Kongsberg Automotive's Turnaround: From Losses to Positive EBIT and a Leaner Footprint
A Decisive Quarter
Kongsberg Automotive's Q2 2026 report marks a clear inflection point. After years of losses and warranty overhangs, the company posted its strongest quarterly EBIT in a long time: EUR 12 million, a 6.2% margin, versus a negative EUR 2.9 million a year earlier. The contract award momentum is also building, with EUR 135 million in new wins during the quarter. The CEO Trond Fiskum sums it up: “Overall, a good quarter that shows that we are on the right track. The fundamentals of the business continue to improve across all key financial metrics.” — Trond Fiskum, President and CEO · 2026-07-16 Net income swung to EUR 5.2 million from a loss of EUR 2 million, and the last-twelve-month cash flow has now improved for six consecutive quarters, reaching EUR 17.7 million.
The improvement is not just cyclical. The company has been executing a structural cost program since the new leadership took over in 2025. In response to a question about whether the cost base is now structurally lower, Fiskum affirmed: “The company now operates with a structurally lower cost base, as also shown in the EBIT bridge by Erik. Yes, also future revenue growth should translate into higher EBIT margins.” — Trond Fiskum, President and CEO · 2026-07-16 The EBIT bridge shows EUR 9.8 million in lower overhead costs for the first half of 2026, a testament to the cost discipline.
Cost Discipline and Footprint Optimization
The cost reduction story is not new. The prior management had already begun trimming the cost base, but the current team has accelerated it. As early as the 2025-02-25 call, the then-CEO Christian Johansson described the warranty issue as related to a drive control system product produced between 2019 and 2022 (“Product quality is a very demanding target in automotive and it's measured in parts per million... this warranty issue is related to a drive control system product and that was produced between 2019 and 2022” — Christian Johansson, CEO · 2025-02-25). The current CEO has taken a more aggressive stance on restructuring. In Q2, the company announced the consolidation of its three manufacturing plants in China into one, and initiated a restructuring process at its Cluses facility in France. This is part of a broader manufacturing footprint optimization. The company is also working to embed better commercial terms in contracts, including raw material indexation and warranty protections.
The focus on cost efficiency is not just about footprint. It's also about culture. In the 2025-05-07 call, the CEO said: “compensation and incentives to executives are a part of the cost reduction activities... no STI, short-term incentive, bonus was paid out. For 2025, there is no salary increase to be made for company executives.” — Trond Fiskum, President and CEO · 2025-05-07 That discipline is now paying off.
Warranty Overhang and Leverage
The warranty issue has been the company's biggest drag for over a year. In the August 2025 call, the CEO acknowledged the ongoing cases and set aside provisions, while noting the difficulty of providing a timeline:
Now, in Q2 2026, the company says "there are no fundamental changes to report" but that discussions are progressing. Yet the company has managed to massively deleverage. Net interest-bearing debt has been cut by EUR 23.2 million since Q1 2025, and the leverage ratio (per bond definition) has fallen from over 4x to 1.6x, well below the 4.0x covenant. The CFO Erik Magelssen explains: “We have managed to achieve a significant reduction in net interest-bearing debt and also in the leverage ratio. This is important for Kongsberg Automotive because it demonstrates a more solid financial company, with a better balance between debt and equity.” — Erik Magelssen, CFO · 2026-07-16 This gives the company financial flexibility to fund growth or M&A.we cannot comment on that as these are ongoing cases and discussions with our customers. The reported warranty cost for Q2 is primarily impacted by the increase of the warranty accruals for future warranty claims, and expenses for known cases.
Outlook: Riding a Recovery While Staying Cautious
Revenues have increased for three consecutive quarters, and the CEO believes the market has "passed the bottom of the cycle," pointing to strength in North America and European commercial vehicles. The pipeline is solid, with high customer engagement. The company has also noted that net working capital is stable at ~19% of revenue. The outlook is cautiously positive, but they acknowledge geopolitical uncertainties. As the CEO concluded on the call:
Q2 delivered a significant improvement in profitability and cash flow, demonstrating that our operational improvements and cost reduction initiatives are delivering tangible results. Revenues increased for the third consecutive quarter, indicating improved market stability and improved market conditions.
This is a company-specific turnaround story, not a market theme. While global headlines swirl around tariffs and geopolitical tensions, Kongsberg Automotive is focusing on its own fundamentals. The question now is whether the structural cost base can be sustained as volume recovers, and whether the warranty overhang will eventually be resolved. With leverage at 1.6x and an improving profit engine, the company is in a far better position than it was a year ago.