Welcome to
Saab Annual and Sustainability Report 2018

Annual Report 2018

CEO Comment

Saab stands firmly to take the next step in its growth journey.

“Creating solutions to make society safe is our mission. And it is why we have to continue to invest in  developing cutting-edge technology and constantly strive to be faster and more productive.”

Håkan Buskhe
President & CEO
PDF 11 MB

It has now been several years since Saab began the journey to create a stronger market position and broader international base. This continued in 2018, and now it is time to take the next step. Saab creates solutions that make people and society safe. To ensure that this mission can be fulfilled in the future, Saab has to continue to develop cutting­edge technology, at the same time as we continue to become more efficient and more productive.

Strengthened market position and several milestones in development projects

Saab strengthened its market position during the year after several customers selected our solutions and we expanded cooperations in many parts of the world. Several milestones were reached in major development programmes with successful results. For example, a number of flights were flown with Saab’s GlobalEye airborne early warning and control system, and in October a Gripen E was testflown for the first time with the Meteor longrange air-to-air missile. The flight with Meteor was part of the ongoing weapon integration in the Gripen E test flight programme. A flight was flown with the second Gripen E as well.  In addition, the Swedish submarine HMS Gotland was launched in connection with its Mid-Life Upgrade.

Partnership for strengthened growth and local presence

For many years, Saab has been working to broaden and strengthen its business outside Sweden. We do so consistently through direct collaborations with armed forces and other authorities in various countries and through partnerships with other defence contractors. During the year, Saab partnered with BAE Systems, along with Lockheed Martin Australia among others, to deliver Australia’s Hunter-class frigates. Saab will integrate the combat management system, weapons and sensors on these vessels. In the U.S., the Air Force selected the T-X training aircraft from Saab and Boeing. Boeing is the designated prime contractor for this new, advanced system, which will help to train future generations of fighter pilots. Together, Saab and Boeing have designed, developed and tested the customised T-X trainer included in the  system.

Strong demand for Saab’s offer

Order bookings during the year amounted to SEK 28 billion, with an increased backlog of small and medium-sized orders. At year-end 2018, the order backlog amounted to SEK 102 billion, 67 per cent of which consists of orders outside Sweden. Our order backlog remains strong and is now 3.1 times higher than our sales. Growth during the year was robust for small and medium-sized orders, which shows that large parts of the business are seeing high demand. Sales rose by 5 per cent to approximately SEK 33 billion.

Increased focus on a more efficient organisation

We continued in 2018 to make our operations more efficient. The focus has been on further standardising and creating aligned business processes, so that they contribute to faster customer deliveries. To complement our continuous efficiency work, two major initiatives were launched to improve productivity under the names “Re-sizing” and “Re-shaping”, the first measures of which were taken in the second half of the year. A review is being conducted of Saab’s product portfolio, with the aim to reduce it, and of the marketing organisation with the aim of making this more efficient. Due to developments in auto mation and digitisation, Saab has decided here as well to focus more than before on standardisation within the framework of the “Re-shaping” initiative. A significant non-recurring expense of MSEK 298 was reported for the identified productivity improvements. Adjusted operating profit increased by 14 per cent to MSEK 2,654, with an operating margin of 7.7 per cent.

Research and development strengthens competitiveness

In a rapidly changing world, Saab has to continuously adapt to competitive conditions. This means keeping our offering updated, which is why we invested 23 per cent of sales in research and development in 2018. A large part of this work is done together with customers in various parts of the world. Combining their needs with the future opportunities that technology offers is critical when developing Saab’s products and services. Collaboration is required between industry, authorities and academia to achieve the best results.

Ready for the next step

Saab is on a growth journey. Today’s order backlog  supports this continued journey, at the same time that we see further opportunities for growth. Capitalising on these opportunities requires investments in new partnerships and new technologies. To strengthen the financial base and make sure Saab can capitalise on these opportunities a rights issue of approximately SEK 6  billion was made in 2018. The rights issue was oversubscribed and I would like to thank our shareholders supporting our journey. Saab now stands strong for the years ahead and the great opportunities in the  market. Our 17,000 employees will drive this continued growth through their talents,  commitment and  ambition.

Stockholm, February 2019
Håkan Buskhe
President & CEO

Key Figures

Our growth journey continues

Why invest in Saab?

To achieve the strategic and financial goals that have been set, Saab operates based on specific objectives. Saab is working to further strengthen its presence in key markets, develop innovative solutions and acquire companies in priority areas. Internally, efficiency programmes are used to continuously improve productivity.

The focus is on continuously developing leaders and employees to build a culture focused on performance, innovation and motivation. Saab’s employees drive the business forward and sustainability is reflected in everything Saab does. Saab is an international partner that contributes to increased security and defence capabilities in Sweden and other countries, which is the foundation of Saab’s commitment to sustainability.

A local presence close to customers creates stronger relationships and collaborations and greater insight into customers’ needs. Better understanding these needs creates opportunities to develop the right combination of products and solutions, which in turn means that Saab also becomes more efficient and more focused on project execution, marketing and sales.

Order bookings

% outside of Sweden
71

Women globally

%
23.5

Adjusted operating margin

%
7.7

Adjusted operating income
and operating margin

MSEK

Order bookings
and sales

MSEK

Saab Annual and Sustainability Report

Download report
PDF 11 MB

A step ahead

Saab’s strategy is based on three priority areas

Market

The market Saab operates in, both nationally and internationally, is changing rapidly, and Saab has to act faster to stay ahead. The focus is on areas where the company has a strong market position and on further strengthening that position in areas with good growth potential.

Read more

Innovation

Saab has been shaped by fierce competition and strict requirements on low product lifecycle costs. Saab knows what is needed and how to get there: the latest technology, the smartest solutions and the newest innovations. Saab’s competent and engaged employees are the key, and Saab believes that diversity drives innovation.

Read more

Performance

In a world of constant change and fierce competition, high efficiency and shorter lead times are essential in order to meet customer demands with technology and solutions that increase their capabilities and profitability. Saab has to be able to deliver more for less, which is why raising efficiency is a continuous process. 

Read more

Focus and priorities generate good margins

The business unit Training & Simulation, with nearly 500 employees in 11 countries, has delivered a significant earnings improvement in recent years. In 2015, the unit reached breakeven, but in 2016 the numbers turned higher and in 2018 Training & Simulation again delivered good results.
Download case study
PDF 425 KB