pandemic trend or is it here to stay?

No, I think it's a continued trend. First of all, we were surprised out of the pandemic. What we were most surprised by was that the private market came back quickly and very strongly. Some trends were established, like taking a holiday in your own country, taking a holiday in your own city, which we call a staycation. That trend came out of the pandemic and has been very strong. When you think about it, many of the small things that happened are logical. Instead of taking your wife or girlfriend and traveling to London and having problems with the kids at home, you do it in Oslo because you can do exactly the same things here. You can stay at equally nice hotels, have equally nice concert experiences, and everything. In addition, it costs a fraction of what it costs in London. But what we see is interesting: it seems like a persistent trend. We fly more, we travel more, we stay more in hotels, and it seems to continue. When you ask people, if you had more money, what would you do? Number one on the list is 'I want to go on vacation' or 'I want to travel'. So it's something people want to prioritize. You might not buy a new hammock or a new bicycle. You bought enough bikes and hammocks during the pandemic. So now I think you want to experience and bring memories.

Finally, Petter, since I have you, I have to ask: what will be the big events in the Strawberry system this year? I think perhaps one of them is what you will do with this bonus collaboration with Norwegian.

Yes, we are creating a new currency. No one has done it before, at least not in Europe, and it will mean a lot for all those who are currently members of Strawberry or Norwegian. It will come before the summer sometime. We will develop this completely new product and currency, and it will be a game changer within hotel and travel. You will see it. So when you ask what the big things will be, that will be one of them. More than 100%. The only guarantee is that we are moving forward and doing new things. If we are lucky, we might see you skydiving or something over a square in a city, but not that much. But it will be on the business side. It will be exciting. I am an optimist at the beginning of 2024.

Petter Stordalen from Strawberry, thank you very much. Happy New Year and good conference.

You are listening to Klokkeland Slaget, a podcast from Finansavisen in collaboration with tidssonen.no, and yes, you guessed right. This is a podcast about watches. We are here with one of the newer ones. If you have followed the development from the first Astrom watches, you have a kind of starburst-like dial. But not only about watches, we will talk about the things that happen around the people. I wanted a watch as a confirmation gift. All the friends got one, I didn't. I got a goldmine of buttons. I am really angry at my parents. The news, the stories, the brands, what is interesting in the watch world.

Welcome back. We have to round off with the quite dramatic price development we now see in the seismic industry on Oslo Børs. TGS is actually at the top of the turnover list. The marriage partner PGS is both down around 13.3%, so it looks like one of the worst days in a long time for seismic stocks after both came out with quarterly updates. TGS had a worse result in the fourth quarter, especially on late sales, than they themselves expected. TGS delivered somewhat better than expected. TGS management points out that a lot of M&A and consolidation in the industry is drawing attention away from exploration activity and seismic purchases. And then we have Kid, which also came with a quarterly update, going like a bullet, up 99.2% now to just over 130 kroner. We have seen that stock rise well into double digits earlier this morning. They had like-for-like sales that increased in the fourth quarter by 99.3%, and solid growth in 2023 as a whole. I also wanted to mention Norwegian, since we have talked a bit about travel with Petter Stordalen today. Not only are they working on this bonus collaboration with Stordalen's Strawberry, which hasn't gotten a name yet, but they also came with a message at the end of yesterday proposing some changes to their bond loans that will allow them to post assets in the Wids system as collateral for up to 1.75 billion kroner in debt. Norwegian reports that two out of three bondholders support the proposal, so it looks like it will be approved. Norwegian got approval just before Christmas for the acquisition of Widerøe for just over a billion kroner, so we expect that to be completed during the year. Another stock to watch today is Norwegian Titanium, which set the subscription price for its partially guaranteed rights issue announced before Christmas at 0.82 kroner per share. The stock was at 269 yesterday, so it is under some pressure today. Otherwise, I also wanted to mention some analyst updates we have received. Europris: Carnegie raised the price target from 69 to 79, repeating Hold. It closed at 77.75 yesterday. Nordic Semiconductor: Kepler Cheuvreux is out, raising the price target quite a bit from 115 to 150 kroner, repeating Buy. That is a stock that has taken a lot of beating, but we have a new CEO coming in. Arctic downgrades from Hold to Sell but keeps price target at 100 kroner. And then Tomra: Sidoti raised the price target by 20 kroner to 110, repeating Hold. It closed at 115 yesterday. ABG raised the price target for Adevinta from 163 to 185, repeating Hold. It closed at 182 yesterday. The oil price is up almost 1% after the sharp fall we saw yesterday, now at 76.73 in the spot market. We were almost at 79 yesterday before the sharp fall after the news of price cuts from Saudi Arabia. The stock exchange is also staying afloat, up 0.1% to 135 points. Later in the day from the Enos annual conference, we will talk to a number of other top executives. We will have the chief economist from LO for a debate on the outlook for 2024, we will talk to Statkraft about their new investments, and many more. So just follow along here on FA TV and on FA.no throughout the day. My name is Marius Lunden. Thank you for watching or listening, and I hope to see you again soon.