Akva Group ASA

OSE:AKVA

Earnings Call Transcript

[Knut Nesse, executive]

Ladies and gentlemen, good morning, and very much welcome to the 2024 Full-Year presentation of AKVA group.

The agenda of this morning is that I will do the introduction and the highlights. Ronny Meinkoehn, the CFO, will do the financial performance, and then we will end with a Q&A session. So for those which are in the call, please post any questions during the presentation.

Let's go straight to the highlights for Q4. Revenue of NOK 792 million and EBIT of NOK 23 million. It was all-time high quarterly order intake of Sea Based. We are very pleased with that of NOK 946 million, and that's very much driven by the deep farming solution. Talking deep farming solution, we still have a very sharp focus on further development and improved implementation of the Nautilus solution. Even though it's a commercialized solution, we still think there is room for development and innovation here. Not exactly in the quarter, but at the start of the year, we got awarded 2 new land-based contracts or RAS contracts, one for the activity of Laxey, which is a re-use technology for growth at Iceland. We got that in January '25, with an estimated contract value of EUR 20 million, and that's subject to financing.

Also, finally, we got what was announced as an LOI in Q4. We got signed the contract with Cermaq Chile for the RAS post-smolt facility in Chile, with a value of approximately EUR 30 million. Also, first time in 3 years, we have to say there have been some kind of headwind and rough sea behind, but we are pleased now to pay a dividend of NOK 1 per share, reflecting first half or expectation for the first half of 2025.

Moving on to the quarter. Activity level of NOK 792 million. This is a little lower than we expected. And the real driver behind that is that normally, we expect a rather even order intake and to start some of the work for the new orders. So, we had some expectation of a fair share of that. But it was a very unusual quarter in that respect because even though we had a very strong order intake, the big, big, big vast majority came actually in December. So the value creation of the new orders were rather limited in Q4, but it's very, very promising for the start of '25 and activity level of '25. So in that sense, we are okay. And in particular, we are okay with the EBITDA and the margins we got out of this activity level.

We think that's a fair number. EBITDA of NOK 76 million, Sea Based at NOK 55 million, Digital at NOK 7.5 million and Land Based, finally, coming in with decent profit level, still at low activity level, but NOK 14 million. So in total, that's the NOK 76 million. And the EBIT combined for the group is then NOK 23 million, which is fair for the quarter given the activity level also if you look at like-for-like last few years.

Then talking the full year, we had an activity of NOK 3,526 million. This is our highest turnover marginally, certainly, but still it's a little beat there. Also on the EBITDA, it's a beat compared with the past of NOK 381 million. Sea Based is the growth -- not the growth, but the profit engine at NOK 337 million, Digital at NOK 29 million and Land Based for the full year at NOK 15 million after a soft first half, but then a rather good progress in the second half of the year. EBIT of NOK 184 million for the full year is representing a bit. It's the highest EBIT ever for AKVA.

So if I should reflect a little bit on this one, we are pleased with the financial performance as such for 2024, in particular, in light of what we have seen and experienced over the last 2 years, 3 years. And the next -- we think that we have done rightsizing. We think the OpEx level or the cost base is correct now given the activity. But still, we have some -- we are still doing quite some investments in our innovation agenda for the future. So, we are geared for growth. And I think the next chapter of AKVA and the development of AKVA is to see top line growth, and that's going to drive also a higher profitability. Come back to that a little bit later when we talk about the guidance of 2025.

Then to the order intake and the order backlog. Overall, order intake of NOK 1,081 million for the quarter, of which NOK 946 million is Sea Based, which is a kind of record quarter for Sea Based, very good. And this is, to quite some extent, driven by deep farming. Also, as mentioned on the summary, we -- during Q1 or the start of the year, we got the 2 new RAS contracts, Cermaq Chile and Laxey, which will then be reflected in the order intake for Q1. So that's the situation on the order intake.

And then to the order backlog, you see we have a slight beat there as well of NOK 2,658 million, sorry. And this is also a reasonable good level. And in particular, when you reflect the 2 new Land-Based contract, which will then come at the top here at approx. NOK 600 million. So when I'm saying that the next chapter for AKVA group is to see more top line growth, I think this order backlog gives some comfort that we can drive growth finally in 2025. So, some comfort there.

Then moving on to the more high-level picture, what is happening in the industry. And all of you are really following the industry, so no need for me to educate you. But as a matter of fact, if we talk Atlantic Salmon globally in terms of volume and supply, there have been -- at a global level, there have been no growth since 2021. So, that's already 4 years without growth. And this is a very simple illustration about what's going on here. And we still believe that on the orange line here that there is an underlying demand capacity or appetite for salmon of more than flat. It should be more up to 5% that supported by good marketing that the global consumption could absorb up to 5%. But going forward, the dark blue line, if we do everything like we just did it in the last few years, probably the max is a growth of 1.5% or something. And then the light blue line is just the delta between the orange and the dark blue, and that is the supply potential. And we believe that you need to come to a kind of technology shift.

We think that growth and sustainable growth for the future can only be realized through applying new technology. So what is new technology? Well, it depends on the glasses and how -- what is the time horizon here. If you talk 2040, you could have one debate or even 2050, you have another debate. But if I'm a little bit practical and just think for the next 5 years into 2030, the view of AKVA is that to quite some extent, we need to rely on technology, which is basically there today. And what is basically there today is within the fuel system, it is -- what is commercial today is deep farming. There is a very good momentum related to deep farming. Deep farming typically comes with lower mortality.

If the average of the industry is 17%, 18%, it's relatively realistic to foresee that you could release half of it in additional growth if you go to better fish health provided by deep farming. So, probably you should get 8%, 9% extra growth if you transform from traditional to deep farming. But the real growth engine, which is possible, we believe, in the next 5 years is about post-smolt because we have seen this and more and more companies are talking about the growth perspective out of post-smolt. A 1 kilo post-smolt is typically coming with 2 elements of growth. Number one is that you can utilize your license and license capacity better. On average, 30% is not a bullish estimate. That's more prudent.

And the other thing is that typically, when you half the production time in the sea, that also comes with lower mortality. And I think it's fair to quote that you could half the mortality when you go to a 1 kilo post-smolt. So, that's also 8%, 9% on average for the industry. So, 2 elements of growth from post-smolt. It's the capacity utilization, and it's the lower mortality. And what about other things? Well, it could be that there could be some momentum for closed or semi-closed, but we think that's still going to take some time to really scale it. And then moving out more exposed, either semi or offshore, we think that's going to take more time because you need more support from legislation there and even the tax system. So for 2030 and the growth perspective, we really believe it that deep farming and post-smolt is one of the more realistic growth drivers.

We have our innovation agenda for Sea Based. We are putting a good effort into that on a constant basis. And we have a very complete offering here, both on the marine infrastructure side, also both precision feeding and not at least deep farming. And just to give you a little update on the deep farming, we have talked about the concept as such before to bring the fish 30 meters underneath, supported by the air dome, which supply the oxygen and also the waterborne feeding.

With regards to the air dome, we have done a very important upgrade there. We are now -- we have launched before Christmas, air dome version 2.0, which comes with easier to use. It works in a better way than version 1.0. And then we are busy with other innovations as well, which we expect to launch later in the year. But on the commercial side, today, there are around 20 active full sites, commercial full-scale sites, which are based on the Nautilus technology currently.

If we take the reported biological results from some of those companies, I think we have summarized that they are reporting that they are achieving consistently 80% to 90% reduction in the number of the sea lice treatments. So, we think that's on a solid basis and also that they are on a more consistent basis, achieving 90% plus superior quality. For us, there is a good momentum there with a number of key customers and the portfolio is growing. And we expect to see a total market there of NOK 5 billion, NOK 6 billion over the next 5 years, 10 years, depending on how fast companies are doing the rollout.

Then a few comments related to the 2 new contracts, the Cermaq contract in the Los Lagos region in Chile. Yes, we got the LOI, letter of intent in Q4. And the final contract was now signed in February, with an estimated contract value of NOK 30 million. So the context here is that Cermaq terminated a contract with Billund in Chile, following the bankruptcy of Billund in Denmark. So as a matter of fact, we are now the only remaining RAS supplier in Chile with physical presence. And we hope to see -- we don't expect it to happen overnight, but we hope to see over a bit of time that there will be a bit more potential post-smolt market in Chile as well. At least we have quite a few Chilean delegations visiting to see some of our state-of-the-art deliveries in Norway these days.

With regards to Laxey, we also announced the next phase of development there as well. So, we have previously delivered several facilities with re-use technology to smolt. So this is different, of course, from the RAS technology. We have mainly been focusing over the last few years. So the first contract we had back in second quarter of '24. And now we got awarded the second contract for the rollout of module 2, which was signed last month with a contract value of around EUR 20 million. So the long-term target for Laxey is 27,000 tonnes, and they have a bold target of adding one more module per year. So, AKVA's position here is that we want to have a long-term partnership with Laxey and support them in their development.

Then moving on to China, NOAP, Nordic Aqua Partners. Phase 2 has started. The construction of Phase 1 was concluded from a project point of view and also financially for us in the second quarter last year. Probably you have seen the announcement last night that NOAP announced that they will restart the harvesting after some period of extra work on the off-flavor. And I think this is representing excellent news for NOAP, but this is also very good news for AKVA group with regards to the ongoing market. Phase 2 has been initiated. We are working on that. Things are on plan. And the project will have full focus on execution and progress during 2025. Mainly -- most of it will be finished during '25. Also, we have signed a contract for a potential Phase 3. That is an awarded contract. It's not in our order backlog because the contract start has not been decided yet. But the fact -- but in light of the announcement of yesterday, it gives some more comfort related to this very thing.

Moving on to digital solution. We are focusing on Observe, which is about automated feeding. And that's our AI company. We acquired 100% of the shares back mid of '24. And we have a number of sites, 118 on our recurring revenue model. Fishtalk is the biological ERP system. We have a global market share there of 60%. So, 6 out of 10 salmons will be on our system. And connect is about bringing hardware and software together. So, we have a pretty complete digital platform here. So, I think we have had a lot of development focus here in the recent years, and that's fine. I think solutions are rather advanced now. But the agenda of this year is to switch towards more a commercial focus because we need to do better in the marketplace. So, we are doing a few new recruitments there, have done as well and to have more focus on the possibilities in the marketplace, which we think are there really.

Then moving on to medium-term financial targets, which is really for 2025. We will come back -- I will talk about the Capital Markets Day in a minute. And there we will -- in June, we will come back with long-term targets. So this is 2025 targets, as you can see. So for 2025, we are guiding revenue of roughly NOK 4 billion. A little bit flavor to that is that, if we talk Land-Based first, on the back of the contracts we already have and the projects being executed as we speak, where we have commitments to customers. When we look at the project -- the expected project progress and the related revenue, that should call for roughly NOK 250 million more than 2024. That's the Land Based segment.

The other growth driver is about deep farming, which is at a fairly much higher level than for 2024. And the third growth driver is some general organic growth, which we think we can exercise now. So, those are the 3 building blocks there. It's Land-Based, which calls for NOK 250 million. It's deep farming and it's in, general, organic growth. So, I think we have more comfort than ever before that this is an achievable target. And on the back of that, we expect to step up the EBIT margin roughly 1 percent point from around 5-ish '24 to minimum 6% for 2025 and also improve the ROACE as well. The EBIT enabler is about operational excellence. It's about, in particular, scaling the Digital and Land Based business, and also thirdly, the momentum on the deep farming.

Then finally, on my part, we are very pleased to invite you and everybody listening here to a Capital Markets Day on June 12. Please save the date. We want to bring you to our home base. We have a lot to show you there. So, you need to fly to Stavanger, which is reasonable. And the agenda for the day, probably we will start around 12, so people can fly in the morning, and we will have an early dinner. So people, if they want, they can fly out in the evening. So it's a 1-day program.

If you want, we host you late in the night as well. Presentation of our strategic roadmaps and financial ambition, business segment presentation to give more visibility into the different -- the 3 segments or the 3 business platforms; Digital, Land Based and Sea Based. We also have quite some production on the Sea Based side, so we will show you that. We have some innovation center for Land Based. We will show you that. And we will also create a Digital stand or booth where we will show you by screens, everything we have on the digital side. So, there will be ample time for Q&A, networking and the social event, as mentioned. So, please bring it into your calendar.

As mentioned when I started this presentation, I think I said the next chapter of AKVA group is to see growth, and I really think we will see quite some growth in the next years to come. And this is the day for the deep dive into that exciting agenda.

So, I think I'll leave it there and hand it over to you, Ronny. So, please?

[Ronny Meinkøhn, executive]

Thank you, Knut. Good morning to everyone.

We are, of course, pleased to report the Q4 and full-year 2024 in line with guiding and in line with our expectations. So, I will start with the consolidated income statement. Revenue more or less at the same level as in Q4 '23. Revenue for the full year, just about NOK 3.6 billion, but then we need to knock off the gain from the Observe transaction, the NOK 76 million related to Q3. So, adjusted revenue just about NOK 3.5 billion in 2024, which is approximately NOK 100 million higher than in 2023. So, EBIT came in at NOK 23 million, which is NOK 33 million higher than Q4 last year. Full-year EBIT of NOK 256 million. But again, we need to adjust for the Observe transaction, this gain of NOK 71 million. So, adjusted EBIT is NOK 184 million, which represents an EBIT margin of 5.2% and in line with our guiding.

So the improvement compared to '23 of NOK 116 million on EBIT. We are, of course, satisfied with this development. We have high financial costs in the quarter. We have ordinary interest of NOK 24 million, IFRS 16 interest of NOK 6 million. We have also reduced market value on the investment in Nordic Aqua Partners of NOK 3 million. And last, we also had some currency losses. So, book-to-bill ratio for 2024 as such is 105%. In Q4 isolated, we are strong at 137%, which is driven by the all-time high quarterly order intake in Sea Based, NOK 946 million. And as Knut talked about, a significant part of the order intake came very late and actually too late to generate any revenue in the quarter. So, that's the reason why the revenue in Sea Based came in approximately NOK 100 million below our expectations and the guiding we did in our Q3 presentation.

So, we continue to see a strong momentum in the Nordic market. Revenue increased by 7% in Q4 compared to Q4 2023. We see increased revenue in Australasia. That's related to the NOAP contract, the Phase 2 of the project. And we continue to see a decline in revenue in Europe, Middle East due to very low activity in our company in Turkey. So overall, Sea Based was 68% of the total revenue in the quarter. We have a really strong increase in Land Based compared to Q4 '23 of 53%, which compensates the 12% reduction in Sea Based and the 18% reduction in Digital.

So, we consider the EBITDA margin of 9.7% in Q4 to be acceptable on the back of a somewhat soft activity level, revenue level in the quarter. The 9.7% is an increase from the 5.1% in Q4 '23. So, EBITDA margin of 10% in Sea Based. We are very pleased with the improvement in Land Based, with an EBITDA margin of 6.5% in the fourth quarter, which is mainly related to the higher activity level, but also to improved project margins. So in Q4 '23, we are still struggling with some old legacy projects, which, of course, had a negative impact on the profitability.

So, we completed our 3 years refinancing with DNB in Q4. And at the same time, we increased our revolving facility with another NOK 150 million to have sufficient financial flexibility. And we're also working to linking our debt facilities to sustainability targets and expect this to be finalized during Q1. So, available cash at the end of Q4 was NOK 471 million, an increase of NOK 23 million compared to Q3. Net working capital increased from the low 7.3% in Q3 to the 10.1% in Q4, which is an increase of NOK 103 million. And this increase, that's a direct consequence of the high order intake we had in Land Based during the fourth quarter as we have prepared our production facilities for a high activity level start of 2025.

And last, the covenant at 3.0, the NIBD EBITDA covenant. We have a threshold there of 4.5, and we consider the headroom there to be comfortable. Net interest-bearing debt increased by NOK 93 million in the quarter, and the driver behind this is, of course, the increased net working capital of NOK 103 million. And for the full year, we have increased net interest-bearing debt of NOK 249 million, and we have 3 big tickets. We have the net working capital, NOK 153 million. We have the CapEx of NOK 187 million. And last, we also have the new debt related to the Observe acquisition we completed in Q3 of NOK 150 million.

On CapEx of NOK 59 million in Q4, where NOK 24 million, that's related to our 3 innovation agendas and another NOK 8 million is related to our new global ERP project. And we went live in 3 of our operating companies in Q4, and we'll continue to roll out this system in the entire AKVA group. It will take a few more years to get all done. So, CapEx for the full year, NOK 187 million.

Also on the dividends, you can see from the picture here, we have not paid any dividends for the past few years, and we are pleased to announce that we have decided to pay NOK 1 per share in the first half of 2025. And we will also make a new assessment for the second half year later this year.

Some more details on the business segments with the Sea Based Technology. Soft revenue level in Q4, but of course, a really strong order intake. So, revenue was reduced by 12% compared to Q4 last year, but we have this strong increase in order intake by more than 40%. EBITDA margin increased from 8.8% in last year to 10.1% in Q4 this year. And we consider the 10% to be acceptable on the back of a somewhat low activity level. So, we need more revenue to really generate economies of scale in the Sea Based business, which have a great impact on the profit margins.

So the Nordic region, strong increase in order intake of 56%, which is driven by the deep farming market, a slight increase in revenue of 4%. In Americas, we see decreased revenue of 12%. Order intake increased by the same 12%. I talked about Europe, Middle East and the low activity in Turkey. So for the region, the revenue is down by 44% compared to a year ago. So, we are pleased to see the order intake trend, the 12 months order intake trend with this record high order intake in Q4. The 12 months revenue trend is going down in Q4, but this is temporary.

We are very sure that the revenue trend will turn upwards during the first half of 2025. So, we have a strong order backlog of NOK 1.1 billion in Sea Based, which is more than NOK 320 million higher than in Q3 -- in Q4 2024 -- sorry, '23. And then on the OpEx-based revenue, we should not forget about the OpEx-based revenue. It was close to 50% of the total Sea Based revenue in the quarter and was NOK 7 million higher than in Q4 last year.

Looking at the full year, we have an OpEx-based revenue close to NOK 1.1 billion, which is 7% higher than in 2023. So, approximately 40% of the total revenue in Sea Based is related to OpEx-based or what we define as recurring revenue and is a very important part of our business model. For Land Based, we had an order intake of NOK 114 million in Q4, which is mainly smaller contracts and also variation orders on existing contracts. We have talked about the Cermaq Chile contract, the RAS contract awarded this year of EUR 30 million and also this contract for Laxey of another EUR 20 million. So, we are confident that the order intake in Q1 this year will be strong for Land Based.

On Q4, we see increased revenue of 53% compared to last year, which is in line with the expectations we have and the guiding we have provided you earlier in 2024. So the progress on the 2 larger contracts, meaning NOAP Phase 2 and Cermaq in Finnmark is okay and according to our plan. And more important, that's the profitability. We are, of course, very pleased to see the 6.5% EBITDA margin in the quarter. We have first the positive impact from the increased activity level, which brings economies of scale to the business.

Secondly, we have improved project margins. We have talked about that several times that we have now a portfolio with sound project margins, with contracts that are either on cost plus or derisked fixed price contracts with the mechanism for price escalation. And last, we also had some positive impact in Q4 from closing of a few Land Based projects, which really underlines the improvements we have made with regards to contract management and project execution over the last few years. So, we're very pleased with this development in Land Based. So the revenue trend is positive. We expect this to continue into 2025. The order intake trend will, for sure, also be positive in Q1, with the award of the 2 new contracts. The order backlog of NOK 1.4 billion will increase as well during Q1 this year.

And last, Digital, a bit disappointing top line in the quarter. First, the order intake was down by NOK 18 million compared to 2023. Revenue was down by 18%. And then we have -- we have 2 revenue sources in Digital. First, we sell our Digital products based on a recurring revenue model, where the length of the contracts are typically 3 years. This revenue was somewhat higher in Q4 '24 compared to last year. And the other part of the revenue stream in Digital, that's related to upgrading projects, typically where customers want to upgrade from an old version of AKVA connect to a new version. This revenue is not recurring as such. It fluctuates. The timing is not certain. And this type of revenue was lower in Q4 '24 compared to '23. And the reason -- and also the reason for the overall reduction in revenue.

EBITDA margin of 23% is acceptable, but we have informed you before that we believe that there is significant room for improvements. We still have a high cost base compared to the current activity level and the overall focus in Digital is to further grow the top line. We can see it also from the trend on the revenue order intake. This is not how we want this business to develop. So, we have implemented several measures on the commercial side, which we expect to see impact from during this year. So we are -- priority #1, 2 and 3 is to increase the sales in our Digital business.

So, that was my financial update. I will give it back to, you, Knut, to close off with the outlook.

[Knut Nesse, executive]

Okay. Thank you very much, Ronny. Okay.

Just -- getting older. Just summarizing the outlook. Salmon prices expected to remain strong, supported by reduced supply that tells us that there will be some ammunition from the customer side to invest, and we think that will happen. We're also continuing the strong momentum and focus on our deep farming concepts. And we expect during this year to see more appetite for investing in post-smolt in Norway. And also, we are continuing to invest and improve our solutions across Sea Based, Land Based and Digital. We have a rather advanced innovation agenda there. We are guiding a revenue of NOK 4 billion for the year, with a corresponding EBIT of minimum 6% for the full year.

And finally, we really, really like to see you and invite you to come over on June 12. So, I look forward to see you there at our place. So, that brings me very much to the end. So let's open up for questions. I think we start with questions from the audience, and then we can go to the call afterwards. So please, anybody in the audience with a question.

[Unknown Executive]

I will send the microphone around. Please present yourself. We can start in the back here.

[Ola Trovatn, analyst]

Ola Trovatn, DNB Markets. Can you give a CapEx guidance for '25?

[Ronny Meinkøhn, executive]

Yes. We can give a guidance. It will not be more than '24. We have approximately between NOK 160 million and NOK 180 million. That's the guidance. Yes.

[Ola Trovatn, analyst]

Yes. And it seems to be a very strong order intake for deep farming in Sea Based. And I guess that will translate into deliveries and revenue in H1 '25. Do you have any bottlenecks in production for H1 '25? Or are you approaching being sold out? Or do you have still more capacity to deliver?

[Knut Nesse, executive]

Starting with the last one. We had one bottleneck related to the air dome, but that is resolved now. We have actually insourced the production of the air dome, and we have installed a new production line next to Helgeland Plast, Mo i Rana. So -- and also, we have strengthened our project organization because it takes people to deliver and execute the project.

So, we don't see a real bottleneck, at least not with a reason, if I can put it that way. So yes, to the first part of your question, there will be a fair uptake on the revenue for first half compared with '24. At the very beginning, we guided very specific on the number of cages. But we just realized that there is some competition around and they are not sleeping. So we have to be less specific, but we have a good uptake in the first half of '25 in what will be delivered and then translated into revenue compared with first half '24. That's a very correct observation.

[Carl-Emil Johannessen, analyst]

Carl-Emil, Pareto. You talked a lot about post-smolt, but do you see any development in full-scale Land Based salmon? So, you have full cycle production on land? Or is it NOAP at the moment?

[Knut Nesse, executive]

It is NOAP at the moment when it comes to, at least, signed contracts. Otherwise, we would have communicated it. But we had to be very clear that before NOAP got the off-flavor issues in China, it was a very, very strong focus on Land Based in China, also from Chinese interests. That faded out a bit during this intensive off-flavor period. We expect to see that coming back now when NOAP will start to harvest fish. We expect that to be a good quality fish by all means. And then we expect to see that window coming back again. So, we are hopeful that there could be some more appetite in China during this year.

I have started to travel to China. I will go 3, 4 times to China this year with the team to entertain interest in a couple of weeks to China. So, China is part of our focus there because we think there will be appetite from local investors in China to look at those kind of projects. And then we see a little bit more movements in the U.S. U.S. is complicated because it takes -- it's very, very, very complicated to get final permits, all type of permits you need. Typically, you get something in the first round, then they are protested in any way, and it's very much complicated. But there could be some movement in the U.S. as well. So -- but it will take a bit of time, but I hope something will happen this year.

[Unknown Analyst]

To the Digital segment, you said that you had some more potential on the margin side of things. What do you believe are normalized margins? And yes, when can we expect that? Is that already in H1?

And also a second question to Digital. Do you have -- have you observed any synergies from the recent transactions that you have done there?

[Knut Nesse, executive]

Yes. You can start on, Ronny, on the margin and the upsell question, then I will give a few comments on the market possibilities.

[Ronny Meinkøhn, executive]

Yes. We are trailing around 20% EBITDA margin for the Digital business at the moment. We strongly believe that we can get well above the 30% EBITDA margin with more volume because we have the organization in place to deliver a significant higher revenue level than we are at today. And we can see from the Digital sales that the gross margins are good, so we need volume.

In regards to Observe, I talked about this the last time. We did not see any impact on the revenue as such because we already had this reseller agreement with Observe, but we see an improved margin from the acquisition. And then, of course, we need to utilize Observe's AI capabilities to also further develop other Digital products in AKVA, and we are at the starting point of doing that. But there are synergies to be utilized.

[Knut Nesse, executive]

And I just want to add a little context or flavor on the market potential. We believe that the type of people we had in our organization were very much geared and focused towards the development agenda and the technology agenda, and we think they did fine. We think we have solid technology platforms and solutions. But we think we have not utilized the full commercial or market potential. So, we have made a few changes and are focusing more on having a very commercial-driven, market-driven organization. So, we expect to harvest from that later in the year. We should drive a higher top line because, yes, there is, of course, a margin potential, but it takes a higher turnover to realize the scale-up effect, the scale of impact. But we hope it will work gradually during the year.

Any questions from the call?

[Unknown Executive]

We don't have any incoming questions. Do we have any further questions from the audience?

[Knut Nesse, executive]

All right. If no other questions, thanks for being here, and have a nice weekend and winter break, if relevant. Thank you very much.

[Ronny Meinkøhn, executive]

Thank you.

[Unknown Executive]

Thank you.