SAAB expects tougher 2011: Bushke


Swedish defence and aerospace company SAAB says it expects sales to decline “slightly” this year compared to 2010 following a decrease in orders over previous years. President and CE Håkan Buskhe confirmed SAAB’s long-term ambitions to grow sales organically at an average of 5% a year and to achieve an operating margin of 10%.

“In order to achieve our long-term growth target we will stay focused on our strong markets, such as the Nordic Region, many European countries, South Africa and Australia, but also establish a stronger local presence in selected areas, including North America, the UK, South America (Brazil) and Asia (Thailand and India), Bushke said at a results presentation yesterday.

Net profit for 2010 was down about third from 2009, coming in at 433 million Swedish Krona (SEK, about R490.3 million) for the year versus SEK686 million (R776.8 million) for 2009. Sales were largely unchanged at SEK24.434 billion (R27.6 billion) for 2010. Operating profit decreased 29% to SEK975 million (R1.1 billion), pulled down by non-recurring costs totalling SEK602 million (R681 million). As a result of the lower sales and profit, the operating margin shrank to 4% from 5.6%. Adjusted for non-recurring items, the margin improved to 6.5% from 5.4%.
“To succeed with our growth ambition we must also invest in product innovation and renewal. Investments will be prioritised in areas where we have a competitive technology and/or a competitive market position and aim at strengthening our unique system knowledge. Over the coming years, growth may be supported by acquisitions if value creating opportunities arise within our prioritised areas, he said.
“The operating margin is expected to increase slightly in 2011 compared to the adjusted operating margin in 2010. Over the coming two years our amortisation of capitalised development costs will stay at the 2010 level and thereafter decline. Together with efficiency improvements, this will provide a platform for us to reach our long-term operating margin target.
“We will continue to focus on improving capital efficiency and generating a strong operating cash flow. Given the size and character of the current tender portfolio and our growth ambitions we also aim at keeping a net cash position in the near-term and continue to target an equity to asset ratio above 30%. A strong balance sheet, a very competitive product offering and high quality employees provide a strong foundation to drive our operational priorities, with the ultimate target to create sustainable long-term value creation.” said Buskhe.