Interim Report January-June 2000

INTERIM REPORT
January - June 2000

Sales amounted to SEK 8,337 m. (4,810, pro forma 8,484).
Operating income increased 19% to SEK 656 m. (549, pro forma 598).
Earnings per share amounted to SEK 3.90 (4.57, pro forma 3.69).
After-tax return on shareholders' equity 16.7% and pre-tax return on capital
employed 13.1%
Decision on Swedish participation in the Meteor missile project.
Several important orders received during the second quarter, including a
mobile combat training center for the Netherlands and an order from FMV to
conduct a study in the field of RMA and in July a serial production order for
the Bamse air defense missile.
As part of the structuring of Saab, Bofors Weapon Systems has been divested to
United Defense.

Comment by the President
"The second quarter was another eventful quarter for Saab. We have received
several very significant orders and our core activities have developed
according to plan. At the same time, we have continued to maintain a high
tempo in the restructuring of the Group.

In May, the British Government announced that it had chosen the European
beyond visual range air-to-air missile, Meteor, and in June Sweden's Defense
Minister stated that the country would be taking part in this six-nation
project. For Saab, this means a share of about 12 percent in a project with an
estimated total value of almost SEK 100 billion over its lifetime. Saab's work
in the project will be carried out both on prime systems level and on
subsystem level, mainly in the sensor and signal processing areas. The
decision on the Meteor is also extremely important for the long-term export
potential of the Gripen.

The second quarter also brought a number of very significant orders. The
Netherlands chose Saab Training Systems as supplier of its mobile combat
training center, an order worth over SEK 560 million. With this order, Saab
Training Systems is taking a major step upwards in the value chain. Looking to
the future, we are pleased to state that several countries are interested in
similar training centers and the breakthrough in the Netherlands will create
prospects for a renewed period of growth for the company. We also received the
first serial production order for the Bamse air defense missile systems from
FMV. With the order for Bamse and the decision on the Meteor, the foundation
has been laid for an internationally robust, long-term missile industry within
Saab.

Work on streamlining the Group in accordance with our strategy is proceeding
with high intensity. During the second quarter, divestment has taken place of
Bofors Weapons Systems, a number of properties and the electronics production
in Karlskoga. We have also divested Combitech Network to CSC and at the same
time agreed about long-term co-operation and substantial increase in
productivity for our IT infrastructure. In addition to this we have also
signed an agreement on selling one of the two oil rigs. We expect to achieve
our goal of completing the major part of this streamlining before the end of
the year. During the year, we have also made minor acquisitions and our core
activities will continue to grow both organically and through acquisitions.

The first six months of the year have meant major changes for Saab. We have
created northern Europe's leading high technology company and captured several
very important orders. We also have several interesting challenges ahead of
us, such as the increasingly likely launching of the A3XX Super Jumbo and our
participation in this project. Income during the first six months has been on
a level with our expectations. During the second half of this year, we expect
to see an increase in sales and thereby a positive influence on operating
income."

Business areas
Saab consists of the core business areas Infomatics, Aerospace, Technical
Support & Services, Dynamics and Space, in addition to Aviation Services and

Other operations. The process of finding other owners for Aviation Services is
ongoing.

Infomatics
Business area Infomatics focuses on command and control systems, simulation
systems and avionics as well as commercial operations in IT and electronics.

Sales amounted to SEK 2,080 m. (pro forma 2,062). Operating income was SEK 100
m. (pro forma 56), corresponding to an operating margin of 4.8 percent. The
increased operating income is mainly attributable to improved income in
several of the companies and lower investments in commercial development
projects.

Order bookings, which during the first six months have been very good for most
of the business units, totaled SEK 2,458 m. (pro forma 1,107). During the
second quarter order bookings were SEK 1,503 m. and included a mobile combat
training center for the Netherlands worth over SEK 560 m., electronics units
for the Gripen worth about SEK 250 m. and an order valued at about SEK 200 m.
for upgrading the HeliTOW anti-tank system on Danish army helicopters. In
July, Barracuda received an important order from FMV for multispectral, mobile
camouflage systems for the Leopard 2 tanks with an order value of SEK 75 m.

Aerospace
Business area Aerospace develops and manufactures military aircraft systems
and is a partner and supplier in subsystems for manufacturers of large
commercial aircraft. Business unit Gripen is the largest unit in the business
area. Gripen is the world's only fourth generation air combat system in
operational service.
Sales amounted to SEK 1,871 m. (pro forma 2,146), of which Commercial Programs
including sales of spare parts to Saab Aircraft was SEK 113 m. (105). The
decrease is mainly due to less work on the further development program for
Gripen. During the first six months, 9 (9) Gripen aircraft have been
delivered. A total of 90 aircraft have thus been delivered out of the total of
204 ordered by the Swedish Defence Materiel Administration, FMV. Gripen is
currently being delivered to FMV at a rate of 17 aircraft per year. Operating
income was SEK 174 m. (pro forma 194), corresponding to an operating margin of
9.3 (9.0) percent. The period's investments in the export program for the
Gripen were higher than last year and are expected to be higher also on a
whole-year basis. The cost for this effort has been charged to income.

Order bookings was SEK 10,688 m. (pro forma 1,167), including the South
African order for 28 Gripen aircraft with related equipment, training, etc. of
SEK 9.3 bn. Order bookings during the second quarter amounted to SEK 343 m.
and included a small order from FMV for studies in the field of RMA,
Revolution in Military Affairs.

Technical Support & Services
In recent years, Saab has grown both organically and through acquisitions in
the field of advanced services, which is considered to be an interesting
future market. Business area Technical Support & Services provides advanced
services for both commercial and military customers.

The business area is dominated by AerotechTelub, which was formed on January 1
this year and is owned to 57 percent by Saab and to 43 percent by TietoEnator.
AerotechTelub is an advanced service company primarily oriented towards
technical services, operation and maintenance, and systems for testing,
simulation, traffic management and customized information systems. The
business area also includes Saab Nyge Aero, which is active in aircraft
maintenance, aerial target towing and special flight operations.

Sales amounted to SEK 1,171 m. (pro forma 1,136). Operating income was SEK 72
m. (pro forma 86), corresponding to an operating margin of 6.1 percent.
Order bookings totaled SEK 1,530 m. (pro forma 999), of which SEK 823 m. in
the second quarter including an order worth about SEK 140 m. from Telia Mobile
for involvement in the building and installation of new base-radio stations
for mobile telephony in Sweden. The business area also received an order worth
about SEK 180 m. from Bombardier to Nyge Aero for rebuilding and modification
of amphibious aircraft and an order from FMV for a new command and control
system to the Tactical Air Command.

Dynamics
Saab's activities in precision engagement have been gathered in business area
Dynamics, which develops and produces missile systems, portable anti-armor
systems and underwater systems for land, sea and air applications.

Sales amounted to SEK 1,018 m. (pro forma 1,543). Sales decreased in several
parts of the operation, but the decrease is mainly due to large deliveries of
STRIX during 1999. Operating income continued to be negative and amounted to
SEK -27 m. (pro forma -49). Intensive integration work is ongoing in the
business area to realize cost synergies and focus the business.

Order bookings totaled SEK 909 m. (pro forma 1,249), of which SEK 471 m. in
the second quarter including among others several orders for Carl Gustaf
ammunition. In July the first serial production order for the Bamse air
defense missile was received from FMV.

Space
Space, which is owned to 60 percent by Saab and 40 percent by Ericsson,
develops and manufactures onboard computers, antennas and other electronic and
mechanical equipment for the space industry.

Sales amounted to SEK 339 m. (329) and included in the second quarter among
others separation systems and equipment to the European meteorological
satellite program METOP. Close to 50 percent of sales went to the commercial
telecom market and 95 percent of total sales were to markets outside Sweden.
Operating income was SEK 30 m. (33), giving an operating margin of 8.8
percent.

Order bookings amounted to SEK 329 m. (388), of which SEK 162 m. in the second
quarter including electronic equipment to telecom satellites and further
orders for the scientific satellite, Rosetta. More than half the order
bookings related to markets outside the institutional sector.

Aviation Services
Celsius Aviation Services, CAS, is a commercial aircraft maintenance company
focused on the USA. CAS operations lies outside the strategy and orientation
chosen by Saab for the future and the divestment process is on going.

Sales during the first six months amounted to SEK 1,565 m. (1,445) and
operating income was SEK 66 m. (100). The decrease in income is to seasonal
variations, but has also cyclical reasons. A strike in one part of the
business has also affected the income. Order bookings amounted to SEK 1,727 m.
(1,451).

Other operations
Other operations include long-term commitments in the form of the leasing
portfolio and maintenance operations for Saab's regional aircraft, as well as
a number of niche companies. To handle the long-term provision of capital for
these companies and to realize values, we are seeking structural solutions for
several of these operations. Among other things, negotiations have been in
progress for some time for the sale of Celsius Materialteknik, oil rigs and
properties. During the first six months of the year, have among others Bofors
Weapon Systems, Combitech Network, Combitech Traffic Systems, properties and
two repair yards been divested.

Sales, income and orders
Sales
Group sales increased by 73 percent to SEK 8,337 m. (4,810, pro forma 8,484).
Sales of core business was SEK 6,016 m. (pro forma 6,820). Growth in several
of the core business areas has been offset by the shrinking sales in Dynamics
and lower sales in Aerospace. For other operations, the increase is mainly
attributable to CAS and Saab Aircraft.

Income
Operating income increased 19 percent to SEK 656 m. (549, pro forma 598),
corresponding to an operating margin of 7,9 percent. Operating income of the
core business amounted to SEK 678 m. (pro forma 343), equal to an operating
margin of 11.3 (5.0) percent. The improved operating income is mainly
attributable to lower investments in certain commercial development projects
in Infomatics and to capital gains totaling SEK 353 m. from the divestments of
Combitech Network and Traffic Systems. Project interest on non-utilized
advance payments, accounted for in gross margin, amounted to SEK 82 m. (127).
The repayment of surplus funds from SPP will be accounted for in the third
quarter and is accordingly not included in the half-year financial statements.

The period's losses for closing Regional Aircraft of SEK -304 m. (-409) and in
Saab Aircraft Leasing of SEK -72 m. (-59) have according to plan been charged
against the termination reserve and loss risk reserve respectively.

Marketing activities in general have been higher during the first quarter this
year compared to the corresponding period last year, while the activities have
been on almost the same level compared to 1999 during the second quarter.
Research and development costs amounted to SEK 433 m. (pro forma 395). The
increase is partly attributable to development work on the export version of
Gripen. Other operating income consists among others of capital gains from
divesting operations of SEK 353 m. (19). The result from the divestment of
Bofors Weapon Systems has been taken as an adjustment against the purchase
analysis and has therefore not affected the income.

Net financial income and expenses amounted to SEK -27 m. (pro forma 2). The
decrease is mainly due to lower liquid funds and a lower interest rate. The
share in income of HDW, which amounted to SEK 19 m., is being reported as
financial income. The average return on liquid funds was 3.6 (5.2) percent.
Income after financial income and expenses amounted to SEK 629 m. (pro forma
600). Current and deferred taxes amounted to
SEK -183 m. (pro forma -180), corresponding to an effective tax rate of 29
percent on income after financial income and expenses.

Order bookings
Group order bookings during the first six months amounted to SEK 17,889 m.
(pro forma 6,548), including among others 28 Gripen aircraft with related
equipment, training, etc. to South Africa to an order value of SEK 9.3 bn.
Order bookings during the second quarter was SEK 4,214 m. The order backlog at
the end of the period was SEK 40,124 m., compared to SEK 29,891 m. at the
beginning of the year.

Liquidity, finance and investments
Finance and liquidity
Cash and marketable securities, less liabilities to credit institutions, have
compared to pro forma opening balance decreased by SEK 530 m. to SEK 5,246 m.
(5,776). The decrease is mainly due to the utilization of advances as the
projects progress within Gripen, payments related to the phasing out of
Regional Aircraft of SEK 304 m., the net effect of the divestment of Bofors
Weapon Systems of SEK 237 m. and the payment of dividend of SEK 266 m. The
Group's financial position is strong and net liquidity after deduction for
provision for pensions amounted to SEK 1,792 m., compared to SEK 2,370 m. in
the pro forma opening balance.

Capital expenditures
The Group's capital expenditures in property, plant and equipment, excluding
leasing assets, amounted to SEK 175 m. (pro forma 424). The decrease is mainly
due to lower investments in buildings and a few major investments during 1999.

Personnel
At the end of the period, the number of employees in the Group was 16,037,
compared with 16,665 at the beginning of the year.

Parent Company

During the first six months, parent company sales amounted to SEK 1,871 m.
(2,764). Operating income was SEK 179 m. (321) and income after financial
income and expenses was SEK 455 m. (463).

Cash and marketable securities, less liabilities to credit institutions,
amounted to SEK 3,123 m., compared with SEK 6,392 m. at year-end. Capital
expenditures in property, plant and equipment amounted to SEK 59 m. (88). The
number of employees at the end of the period was 4,259, compared with 4,298 at
the beginning of the year.
Ownership
Saab's principal owners are Investor AB, BAE SYSTEMS, the Wallenberg
foundations, US funds, Fifth National Pension Insurance Fund, AMF, UBS Schweiz
and Skandia, which together represents about 85 percent of the capital and 90
percent of the votes.

Accounting Principles
This Interim Report has been drawn up in accordance with earlier accounting
principles. Celsius is included in the Saab Group as from January 1, 2000. For
comparability pro forma figures are published, which refers to the Saab Group
including Celsius for the whole year 1999 and the quarters of 1999. The pro
forma figures will be adjusted in pace with the restructuring of the Group and
has accordingly been adjusted for the divestment of Bofors Weapon Systems.

Linköping, July 13, 2000

Bengt Halse
President and CEO

We have reviewed this interim report in accordance with the recommendation
issued by the Swedish Institute of Authorised Public Accountants, FAR. A
review is significantly limited compared to an audit. We have found nothing to
suggest that this interim report does not comply with the requirements set out
in the Exchange and Annual Accounts Acts.

Linköping, July 13, 2000

Gunnar Widhagen Caj Nackstad
Authorized Public Accountant Authorized Public Accountant
Ernst & Young AB KPMG Bohlins AB

Dates for financial information:
Interim Report for January - September will be published on October 25, 2000.

For further information, please contact:
Lars Jagerfelt, Vice President, Corporate Communications
tel. +46 13 18 71 65
Agneta Kammeby, Manager Investor Relations, tel. +46 13 18 71 25

The interim report can also be accessed on the Internet at www.saab.se

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