Saab sees further increases in defence spending internationally


“In large parts of the world we are seeing further increases in defence spending and bigger investments in civil security than before,” Saab President and Chief Executive, Hakan Buskhe said when he made public the company’s performance for the first nine months of this year.

In times of complex threat scenarios, it is clear the borders between what has traditionally regarded as a military or civil threat is gradually being erased and Saab’s capabilities in systems integration, sensors and cybersecurity are therefore growing in demand he said.
“During the third quarter, we joined Adani Group of India to announce a collaboration plan in aerospace and defence. The intended collaboration aligns with the Indian government’s ‘Make in India’ initiative and could encompass design, development and production of Gripen and other high-tech products. We also announced a plan to establish manufacturing capabilities for the T-X trainer aircraft in the US, should Boeing and Saab win the competition for this aircraft in the US.”

During the first nine months of the year, order bookings increased to MSEK 24,255 (14,960). Major orders were received in several areas, including two in airborne surveillance and one for the Next generation Light Anti-Tank Weapon system (NLAW), to the Swiss Army. Sweden ordered development and production of the next generation anti-ship missile, modification and upgrading of the Gävle-class corvettes, a new signal intelligence vessel and continued support and maintenance of Gripen C/D.
“During the period, we received a number of small and medium-sized orders, including a three-year contract extension with the UK Ministry of Defence for the provision of Tactical Engagement Simulation (TES). In collaboration with Lockheed Martin, we also received an order for a training system for the U.S. Army.”

The order backlog amounted to MSEK 109,406 at the end of the period.

Sales increased by 10% compared to the same period in 2016. Several business areas saw strong growth in the period.

Operating income amounted to MSEK 1,273 (837) with an operating margin of 5.9% (4.3). The improved operating margin is mainly attributable to stronger income in the Dynamics business area and a higher activity level related to airborne surveillance systems and support operations. We continue to focus on efficiency improvements in operations.

Operational cash flow amounted to MSEK -758 (1,922), in line with expectations, as we had a strong positive cash flow in 2016 due to large advances and milestone payments that have not been repeated, at the same time the activity level remains high.

Earnings per share after dilution amounted to SEK 8.29 (4.76).

In early October, Saab was identified by the Australian government to provide the tactical interface to the Royal Australian Navy’s fleet of nine Future Frigates. Saab was also named as the supplier of the 9LV Combat Management System for the upcoming programme, including Offshore Patrol Vessels.

Saab estimates sales growth in 2017 will be higher than Saab’s long-term financial goal: annual organic sales growth of five percent.
“We expect the operating margin, excluding material non-recurring items, to improve compared to 2016 and the company will take a step towards its financial goal of a 10% operating margin,” Buskhe said.