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 number 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 developments and results may differ from [expectations?] 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 project 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 project, including subcontracted work. Despite this revenue development, operational EBITDA level was maintained at €104 million, and the operational EBITDA margin improved to 15.7%.

A major milestone in the quarter was that the Champlain Hudson Power Express project 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 €13 billion at the end of Q2, only slightly down from the record high level at the end of Q1, driven by project 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 €2.65 to €2.75 billion, and operational EBITDA is expected to be between €400 and €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 number 6 for a look at the overall financial performance in the quarter. Revenue at standard metal prices declined to €657 million from €723 million in the same quarter last year, corresponding to an organic growth of -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 €104 million compared to €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 project mix in transmission and Grid Solutions and Accessories. In transmission, organic growth was -20%, while operational EBITDA increased to €67 million.

Grid Solutions and Accessories delivered strong organic growth of 15% and operational EBITDA of €20 million, driven by high activity levels and satisfactory execution. Distribution delivered organic growth of 1% and operational EBITDA of €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 number 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 €334 million, down from €419 million in Q2 2025.

This corresponds to an organic growth of -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 €67 million from €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 project mix, and good utilization of our assets, including NKT Victoria.

I'd like to remind that in a project business like transmission, quarterly profitability will vary depending on the projects and execution, and in this quarter, we've benefited positively from this. During the quarter, we continued to progress and execute on several large projects, including Biscay Gulf, 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 €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 €13 billion to be compared to €13.5 billion reported at the end of Q1, driven by project 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% to offshore wind projects. Looking ahead, we continue to anticipate that our average addressable transmission market will exceed €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 and Accessories. Turning to Grid Solutions and Accessories, the business line delivered a good quarter with growth in revenue and improved profitability.

Revenue at standard metal prices amounted to €129 million, an increase from €112 million in Q2 2025, corresponding to an organic growth of 15%. The growth was driven by higher revenue in both Grid Solutions and 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 €20 million compared to €16 million in Q2 2025, and the operational EBITDA margin improved from 15.6% 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 accessories site in Nordenham became our first zero-carbon factory during the quarter. This is an important milestone for our sustainability agenda and supports our target of reaching zero-emission operations across our sites.

Let's go to slide number 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 €239 million in Q2 2026 compared to €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 €27 million relative to €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 hall, 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 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 will 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 €657 million in Q2 2026 compared to €723 million in Q2 2025. This corresponds to a negative organic growth of -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 €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 and 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 €69 million compared to €71 million in Q2 2025. Net financial items amounted to a cost of €3 million, mainly driven by non-cash exchange rate fluctuations, and thereby the net result was €52 million compared to €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 -€145 million in Q2 2026 compared to -€1 million in Q2 2025. The positive EBITDA contribution was more than offset by an outflow from changes in working capital, which amounted to -€225 million in the quarter.

The working capital development was driven by phasing between milestone payments and project execution in transmission, but also an increase in inventories and trade receivables. Inventories rose slightly due to the strategic stock build-up 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 -€104 million in Q2 2026 relative to -€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 continued 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 -€249 million in Q2 2026 compared to -€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 €1.2 billion at the end of the quarter.

This was lower than the three months ago, mainly driven by the phasing between milestone payments and project execution in transmission, but better than the working capital balance one year ago. Capital employed increased to almost €1.7 billion at the end of Q2 2026, up from €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 €251 million during the quarter, mainly reflecting the negative free cash flow development. At the end of Q2, the net cash position amounted to €591 million compared to €842 million at the end of Q1.

Financial leverage was -1.5 times operational EBITDA on a last-12-month basis. Available liquidity reserves was more than €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 €2.65 to €2.75 billion compared to previously €2.63 to €2.78 billion, and operational EBITDA is now expected to be approximately €400 to €430 million from previously €360 to €410 million.

With the update, we are narrowing the ranges for 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 €20 million above the previous range.

The update is driven by the solid project execution as we have seen and expect 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 and 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 and 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 line, 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 number 17 now. Before we conclude the call, I would 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 operational EBITDA remained stable at €104 million.

The transmission order backlog remained at a high level at €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're 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 Capital Markets 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 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.

Yes, thank you. I have three questions, I'll just shoot them one by one.

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.

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.

Good morning, Kristian. Claes here.

Thank you for your question. Not unexpected, of course.

I think you're pointing to part of the explanation for it. It was a solid execution and performance in transmission in the second quarter.

I'll remind us all that 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 is had in the incumbent quarter. A third component is the way we execute, meaning the way we manage both risk and opportunities.

Temporarily for the moment, we have a fourth component, which is also the OpEx drag with the ramp-up that Michael talked earlier about. If we leave aside the last component, it is a good combination where all the three fore-mentioned components contributed positively to the margin in the given quarter.

That gives us then the overperformance versus our expectation, which also further then gives us some confidence in then upgrading the guidance. 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.

It was a strong quarter indeed.

Understood. Second question is on the Champlain Hudson project.

You highlight several times that it has reached commercial operation. Doesn't necessarily mean it's fully completed from your side.

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.

Yep. 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 close of project.

Of course, there can also be certain things to be worked out between ourselves, our subcontractors, but also ourselves and the customer. That typically takes some time after the project has reached COD.

As to how much or whether we have provisions left, etc., I think I'm unable to comment on a specific project, which I'm sure you understand.

Fair enough. On the timing, when should we expect it to be fully closed?

I don't dare to give you an exact timeline, but we are talking months and not years.

That's clear. Excellent.

Third and last question here is just on the €2.5 billion in booking commitments, whether there is any update to when you expect that converted into firm orders. Thank you.

No, no fundamental, major update since last quarter. There has been plans, as you're well aware, when we booked these 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. 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. No big news since last quarter.

Understood. That was all for me.

Thank you.

Hi. A few questions from my side as well.

The first question goes to the transmission division. This 20% EBITDA margin we 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.

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. We can expect that journey to continue.

Then you have to see it over a couple of quarters. It's more difficult to promise anything from quarter to quarter, because things can also vary in and out of the incumbent execution.

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. When we look at the more radical change in mix, we remain with our earlier communication that this will happen during 2027.

Sure, but 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. That must have a very good lead 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.

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. 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.

I think we had a combination of three strong performance or strong outset in all of these three buckets in the second quarter, but also especially the last one.

That's fair, thanks. Then with the Karlskrona factory soon to be ready, does that mean you are more confident about your capacity the rest of the decade?

In other words, maybe your appetite for adding more projects is a bit higher than it was maybe one 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, 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. 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.

That makes a lot of sense. Then my final question is as to the guidance upgrade.

Once again, that's a very impressive, long trail of guidance upgrades. Looking at the second half of this year, have you still included some being conservative as to things are not developing as hoped for?

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 what you should read 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. We will remain with the same perspective of caution, of diligence, and managing our risks and opportunities, and that is part of the guidance.

Just to be sure, so that is, you are doing guidance as you always do, 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.

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. There can also be variance in that performance, both up and down, and still we end up within the guidance, to speak.

Then it's a question about magnitude. Can we rule out that we could perform even so much better, we could come out of the guidance?

I don't think we can say that there is no chance for that. 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 €400 to €430 that we believe will be the range where NKT ends up.

Cool, understood. Thank you so much and well done.

Thank you, Claus.

Hi, good morning. Thank you for taking my questions.

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 this topic about clarifying the guidance and 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. 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.

Is that what then drives your higher confidence on margin, or should we ascribe the higher confidence on margin to the other divisions as well?

Hi, good morning, Daniela. Let me tackle this question.

I think you are leaning into the answer. There's no change in the revenue profile for the transmission business, so that mid-single-digit year-over-year decline remains constant.

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 seven 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, a lower risk and contingency profile for the projects.

If you compare what you viewed at the beginning of the year, as you progress through the projects, you reach certain milestones, you reach certain amount of completion, then that risk is behind you. I think this is how you have to read our indication here.

That's very clear, thank you. Then I wanted to ask you a little bit about It's kind of a two-part question, but do you think backlog will grow in '26 and '27?

How are you seeing the tendering pipeline right now? Some of your competitors talk about a restart of another wave of contracts in '27 on the HVDC side.

From another side, we saw yesterday another player, which is not one of the normal three, getting a large HVDC contract. Is the competitive environment, if we have these extra waves, different than it was perhaps before?

How are you viewing this changing in environments?

Thank you, Daniela. Good morning also from my side, Claes here.

We continue to see a high market activity, and I think the first half is also a testament to that. According to what I said earlier, with round about €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 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. This is also one of the reasons where we started to talk about average market volumes instead of talking about individual years.

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. 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 I think this is nothing that has surprised us, if we put it like that. The market has grown significantly over the years, measuring over a 10 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. That is well in line with the expectations, and it does not materially change our view on the supply-demand balance situation on the market.

Very clear, thank you. You're welcome.

Thanks, Daniela.

Thank you, and also from me, congrats with a spectacular quarter. First a household question on slide 9 for Grid Solutions and Accessories.

You mentioned that you had a 15.0% margin in Q2 last year. If I take €16 million on a €112 million revenue, I get 14.3%, I wonder how you derived at 15.

A related question, of course, is if my math is correct, and you have a 130-bp margin expansion despite start-up costs, then okay, that's of course not here, but a 130-bp margin expansion, is that sustainable or just a quarterly blip?

Lars, I have not done the math like you did just for the moment, looking to my CFO, who's I think also looking at that for the moment. What I will say is that Grid Solutions and Accessories did have a strong quarter.

We had a strong quarter with high activity levels across let's say the running business, to speak, the expected business both in HVAC onshore products 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. Also what added to the good progression was the mix of repairs that we were able to attain during the quarter, and that put some uplift on the profitability.

I think that is what you need to keep in mind, this last component, as you reflect about the profitability in coming quarters. That is something which is not a given one every quarter.

Thanks. Then and 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 TSOs that are your core customers would still focus on track record and then still select yourself, Prysmian, and Nexans?

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. Number two, you should read in to our confidence about our own abilities to secure orders and our own ability to compete effectively.

I think these two 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 very clear, Claes. Then a question on the change in project mix.

If I look from Q1 to Q2, I think the notable thing is that Spittal-Peterhead comes in as a project you execute on. If I look at, what should we say, the contract value relative to the cable length, this has by far the highest value of any project you've 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. I think it's difficult for us to give the exact component of an individual project.

What I can say is two 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 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, etc.

We should not deduce that pricing, to speak, is the only metric that makes the value change from project to project. I 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.

Are you aware of 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. I don't think it's a secret that there are projects like LionLink and EGL 5 and 6.

I would avoid to confirm whether active or non-active, etc.

In 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.

Amazing. Thank you so much, guys, and again, congrats.

Thank you, Lars.

Hi, guys. Hopefully you can hear me.

Could 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 for Champlain Hudson and in the quarter, and 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? If not, should we expect variation orders to be more of a headwind into the second half of the year?

That's the sort of first question. 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 were 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.

Thank you. Let me at least try, and then I 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 you are also having the answer basically yourself. The second quarter, when you look at the comparison period last year, then we had a 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 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. I think these are the two 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. Here we have not given components, discrete components, how much in what quarter, and also not exactly how much per business line.

I think it's known by all of you where we are conducting the expansions. The primary part of the expansion is in transmission, and then there is a smaller part of expansion being carried out in distribution.

We left last year with 1 percentage point drag, we will end this year with around 2 percentage point drag. I think based on these data points, you should be able to estimate a little bit or make reasonable estimates for your analysis.

I would just add we're in that journey between the 1 and the 2. Also I think it remains a relevant data point considering that the revenue guidance is narrowed, but on the same middle point.

The frame of reference is still the same.

Yeah.

Thank you, and actually, if I could 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 will you see that, as you saw in Q2, you've got to absorb some of these ramp-up costs, but equally, hopefully you'll also have some of the raw material inflation sort of being passed on?

Could you speak to the drivers of what you're seeing in the distribution segment for the second half of this year, please? That would 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 Asnæs capacity of which the project has just been completed in the second quarter. 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 have been ramping this up in Denmark, and we are also ramping them up now.

We are more or less at a peak point of that combination of ramp-up costs. As the volume comes online, then obviously the contribution from these volumes will start improving the margin.

That said, I think to 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 large extent, in the second half of the year through also pushing this down also towards the customers. I would caution in taking a specific margin of the quarter and doing an extrapolation for that, because it will be recovering and absorbing the costs.

I think with those data points, that's how I would color the evolution of distribution in the second half of the year.

Thanks for the answer. Thank you, guys.

Hello, good morning, and thanks for the time. I have a few as well, if we can take them one at a time.

The first one is just on free cash flow and the transmission part. I just wanted to confirm, did you get down payments for kind of EGL and the SSE orders this year, and do they come with down payments in size, kind of that has solved you having an improvement in performance?

Just on working capital more generally, where do you see that settling towards year end? Thank you.

Hi, Lucas. Good morning to you.

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. 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. It's more what's driving the negative evolution of the working capital in the quarter has to do with the phasing of It's a timing topic, the phasing of milestones of cost and of incoming cash on receivables.

I would say nominal. If your question's also asking for an indication towards the end of the year, I think where we're ending the first half in the quarter, we are on our operational plan, I would expect that we will land at a similar level towards the end of the year.

That would be the indication we give today. That is also indication not just for the transmission line, but in general for the company.

Similar level to Q2?

Similar level to Q2. More balanced than Q2,

yeah. Yeah.

Perfect. 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 I had something more like around. 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. Also good morning from my side there.

No, I don't know if you perceived a 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.

Also with that, of course, also when we look at in-operation taking of a plant 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 Asnæs, machinery installation plays into it, capabilities build-up, product qualification, output optimization, planning of the commercial volumes into the factory, etc.

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. Then the last one was just on coming back on Hellenic Cables and potential changes in the competitive environment.

The first question I had was more, 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 reduce you for a player to kind of move up that value chain? Also maybe how do you think about owning the vessel?

How does that and also doing more scope in-house, 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-sourced?

Thank you. Highly relevant both observation and question.

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 EirGrid project between Ireland and UK of 200 kV, coming through the 320 kV projects in the German territorial waters.

Now here we are somewhere around 2014 or so. Then launching the 525 kV in '14, commercializing it initially on land in 2020.

You can see it's a long period of step-wise 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 conductor material, sizes, every specific product circumstance gives you learnings, caution, and reflections for the future. 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.

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 a diligent and long history of doing these kind of things in order to be able to produce and deliver successfully these projects. A big part of the delivery of these projects is also the EPCI concept as in reference to your second part of the question.

Here, I imagine it's different perspectives. 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 a value-creation and a risk-management perspective is to have the EPCI breath, including also full control over your vessels, both from a, let's say, technical compatibility perspective, but also from an execution certainty perspective.

We remain with that opinion, but we also respect different views, of course, how this should be done. 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.

Yes, great. Thank you.

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.

With those words, I thank you for the attention, and I wish everybody a good weekend when you get there.