Shares in Swedish defence company Saab slid more than 10% on Monday after it posted falling third-quarter profits and said it saw increased risks due to the coronavirus pandemic.
The maker of the Gripen fighter jet said the slow economic recovery from the pandemic was primarily affecting subcontractors and material supply for the Gripen E/F programme.
Saab said it had managed increased risks by adjusting project estimates, resulting in a 1.5-billion crown ($170 million) hit to operating income in the quarter, of which 1.1 billion was in the aeronautics business.
Jefferies said that the charges were unexpected and initially likely to generate significant caution.
“Today’s charge is unwelcome, but we believe the key issue is whether the Gripen E/F programme is significantly delayed,” the investment bank said in a note.
Saab shares were down 11.6% at 0932 GMT, on track for their worst day since April and at the bottom of STOXX 600 index.
The company swung to an operating loss (EBIT) of 663 million crowns, with adjusted operating profit at 445 million crowns in the quarter, from a 518 million profit a year ago. Order bookings increased 8% to 10.15 billion crowns.
“Due to the ongoing pandemic and drawn-out global recovery, Saab now sees an increased risk related to the effects of Covid-19,” the company, which continued to say it could not currently give a financial outlook for the year, said in Monday’s statement.
The company stood by its forecast of a high delivery rate in the fourth quarter and positive operational cash flow for this year. It also said it remained committed to its long-term financial goals for growth and profitability.
Saab’s previous full-year outlook, which it dropped in April, was for organic sales growth of 5% in 2020 and an improved operating margin compared to 2019.
The company, which had cancelled its proposed dividend for 2019 in March, was originally due to post third-quarter earnings on 21 October.