• Sales amounted to SEK 3,822 m. (3,813)
• Net income for the period was SEK 232 m. (250)
• Earnings per share amounted to SEK 2.04 (2.26)
• Order bookings after the first quarter amounted to SEK 3,801 m. (4,223)
• The order backlog amounts to SEK 43 billion (46)
• Operating income was SEK 345 m. (353) and income after financial items was SEK 327 m. (349)
Statement by the CEO
“The first quarter developed in line with our plans and previous estimates. Similar to previous years, sales were slightly lower than the annual rate. Income as a whole is stable and the margin before structural costs is in line with the previous year. Income has improved for the business segments Defense & Security Solutions and Systems & Products, while we are seeing a decrease in Aeronautics due to lower income in the Gripen program.
Order bookings continue to be dominated by foreign orders; 64 percent of our orders during the first quarter are attributable to the export market.
The largest order was for a fire control system and vehicle computers for the Dutch Army's CV9035 combat vehicles. The combined order value is SEK 700 million.
In Australia, Saab received an order to upgrade the command and control system for the ANZAC frigates. The contract value exceeds SEK 650 million and entails development work in both Sweden and Australia.
During the quarter Saab further extended its cooperation with Airbus through an agreement signed in March for avionics equipment for the A400M, the next-generation military transport aircraft. Based on Airbus’ market estimates, the contract could be worth approximately SEK 400 million. Saab is a risk-sharing partner in the program.
An historic milestone in the Gripen program was passed last Monday when six aircraft were delivered to the Czech Air Force. The Gripen system will now become operational for the first time in a NATO country.
In December 2004 the Swedish Parliament set the defense budget for the period 2005–2007, gradually reducing the annual budget. The government also decided on further cuts for 2005. The spring bill presented last week includes no changes in this regard. As a whole, this will lead to fewer development projects and shorter production series for the defense industry. Saab will therefore continue to improve efficiencies and adapt its Swedish operations at an undiminished rate. During the first quarter a total of 105 employees were laid off and in early April another 305 were let go.
The consequences stretch outside the defense industry. We are strongly convinced that a highly efficient, research intensive industrial company like Saab is important to Sweden.
Saab’s strategy entails a continued internationalization with the aim of growing through acquisitions. Negotiations on the offer to acquire an additional 49 percent shareholding in Grintek Ltd in South Africa continue, and our hope is that the deal can be finalized during the second quarter. If the purchase is completed, Saab will become the majority owner with slightly over 70 percent of the shares and the number of employees outside Sweden will increase by approximately 1,500.
Our full-year forecast remains unchanged. We anticipate approximately 5 percent organic growth. Operating income is expected to generate an operating margin below last year’s reported level of 9.3 percent. Income after structural costs will therefore be slightly lower than 2004. Our long-term objective of a 10 percent operating margin remains unchanged.
From 2005 Saab is reporting according to new business segments and the International Financial Reporting Standards, IFRS. The new financial reporting method for Saab’s operations more clearly reflects the strategic direction of the company. A more detailed description of our business segments is provided in a press release dated April 7.”