Extract from CEO Åke Svensson's address to Saab's Annual General Meeting
in Stockholm, March 30, 2004
In his address to Saab's Annual General Meeting in Stockholm today,
President and CEO Åke Svensson described last year as a show of strength
by the company. Profitability improved and the order backlog at year-end
was record-high. He also stressed the role of the defence industry in
creating good protection against the threats to Sweden's security, while
at the same time serving as a growth engine for the economy.
2003 - a show of strength
Åke Svensson opened his address at today's Annual General Meeting by
listing a number of orders that confirm Saab's leading position in key areas.
He mentioned Gripen, which achieved further success in Hungary and was
recommended in the Czech Republic, the Meteor air-to-air missile
program, the wing sections of the Airbus 380, and an order won together
with IBM, Boeing and Ericsson to begin creating Sweden's new network-
Level of incoming orders
At year-end, Saab had a record-high order backlog of SEK 46 billion.
This surpasses the previous all-time high from 2002 by SEK 3 billion.
Order bookings in 2003 totaled SEK 19.6 billion, in line with the
Exports continue to increase in importance. Last year, 60 percent of
order bookings came from outside Sweden, and exports' share of the order
backlog reached 65 percent at year-end.
"The historically high share of exports in the order backlog is largely
a conscious effort on our part to grow in the international market,"
said Åke Svensson.
Åke Svensson described acquisitions and divestments as an important
element in Saab's goal to focus on its core business, which also entails
establishing new home markets other than Sweden.
As an example, he mentioned that Saab acquired 21 percent of the South
African company Grintek, and together with SPNE of France and Patria of
Finland created a new European propellant and explosives company,
The financial results for 2003 were also a show of strength. Sales rose
to slightly over SEK 17.2 billion, corresponding to growth of 4.3
percent, and operating income rose to SEK 1.3 billion.
The operating margin, excluding structural costs, improved
substantially, from 7.6 percent till 9.3 percent. This is close to
Saab's target of 10 percent.
"The significant improvement in the margin, excluding structural costs,
shows that the measures we have taken are producing results," said Åke
Earnings per share amounted to SEK 7. The Board of Directors has
proposed a dividend of SEK 3.50, unchanged from the previous year.
Global changes and new threats
With the events of March 11 of this year in Madrid and September 11,
2001 in New York fresh in our memories, Åke Svensson noted that the
threat assessment from the Cold War has been replaced by new threats.
Network-based civil defence
He described initiatives to create a "network-based civil defence,"
where civil and military units are linked together to protect society
against the threats to its security in a much more efficient way than is
Defence decision 2004
Against this background, Åke Svensson stressed the importance of Defence
Decision 2004. It stakes out the direction and assumptions by which
Swedish defence will be organized and how it will be equipped for many
years to come, and therefore also has a major impact on the defence
Åke Svensson described the benefit to Sweden of a well-oiled defence
industry and how important it is that the industry remains competitive
enough to participate in international research, technological
development and product development projects.
He hopes to see further investments from the Swedish defence in areas
where the defence industry is strong.
"It would benefit Sweden, since the defence industry can then continue
to provide the country with access to advanced technology, help to
ensure that high-tech competence remains within the country, spread
technology to commercial industry and generate considerable export
sales," said Åke Svensson. "Further investments would basically give the
defence industry the opportunity to continue to serve as a growth
engine, at the same time that it helps to defend society.
"Hopefully we will see a defence decision this year that gives Sweden an
effective, sophisticated defence against today's threats, contributes to
good growth opportunities, and at the same time offers Saab stable, long-
term operating conditions," he continued.
Outlook for 2004
Åke Svensson reaffirmed the forecast for 2004 that he gave in the 2003
"This year we expect to maintain organic growth of around 5 percent," he
said. "And we feel that our objective of an operating margin of 10
percent is within reach, provided that no further structural adjustments
are needed due to the status of development orders."
Lastly, Åke Svensson reviewed his priorities for 2004.
"The emphasis in our work will be on airborne systems and missiles,
command and control systems and advanced electronics, and service and
maintenance. We will continue in our efforts to expand in the
international market, and we will continue to focus on acquisitions to
strengthen our presence in key markets and enter new ones," he
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