Monday, 20 July 2020

Saab signs support agreement for GlobalEye and reports Jan - June 2020 results

Saab has signed a support agreement with the United Arab Emirates regarding the advanced airborne early warning and control (AEW&C) solution GlobalEye. The agreement is valid between 2020 and 2022, with an order value of 144.9 MUSD.

The agreement covers support and maintenance for the airborne surveillance system GlobalEye.

The support and maintenance will be executed locally in the United Arab Emirates.

Saab’s Results January-June 2020

Statement by the President and CEO Micael Johansson:
Strong orders and continued good profitability
During the second quarter of 2020, the COVID-19 pandemic had a major impact on people, countries and companies around the world. The situation affects Saab as well, but our defence business remains strong. Our civil business, on the other hand, is facing a larger impact from the pandemic, with demand in civil aviation being significantly down. Despite these challenges, Saab showed a strong performance in the second quarter and results for the first half-year were in line with last year.
Since the COVID-19 outbreak, Saab has effectively utilised modern technology to interact with existing and new customers. This enabled further increases in orders during the quarter and successful execution of key milestones. A number of measures were taken to adjust costs in operations that have been adversely impacted by the ongoing crisis. This work is expected to continue in 2020. Given the ongoing pandemic, Saab cannot however rule out further impact on its business, particularly in the supply chain. Saab is entering the third quarter with a strong order backlog, which continues to support a significant portion of this year’s expected sales. For 2020, the aim remains that operational cash flow will be positive.
Saab continues to execute on its strategy with a focus on further internationalisation and investments in the product portfolio’s core areas. Focus is also on project execution and Saab remains committed to its long-term financial goals for growth and profitability.
Order bookings in the first half of 2020 increased by 45 per cent to SEK 14,070 million (9,710). The increase was a result of continued demand for defence products and solutions, where Saab in this challenging time, signed both large and mid-sized orders. Growth in small orders was 9 per cent. Orders in the second quarter included support contracts for both Gripen and SK60 for Sweden, orders for Airborne Early Warning and Control (AEW&C) systems and orders from the U.S., Estonia and Latvia for Carl-Gustaf systems.
Sales and operating income
Sales in the first half of 2020 were in line with the same period in 2019 at SEK 16,876 million (16,941). In the second quarter, Saab reported sales growth of 5 per cent driven by good project execution and increased deliveries in several business areas.
Operating income amounted to SEK 1,212 million (1,221) in the first half of the year, corresponding to a margin of 7.2 per cent (7.2). The negative impact on the civil business was offset by higher sales volumes within the defence business and cost reductions.
During the quarter, Saab delivered the first GlobalEye Swing Role Surveillance System to the United Arab Emirates. In addition, the first flight trials were completed with the new fighter
X-band AESA radar. During the quarter, the partnership with the UK regarding the Future Combat Air System (FCAS) was intensified and new studies were conducted.
Outlook statement
Due to uncertainty related to the scope and duration of COVID-19, it was stated in the first quarter interim report of 2020 that the previous forecast for the full-year 2020 could not be confirmed. Saab reiterates this assessment.

Financial highlights

MSEKJan-Jun 2020Jan-Jun 2019 Change, %Q2 2020Q2 2019 Change, %Full Year 2019 
Order bookings14,0709,710459,2475,2287727,216
Order backlog90,45894,236-493,293
Gross income3,7113,788-21,8311,937-58,035
Gross margin, %22.022.420.722.922.7
EBITDA margin, %11.411.211.411.512.1
Operating income (EBIT)1,2121,221-165263032,937
Operating margin, %
Net income8608264518429212,025
of which Parent Company’s shareholders’ interest8558313521433201,983
Earnings per share after dilution, SEK ¹⁾6.406.203.903.2314.81
Return on equity, % ²⁾10.010.510.0
Operational cash flow235-2,7021,817-779-1,300
Free cash flow22-3,1261,722-989-2,036
Free cash flow per share after dilution, SEK0.16-23.3212.89-7.38-15.20
¹⁾ Average number of shares after dilution133,690,023134,064,875133,625,118134,039,937133,929,292
²⁾ Return on equity is measured over a rolling 12-month period.

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