January - September 2002
· Order bookings after nine months amounted to SEK 16 billion, of
which SEK 3 billion in the third quarter. Order backlog amounted thereby
to SEK 44 billion.
· Sales SEK 11,708 m. (10,605), an increase of 10%.
· Operating income SEK 678 m. (580 m., excluding capital gains) and
income after financial items SEK 593 m. Earnings per share SEK 3.85.
· Latest version of the Gripen delivered to Sweden.
· Export orders for serial production of the Taurus standoff missile
and the air defense missile system RBS 70.
Statement by the CEO
"Order bookings were good also during the third quarter and the order
backlog thus stands unchanged at about 44 billion SEK, corresponding to
almost three years invoicing. Bookings include orders from Germany for
serial production of the Taurus standoff missile developed jointly by
Saab and the German LFK, and from Finland for the RBS 70 air defense
system. We have also expanded our participation in the Swedish
helicopter program through an order for sonar systems for the NH90. Last
week, we received a Swedish order for further maintenance equipment for
During the third quarter, we passed an important milestone in the Gripen
program with the handing over of the first aircraft of the new C-version
to the Defence Materiel Administration. The Swedish C-version is
identical to the Gripen aircraft intended for export and includes among
others in- flight refueling, full color displays and new pylons. This
combination of advanced technology and increased capabilities brings a
step change in the operational effectiveness of the aircraft over a wide
range of missions.
So far this year, we have seen good growth in the defense-oriented
operations. As in previous years, the customary variation in income over
the year means that the third quarter is weak as a result of the
vacation period. The earlier assessment for the whole year, which
indicated continued improvement in operating income and operating
margin, excluding capital gains, remains unchanged."
As part of the streamlining process of the Group, Aerotech Telub
Information & Media AB has been divested during the third quarter to
Sörman Information and negotiations are in progress on divesting further
operations of a minor nature.
Earlier this year, BAE SYSTEMS' signature management operation in the
U.S. and the remaining 35 percent in Combitech Systems were acquired.
With effect from January 1 this year, Nyge Aero has been transferred
from Saab Technical Support and Services to Saab Aerospace.
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 increased organically by 10 percent to SEK 11,708 m.
(10,605). Seventyfive percent of sales were related to defense and 40
percent of total sales were export. Sales during the third quarter
increased by 9 percent to SEK 3,424 m. (3,147).
Sales of all operations in Systems & Electronics have increased compared
with the same period last year. The increase in Aerospace is mainly
attributable to defense and the internal acquisition of Nyge Aero. Sales
included 16 (11) Gripen aircraft, of which 4 (3) in the third quarter.
The changes compared with the previous year for Technical Support &
Services are mainly due to the transfer of Nyge Aero and lower volumes
for the aircraft maintenance operation in Saab Aviocomp, while sales for
AerotechTelub, however, have increased slightly. Total sales for
Dynamics have increased compared to the previous year, which also
applies to most of the constituent business units. The decrease in sales
for Space is mainly attributable to the situation in the commercial
telecom market, as well as to reduced public funding of space research.
The decrease in Aviation Services is related to the customer support
activities and is a result of the general situation for air travel.
Income and profitability
Operating income amounted to SEK 678 m. (1,230), of which SEK 204 m.
(171) in the third quarter. The result for the previous year included a
capital gain from the divestment of Saab Marine Electronics of SEK 650
m. Operating income before capital gains was thus SEK 678 m. (580),
corresponding to a margin of 5.8 percent (5.5). The nine-month income
has compared to the previous year been positively affected by SEK 184 m.
related to capitalization of development costs and negatively affected
by SEK 40 m. related to structural costs in the space operation. Income
from the defense business has improved compared to the previous year,
but the total income has been affected by the general market situation
for the space business and Aviation Services.
Operating income per business area is reported before goodwill
amortization, see table on page 7. Operating income for Systems and
Electronics has improved mainly as a result of volume increases for Saab
Training Systems and Saab Avionics. However, income is lower for
Combitech Systems as a result of the general market situation for
consultants and for Saab Tech Systems as a result of the project mix.
Operating income for Aerospace has improved as a result of volume
increases and capitalization of development costs. Operating margin
excluding capitalization is on level with previous years. Operating
income for Technical Support and Services is on a level with last year
with an improved margin mainly due to higher utilization ratio and cost
reductions. The improvement in income for Dynamics is mainly due to
volume increases and a favorable product mix and certain project
finalizations during the quarter. In addition to the provision made in
the Space business in the first quarter of SEK 40 m. for structural
changes, a provision of SEK 20 m. was made in the third quarter for
project overrun. Lower volumes have affected operating income for
Aviation Services, but the margin continues to be above 8 percent, the
same level as for the whole year 2001. Operating income for
Corporate/Other Operations has improved as a result of continued
structuring, but temporary group eliminations have affected income
negatively during the third quarter.
Administration and marketing expenses are somewhat lower than previous
year. Of the period's research and development costs, a total of SEK 184
m. (0) has been capitalized in accordance with new accounting principles
and SEK 309 m. (546) has been charged to income. If these rules had been
applied in 2001, SEK 140 m. would have been capitalized in the balance
sheet for the first nine months of that year. Other operating income
during both the present and previous years consist mainly of trading
income in Treasury and currency gains etc. The previous year also
included a capital gain of SEK 650 m. Other operating expenses consist
mainly of currency and capital losses. The present year also include the
provision made for structural changes in Space of SEK 40 m. Project
interest on non-utilized advance payments, which has decreased financial
net and is reported as gross margin, amounted to SEK 133 m. (85).
Net financial income and expenses amounted to SEK -85 m. (-33). The
average return on external investments was 4.37 percent (4.63). The
decrease in financial net compared to the previous year is mainly
attributable to increased interest level on the pension debt. The
positive financial net in the third quarter is mainly due to revaluation
of the bond portfolio due to decreasing market interests during the
quarter and termination of currency forward contracts. Income after
financial items amounted to SEK 593 m. (1,197).
Current and deferred taxes amounted to SEK -193 m. (-267). Minority
interest in income is positive as a result of the negative income in
Saab Ericsson Space and as a result of the acquisition of the
outstanding minority in Combitech Systems.
Net income for the period was SEK 410 m. compared with SEK 882 m. for
the same period previous year including the capital gain from the
divestment of Saab Marine Electronics. This corresponds to an income per
share of SEK 3.86 (8.28). Pre-tax return on capital employed was 10,0
percent (18.1). After-tax return on shareholders' equity was 10,0
Group order bookings amounted to SEK 15,714 m. (10,483), of which SEK
3,258 m. (2,939) in the third quarter. Of order bookings, 75 percent
came from customers outside Sweden. Order bookings during the third
quarter included serial production for Germany of the Taurus standoff
missile, the air defense system, RBS 70, for Finland, sonar systems for
the Swedish helicopter program, further development of command and
control systems for air and army forces, separate orders and spare parts
for Gripen, data handling systems and anti-armor weapons and ammunition
for the Carl-Gustaf system. The order backlog at the end of the period
amounted to SEK 43,786 m. compared to SEK 40,034 m. at the beginning of
Liquidity, finance and investments
Finance and liquidity
Liquid funds less liabilities to credit institutions compared to the
beginning of the year have decreased by SEK 1,460 m. to 3,103 m.
(4,563). The decrease is mainly related to utilization of advances
within the Gripen program, payment of dividend and the amortization of
the pension liability. The Group's net debt after deduction for
allocations to pensions amounted to SEK 357 m., compared with a net
liquidity of SEK 885 m. at the beginning of the year.
Group equity/assets ratio amounted to 23.0 percent (21.3), compared to
SEK 22.3 percent at the beginning of the year. Shareholders' equity
amounted to SEK 6,578 m. (6,495), corresponding to SEK 61.79 (61.01) per
share, compared with SEK 62.74 at the beginning of the year.
Operating cash flow was negative during the first nine months by SEK -
702 m. Working capital has increased mainly due to VAT payments,
increase in inventory related to among others the A380 project and
payments related to utilization of previously made provisions. Operating
cash flow of SEK -702 m. is distributed between cash flow from the
operations of SEK -634 m., acquisitions SEK -77 m. and from the regional
aircraft leasing business SEK 9 m.
The period's capital expenditures in property, plant and equipment,
excluding lease assets, amounted to SEK 425 m. (335).
At the end of the period, the number of employees in the Group was
14,109, compared with 14,028 at the beginning of the year.
Saab's principal owners are BAE SYSTEMS, Investor AB, the Wallenberg
foundations, AMF, Robur funds, Eikos fund, GMO International Funds, The
AP funds, Skandia, Pictet & Cie, Fidelity funds, SHB funds and several
U.S. and U.K. funds.
The Group follows all the recommendations of the Swedish Financial
Accounting Standards Council, which are applicable to 2002. This means
that from 2002 onwards, the new accounting principles will be applied
also in regard to intangible assets, allocations and depreciation, etc.
Only the recommendation on intangible assets, RR 15, has been of
material significance for the Group's income and financial position. In
all other respects, the report has been drawn up in accordance with
earlier applied accounting principles. Sales and operating income by
business area for the year 2001 has not been adjusted for the internal
re-organization regarding Saab Nyge Aero.
Linköping, October 16, 2002
President and Chief Executive Officer
This Interim Report has not been subject to review by the Company's
Dates for financial information:
The 2002 Report will be published on February 14, 2003.
For further information, please contact:
Agneta Kammeby, Manager Investor Relations tel. +46 13 18 71 25
Jan Nygren, Head of Corporate Communications tel. +46 13 18 19 99
Press conference with CEO Bengt Halse:
Today Wednesday October 16, 16.00, World Trade Center, Stockholm
Telephone interview with CEO Bengt Halse:
Today Wednesday October 16. Contact Marita Sidén tel.+46 13 18 71 49
Today Wednesday October 16, 17.15 (CET). tel. +46 13 18 71 49
Contact Marita Sidén for registration and further information.
The Interim report can also be accessed on the Internet at www.saab.se
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