• Sales amounted to SEK 12,458 m. (12,089)
• Net income for the period was SEK 631 m. (696)
• Earnings per share amounted to SEK 5.63 (6.21)
• Order bookings during the period amounted to SEK 11,165 m. (11,300)
• The order backlog totaled SEK 42,660 m. (44,668), against SEK 43,162 m. at the beginning of the year
• Operating income was SEK 944 m. (1,057) and income after financial items was SEK 889 m. (965).
Statement by the CEO
“The first three quarters of the year have developed in line with our plans and previous estimates, with the exception for the increased cost for the helicopter program, reported in the 2nd quarter. The operating margin is, after three quarters 7.6 percent, compared with 8.7 percent in the corresponding period last year, and has been impacted by restructuring costs. The underlying result, excluding costs for ongoing restructuring, is as a whole stable and the reported operating margin is in line with our long-term objective of 10 percent. Operating income has improved for the Defense & Security Solutions and Systems & Products business segments, while we are seeing a decline in Aeronautics, mainly due to lower margins in the Gripen program and provisions for the helicopter program.
Order bookings continue to be dominated by the international market, and 67 percent of our orders during the period were from outside Sweden. The largest single order during third quarter was from the German Air Force for radar warning equipment worth approximately SEK 1 billion. This is a large order within a well-defined market segment for aircraft jammers and warning equipment, where Saab is the world leader. My hope is that we will be awarded more such orders in the years ahead. The order for the RBS15 anti-ship missile system from the German Navy is also an important breakthrough, since it could lead to more orders from Germany and from other customers who have shown a strong interest in the RBS15.
Early in the fourth quarter we signed an agreement to supply an airborne surveillance system to Pakistan. The system provides better control for border security, rescue operations and protection against terrorism and organized crime. A number of important conditions must be met before the agreement takes effect and the order can be registered. The order value is estimated at SEK 8.3 billion, approximately 30 percent of which is for Ericsson Microwave Systems. In October an order for ultra lightweight camouflage net systems from the U.S. defense, worth approximately SEK 500 million, was received and also a significant order for the design, development and manufacture of cargo doors for Boeing’s new Dreamliner 787, initially worth SEK 800 m. The Boeing project is also important in that it ensures that we can retain a portion of the long-term aerospace competence associated with the Gripen program.
A decision on Swedish participation in the European development of a demonstrator for the unmanned Neuron aircraft is essential if we are to retain the strategic development competence in the Gripen program. Saab welcomes the investigative committee that the government has appointed and intends to assist in any way possible. It is however my firm belief that participation in the Neuron project would give us cost-efficient access to technology that is critical in this respect.
We are also gradually broadening our operations in key areas such as civil security and extended lifecycle commitments for Saab’s products and systems. AerotechTelub’s agreement with the Swedish Coast Guard on the development of an information system that coordinates maritime monitoring and information, SJÖBASIS, is initially small in scope, but is nevertheless a strategic example of civil security projects. If you also add Japan’s intention to order specially equipped Saab 340 aircraft for maritime rescue missions and an order from China in October for the fifth transponder base station, the total value is approximately SEK 200 million.
In our full-year forecast, we are projecting top line growth of slightly over 8 percent, of which organic growth accounts for approximately 5 percent. Other growth refers to the net of the acquisition of Grintek and the divestment of our majority holding in Hawker Pacific, which is reported this year as an associated company. As previously announced, operating income is expected to generate a margin below last year's reported level of 9.3 percent and income after structural costs slightly lower than the SEK 1,657 m. reported in 2004. In addition, income was charged with provisions of SEK 250 m., which in itself reduces the margin by slightly over 1 percentage point. Our long-term objective of 10 percent remains unchanged.”