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Saab Annual and Sustainability Report 2017

Annual Report 2017

CEO Comment

We create profitable growth by staying a step ahead

"We have to continuously challenge ourselves to be better, more productive and stay a step ahead. In this way we can reach our long-term goals and make our customers even better."

Håkan Buskhe
President & CEO

In 2017, we focused on continued profitable growth and improving efficiencies. When Saab grows, we face more demands. We have to continuously challenge ourselves to be better, more productive and stay a step ahead. In this way we can reach our long-term goal of a safer and more secure world and make our customers even better.

Continued strong development

The year was distinguished by strong development in the markets where we are active. Demand is growing in civil security as well at an anxious time when threat scenarios are becoming more complex. 2017 was an important year when Saab further strengthened its position as an international leader and partner. Last summer, Gripen E, the world's most modern jet fighter, made its historic maiden flight, and in the autumn Saab was selected by the Australian government as a potential supplier of the tactical combat management system for its future frigates, among other applications. In addition, Saab received two major orders during the year in airborne surveillance, and Sweden ordered the development of production of the next generation of anti-ship missiles, the modification and upgrade of the Swedish Navy's Gävle-class corvettes, a new Special Purpose Ship for Signal Intelligence (SIGINT), and continued support and maintenance of Gripen C/D.

We received major orders in several areas during the year and order bookings rose 41 per cent to SEK 30.8 billion. At year-end 2017, Saab’s order backlog was SEK 106.8 billion, of which 63 per cent was orders from outside Sweden. Our order backlog is now 3.4 times higher than our sales, which positions us well for further growth in the years to come. Sales amounted to SEK 31.4 billion. Operating income amounted to MSEK 2,155 and the operating margin was 6.9 per cent. Operational cash flow amounted to MSEK 1,388.

Today, Saab has large ongoing projects developing a new generation submarine, A26, a new combat aircraft system, Gripen E, next generation airborne early warning and control system, GlobalEye and a new anti-ship missile to Sweden. It is of utmost importance for Saab that we execute these large complex projects efficiently and that everyone delivers at the highest level. During the year, a number of efficiency improvement projects has been implemented within the company, where we for example focus on streamlining functional processes. Mainly the business area Dynamics and operations related to airborne early warning and control systems and support operations improved profitability in 2017.

In 2018, the focus on efficiency improvements will continue. This is an important factor for Saab to reach its long-term goal of a 10 per cent operating margin.

Collaborations are a key to success

Various types of collaborations not only strengthen our business, but are a way for us to create jobs, social cohesion and increased trade between countries. We also see that to a large extent this is demanded by customer countries, as it contributes to the development of their defence capabilities and industrial expertise. In 2017, we announced plans to manufacture the T-X trainer aircraft in the US if Boeing and Saab win the tender to supply this advanced aircraft to the US. We also signed an agreement with Nanyang Technological University in Singapore to extend our research collaboration in air traffic control. The latter is just one of many examples of the so-called triple helix model, where value-added is created collaboratively between industry, universities and the government.

In a turbulent world taking long-term responsibility is growing more important

It remains a turbulent world. War, terrorism, geopolitical threats and cyberattacks are making people worried. As threat scenarios change and become more complex, borders are gradually being erased between what has traditionally been considered military versus civil threats. Saab’s capabilities and core competence in systems integration, sensors and cybersecurity are therefore growing in demand.

In times of instability, our shared responsibility is to stand up for freedom, safety and security. We want to help make the world a safer, more secure place for people and society. As a business with a long-term perspective, we will always make sustainable choices and act in accordance with the company's values, code of conduct, regulations and processes, where anti-corruption and defence exports are two important areas. Sustainable and responsible business is essential to remain profitable. During the year, we further integrated sustainability in our operations and business strategy. The UN Global Compact's principles on human rights, labour, the environment and anti-corruption are an important foundation.

Our global environment is another major challenge we have to manage in various ways. One example of how we are constantly challenging ourselves is that in 2017 we successfully conducted a number of test flights of Gripen D on biofuel. The flights went off as planned and our continued efforts in this area are helping to further advance our positions and ensure Gripen's future.

Increased internationalisation is critical to our strategy

Our innovative strength, combined with a presence close to customers around the world, gives us a unique ability to share insight and know-how with customers. In the process, we can also stay a step ahead and constantly meet their needs for new solutions. In the area of cybersecurity, we are now working on concrete innovations and technical solutions. This is one of many challenges ahead of us.

In line with our business energy, we are now established in more locations than ever before. In Australia, we created a strong platform during the year for future growth and further consolidated another home market. We also took an important step in the United Arab Emirates to expand our position by inaugurating a new centre to develop and produce sensor systems. In the US and several other countries, we are working to strengthen our presence and build closer relationships.

This is a natural step as we grow. Looking a number of years ahead, we will have larger operations outside Sweden than today. Further internationalisation, efficiency improvements and a focus on being local where our customers need us are the keys to our strategy.

We have to constantly challenge ourselves and be more efficient in everything we do.

When we grow, the demands we face increase, which means that we have to build on our success by further strengthening sales, winning new orders and delivering on all our projects.

We look forward with confidence to the coming years and believe we will see further growth, strong technological development and new advances.

None of this would be possible without our over 16,000 employees. It is their skills, engagement, and range of perspectives and backgrounds that are driving our business forward.

Stockholm, February 2018

Håkan Buskhe
President & CEO

Key Figures

Our growth journey continues

Why invest in Saab?

On the ground close to customers

Saab has expanded its marketing organisation in recent years and created a stronger local presence and relationships with customers in selected markets. The ability to build long-term industrial partnerships provides us with greater insight into what is in demand and helps us to further develop technologies and end products in order to provide customers with the new technology and sustainable solutions they want.

Cost efficient

Saab is working constantly to shorten lead times and increase efficiency in  its production. This has resulted in lower costs for Saab and for customers. Cost efficiency is always integrated as a parameter back when products and solutions are designed, and Saab is continuously making processes more efficient through automation and digitisation.

Highly innovative

Technological development is accelerating and competition intensifying. Staying on the forefront of technology, combined with cost efficiency, is in Saab’s DNA. Cutting-edge expertise, talented employees and business strategy drive Saab and its customers to stay a step ahead and meet future challenges.

Order backlog

% Outside of Sweden

Net income per share


Free cash flow


Order bookings
and sales


Operating income
and operating margin


Saab Annual and Sustainability Report

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A step ahead

Saab’s strategy is based on three priority areas


Through a strong local presence partnerships and collaborations, focus is on areas where we have a strong market position and on strengthening our position in areas with good growth opportunities.

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The focus is on continously making functional processes more efficient, implementing an even more business-oriented culture, and developing leaders and employees.

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The product portfolio is concentrated on innovations in five core areas where diversity and engaged employees drive innovation.

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The importance of digitisation to the defence industry

Technological developments are advancing at a rapid rate. Digitisation in society is reducing the cost to store and distribute large amounts of information, at the same time that information and tools for data processing are available wherever we want. But what does this really mean for Saab, which has world-leading technology in many areas?
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