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Saab Year-end Report Jan - Dec 2019

Year-end Report Jan-Dec 2019

CEO Comment

A strong year with continued growth and improved profitability

Saab reported strong development in 2019: stable order bookings and good execution contributed to continued organic growth and improved profitability.

Micael Johansson
President & CEO
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At the end of the year, Saab also secured key milestone payments, which generated strong operational cash flow in the fourth quarter.

Demand for the company’s products and solutions remains high and the market is expected to continue to grow the next coming years, as Saab is entering production and delivery stage. Saab is re-confirming its long-term financial goals of annual organic growth of 5 per cent and an operating margin of 10 per cent per year over a business cycle.

Orders

Order bookings in 2019 amounted to SEK 27.2 billion (28.0). The order backlog was SEK 93.3 billion (102.2) at the end of the year. Volumes for small orders continued and increased by 10 per cent compared to previous year. During the year, Saab received a major order from Finland’s Ministry of Defence to provide and integrate the combat system and sensors for Finland’s new corvettes. Key framework agreements were signed for the Carl-Gustaf weapon system. Further, the United Arab Emirates announced in the fourth quarter its intention to acquire two additional GlobalEye Airborne Early Warning & Control aircraft.

Sales and operating income

Sales increased to SEK 35.4 billion (33.2) in 2019, corresponding to a growth of 7 per cent. Organic growth was 6 per cent with five of six business areas contributing to the increase. Saab continues to invest in R&D and innovation to support future profitable growth. Sales are expected to continue to grow in 2020 in line with Saab’s long-term growth goal.

Operating income amounted to SEK 2,937 million (2,564) with an operating margin of 8.3 per cent (7.7). The improved profitability benefitted mainly from the increase in volumes. The operating margin in 2020 is expected to continue to improve compared to 2019.

In the last quarter, Saab took important steps in the Gripen E programme for Sweden, where the first serially produced aircraft made its maiden flight and was delivered to the joint test flight programme. Earlier in the year, steps were taken in the delivery of Gripen E to Brazil. In addition, work progressed on Saab’s new production facility for the trainer aircraft T-7A Red Hawk in West Lafayette, Indiana, in the U.S.

Operational cash flow

Operational cash flow for 2019 improved to SEK -1,300 million (-2,424). Key milestone payments in the fourth quarter generated a strong operational cash flow of SEK 3,056 million (2,773). For 2020, the aim is to have a positive operating cash flow.

Dividend

The Board of Directors is proposing a dividend for 2019 of SEK 4.70 (4.50) per share.

OUTLOOK STATEMENT FOR 2020:

Saab estimates that organic sales growth in 2020 will be in line with the long-term financial goal of 5 per cent. The operating margin* in 2020 is expected to improve compared to 2019.

*Excluding material non-recurring items

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.

Sales

BSEK
35.4

Organic sales growth

%
6

Operating margin

%
8.3

Adjusted operating income
and operating margin

MSEK

Order bookings
and sales

MSEK

Year-end Report
Jan - Dec 2019

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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.

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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.

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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. 

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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.
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