Hvordan Kongsberggruppen navigerer fremtiden: En samtale med CFO Mette Toft Bjørgen

Thank you very much.

Yes, if I start with my background, I am educated at the Bergen University College, so I have a degree that was then called a sivøk (Master of Economics) from the college. After I graduated, I started working in finance, so I have two years in Carnegie Investment Banking, then I was 12 years in Statoil, and then I got my first CFO role when I started in Viken Skog in 2015. I was there for four years. I was CFO in Ekornes for two years from 2019 to 2021, and then I have been in Kongsberg Gruppen from 2021.

Yes, well, all companies are in different situations, and these are also very different industries. So it is clear that being CFO is very much about driving the strategy and what the businesses are facing. So on the one hand, being CFO is a craft and a toolbox you need to have with you because you deliver an annual report every year, and there are certain things that are included in all CFO roles. But then, all companies face different challenges, and you have to adapt to what the company is facing and what I can contribute with my background and experience in the different roles.

I think I have learned a lot in the years I have been there. I started in Kongsberg Defence and Airspace, so in the defence area of Kongsberg. And it is clear that when we were already in a significant growth period, and to be in such extensive growth while so much is happening around the world that affects the company, it places entirely new demands on the business. So I have learned a lot about adapting to the environment we live in and seeing how we contribute and stand in that situation.

Yes, Kongsberg Gruppen has four business areas: Kongsberg Maritime, Kongsberg Defence and Airspace, Kongsberg Discovery, and Kongsberg Digital. Our largest business area is Kongsberg Maritime, which delivers products and equipment to the maritime fleet. We have equipment from Kongsberg Maritime on board about one-third of the commercial vessel fleet of 100,000 vessels. So it is a comprehensive market. Kongsberg Maritime had a turnover of 20 billion in 2023. The second largest business area is Kongsberg Defence and Airspace, which we have become well acquainted with in Norwegian media through our air defence system NASAMS, which has been donated to Ukraine. They produce and have developed new anti-ship missiles that we have just announced a new contract for with the US Navy. We have combat systems, communication systems, remote weapon systems – it is extensive technology and equipment delivered within Kongsberg Defence and Airspace, mainly to Norway but also to the USA and other allied countries. In addition, we have a newly established business area, Kongsberg Discovery, which is spun out from Kongsberg Maritime and has a lot of exciting technology focused on what happens under the sea. We have autonomous vessels, sensors, hydroacoustics, sonars, drone radars – very exciting technology that delivers mainly to the maritime sector but also to other business areas. And the last area is Kongsberg Digital, a slightly different business working with digital solutions, with a focus on offshore industry, traditional oil operations, and we also deliver digital solutions to the maritime industry. So very exciting things happening in Kongsberg overall.

We are a group, and we have our own CFOs or Executive Vice Presidents of Finance within all four business areas. Within those functions, we have result monitoring, controlling, investor relations that report to the market and investors, tax, and treasury. And of course, result monitoring and controlling. We have significant requirements, especially within sustainability reporting. We are now in the middle of implementing CSRD reporting, so it places new demands. But these are areas that we, through being listed and investor requirements, have had significant pressure to show how we work with sustainability and find a standardized way to communicate it, and now these reporting requirements are coming in.

Well, I hope that these new standards and requirements – because it is a comprehensive reporting tool – the most important thing for us is also what we do strategically. We are focused on transitioning our business to new requirements. We must reduce emissions. It is obvious that we have challenges within climate, and it is clear that we must contribute on that journey. So the strategic part is important for us, and it must be matched with these new reporting requirements.

Yes, I think one should be careful to say that as an economist one should lead the engineers, because they prefer to do that themselves. So I think we as economists must make the engineers good. I think we can argue quite well that we all play different roles. So being a clear business partner but sparring partner for the engineers – we must have respect. I think I should be careful about venturing too much into extensive product displays. But of course, when it comes to challenging profitability, challenging – many engineers want to deliver the absolute best technological product, so we as economists can perhaps challenge a bit on cost-benefit of having the absolute best versus actually what best meets the market.

Yes, well, we are all driven by achieving goals, and that also goes a lot on economic KPIs. We work with many large projects in Kongsberg, so the project control role is very important within the project. It is to deliver projects on plan, according to cost, and ensure that we make the right assessments regarding risk along the way. Many of our projects have quite a lot of technology content, so making the right risk assessments regarding the development of new technology is also important from an economic perspective. So working with risk assessments and sparring on profitability and ensuring that we are very focused on our costs is also an important role for the economists in this business.

I think it's great fun to work in Kongsberg, and I learn something every day. So I have enormous respect for the organization and what it has stood for for 200 years. I think many are concerned with meaning in their job. And it is clear that as Kongsberg, we have a purpose of protecting people and planet. Those are big, grand words, but they are embedded in the organization's backbone, and they mean something. It means that we develop technology and systems that will reduce emissions and contribute to a more sustainable world, but also that we contribute to total defense in Norway. And what we see is so important these days to protect the society we in Norway are so fortunate to have, and which is especially important to protect in the geopolitical uncertainty we also experience.

Yes, I can take it from a bit of an opportunity perspective first. As we perhaps said initially, we are positioned very strongly in a world characterized by increased focus on security and also a focus on achieving more sustainable solutions, especially in the maritime industry. Regarding security, it is the case that especially in Europe, and it has become very clear now, even more clear with Trump as the new president in the USA, that we in Europe must invest more in defense. We have underinvested in defense; we have not lived up to NATO obligations. That means there is a significant backlog of investments, in addition to that one must donate or one wants to donate, and there are significant donations to Ukraine. So it is a situation where we are well positioned because we have newly developed, relevant, good systems that help strengthen defense in Europe and for the allies. And we also see that through the new long-term plan in Norway, where Kongsberg aims to be a significant supplier of the systems Norway needs. And then we have the other side: we must reduce emissions, we must make things more sustainable. Kongsberg Maritime has delivered equipment that reduces emissions. It was previously driven by a cost perspective, but now it is to an even greater extent driven by requirements to reduce emissions. So we will continue to do even more of what we have already done, and even better going forward.

We have long contracts, and we have just entered into a new agreement with the US Navy over five years. It is clear that significant inflation in that period will affect our cost level. So we are concerned when entering long contracts that we have the possibility to escalate according to normal inflation targets. And then we operate in a global business. We sell about 20% of our goods in Norway, but the rest is in other countries and in export markets. That means we constantly have to look at cost follow-up, both in Norway and other countries, and think about it in a long-term perspective.

We have good processes and systems in place to constantly assess what the most important risks are for us and how we handle them. So as CFO, we must ensure that when we enter long-term contracts and agreements, we have made good assessments on currency, cost base, and that also applies to our investments. We need good decision-making bases, constantly work with the criteria to make good decisions, and ensure that over time we do this in a profitable way.

We have had strong functions in Kongsberg for a long time. But what we are perhaps more focused on now than before is that we work more strategically in the finance function as well. That means we work more with the strategic long-term plans. We are changing our processes; we have changed the budget process so that we have more focus on forecasting and prognosis going forward, rather than looking in the rearview mirror and going into details in history. So we try to be more forward-looking. We work more strategically and align the strategic plans with the strategy process, work with capital allocation, resource allocation into the strategy process, so that we get good economic discussions when we talk about the strategic choices that are important for us.

I am very glad you asked that, and I wish I could say that we use technology much more actively. That is definitely a goal we have for the future. So far, we have worked more on changing the processes. We don't have more people; we have removed tasks, so we have rationalized away some focus on details, and increased focus on the forward-looking and long-term.

Yes, I think reporting well on those requirements is a journey that many businesses are on. It is almost like we have to start reporting the financial accounts from scratch. So I think we have to work into it over time. But what we do in Kongsberg is that we have gone from a very top-down process to working it down into the organization and integrating it into the existing reporting. So we work very closely with the business areas, have established forums. I am very concerned that sustainability should not become a separate compliance, because then I think we will fail. We must get this into the ordinary, as natural as we talk about financial key figures.

Well, I think Kongsberg is a company that is over 200 years old, and we work long-term. Norwegian authorities, just to take the example of defense, have laid a 12-year plan for defense now. These are long-term plans. Things don't happen overnight unless you get an immediate threat, of course. So working long-term is something we have always done. So I think it is completely natural for us. And we are in a very special situation, and that was also the background for why we stretched our goals and ambition level 10 years forward. I think what we can realize in two to three years is limited in terms of capacity and plans, so we were concerned with really stretching both the organization and setting the ambition level much higher because we believe we are in a completely special market situation in our areas, both in the maritime and in Kongsberg Defence and Airspace, which means we can take positions and should take positions with the competence and existing market positions we have, which means we must see the opportunities to just grow further. So this is an attempt to really stretch ourselves because if we don't, others can take those positions. So I think it was the right time for us, given the situation our market is in, to stretch a bit further and also increase the ambition level.

Yes, well, we constantly make more short-term forecasts and work on measures in the short term. So we have had a very strong focus on working capital this past year, focus on cost level. You mentioned high costs, and we see these cost increases that are challenging. We are also growing in number all the time, so they have to come in and contribute to the large organization as well. So there are many considerations to take in the short term. But the long-term perspective is the goal and what we work towards, and it is important to see the potential we are in. So I think it is important when we are a bit buried in work now to have the long-term goals to stretch towards. And it is clear that Kongsberg parked over a period, and now we say we are going to triple again. It is clear we are going to deliver 120 billion in revenue in 2033 with higher profitability assessments.

We see that we get a lot of attention, and it has been a pleasant journey. It is nice to talk to investors when things have gone well. But it is also clear that it creates increased expectations on us and increased focus. And I think, on the one hand, it is good that we have increased expectation pressure on us because there are many skilled people in Kongsberg who want to deliver even better and who stretch themselves when they get these goals. So I think that can mobilize the organization as well. And then it is clear that we have to be prepared; we run our business and know what we are going to deliver on, we know what challenges we have, and that things take time. So we have to communicate that in a good way as well.

Yes, over the past year we have changed some of our processes. We have changed the budget process and we have changed some of the reporting. And then we have focused on the three F's, which fit nicely within finance: Forbedre (improve), Forsterke (strengthen), and Forenkle (simplify). And it goes back to what I said about doing things better but not necessarily doing more. I think we have a tendency within finance to often add more, but we need to take away and get rid of the tasks that are not value-creating, because we have to focus on the right things. And that also applies when we are going to use new technology because we need to move away from manual, repetitive tasks within finance. We need to control, analyze, and support the business. And we cannot just sit and do the simple things.

Yes, labor is expensive, and we have all heard that artificial intelligence will come in and take over many tasks. So I think, again, we need to move away from simple repetitive tasks and over to more value-creating tasks that machines cannot solve for us. That is a trend we have seen over time, and it will only strengthen when we talk about succeeding with this transformation.

Yes, I think I should be careful to say that we have achieved full success in that area, but it is definitely something we are working on and focusing on. But I think it is important to remember that these are large change processes, and you have to work with change in behavior. You cannot just implement a new system and expect to get the effects. So I think that is perhaps an essential success factor to make it happen.

I think a little, to succeed as a CFO, or actually to succeed in any job, it is perhaps important to be honest about what you are good at and what you maybe are not so strong at, and ensure that there is a match with what the role demands, and not try to compensate. So that is a bit of a foundation. And based on that, see where you can contribute, what the focus is here. In my experience in different roles, it is about finding where you can contribute, because all jobs and all businesses have completely specific challenges. So it is a bit about time and place and matching the competence you bring.

I think what I have brought into many of the roles I have had is the ability to connect the strategic to our role as finance. So picking up where we are and seeing the strategic challenges of the business and then bringing that into the finance function with simplifications and improvements, and daring to make some tough choices to remove some detailed information and focus on the important things, and being forward-looking. So I think those are some of the strengths I have brought with me.

I think it's dangerous to regret things because you can't do anything about it. But what I have perhaps learned to a greater degree and do a bit faster today than many years ago is that when you are in a situation and are a bit unsure if you thrive in the job or not, I usually say there are two things you can do something about: either you must work on your attitude, or you must change the situation. And I think first work on your attitude: is there something I misunderstand? Could I have a different perspective? Can I change the way I approach this? That I could have done a bit faster. And if you can't do anything about your attitude and mindset, then you just have to do something about the job.

It's a bit dangerous to dream about a job in 10 years, so I think you have to make the best of where you are now, take that experience, and move on. And as I said earlier, working on yourself and the attitude you have in every position, because it's so easy to see that the grass is greener on the other side. But try to make the best of the situation and really utilize the opportunities. And then you have to dare to make some tough choices in between, and take a chance. Sometimes it also means daring to take a position that you don't necessarily feel 100% qualified for, but just jump into it.

Thank you for having me. We look forward to following both you and Kongsberg Gruppen further in everything that will be created.