January - September 2000
* Order bookings after nine months amounted to SEK 23 billion, of which
SEK 5 billion during the third quarter
* Sales amounted to SEK 12,313 m. (pro forma 12,399).
* Operating income increased to SEK 876 m. (pro forma 725).
* Earnings per share amounted to SEK 4.81 (pro forma 4.42).
* After-tax return on shareholders' equity 14.5% and pre-tax return on
capital employed 12.0%
Comment by the President
"The acquisition of Celsius took place at the beginning of March this
year. Since then, operations have been characterized by intensive,
internal integration work with major structural changes, as well as
considerable activity and success in our markets.
Order bookings after nine months amounted to SEK 23 billion, an all-time
high, and the order backlog at the end of the same period was SEK 41
billion. This corresponds to over two years' invoicing and at least one
year's invoicing for all individual business areas.
Several of the orders obtained represent important breakthroughs, either
in markets or products. Examples include the mobile combat training center
for the Netherlands, the first serial order for the Bamse air defense
missile, the Gripen aircraft for South Africa, a new generation of marine
command and control systems, and equipment for a new generation of
We now have an internationally competitive product portfolio in all our
future-oriented business areas.
In connection with the extensive structural measures necessitated through
the acquisition of Celsius, a detailed review has been made of certain
major projects. We have found that a number of development projects in the
torpedo and missiles operations from the former Celsius Group have
required further provisions due to cost overruns. This will have no
influence on the long-term earnings capability. However, the third quarter
also contains a positive extraordinary item through the revenue from SPP's
surplus, which in total means a small positive effect on the period's
Normally, the third quarter is affected by some seasonal fluctuations and
a somewhat lower sales in our type of operations and this year is no
exception. The income has also, in addition to above mentioned costs, been
burdened with certain other extraordinary expenditures such as integration
costs in AertechTelub. The fourth quarter is expected to be strong also
The integration and structuring process has so far entailed streamlining
with the aid of divestments and outsourcing; focusing and rationalization
in the business areas, mainly Dynamics; closure of the head office
functions in Celsius; new management structures and changes on managerial
level, and various other measures. This work is closely following the plan
which aims at generating at least SEK 400 million a year in cost savings
within three years."
Saab consists of the business areas Infomatics, Aerospace, Technical
Support & Services, Dynamics, Space, Aviation Services and Other
Business area Infomatics focuses on command and control systems,
simulation systems and avionics as well as commercial operations in IT and
electronics. During the quarter, operations were acquired in the area of
EMC, Electromagnetic Coexistence, which will further strengthen
Infomatics' know-how in the field of undesirable interaction between
Sales amounted to SEK 2,995 m. (pro forma 2,875). Operating income was SEK
158 m. (pro forma 58), corresponding to an operating margin of 5.3
percent. The improvement is mainly attributable to the systems business
and to the phasing out of certain development projects.
Order bookings, which during the first nine months have been very good for
most of the business units, totaled SEK 3,266 m. (pro forma 1,702). During
the third quarter order bookings were SEK 808 m. and included among others
orders from FMV regarding further development of the environment
simulator, STRIC, for the Air Force and for multispectral, mobile
camouflage systems for the Leopard 2 tanks, an order from the Brazil oil
company Petrobras for radar-based level gauging systems for tank terminals
and an order from Ericsson regarding a radio link for military use. In
addition to this, an order was received in the beginning of October for a
digital recorder to the upgrade of the display systems in the Spanish F-
Business area Aerospace develops and manufactures military aircraft
systems and is a partner and supplier in subsystems for manufacturers of
large commercial aircraft.
Sales amounted to SEK 2,717 m. (pro forma 2,973), of which Commercial
Programs including sales of spare parts to Saab Aircraft was SEK 164 m.
(141). The decrease is mainly due to less work on the Swedish further
development program for Gripen. During the first nine months, 12 (12)
Gripen aircraft have been delivered. A total of 93 aircraft have thus been
delivered out of the total of 204 ordered by the Swedish Defence Materiel
Administration, FMV. Gripen is currently being delivered to FMV at a rate
of 17 aircraft per year. Operating income was SEK 238 m. (pro forma 261),
corresponding to an operating margin of 8.8 percent. The period's
investments in the export program for the Gripen were higher than last
year and are expected to be higher also on a whole-year basis. The cost
for this effort has been charged to income.
Order bookings was SEK 11,596 m. (pro forma 1,647), including the South
African order for 28 Gripen aircraft with related equipment, training,
etc. of SEK 9.3 bn. Order bookings during the third quarter amounted to
SEK 908 m. and included among others an order worth close to SEK 600 m.
from FMV for upgrading of earlier delivered Gripen aircraft.
Technical Support & Services
In recent years, Saab has grown both organically and through acquisitions
in the field of advanced services, which is considered to be an
interesting future market. Business area Technical Support & Services
provides advanced services for both commercial and military customers.
The business area is dominated by AerotechTelub, which was formed on
January 1 this year and is owned to 57 percent by Saab and to 43 percent
by TietoEnator. AerotechTelub is an advanced service company primarily
oriented towards technical services, operation and maintenance, and
systems for testing, simulation, traffic management and customized
information systems. The business area also includes Saab Nyge Aero, which
is active in aircraft maintenance, aerial target towing and special flight
Sales amounted to SEK 1,660 m. (pro forma 1,649). Operating income was SEK
106 m. (pro forma 101), corresponding to an operating margin of 6.4
Order bookings amounted to SEK 2,087 m. (pro forma 1,616), of which SEK
557 m. in the third quarter related to a computerized test system for the
Swedish Army's Leopard 2 battle tanks and a new radio system for the
Gripen, among other projects. In addition, an outline agreement has been
signed with the National Police Board in the area of IT security.
Saab's activities in precision engagement have been gathered in business
area Dynamics, which develops and produces missile systems, portable anti-
armor systems and underwater systems for land, sea and air applications.
Sales amounted to SEK 1,502 m. (pro forma 1,999). Sales decreased in
several parts of the operation, but the decrease is mainly due to large
deliveries of STRIX during 1999. An intensive integration work is ongoing
in the business area to realize cost synergies and focus the business.
This has produced effect as from the third quarter, which showed a
positive operating income of SEK 28 m. Operating income for the first nine
months by that amounted to SEK 1 m. (pro forma -23).
Order bookings totaled SEK 2,608 m. (pro forma 1,631), of which SEK 1,699
m. in the third quarter including among others the first serial production
order for the Bamse air defense missile from FMV worth above SEK 1
billion, an order worth over SEK 300 m. from France regarding the new
version of the AT 4 CS, anti armor weapon system, an order from FMV for
advanced mobile underwater data acquisition systems and several orders for
Carl Gustaf ammunition.
At the end of September, a further successful test flight was performed
with the autonomous stand-off missile TAURUS KEPD 350, which is being
developed together with the German company LFK (Lenkflugkörpersysteme
GmbH) for the German Air Force.
Space, which is owned to 60 percent by Saab and 40 percent by Ericsson,
develops and manufactures onboard computers, antennas and other electronic
and mechanical equipment for the space industry.
Sales amounted to SEK 518 m. (506). Close to 50 percent of sales went to
the commercial telecom market and 94 percent of total sales were to
markets outside Sweden. Operating income was SEK 44 m. (51), giving an
operating margin of 8.5 percent. The deterioration in earnings is due to
internally financed development costs related to the intensified focus on
the commercial telecom market.
Order bookings amounted to SEK 501 m. (558), of which SEK 172 m. in the
third quarter including onboard computers and antennas to Alcatel
concerning Eutelsat's Atlantic Bird 2 and HotBird 6 spacecraft and
microwave electronics to Hughes for the new high-speed multimedia
satellite system called Spaceway. Close to half of the order bookings
related to markets outside the institutional market and in September the
second sales office in the USA was opened in Los Angeles in order to be
closer to customers.
Celsius Aviation Services, CAS, is active in commercial aircraft
maintenance with the focus on the USA. Partly as a result of the economic
cycle, the work of finding a new owner for CAS has been more complex than
expected. A review of the business structure is now ongoing and
discussions have started with potential purchasers of individual companies
in the business among other things.
Sales during the first nine months amounted to SEK 2,356 m. (2,170) and
operating income was SEK 105 m. (150). The deterioration in earnings is
mainly due to a general cyclical downturn in the markets processed by CAS.
Order bookings amounted to SEK 2,516 m. (2,078). During the third quarter,
a new outline agreement for jet engine maintenance valued at SEK 1,020 m.
was signed with the American defense.
Other operations include long-term commitments in the form of the leasing
portfolio and maintenance operations for Saab's regional aircraft, as well
as a number of niche companies. To handle the long-term provision of
capital for these companies and to realize values, we are seeking
structural solutions for several of these operations. During the third
quarter the 30 percent stake in the drilling rig Louisiana was divested.
Sales, income and orders
Group sales increased by 83 percent to SEK 12,313 m. (6,733, pro forma
12,399). This is on the level with pro forma last year except for Dynamics
due to the fact that last year several contracts were finalized and this
year includes the development phase of several new projects and for
Aerospace due to decreased pace in the Swedish further development program
for Gripen. The increase in Other operations is mainly attributable to
sales of spares in Saab Aircraft.
Operating income increased 21 percent to SEK 876 m. (725, pro forma 725),
corresponding to an operating margin of 7.1 percent. The improved
operating income is mainly attributable to Infomatics, the structural work
within Dynamics and to capital gains totaling SEK 353 m. from the
divestments of Combitech Network and Traffic Systems. Project interest on
non-utilized advance payments, accounted for in gross margin, amounted to
SEK 128 m. (183).
The ongoing termination of the regional aircraft business is still better
than plan. The period's losses for Regional Aircraft of SEK -361 m. (-607)
and in Saab Aircraft Leasing of SEK -72 m. (-90) have as previously been
charged against the termination reserve and loss risk reserve
Marketing activities have in general been higher in all business areas
this year compared to the corresponding period last year. Research and
development costs amounted to SEK 603 m. (pro forma 570). The increase is
partly attributable to development work on the export version of Gripen.
Other operating income consists among others of capital gains from
divesting operations of SEK 353 m. (32). The divestment of the drill rig
Louisiana had no effect on income.
Items affecting comparability amounted to SEK 33 m. (212) and related this
year to funds of SEK 521 m. received from SPP and provisions of SEK 488 m.
for certain development projects in the torpedo and missiles operations
from the former Celsius Group. Items affecting comparability for the
previous year relate mainly to dissolution of provisions regarding
The Saab Group has received a total of SEK 1,262 m. from SPP, of which SEK
722 m. has been paid in cash. The remaining SEK 540 m. has been reported
as a long-term receivable. The proportion of SPP's surplus which relates
to Saab has been taken to income in the third quarter and has influenced
earnings by SEK 521 m. after discounting the receivable at present value.
The portion totaling SEK 741 m. which relates to the former Celsius Group
is included in the purchase analysis and has not affected earnings.
Net financial income and expenses amounted to SEK -67 m. (pro forma -11).
The decrease is mainly due to lower liquid funds and a lower interest
rate. The deterioration of the financial net compared to the outcome last
year is primarily due to the cash acquisition of Celsius, which
corresponds to a decreased interest income of about SEK 250 m. The share
in income of HDW, which amounted to SEK 40 (0) m., is being reported as
financial income. The average return on externally invested liquid funds
was 4.76 (4,85) percent. Income after financial income and expenses
amounted to SEK 809 m. (pro forma 714). Current and deferred taxes
amounted to SEK -234 m. (pro forma -214), corresponding to an effective
tax rate of 29 percent on income after financial income and expenses.
Group order bookings during the first nine months amounted to SEK 23,098
m. (pro forma 9,582). Order bookings during the third quarter was SEK
5,209 m. The order backlog at the end of the period was SEK 41,381 m.,
compared to SEK 29,891 m. at the beginning of the year.
Liquidity, finance and investments
Finance and liquidity
Cash and marketable securities, less liabilities to credit institutions,
have compared to pro forma opening balance increased by SEK 98 m. to SEK
5,874 m. (5,776). The increase is mainly a net of the SEK 1,262 m.
received from SPP and payments related to the phasing out of Regional
Aircraft of SEK 361 m. and the payment of dividend of SEK 266 m. and to
continued high utilization of advances within Gripen. However, the Group's
financial position is strong and net liquidity after deduction for
provision for pensions amounted to SEK 2,375 m., compared to SEK 2,370 m.
in the pro forma opening balance.
The Group's capital expenditures in property, plant and equipment,
excluding leasing assets, amounted to SEK 304 m. (pro forma 559). The
decrease is mainly due to lower investments in buildings and a few major
investments during 1999.
At the end of the period, the number of employees in the Group was 15,646,
compared with 16,665 at the beginning of the year.
Saab's principal owners are Investor AB, BAE SYSTEMS, the Wallenberg
foundations, US funds, Third National Pension Insurance Fund, AMF,
Skandia, UBS Warburg, FPG and Handelsbanken funds.
This Interim Report has been drawn up in accordance with earlier
accounting principles. Celsius is included in the Saab Group as from
January 1, 2000. For comparability pro forma figures are published, which
refers to the Saab Group including Celsius for the whole year 1999 and the
quarters of 1999. The pro forma figures will be adjusted in pace with the
restructuring of the Group. The sales pro forma figures for 1999 have been
changed since the half-year report.
Linköping, October 25, 2000
President and CEO
This Interim Report has not been subject to review by the Company's
Dates for financial information:
The 2000 Report will be published on February 16, 2001.
For further information, please contact:
Jan Nygren, Head of Corporate Communications tel. +46 13 18 19 99
Agneta Kammeby, Manager Investor Relations, tel. +46 13 18 71 25
The interim report can also be accessed on the Internet at www.saab.se
Pro forma Pro forma
9 months 9 months 9 months 12 months
SEK m. 2000 1999 1999 1999
Sales 12,313 6,733 12,399 18,018
Cost of goods sold -9,304 -4,934 -9,535 -13,882
Gross margin 3,009 1,799 2,864 4,136
Marketing expenses -1,094 -553 -990 -1,390
Administrative expenses -838 -408 -962 -1,309
Research and development costs -603 -378 -570 -858
Items affecting comparability 33 174 212 255
Other operating income 454 144 239 347
Other operating expenses -81 -52 -67 -65
Share in income of associated -4 -1 -1 9
Operating income 876 725 725 1,125
Result from financial investments -67 239 -11 -9
Income after financial items 809 964 714 1,116
Taxes -234 -289 -214 -352
Minority interest -63 -35 -29 -29
Net income 512 640 471 735
Earnings per share, SEK 4.81 6.01 4.42 6.90
Earnings per share after full 4.69 5.86 4.31 6.73
Includes depreciation of -919 -668 -944 -1,311
of which depreciation on -391 -353 -353 -511
Number of shares: 106,459,675
as per Sept. 30, 2000
Number of shares after full
Sales by business area
Pro forma Pro forma Whole
9 months 9 months year 3 Q
SEK m. 2000 1999 Change 1999 2000
Infomatics 2,995 2,875 4% 4,294 915
Aerospace 2,717 2,973 -9% 3,964 846
Technical Support & 1,660 1,649 1% 2,367 489
Dynamics 1,502 1,999 -25% 3,393 484
Space 518 506 2% 676 179
Internal sales -559 -536 -797 -96
8,833 9,466 -7% 13,897 2,817
CAS 2,356 2,170 9% 3,009 791
Other operations 1,124 763 1,112 368
Saab Group 12,313 12,399 -1% 18,018 3,976
Operating income by business area
Per- Pro forma Pro forma
9 months centage 9 months Whole year 3 Q 2000
SEK m. 2000 of sales 1999 1999
Infomatics 158 5.3% 58 199 58
Aerospace 238 8.8% 261 450 64
Technical Support & 106 6.4% 101 146 34
Dynamics 1 0.1% -23 -39 28
Space 44 8.5% 51 65 14
Corporate 309 18 -40 -20
856 9.7% 466 781 178
CAS 105 4.5% 150 212 39
Other operations -85 109 132 3
Saab Group 876 7.1% 725 1,125 220
Sept. 30, Sept. 30, Pro forma Dec. 31, 1999
SEK m. 2000 1999
Goodwill and other intangible 1,773 382 1,827
Property, plant and equipment, 4,174 2,710 4,339
Lease assets 8,212 8,269 8,963
Long-term interest bearing 1,559 1,180
Shares, etc. 924 39 999
Deferred tax receivables 970 457 959
Inventories, etc. 4,056 1,763 3,954
Short-term interest bearing 629 231
Other receivables 6,045 2,297 6,474
Cash and marketable securities 6,169 12,003 7,705
Total assets 34,511 27,920 36,631
Shareholders' equity and
Shareholders' equity 5,147 4,432 4,700
Minority interest in 821 191 752
Provision for pensions 3,499 1,963 3,406
Other provisions 5,999 5,366 6,596
Liabilities to credit 2,255 37 3,123
Convertible debenture loan 228 216 217
Lease obligations 4,203 4,647 4,591
Advance payments from customers, 3,886 4,483 4,631
Other liabilities 8,473 6,585 8,615
Total shareholders' equity and
liabilities 34,511 27,920 36,631
Subdivided summary of balance sheet, September 30, 2000
Regional Elimi- Saab Group
SEK m. Saab Aircraft SAL nations
Goodwill and other intangible 1,773 0 0 0 1,773
Property, plant and equipment, 4,173 0 1 0 4,174
Lease assets 652 0 7,560 0 8,212
Long-term interest bearing 1,559 0 0 0 1,559
Shares, etc. 2,424 0 0 -1,500 924
Deferred tax receivables 694 564 0 -288 970
Inventories, etc. 4,056 0 0 0 4,056
Short-term interest bearing 629 0 0 0 629
Other receivables 4,937 0 1,108 0 6,045
Cash and marketable securities 2,843 1,451 1,875 0 6,169
Total assets 23,740 2,015 10,544 -1,788 34,511
Shareholders' equity and
Shareholders' equity 4,815 0 1,832 -1,500 5,147
Minority interest in 810 0 11 0 821
Provision for pensions 3,499 0 0 0 3,499
Other provisions 1,419 2,015 2,853 -288 5,999
Liabilities to credit 2,255 0 0 0 2,255
Convertible debenture loan 228 0 0 0 228
Lease obligations 113 0 4,090 0 4,203
Advance payments from customers, 3,886 0 0 0 3,886
Other liabilities 6,715 0 1,758 0 8,473
Total shareholders' equity and
liabilities 23,740 2,015 10,544 -1,788 34,511
Sales and income per quarter
st nd rd st nd rd th
SEK m. 1 Q 2 Q 3 Q 1 Q 2 Q 3 Q 4 Q
Sales 4,187 4,150 3,976 3,896 4,970 3,533 5,619
Operating income 247 409 220 192 406 127 400
Operating margin 5.9% 9.9% 5.5% 4.9% 8.2% 3.6% 7.1%
Net financial income 8 -35 -40 -28 30 -13 2
Income after financial 255 374 180 164 436 114 402
Net income 161 254 97 103 290 78 264
Earnings per share, SEK 1.51 2.39 0.91 0.97 2.72 0.73 2.48
Number of shares:
106,459,675 as per
Sept. 30, 2000.
Summary of cash flow statement
9 months 9 months 1999 Whole year
SEK m. 2000 1999
Cash flow from operating activities
Income after financial items excl.
share in 813 970 1,380
income of associated companies
Depreciation and write-down charged to 919 668 918
Items affecting comparability -174 -255
Tax -221 -37 -182
Cash flow from operating activities
before 1,511 1,427 1,861
changes in working capital
Inventories etc. -102 478 524
Receivables 459 196 8
Advance payments from customers, net -745 -708 -1,136
Other liabilities -142 -1,053 -554
Lease obligations -388 -306 -362
Provisions -597 -686 -929
Change in working capital -1,515 -2,079 -2,449
Cash flow from operating activities -4 -652 -588
Investments in intangible fixed assets -69 -93 -104
Investments in shares etc. 70 -1 -1,285
Investments in tangible fixed assets -240 -302 -280
Investments in lease assets 360 43 -83
Change in long-term receivables -29 0 -28
Cash flow from investments 92 -353 -1,780
Operating cash flow 88 -1,005 -2,368
Change compared to pro forma balance sheet as per December 31, 1999.
Pro forma Pro forma
9 months 2000 9 months 12 months
Operating margin before depreciation 11,4% 10,6% 10.7%
Operating margin after depreciation 7.1% 5.8% 6.2%
Pre-tax return on capital employed 12.0% - -
After-tax return on shareholders' 14.5% - -
Equity/assets ratio, excl. Regional 20.3% - 18.2%
aircraft and SAL
Equity/assets ratio 14.9% - 12.8%
This information was brought to you by BIT http://www.bit.se
The following files are available for download: