Aker Horizons (Stuttgart:7QF) Q1 2026 Earnings Call

0:00 Good morning, and welcome to Aker's First Quarter Results Presentation for 2026. My name is Fredrik Berger, Head of Investor Relations at Aker. I'm joined by Aker's President and CEO, Eivin Edixson, who will take you through the key highlights and portfolio developments in the quarter. I'm also joined today by Torbjorn Chus, Chief Economist at Aker BP, who will share his perspectives on the energy markets. And finally, Aker's CFO, Sainos Karstoknes, will take you through the financial results in more detail. After the presentation, we will open for questions. You may submit your questions at any time using the chat function. And with that, I hand it over to Ewene Eitzen. Thank you, Fredrik.

0:45 It's tempting to start with a fun fact that puts things into perspective. When I joined Aker in 2009, our net asset value was billion. Today, we're reporting a single quarter, three months only, which added NOK43 billion to our net asset value, and the AKHOF share price went up 39% in the same period. Two companies drove the development. Aker BP contributed NOK15 billion to our net asset value and EnScale added NOK22 billion following our investment in the series c capital raise.

1:32 Beyond record breaking results, the numbers reflect underlying forces. In energy, a structural shift is underway. Geopolitics is no longer episodic, but a persistent part of how energy is priced. Supply is more actively managed, investments has been uneven, and the system's buffer is thinner than it has been for decades. In artificial intelligence, demand for compute continues to run ahead of supply, and the gap is not narrowing. This is no longer just about technology. It's about access to power, infrastructure and capacity over time.

2:22 These are forces shaping our portfolio and driving growth. Aker is heading into a next phase of long term value creation. The quarter materially advanced the portfolio, not just in results, but our position going forward. EnScale stands out. The company raised 2,100,000,000 US dollars in its series c, the largest of its kind in Europe ever. Aker invested $350,000,000 US dollars in cash and rolled up our joint venture stake. As a consequence, Aker became Enscaler's largest shareholder.

3:10 Our ownership is now direct and more strategically anchored. ENSCAL represents an asset value of billion and has become our second largest asset after Aker BP. The company is progressing at an incredible speed both commercially and operationally. I'll get back to this in more detail shortly. Across the rest of the Aker portfolio, values continue to be crystallized. Aker Horizons listed HMH on NASDAQ, raising $210,000,000 US dollars, consistent with its strategy of unlocking value.

3:57 Aker Solutions monetized its shareholding in SLB and returned the proceeds to its shareholders. In total, 4,200,000,000 was distributed as dividend after quarter end. And lastly, Aker BP delivered yet another strong quarter. Operationally, the Simra field came on stream nine months ahead of schedule, and Solvay phase two started as planned, adding more than 100,000,000 barrels of recoverable resources, Reflecting on the strength of the portfolio, the annual general meeting approved a dividend of NOK 29 per AKHOF share with authorization for an additional distribution to our shareholders later this year.

4:52 Now, back to the biggest single portfolio event this quarter, and was one of the most significant and consequential moves we have made in years. Our investment in nScale and entry into AI infrastructure. It comes at a time when AI is scaling into build out at industrial level. Demand is moving ahead of what can be realistically deployed, which reflected in both capital allocation and in pricing. Hyperscalers are investing at a pace the industry has not seen before. At the same time, access to compute capacity is tightening, constrained by power, grid, availability, hardware, and the ability to execute at scale, which is shaping how this market develops and who captures the value.

5:58 This is a massive opportunity and exactly where EnScale is positioned. In The US, platforms such as Corviv and Nebius give a clear reference point for valuation. They are scaled against capacity, contracted demand and growth in deployment. The Series C post money valuation of EnScale at 14,600,000,000 US dollars sits within that range for a platform that is is earlier in this build out, but scaling quickly in the same market. EnScale is building a fully integrated AI infrastructure platform.

6:46 It designs, builds, owns, and operate data centers and compute clusters as one system, facilities, GPUs, networking, and the software layer developed specifically for AI workloads. This integrated approach is a key point of differentiation and allows capacity to be developed and deployed in parallel rather than step by step. The platform is anchored in markets with access to low cost renewable power, including Norway, Iceland, and Portugal, and is firmly established in The United States, the world's largest and most active AI infrastructure market.

7:35 Enscaler has already established a portfolio of projects with a growth potential that can make it one of the leading neo cloud companies in the world. The company and partner base with global leaders like Microsoft, NVIDIA, Nokia and Dell also reflect that position. I'm the vice chairman of the n scale board. The quality of the team combined with the pace and scale of the company's trajectory is, frankly speaking, unlike anything I have ever seen. Starting with governance. During the quarter, Sheryl Sandberg, Susan Becker, and Nick Legg all joined the Enscaler board.

8:23 Those kinds of high caliber leaders are both a testament to the company's potential and a reflection of the current moment. On the technology side, EnScale has secured early access to NVIDIA's industry leading Vera Rubin platform, with plans to deploy more than 100,000 GPUs across Europe starting in 2027. That's capacity at industrial scale and speaks to the level of partnership that Nscale has already established. On financing, the Series C was complemented by a 1,400,000,000 US dollar asset backed term loan to support GPU development and deployment.

9:11 Critical, financing components to ensure both build out and deployment. Commercially, Microsoft has now contracted the full initial capacity at Malvik, replacing the earlier Stargate structure. The site itself hasn't changed, but the company now has a larger long term agreement with one of the strongest counterparties in the market. And in The United States, the acquisition of the Monarch Compute Campus in West Virginia firmly moves and scale into the top tier of AI infrastructure. This is a 2,000 acre multi gigawatt site designed to scale into one of the largest AI compute environments globally.

10:08 Microsoft has already in place a letter of intent converging more than a gigawatt of compute capacity. Beyond AI infrastructure, our industrial software platform has also reached an inflection point. Cognite is operating at scale, as reflected in the first quarter results. Revenue grew 28% year on year with recurring revenues up 27% and more than 86% of bookings are now driven by Atlas AI, Cognite's industrial AI agent workbench, which allows customers to build and deploy AI agents directly on top of trusted contextualized operational data.

10:59 Adoption is accelerating fast. The number of Atlas AI customers has increased nearly fivefold over the past year. At the same time, Cognite is expanding its ecosystem in a way that strengthens the platform. The partnership with NVIDIA supports faster execution of industrial AI workloads, while the collaboration with Snowflake extends the reach across the enterprise data stack, connecting operational data with analytics and decision making. That progress is being recognized externally. Cognite was named the leader in the IDC market scape for industrial data ops platforms.

11:52 And, the growth is broadening beyond energy. We are seeing solid traction in pharma and life science, which speak to the broader applicability of the platform. When I look at what has been built over the past several years, I see a platform that is becoming more relevant with each passing quarter. As AI deployment accelerates across industries, the need for trusted, contextualized operational data only deepens, and that is exactly where Cognite is positioned. For Aker, Cognite hits our ownership sweet spot, combining strong underlying trends with deep domain expertise and building platforms that sit at the center of where value is created.

12:51 All in all, a pivotal quarter with performance at historical magnitude at Aker. I can't promise to beat that record quarter by quarter. That's neither the objective while managing a portfolio with exposure to geopolitical and market volatilities. What matters ultimately is the longer term creation of shareholder value. What excites me most is the repositioning of Aker at the intersection between energy and AI. Both segments with undisputed growth trajectories and high investor appetite, and both opportunities that we are pursuing and realizing with customers and partners who are defining the future globally.

13:41 I can hardly think of a better point of departure for managing the current uncertainties and opportunities in the world markets and generating even more value to Aker shareholders. But it also requires insight and analysis. I'm privileged to have some of the most knowledgeable experts as my colleagues. One is I invited to join me today to share with us briefly his perspectives and outlook for the energy markets. So the floor is yours. Thank you, and good morning. I will, in particular, explain why price developments in Dated Brent and North Sea crude grades have been so extreme recently and what this tells us about risk premia, timing and physical scarcity in the market, factors that are directly relevant for value creation and cash flow in Aker's portfolio companies.

14:48 I will cover five topics: How oil is priced in practice, what dated Brent actually is, why North Sea differentials have moved so much, and what an oil price above $100 really means in historical context, and what kind of longer term effect the current harmless crisis might entail. So how is oil actually priced in real life? Crude oil is generally sold as a price differential to a benchmark, not at a fixed flat price. And Brent is the dominant global benchmark, around 60% to 70% of all globally traded waterborne crude is priced against it.

15:34 The futures market, on the other hand, dominated day to day price discovery. But the futures market is ultimately anchored to physical oil through delivery mechanisms. That physical connection becomes especially important when futures contracts are approaching expiry and markets are stressed. So what is Dated Brent and why is it so much higher now than the paper market, the futures market? Well, Dated Brent is a daily assessment of the price of fiscal crude oil available for prompt delivery in the North Sea, typically within a ten to thirty day window. It is assessed each day by S and P Global Platts based on market activity in the market on close window, some call this the Platts window, which closes at sixteen thirty London time.

16:27 What we have seen recently is a record high differential between Dated Brent and the Frontmont Brent futures contract. The key reason is timing. When physical barrels are scarce, the market places a very high premium on immediate availability and the forward curve becomes sharply backwardated. In simple terms, people are willing to pay much more to get oil right now than to get it next month. So since March 12, when the Brent price surpassed $100 per barrel, Brent dated has averaged $117 per barrel, while the first month Brent futures have averaged around $105 per barrel. So historically extreme differential between those 2 of $12 a barrel.

17:19 So why have these North Sea differentials increased so much? Because on top of the brand dated price, the NCS producers receive a differential agreed on average about a month before each cargo is loading. And the average peak differential of NCS crude oil grades versus Brent dated was agreed in the period about ten to fifteen of April, at close to $19 a barrel on top of the Brent dated price. So this means that peak physical pricing for NCS grades should likely be in the first two, three weeks of May. The underlying driver is a severe physical supply disruption, of course, related to the flow through the Strait Of Hormuz. We estimate that around 13,000,000 to 15,000,000 barrels per day of crude oil production is currently shut in, because storage fills up inside the Hormuz Strait, making it necessary to curb production, logistics are tightening, shipping times increase.

18:23 So in the most optimistic scenario, which would be a reopening of the Strait during May, Middle East producers will have shut in approximately 1,500,000,000 barrels of oil production in 2026. When flows resume, global inventories will need to be refilled, supporting incremental import demand of about 2,000,000 barrels per day for up to two years. This alone should support prices well into 2027. So is $100 a barrel, is that a historically high oil price? Well, in nominal terms, yes, of course, it is significant. But in real inflation adjusted terms, it's not historically exceptional at all actually, because the average Brent price the past twenty years in real terms has actually been $100 a barrel.

19:19 So what matters most is the share of global economic output spent on oil. So if Brent dated averages $150 a barrel in 2026, the oil burden would be approximately 5%, similar to what we observed between 2011 and 2014, when the nominal average Brent price was around $107 a barrel. Now what about the longer term oil price effects? A prolonged closure of the Strait Of Hormuz would leave lasting imprints on global oil markets. The Hormuz crisis has underscored more sharply than any event in recent years that energy security remains a central concern for governments and corporations alike.

20:09 Governments and corporations would likely mandate structurally higher strategic petroleum reserves and emergency stockpiles, while new and costlier trade routes such as expanded pipeline capacity and longer tanker voyages would embed a permanent risk premium. So a sustained price shock of this magnitude could however accelerate fleet electrification and biofuel adoption, for example, in transportation. Much as the oil shocks of the early 1980s permanently drove oil out of power generation market, a market it never has really meaningfully reentered. We don't almost use oil for power generation anymore. Now this stands in sharp contrast to episodes of mere demand suppression, as I like to call it, such as the two thousand and eight and two nine financial crisis or the COVID shock of twenty twenty, where demand collapsed, but only temporarily and ultimately rebounding, leaving oil's structural market position mainly intact.

21:17 So while European EV sales, electric vehicle sales have accelerated after the Harmless Crisis, sales are down in both the key markets, China and The United States, so far in 2026, which is reflecting reduced policy support in both those important markets for electric vehicles. The net result is that global year on year EV sales were in fact negative even in March, meaning the crisis potential to accelerate oil demand displacement through electrification remains for now at least more of a medium term aspiration than a near term reality. What is observable so far is that the market has already priced up the average expected Brent price for 2027 to 2029 by about 15% to 30% compared to when we started this year of 2026.

22:14 So what are the key takeaways? First, Brent is the dominant global benchmark for crude oil, and crude oil is sold as a differential to Brent. Second, the large gap between Dated Brent and Brent futures is mainly driven by timing and physical scarcity. Third, North Sea differentials are amplified by the same timing effects and steep backwardation curve structure. And fourth, an oil price above $100 a barrel is not historically extreme. We would need a sustained average of $150 a barrel to match the oil burden that we saw from 2011 to 2014 of about 5%.

23:00 Finally, the longer term effects of the hormones crisis, they are uncertain. Will we end up with permanent demand destruction like we saw in the early 1980s or just temporary economic demand suppression like we saw in the grain financial crisis in 2008 and 02/09 and the COVID crisis in 2020. No matter what happens to real oil demand going forward, we believe we can be quite certain that demand for imports to refill drawn down inventories will be supportive for oil prices at least far into 2027. For Aker ASA, where Aker BP is the core industrial asset, these market dynamics primarily support earlier, more visible and resilient cash flows, which is strengthening the predictability of dividend income and overall financial flexibility.

23:56 Thank you for listening. Thank you, Torbjorn, and good morning. To begin, I will provide a brief overview of the key numbers for our listed and unlisted equity investments along with cash and other assets, followed by a more detailed discussion of our financial results. At the end of the first quarter, Aker's listed equity investments were valued at billion, making up 62% of Aker's total assets and equal to NOK1039 per share. Most listed investments increased in value during the quarter, leading to an overall appreciation in value of approximately NOK20 billion, with Aker BP as the single largest contributor, up NOK13.9 billion for the quarter.

24:51 These gains were partially offset by a decrease of NOK0.9 9,000,000,000 related to the portfolio of listed real estate investments. Throughout the first quarter, total dividends from listed investments amounted to NOK 1,000,000,000. Of this, Aker BP contributed NOK $841,000,000, Solstad Maritime provided NOK 74,000,000, Acostor added NOK 40,000,000 and Solstad Offshore contributed NOK 13,000,000. Next, over to Aker's unlisted equity investments, which represented 36% of Aker's total assets at the end of the quarter and were valued at NOK 45,000,000,000 or NOK $60.05 per share.

25:42 This value represents an increase of NOK 25,500,000,000 compared to the previous quarter and the growth was primarily driven by Aker's participation in EnScale's Series C funding round, which valued EnScale post money at $14,600,000,000 Aker's participation in Series C included a cash investment of $350,000,000 the roll up of Aker's 50% ownership stake in the Aker Enscaler joint venture and a full earn out realization. After transaction, Aker now holds a 22.8% ownership interest in Enscaler, strengthening its position in the company and reflecting a strategic investment decision.

26:31 At the end of the quarter, cash and other assets accounted for 2% of Aker's total assets equivalent to NOK38 per share. Cash inflows of NOK4.2 billion was primarily from a net NOK3.2 billion drawdown on available credit facilities and nearly NOK1 billion in dividends received from Aker BP, Solstad Maritime, Akastor and Solstad Offshore. Cash outflows amounted to NOK 4,300,000,000, including the investment of NOK 3,400,000,000 in EnScale, a NOK $340,000,000 capital allocation to Aker Horizons and a NOK15 million interest bearing convertible loan to Cognite.

27:22 Meanwhile, outlays related to operating expenses and net interest for the quarter amounted to million. As a result, the cash balance at quarter end stood at NOK0.7 billion. Then let's move to the first quarter financials for Aker ASA and holding companies, starting with the balance sheet. In accordance with our accounting principles, investments are recognized at the lower of historical cost and market value. At the end of the quarter, the book value of Aker's investments was billion, which represents an increase of billion compared to the previous quarter.

28:11 This change primarily reflects the roll up of Aker's 50% ownership interest in the Aker Enscaler JV into Enscaler and the $350,000,000 cash investment in Enscaler. This resulted in an increased book value of the investment of NOK18.7 billion. The book value of equity at quarter end was NOK40.4 billion, up NOK16.4 billion from the previous quarter due to the profit before tax in the quarter. On a fair value adjusted basis, Aker's gross asset value was NOK124.9 billion. After subtracting for liabilities, the net asset value amounted to billion or NOK1449 per share, after allocation for dividend.

29:06 And the value adjusted equity ratio was 86.2% also after allocation for dividend. Of the total liabilities billion is related to bond debt and bank loans and billion is related to the dividend allocation for 2025, representing NOK29 per share and this dividend was distributed earlier this month. Aker maintains a strong financial position with modest leverage and ample debt capacity with a loan to value ratio at 11%. The total liquidity buffer was billion including undrawn credit facilities and liquid funds.

29:54 At quarter end, net interest bearing debt increased to NOK12.7 billion from NOK9.7 billion in the prior quarter, primarily reflecting higher interest bearing debt following the cash investment in Emscale. And Aker's weighted average debt maturity was three point one years. Factoring in available options for credit and loan extensions, the total effective loan maturity extends to more than five years. Finally, moving to the income statement. Operating revenues were primarily driven by a gain recognized as a result of the roll up of Aker's 50% ownership interest in Aker Enscaler JV into Enscaler.

30:42 This gain was measured based on the Series C transaction value. Operating expenses for the first quarter amounted to NOK148 million, reflecting the high activity level during the period. Dividend income totaled nearly NOK1 billion. The majority of this income was generated from Aker BP with additional contributions from the Solstad Companies and Akastor. The net value change for the quarter was positive million and was mainly attributable to the value increase in Akastor, which amounted to NOK422 million. Net other financial items came in at negative NOK 134,000,000 for the quarter.

31:30 And finally, Aker's profit before tax for the quarter reached NOK 16,400,000,000. Thank you. That concludes today's presentation and we will now proceed to Q and A. Thank you, So let's start with the first question. Evan, in your presentation, you mentioned the repositioning of Aker at the intersection between energy and AI. Could you elaborate a little bit more on the potential it creates for Aker? Well, energy and AI are interlinked and some of the key global trajectories as we speak. And I can hardly think about the company better position to balance the two factors and create value in that intersection.

32:21 So what the results were reported this morning is just a start. And the next question, also on the same type of topic, Aker has invested in AI through both Enscaler and Cognite. How do you see AI evolving as part of Aker's portfolio in the longer term? Well, the numbers are speaking for themselves. It's already a very, very important part of the portfolio and it will continue to grow and the transition Aker from more traditional industries to AI and AI infrastructure. But in addition to that, we're getting access to technology and suppliers and knowledge, which benefits our operating entities, Aker BP, Aker Solutions, Aker BioMarine.

33:15 So it's an ecosystem in addition to individual opportunities, which continue to drive development, growth, and shareholder shareholder value. So continuing on the topic of nScale and AI. So how do you see the contract portfolio evolving? How is demand and opportunities beyond Microsoft? Well, Enscaler is a young company. Enscaler has already gained the trust with some of the most sophisticated tech companies in the world. And what I admire as Vice Chairman of the Endscale board is the discipline in the management team. So it's not only about growth, but it's quality growth. One example is the criteria that Enscaler primarily does business with investment grade companies.

34:13 Hence, hyperscalers, hence, Microsoft. So far, that has been the prioritization. As Enscaler continues to grow, it's time also to diversify the portfolio even more, because it goes without saying that even in this segment, companies without investment grade. Like some of the most rapidly growing AI companies, they will typically pay a higher margin for the project and hence a consequence, it will boost the profitability of EnScale going forward. And a follow-up on ENScale, any update on the IPO prospects and how does Aker think about the potential participation in future funding rounds or IPO? Well, as I've said before, the ENScale board has to decide and communicate whether or not to IPO, and if yes, when. But what's important to keep in mind is that in through Aker, it's already possible to participate in this exciting opportunity.

35:27 So as Enscaler becomes a more and more important part of our portfolio, the Aker share is an implicit listing of Ansible. So the next question then is about Cognite. When can we expect or what is the target of reaching EBITDA profitability? Well, whenever we decide, let's Cognite become profitable, because it's a balancing act between investment in AI product development, sales organizations, growth and p and l. And so far, our view has been that we would rather invest in the future and invest in the position as a global leader in AI for industry, which has been verified by its own rankings and experts recently.

36:27 We rather make that investment than adjusting back the level of activity to something which can make a Cognite profitable. But it's our choice. It's a well run company with a great first quarter verifying the market positioning and the market opportunity. So the last question is about share price, which increased less than underlying values reflected in Aker's NAV during this quarter. What's your thought on this? Big investment opportunity. Then you can ask why did the discounts to NAV increased during the quarter? I think the simple question is that investors and analysts in Europe are less familiar with the investment proposition of AI and AI infrastructure.

37:28 So piece of advice from me to our shareholders and analysts today is to spend more time on what's going on in The United States. You have great listed companies like Corbiv and Nebius, peers into Enscaler. Follow them and consider the development of Enscaler by benchmarking with listed peers, and you will see that why we're so excited about this Thank you very much, Joyn. That was the last question and concludes our webcast for today. So thank you all for listening and see you next quarter.