Kongsberg Says Demand for Air Defense Systems Is Growing

Speakers

Eirik Lie — CEO of Kongsberg Defense (Incoming CEO of Kongsberg Group)

Summary

European Rearmament is Structural: The "Vilnius" summit and the Ukraine war have created a dual-track demand shock: immediate support for Ukraine and long-term rebuilding of European sovereign capacity.
Margin Expansion: Kongsberg’s margins have expanded significantly from ~13% (Q4 2020) to ~21% currently, driven by high demand and operational leverage.
"Buy European" Trend: There is a distinct shift in tone towards "wanting to buy European" to close capability gaps, particularly in air defense where US systems (Patriot) have historically dominated.
Supply Chain as the Bottleneck: Defense security is now viewed synonymous with supply chain security (rare earths, chips), with companies holding 12+ months of stockpile to mitigate risks.

Trade Ideas

Ticker	Direction	Speaker	Thesis	Time
KOG /RNMBY	LONG	Eirik Lie CEO of Kongsberg Defense (Incoming CEO of Kongsberg Group)	"We still see a high demand for air defense and our air strike missile capacity... margins... now almost at 21%." The combination of a "high demand" environment (order backlog) and significantly improved profitability (margin expansion) indicates that defense primes are entering a "Golden Age" of free cash flow. Kongsberg (KOG) and peer Rheinmetall (RNMBY) are direct beneficiaries of the European rearmament cycle. LONG. These companies are transitioning from "stable yield" to "growth" assets due to the geopolitical supercycle. Government budget constraints or a sudden de-escalation in geopolitical tensions reducing forward order books.	—
ITA /DEFENSE SECTOR	LONG	Eirik Lie CEO of Kongsberg Defense (Incoming CEO of Kongsberg Group)	"Europe needs to continue the build up of the capacity... wanting to buy European... This is a very active discussion within Europe." The speaker highlights a structural shift away from solely relying on US imports toward building domestic European capacity. However, the sheer scale of the "gap in capacities" implies a rising tide for the entire sector, including US primes that supply components or joint ventures (like the F-35 missiles mentioned). LONG. The sector is under-equipped for the current threat environment, guaranteeing multi-year government spending floors. Supply chain disruptions preventing delivery of the backlog.	—
REMX /MP /CRITICAL MINERALS /AI / ROBOTICS / RARE EARTHS	LONG	Eirik Lie CEO of Kongsberg Defense (Incoming CEO of Kongsberg Group)	"Basically your defense is only as secure as your supply chains are... meeting every single week about rare earth metals to make sure they have the supply." Second-Order Thinking: You cannot have a defense boom without a raw materials boom. If every major defense contractor is stockpiling "12 months of supplies" (as noted regarding Rheinmetall), this creates an artificial demand shock for critical minerals and rare earths upstream. LONG. Defense demand acts as a non-cyclical floor for rare earth prices, decoupling them slightly from general industrial demand. China export controls or new mining supply coming online faster than anticipated.	3:58
SPACEX /SPACE MANUFACTURING	LONG	Eirik Lie CEO of Kongsberg Defense (Incoming CEO of Kongsberg Group)	"You'll see also the space segment... taking a leading position for this new space segment there also for military purposes." Space is no longer just for communications; it is now a contested military domain ("underwater domain" and "space segment" linked). This validates the valuation premiums for companies involved in satellite launch, manufacturing, and data downlink (like Kongsberg's KSAT or SpaceX). LONG. Continued militarization of space drives recurring revenue for launch and satellite infrastructure providers. High capital intensity and technical failure risks in launch operations.	—