SAAB presented January – June 2018 financial results this Friday. Sales remain stable, however our analysts believe that reaching a goal of 5% organic sales growth this year will prove to be elusive given the aggressive global competition in the defense markets. SAAB’s brave venture into the world of modern bizjet AEW with the GlobalEye, can prove itself as a profitable move in the future however in the near term (post launch customer), selling such an aircraft in the crowded AEW market can prove extremely challenging. While the jury is still out on whether future AEW systems will utilize narrow body jets or bizjets platfoms, SAAB is entering IAI-ELTA’s high end turf of AEW bizjets – an area the incumbent has a long time proven expertise.
Several fighter aircraft tenders are appearing lately, in Europe among others, however competition from F-16V (Slovakia) and pre-owned F-16 (Croatia) are proving too difficult for the Gripen to handle.
Total order bookings amounted to SEK 12.7 billion. A large order was received during the period for Gripen development and operational support worth SEK 1.4 billion. Large orders received in the same period of 2017 totalled SEK 10.7 billion. Interest in Saab’s products remains high.
Sales amounted to SEK 15.7 billion with organic growth of 1 per cent. The business areas Aeronautics, Surveillance and Kockums saw strong growth driven by increased activity in major projects.
Operating income amounted to SEK 905 million (886) and the operating margin was 5.8 per cent (5.8). The operating margin improved during the period within several business areas, and as expected the operating margin was negatively affected within the business area Dynamics by a lower delivery level than in the same period of 2017.
Operational cash flow amounted to SEK -2,750 million (-443), according to plan. The main reason for the negative cash flow was a high level of capital employed within the Gripen operations and utilisation of previously received advances and milestone payments.
The financial net had a negative impact on net income due to changes in market value of derivatives related to hedged tenders mainly in USD.
Financial data source: Saab