January - June 2002
· Order bookings during the first half-year were more than SEK 12
billion, of which SEK 6 billion in the second quarter. Order backlog
amounted thereby to SEK 44 billion.
· Sales SEK 8,284 m. (7,458), an increase of 11%.
· Operating income SEK 474 m. (409 m., excluding capital gains) and
income after financial items SEK 374 m.
· Earnings per share SEK 2.47 (7.47).
· Breakthrough order for next generation anti-armor weapon,
confirming Saab's world leading position.
· Germany has decided to order serial production of the Taurus
Statement by the CEO
"Order bookings continued to be very good during the second quarter and
the order backlog has thereby increased to SEK 44 billion, which once
again is an all-time high and equals more than two and a half years'
sales. The largest individual order during the quarter was for the
supply of the next generation light anti-armor weapon program for the
British and Swedish armies. This order confirms that we are world
leaders in the area of light anti-armor weapons and the product has a
significant export potential. And last week, Germany decided to order
serial production of the Taurus standoff missile, which Saab and LFK of
Germany have developed together.
So far this year, we have seen a good growth in the defense related
The customary variation in income over the year normally means that the
first half-year is usually weaker than the second. This picture is
reinforced by the costs we took in the first quarter for restructuring
our space activities. For the whole year, however, I continue to
anticipate further improvement in operating income and operating margin,
excluding capital gains."
With effect from January 1 this year, Nyge Aero has been transferred
from Saab Technical Support and Services to Saab Aerospace as part of
the co-ordination of the Group's aero structures activities.
During the second quarter, the US DoD granted Saab necessary approvals
for takeover of the signature management operation acquired from BAE
SYSTEMS. Earlier this year, Saab also acquired the remaining 35 percent
in Combitech Systems.
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 end of the report.
Sales, income and orders
Group sales increased organically during the first half-year by 11
percent to SEK 8,284 m. (7,458). Seventyfour percent of sales were
related to defense and 40 percent of total sales were export. Sales
during the second quarter increased by 16 percent to SEK 4,754 m.
Sales of all operations in Systems & Electronics have increased compared
with the same period last year. The increase in Aerospace is mainly
attributable to defense, but sales of the commercial operations have
also increased through more deliveries to Airbus and the internal
acquisition of Nyge Aero. Sales for the first half-year included 12 (8)
Gripen aircraft, of which 9 (6) in the second quarter. The changes
compared with the previous year for Technical Support & Services are
mainly due to the transfer of Nyge Aero and lower volumes for the
aircraft maintenance operation in Saab Aviocomp. Total sales for
Dynamics have increased compared to the first half-year of the preceding
year, which also applies to most of the constituent business units. The
decrease in sales for Space is mainly attributable to the situation in
the commercial telecom market, as well as to reduced public funding of
space research. The decrease in Aviation Services is related to the
customer support activities and is a result of the general situation for
Income and profitability
Operating income amounted to SEK 474 m. (1,059), of which SEK 328 m.
(256) in the second quarter. The result for the previous year included a
capital gain from the divestment of Saab Marine Electronics of SEK 650
m. Operating income before capital gains was thus SEK 474 m. (409),
corresponding to a margin of 5.7 percent (5.5). The six-month income has
compared to the previous year been positively affected by SEK 120 m.
related to capitalization of development costs and negatively affected
by SEK 40 m. related to structural costs in the space operation. Income
from the defense business has improved compared to the previous year,
but the total income has been affected by the general market situation
for the space business and Aviation Services.
Operating income per business area is reported before goodwill
amortization, see table on page 7. Operating income for Systems &
Electronics has improved mainly as a result of volume increases and
higher margins for Saab Training Systems and Saab Avionics. Operating
income for Aerospace has improved as a result of volume increases and
capitalization of development costs. Operating margin excluding
capitalization is on level with previous years. Operating income for
Technical Support & Services is on a level with last year with an
improved margin mainly due to higher utilization ratio and cost
reductions. During the first half-year, the product mix has affected
operating income and margin for Dynamics. Operations in Space have been
affected both by the situation in the telecom industry and by a decrease
in public-funded orders and by the provision made in the first quarter
of SEK 40 m. for structural changes. Lower volumes have affected
operating income for Aviation Services, but the margin continues to be
above 8 percent, the same level as for the whole year 2001. Operating
income for Corporate/Other operations has improved as a result of
Administration and marketing expenses are on level with previous year.
Of the period's research and development costs, a total of SEK 120 m.
(0) has been capitalized in accordance with new accounting principles
and SEK 216 m. (369) has been charged to income. Capitalized development
costs are mainly related to the export version of Gripen. If these rules
had been applied in 2001, SEK 90 m. would have been capitalized in the
balance sheet for the first half-year of that year. Other operating
income during both the present and previous years consist mainly of
trading income in Treasury and currency gains etc. The previous year
also included a capital gain of SEK 650 m. Other operating expenses
consist mainly of currency and capital losses. The present year also
include the provision made for structural changes in Space of SEK 40 m.
Project interest on non-utilized advance payments, which has decreased
financial net and is reported as gross margin, amounted to SEK 83 m.
Net financial income and expenses amounted to SEK -100 m. (-8). The
average return on external investments was 3,09 percent (4,89). The
decrease in return is mainly attributable to revaluation of the
obligation portfolio due to increasing market interests. The financial
net has also been negatively affected by a major increase in the
interest level on the pension debt. Income after financial items
amounted to SEK 374 m. (1,051). Current and deferred taxes amounted to
SEK -122 m. (-215). Minority interest in income is positive as a result
of the negative income in Saab Ericsson Space and as a result of the
acquisition of the outstanding minority in Combitech Systems.
Net income for the period was SEK 263 m. compared with SEK 795 m. for
the same period previous year including the capital gain from the
divestment of Saab Marine Electronics. This corresponds to an income per
share of SEK 2.47 (7.47). Pre-tax return on capital employed was 9.9
percent (17.9). After-tax return on shareholders' equity was 9.3 percent
Group order bookings amounted to SEK 12,456 m. (7,544), of which SEK
6,396 m. (3,750) in the second quarter. Of order bookings, seventy-five
percent came from customers outside Sweden. Order bookings during the
second quarter included development and serial production of next
generation anti-armor weapon, further development of command and control
systems for air and army forces, separate orders and spare parts for
Gripen, sensors and anti-armor weapons and ammunition for the Carl-
Gustaf system. In addition, Saab Training Systems has signed a 10-year
agreement with the US army regarding gunnery and training ranges. The
order backlog at the end of the period amounted to SEK 44,004 m.
compared to SEK 40,034 m. at the beginning of the year.
Liquidity, finance and investments
Finance and liquidity
Liquid funds less liabilities to credit institutions compared to the
beginning of the year have decreased by SEK 349 m. to 4,214 m. (4,563).
The decrease is mainly related to payment of dividend and the decrease
of the pension liability. The Group's net liquidity after deduction for
allocations to pensions decreased to SEK 788 m., compared with SEK 885
m. at the beginning of the year.
Group equity/assets ratio amounted to 22.1 percent (20.4), compared to
SEK 22.3 percent at the beginning of the year. Shareholders' equity
amounted to SEK 6,476 m. (6,295), corresponding to SEK 60.83 (59.13) per
share, compared with SEK 62.74 at the beginning of the year.
Operating cash flow was positive during the first half-year by SEK 373
m. Working capital has increased mainly due to increase in inventory
related to the A380 project and payments related to utilization of
previously made provisions. Operating cash flow of SEK 373 m. is
distributed between cash flow from the operations of SEK 444 m.,
acquisitions SEK -77 m. and from the regional aircraft leasing business
SEK 6 m.
The period's capital expenditures in property, plant and equipment,
excluding lease assets, amounted to SEK 276 m. (197).
At the end of the period, the number of employees in the Group was
14,226, compared with 14,028 at the beginning of the year. The increase
is mainly due to the acquisition of the signature management business in
During the first six months, parent company sales amounted to SEK 2,547
m. (1,800). Operating income was SEK 310 m. (113) and income after
financial income and expenses was SEK 232 m. (132).
Cash and marketable securities, less liabilities to credit institutions,
amounted to SEK 1,188 m., compared with SEK 1,617 m. at year-end.
Capital expenditures in property, plant and equipment amounted to SEK
100 m. (54). The number of employees at the end of the period was 4,276,
compared with 4,237 at the beginning of the year.
Saab's principal owners are BAE SYSTEMS, Investor AB, the Wallenberg
foundations, AMF, GMO International Funds, Third AP fund, Robur funds,
Eikos fund, Fidelity funds, Skandia, SHB funds and several U.S. funds.
The Group follows all the recommendations of the Swedish Financial
Accounting Standards Council which are applicable to 2002. This means
that from 2002 onwards, the new accounting principles will be applied
also in regard to intangible assets, allocations and depreciation, etc.
Only the recommendation on intangible assets, RR 15, has been of
material significance for the Group's income and financial position. In
all other respects, the report has been drawn up in accordance with
earlier applied accounting principles. Sales and operating income by
business area for the year 2001 has not been adjusted for the internal
re-organization regarding Saab Nyge Aero.
Linköping, July 11, 2002
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 11, 2002
Björn Fernström 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 16,
The 2002 Report will be published on February 14, 2003.
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 CEO Bengt Halse:
Today Thursday July 11. tel.+46 13 18 71 75
Contact Anders Stålhammar, Press Officer tel. +46 708 89 70 96
Today Thursday July 11, 16.00 (CET). Contact Marita Sidén tel. +46 13 18 71 49
for registration and further information.
The Interim report can also be accessed on the Internet at www.saab.se
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http://www.waymaker.net/bitonline/2002/07/11/20020711BIT00060/wkr0001.doc The Full Report
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