INTERIM REPORT January - June 2001
· Order bookings after six months amounted to SEK 8 billion.
· Sales amounted to SEK 7,840 m. (8,337), an increase of 7% for
· Operating income amounted to SEK 1,059 m. (656).
· Earnings per share amounted to SEK 7.47 (3.90).
· After-tax return on shareholders' equity 25.4% and pre-tax return
on capital employed 17.9%.
· Streamlining of the Group and development of the core business have
continued according to plan.
Statement by the CEO
"Business continues to develop well and divestments and capital gains
aside, both sales and operating income show an increase. Order inflow
has also continued to be good for the second quarter. Training Systems,
for example, won another order for a Combat Training Center, worth
approximately half a billion SEK, this time for the Norwegian national
defense forces and Finland has ordered an upgrade of the Rbs15 anti-ship
missile. This means that we still have an order backlog amounting to
some 40 billion SEK, equivalent to approximately two and half years'
Also during the second quarter it became definite that Saab will be
participating as an industrial partner in the Airbus A380 project, which
will give us estimated revenues of more than 10 billion SEK over the
next twenty years. We shall develop and manufacture advanced parts of
Streamlining and development of the Group have also continued during the
second quarter. In addition to the value realization from defense
technology, Celsius Aerotech in the USA and Hawker Pacific in Australia
have been sold. Our co-operation with Grintek in South Africa around our
joint venture Avitronics, has been broadened in the communications and
Network Defense area. We have also acquired Ericsson's 50% holding in
Ericsson Saab Avionics, which is now a wholly owned subsidiary under the
name of Saab Avionics. We expect to incorporate Fokker Space within a
Our new Venture Capital function, formed this year, has reinforced and
further focused our strategy of continuously creating value through the
application of defense technology in civil markets. During the second
quarter, three interesting technologies with high growth potential,
outside Saab's core areas, have acquired new principals, while we remain
as minority owners or royalty owners and can thus share in any future
In line with our forecast in the 2000 Report in February, the year began
somewhat weaker than last year as regards operating income before
capital gains. After six months, we can now see that operating income
have improved compared with the same period last year and we are still
confident that earnings per share for the whole year will be well on a
par with last year."
Major events and structural changes
During the second quarter, Celsius Aerotech in the USA was sold to
Reliance Aviation-Tennessee Inc. and the military division of Hawker
Pacific in Australia to EADS. An agreement was also reached to sell
Hawker Pacific to Lynton International by stages, the first stage being
that they take over 25% of the shares and management responsibility for
the company. In addition, parts of Saab Aviocomp's operations in Holland
have been sold. The effect on earnings of these divestments has been
considered in the fair value analysis that was done in connection with
the acquisition of Celsius, and will not affect the earnings of the Saab
Group. The second quarter's divestments have had a positive effect of
almost 200 million SEK on net liquidity.
Three companies have also been sold through the new Venture Capital
function. Saab's holding in the associated company Triangle Equipment
A/S, whose product for the oil industry is based on technology developed
by Saab Avionics, has been sold to Global Geo Services, GGS, who are
listed on the Oslo stock exchange, for both a cash payment and shares
equivalent to about 3% of GGS. 60 percent of our subsidiary in the field
of active sound control, A2 Acoustics AB, has been sold to WM-Data and
the subsidiary Sanguistech, active in systems for blood centrifuging,
has been sold to Gambro.
With effect from January 1 this year, Saab has acquired Ericsson's
minority holding in Ericsson Saab Avionics from Ericsson for 225 million
SEK. The acquisition will not affect sales or operating income, but is
expected to have a positive effect on net income. Fokker Space, which
will become part of the Saab Ericsson Space business area after the take-
over comes into effect in a few months' time, has an annual turnover of
approx. half a billion SEK and 400 employees.
Saab Marine Electronics was sold earlier this year with a capital gain
of 650 million SEK. The sale of Celsius Amtec and Kockums Industries had
no effect on income. These divestments have had a positive combined
effect on net liquidity of approx. 1,300 million SEK.
Saab is one of the world's leading high-technology companies, with its
main activities focusing on aerospace and defense. The operation covers
clearly defined areas within defense electronics, missile systems and
space electronics as well as military and civil aviation. Saab also
focuses on high technology services and maintenance. Saab comprises the
business areas Saab Systems & Electronics, Saab Aerospace, Saab
Technical Support & Services, Saab Bofors Dynamics, Saab Ericsson Space
and Saab Aviation Services. For a brief description of the business
areas see the last page in the report.
Sales, income and orders
Group sales decreased to SEK 7,840 m. (8,337), due to divestments of
companies and operations mainly within Systems and Electronics and
Aviation Services. For comparable units, sales increased by 7 percent.
During the first six months, eight (nine) Gripen aircraft were invoiced,
of which six (five) in the second quarter. The sales increase in
Technical Support & Services is mainly attributable to the defense
related business within AerotechTelub. The increase in Dynamics is
mainly related to anti-armor weapons and for Space the volume growth
continues. Sixty-seven percent of sales were related to defense and the
foreign markets' share of total sales was 45 percent.
Income and profitability
Operating income amounted to SEK 1,059 m. (656). The half-year result
includes the capital gain from the divestment of Saab Marine Electronics
of SEK 650 m. and last year's income included capital gains of SEK 353
m. Operating income before capital gains was SEK 409 m. (303)
corresponding to an increase of 35 percent, which mainly is due to the
restructuring of Dynamics and continued good profitability in Saab
Operating margin for the remaining operations in Systems & Electronics
are on a level with the previous year. Due to fewer deliveries Aerospace
has a somewhat lower operating income compared with the corresponding
period last year, however, the margin is on level. Technical Support &
Services is on a level with the previous year, but due to variations
during the year the business area had a somewhat lower operating margin.
For Dynamics the positive trend following last year's rationalization
has continued. In the second quarter, operating margin for Space is back
on level, but is for the total period still somewhat low as a result of
internally financed development. Saab Aviation Services, which core
consists of Saab's leasing and customer support operation in regional
aviation and remaining activities from Celsius Aviation Services until
these are divested, reports continued good profitability. Project
interest on non-utilized advance payments, accounted for in the gross
margin, amounted to SEK 49 m. (82).
Operating expenses are generally somewhat lower compared to the same
period in the previous year. Other operating income during both the
present and previous years consists mainly of capital gains, trading
income in Treasury business and currency gains, etc.
Net financial income and expenses amounted to SEK -8 m. (-27). The
average return on external investments amounted to 4.89 percent. Income
after financial items amounted to SEK 1,051 m. (629). Current and
deferred taxes amounted to SEK -215 m. (-183). The tax portion of income
after financial items has been affected by the fact that certain capital
gains have been assessed as tax-free and that certain capital losses
have been assessed as non-deductible. The Group's effective tax rate for
the year, excluding these one-recurrent items, is calculated at 29
Net income for the period was SEK 795 m. (415), corresponding to an
income per share of SEK 7.47 (3.90).
Group order bookings during the first half-year amounted to SEK 7,920 m.
(17,889), of which the second quarter SEK 3,922 m. (4,325). Second
quarter order bookings included combat training center from Norway,
upgrade of anti-ship missile RBS15 from Finland, add-on orders for the
Swedish Gripen program, the first order to conduct a study related to
the Swedish Defense's future command and control system, eye-safe laser
rangefinder from Thales for French fighter aircraft, upgrade of the fire
control on the Swedish Defense's Göteborg-class corvettes, next
generation of separation system for Lockheed Martin's new Atlas V launch
vehicle and Sweden's first commercial TETRA system (digital platform for
two-way radio) from the city of Gothenburg. The order backlog at the end
of the period amounted to SEK 40,748 m., compared to SEK 41,091 m. at
the beginning of the year.
Liquidity, finance and investments
Finance and liquidity
Compared to opening balance, liquid funds less liabilities to credit
institutions decreased by SEK 125 m. to SEK 3,817 m. (3,942). The
decrease is mainly a net of high utilization of advances within Gripen,
utilization of structural reserves, payment of dividend, acquisitions
and divestments of businesses. The Group's net liquidity after deduction
for allocations to pensions amounted to SEK 222 m., compared with SEK
415 m. at the beginning of the year.
Group equity/assets ratio amounted to 20.4 percent (14.0) compared with
18.2 percent in the opening balance. Shareholders' equity amounted to
SEK 6,295 m. (4,849), corresponding to SEK 59.13 (45.55) per share,
compared with SEK 53.26 at the beginning of the year.
Group cash flow from operating activities continued to be good. Working
capital decreased as a result of utilization of part of last year's
provisions within Dynamics, utilization of advances within Gripen,
payments related to the regional aircraft business and decreased lease
obligations due to the divestment of Amtec. The cash flow from
investments was positive as a result of the divestment of Amtec and
lease assets included therein. Operating cash flow was positive and
amounted to SEK 164 m. (-302).
The period's capital expenditures in property, plant and equipment,
excluding lease assets, amounted to SEK 197 m. (175).
At the end of the period, the number of employees in the Group was
14,552, compared with 15,453 at the beginning of the year. The decrease
is mainly related to divestment of operations.
During the first six months, parent company sales amounted to SEK 1,800
m. (1,871). Operating income was SEK 113 m. (179) and income after
financial income and expenses was SEK 132 m. (455).
Cash and marketable securities, less liabilities to credit institutions,
amounted to SEK 780 m., compared with SEK 1,785 m. at year-end. Capital
expenditures in property, plant and equipment amounted to SEK 54 m.
(59). The number of employees at the end of the period was 4,168,
compared with 4,230 at the beginning of the year.
Saab's principal owners are Investor AB, BAE SYSTEMS, the Wallenberg
foundations, Fidelity Funds, AMF, Third AP fund, MFS Funds and Skandia.
The report has been drawn up in accordance with earlier accounting
principles. This means that divested companies such as Saab Marine
Electronics, Celsius Amtec and Celsius Aerotech are not included in the
Group for any part of 2001. The figures for 2000 have not been adjusted
for external acquisitions and divestments made during 2001. However,
sales and operating income by business area for the year 2000 have been
adjusted for internal reorganizations.
Linköping, July 12, 2001
President and Chief Executive Officer
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
Linköping, July 12, 2001
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 19,
The 2001 Report will be published on February 14, 2002
For further information, please contact:
Agneta Kammeby, Manager Investor Relations tel. +46 13
18 71 25
Jan Nygren, Head of Corporate Communications tel. +46 13
18 19 99
Telephone interview with President Bengt Halse:
Today, Thursday July 12, approx. 14.00 - 14.45 tel. +46
703 19 28 15
Contact Eva Aldenstedt
Today, Thursday July 12, 15.00. Contact Marita Sidén tel. +46
13 18 71 49
for registration and further information.
Interim report can also be accessed on the Internet at
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