THE 2001 REPORT
· Order bookings SEK 15 billion and order backlog SEK 40 billion.
· Sales SEK 15,689 m. (17,840), an increase of 5% for comparable
· Operating income SEK 1,594 m. (1,533).
· Earnings per share amounted to SEK 10.59 (9.75).
· After-tax return on shareholders' equity 18.3% and pre-tax return
on capital employed 15.5%.
· Proposed dividend per share: SEK 3.25 (3,00).
· Hungary signed lease for 14 Gripen aircraft.
· Czech Republic started negotiations on purchase of 24 Gripen
· Order for new tactical system for NH90 helicopters received in
January 2002; order value approximately SEK 2 billion.
Statement by the CEO
"As expected, income in 2001 was well in line with the previous year
and the strong cash flow improved yet further. Like previous years, the
fourth quarter was a strong quarter for our core business. Order
bookings in the quarter was also good and the order backlog remains at
just over SEK 40 billion, or about two and half years' sales.
For natural reasons, interest was focused on Hungary's decision and the
Czech Republic's choice of Gripen for equipping their respective Air
Forces. Significant business has also taken place in other areas, such
as combat training centers for new NATO customers, countermeasures for
the US and the choice of the RBS 15 anti-ship missile in key markets.
Sweden's decision to purchase 18 NH90 medium weight helicopters has
provided us with important business potential. The fact that Saab has
been given responsibility for development of a totally new tactical
system is a testament to the strength of our systems integration and
defense electronics capabilities. Development, adaptation and
maintenance of the new helicopters mean considerable revenues for Saab.
Streamlining of the Group has continued during the year through
extensive divestments and development of the core business. During the
fourth quarter, Aerothrust has been divested, which means that we have
now found solutions for all the operations that previously made up
Celsius Aviation Services.
We have a clear future orientation in growth sectors such as systems
integration, segments of defense electronics and high technology
services. We intend to strengthen our orientation and concentration with
continued acquisitions and divestments, and to play an active part in
the continued restructuring of the global defense and aerospace
For 2002, I anticipate further improvement in operating income and
operating margin, excluding capital gains."
Major events and structural changes
During the fourth quarter, Aerothrust and the 25 percent holding in the
German shipyard Howaldtswerke-Deutsche Werft, HDW, were divested. The
effect on earnings of the divestments has been considered in the fair
value analysis that was done in connection with the acquisition of
Celsius, and will not affect the earnings of the Saab Group.
Saab Marine Electronics was sold earlier this year with a capital gain
of SEK 650 million. The divestments of Celsius Amtec, Celsius Aerotech,
Aero Systems Engineering, the defense related part of Hawker Pacific,
the Kockums engineering workshop and other operations have taken place
without any impact on income, and agreement has also been reached on the
gradual divestment of Hawker Pacific. Through the venture capital
function created during the year, the share in Triangle Equipment A/S,
60 percent in A2 Acoustics and the operation of Sanguistech have been
divested during the year. The divestments during the year have had, in
total, a positive effect of about SEK 3 billion on net liquidity.
With effect from the beginning of the year, the minority share in Saab
Avionics has been acquired for SEK 225 million and with effect from
October 1, the minority share in AerotechTelub has been acquired for SEK
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 and Electronics, Saab Aerospace, Saab
Technical Support and 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 decreased to SEK 15,689 m. (17,840), due to divestments of
companies and operations mainly within Systems and Electronics and
Aviation Services. Sales have increased for almost all today remaining
operations and the average organic growth was about 5 percent for
comparable units. The year's acquisitions have not affected sales, as
they were acquisitions of outstanding minorities. Seventy percent (62)
of sales were related to defense and 40 percent (48) of total sales were
export. Sales have increased for all remaining operations in Systems and
Electronics compared to the previous year. The increase in Aerospace is
related to both military and commercial aircraft. During the year, 18
(17) Gripen aircraft were invoiced, of which seven (five) in the fourth
quarter. The delivery of one more Gripen aircraft compared to the
previous year was to some extent evened out by lower rate in development
orders. The sales increase in Technical Support and Services is mainly
attributable to organic growth in the defense-related business and in
the field of medical technology within AertotechTelub. The increase in
Dynamics depends mainly on increased deliveries of Carl-Gustaf
ammunition and disposable anti-armor weapons and the delivery start of
Torpedo 62 to Sweden. The sales increase in Space is attributable to
higher volumes in the commercial market. The sales decreases in Aviation
Services and Other operations respectively, are to all extent related to
divestments, while the customer support business and the other remaining
operations are on a level with last year.
Income and profitability
Operating income increased by 4 percent to SEK 1,594 m. (1,533). The
result includes the capital gain from the divestment of Saab Marine
Electronics of SEK 650 m. (638). Operating income before capital gains
was thus SEK 944 m. (895), corresponding to an increase of 5 percent and
an improvement of the margin to 6.0 percent (5.0). The improvement is
mainly due to the continued restructuring and increased volumes in
Aerospace and AerotechTelub.
Operating income and margin for the remaining operations in Systems and
Electronics have improved during the year and by that, the total margin
is on a level with the previous year despite the divestment of Saab
Marine Electronics. Operating income for Aerospace and Technical Support
and Services were as a result of volume increases compared to previous
year higher with maintained margins. As a result of the integration work
to realize cost synergies and focus the operation, which started in
2000, Dynamics has increased both operating income and margin. Operating
income for Space has been affected by the situation in the telecom
market and has during the fourth quarter also deteriorated due to major
cost over runs in a few development projects. The cost overruns are
mainly related to the development of the computer based sensor system
for the Metop meteorological system. Operating margin for Saab Aviation
Services and operating income for Corporate/Other operations have
improved sharply as a result of the year's restructuring. Fourth quarter
income, however, for Aviation Services has been affected by the general
situation in the aviation business.
Operating expenses have decreased as a result of continued cost
rationalization and divestments. Development costs for the export
version of Gripen were on a level with the previous year. Other
operating income during both the present and previous years consists
mainly of capital gains, trading income in Treasury and currency gains
etc. Other operating expenses consist mainly of currency and capital
losses. Items affecting comparability the previous year related to
reversal of reserves regarding Regional Aircraft, funds received from
Alecta (SPP) and provisions for certain development projects. Project
interest on non-utilized advance payments, shown in the gross margin,
amounted to SEK 168 m. (172).
Net financial income and expenses amounted to SEK -40 m. (-85), of which
Leasing SEK 80 m. (68). The average return on external investments was
5.32 percent (4.72) and the average liquidity was SEK 3,066 m. (5,400).
The increase is attributable to both the higher return and non-recurrent
items. The financial net has also been positively affected as a result
of that the former long-term net present value calculated receivable on
Alecta (SPP) due to changed payment rules and an agreement with the
employee organizations has become short-term. Income after financial
items amounted to SEK 1,554 m. (1,448). Current and deferred taxes
amounted to SEK -379 m. (-333). The tax portion of income after
financial items has been affected by the fact that certain capital gains
have been assessed as tax-free and that certain capital losses have been
assessed as non-deductible and goodwill amortization. The Group's
effective tax rate for the year amounted by that to approximately 24
percent compared to normally 29 percent. Minority interest in income has
decreased as a result of the acquisitions of the outstanding minorities
in Saab Avionics and AerotechTelub during the year.
Net income for the year was SEK 1,127 m. (1.038), corresponding to an
income per share of SEK 10.59 (9.75). Income per share before goodwill
amortization amounted to SEK 12.11 (11.47). Pre-tax return on capital
employed was 15.5 percent (14.6). After-tax return on shareholders'
equity was 18.3 percent (20.0).
Group order bookings amounted to SEK 15,274 m. (28,141), of which the
fourth quarter SEK 4,820 m. (5,043). Of the year's order bookings 52
percent were export. Fourth quarter order bookings included the
adaptation of the Gripen aircraft which Hungary will lease from the
Swedish Government, reconnaissance pods for Sweden's Gripen aircraft,
naval fire control system to Finland, countermeasure dispensers to USAF
F-15 and order for maintenance equipment for Sweden's fourth Gripen
wing. The order backlog at year-end amounted to SEK 40,034 m. (41,091),
and includes defense orders worth SEK 38,040 m.
Liquidity, finance and investments
Goodwill has net increased through the acquisitions of the outstanding
minorities in Saab Avionics and AerotechTelub and the divestment of
Amtec. The goodwill amount related to the acquisition of Celsius has
finally been confirmed to SEK 700 m. The acquisition of the outstanding
minority in AerotechTelub brought additional goodwill of SEK 586 m. From
2002, all goodwill will be allocated to the business areas.
Remaining provision for the phase-out of regional aircraft production
amounts to SEK 1,567 m. and relates mainly to estimated costs for the
responsibility of airworthiness. The loss risk reserve for the leasing
operation amounted to SEK 1,648 m. at year-end. After offset against the
lease assets with SEK 1.030 m., the provision shown in the balance sheet
amounts to SEK 618 m. Remaining provisions are mainly related to
restructuring and project reserves resulting from the acquisition of
Finance and liquidity
Liquid funds less liabilities to credit institutions have increased by
SEK 621 m. to 4,563 m. (3,942). The increase is mainly a net of new
advances and payment from divestment of businesses and high utilization
of advances within the Gripen program, utilization of structural
reserves, payment of dividend and acquisitions of businesses. The
Group's net liquidity after deduction for allocations to pensions
amounted to SEK 885 m. (415).
Group equity/assets ratio amounted to 22.3 percent (18.2). The interest
coverage ratio was 5.50 (5.32). Shareholders' equity amounted to SEK
6,679 m. (5,670), corresponding to SEK 62.74 (53.26) per share.
Operating cash flow was positive and amounted to SEK 1,642 m. Group cash
flow from operating activities have further improved to SEK 2,652 m.
Working capital has despite higher advances increased mainly due to
utilization of part of last year's provisions within Dynamics, payments
related to the regional aircraft business and decreased lease
obligations due to planned changes in the portfolio. In cash flow from
investments, the investments in lease assets are a net of decreased
lease assets due to the divestment of Amtec and a planned increase of
leasing aircraft on balance sheet, regarding aircraft already included
in the portfolio.
Operating cash flow of SEK 1,642 m. is distributed between cash flow
from the operation of SEK 566 m., from divestments and acquisitions SEK
2,336 m. and from increase according to plan of internal funding in the
lease portfolio and phase-out of regional aircraft production of SEK -
The year's capital expenditures in property, plant and equipment,
excluding lease assets, amounted to SEK 532 m. (1,077). Net investments
including lease assets and intangible fixed assets amounted to SEK -331
m. (-502), including lease assets of SEK -120 m. (476).
Research and development
The year's expenditure on research and development amounted to SEK 3,819
m. (3,808), of which SEK 3,101 m. (2,948) relates to development paid
for by customers.
At the end of 2001, the number of employees in the Group was 14,028,
compared with 15,453 at the beginning of the year. The decrease is
mainly related to divestment of operations.
Sales and income
Sales of the parent company amounted to SEK 4,097 m. (3,921). Operating
income amounted to SEK 421 m. (838). Net financial income and expenses
amounted to SEK 930 m. (843) and income after financial income and
expenses was SEK 1,351 m. (1,681). Of the financial net SEK 954 m. (743)
are group contributions and dividends. After appropriations of SEK -6 m.
(-148) and paid and deferred tax of SEK -102 m. (-305), net income for
the year amounted to SEK 1,243 m. (1,228).
Proposed dividend and repurchase of own shares
The Board of Directors long-term dividend policy is for 20-40 percent of
the Group's net income to be distributed. For 2001, the Board of
Directors and the President propose to distribute to the shareholders
SEK 3.25 (3.00) per share or a total of SEK 346 m. (319), corresponding
to 31 percent (31) of the Group's net income. April 11, 2002 has been
proposed as the record date and the dividend is expected to be
distributed, April 16, 2002.
Further, the Board of Directors will as the previous year propose the
Annual General Meeting an authorization for the Board to decide on
repurchase of the company's shares up to 10 percent of the total shares
outstanding. The mandate is proposed to be valid until the next Annual
General Meeting. The purpose of the empowerment is to provide the Board
with increased scope for action in working with the company's capital
structure and to enable acquisitions to be made where considered
appropriate. Such repurchases may be effected over the stock exchange or
through offerings to shareholders. It is also proposed that the Board's
mandate includes the possibility to transfer repurchased shares in
accordance with current legislation.
Annual General Meeting
The Annual General Meeting will be held at Saab, Linköping on Monday,
April 8, 2002 at 18.00. Saab's revised annual report will be available
at the company's office in Linköping. The printed Annual Report will be
distributed upon request to shareholders from March 4, 2002.
Saab's principal owners are BAE SYSTEMS, Investor AB, the Wallenberg
foundations, AMF, Fidelity Funds, Third AP Fund, Eikos Fund, Skandia and
The report has been drawn up in accordance with earlier accounting
principles. This means that divested companies, such as Saab Marine
Electronics, are not included in the Group for any part of 2001. The
figures for 2000 have not been adjusted for external acquisitions and
divestments made during 2001. However, sales and operating income by
business area for the year 2000 have been adjusted for internal
Linköping, February 15, 2002
President and Chief Executive Officer
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