Saab interim report January-September 22 October, 2019 Håkan Buskhe, President and CEO Magnus Örnberg, EVP and CFO
Highlights Jan-Sep 2019 Strong order growth • xxxxxxx • Increased order bookings of 11% • Squadron 2020 contract • Growth in small orders Improved performance • Good organic growth of 11% • Operating income increased in several business areas, Group margin of 7% • Continued focus on efficiency Successful execution • Execution of major projects progressing according to plan • First flight with the Brazilian Gripen E and first delivery • UK – SWE FCAS cooperation initial activities launched Gripen E Key milestones reached with GlobalEye • 2
Saab well positioned for growth Global market drivers Saab strategic priorities • Strengthen market position • Continued increase in defence budgets for NATO countries and other major countries Focused market strategy and • internationalization • Geopolitical uncertainty continues • Unique portfolio with high-tech platforms • Global economic slowdown not affecting the industry due to different characteristics • Continued R&D investments and project execution • Technology advancements and digitalization Grow recurring business • Military strategies are embracing more digital tools • and increasing the use of space technologies 3
Strong market demand • Saab contracted for the Finnish Navy’s Squadron 2020 Stronger order bookings growth in BA Surveillance, • Finnish Navy Corvettes Support & Services and Dynamics • Order bookings of small orders increased 19 per cent • U.S. radar program GATOR has entered full rate production phase Two in-service support contract signed for airborne • surveillance systems Airborne system • Continued high demand for Carl-Gustaf and AT4 system Carl-Gustaf M4 4
Squadron 2020 • Saab chosen as the provider to integrate the combat system for the Finnish Navy’s Corvettes • Part of finish Squadron 2020 program with a multi-business order value of EUR 412 million • Contract period 2019-2027 with fully operational Corvettes expected by 2028 • Includes Saab’s Combat Management System (9LV) and integrated mast with Saab’s radars Sea Giraffe 4A Fixed Face and Sea Giraffe 1X • Also includes TactiCall communication system and the remote weapon station Trackfire • In 2018, Saab signed a contract for deliveries of the New Lightweight Torpedo to the Finnish Navy 5
Financial highlights, Q3 2019 Sales Order bookings 10 9.4 10 7.9 8 8 6.4 6 6 BSEK BSEK 4.5 4 4 2 2 0 0 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Adj. operating income Operational cash flow 0 600 518 -500 500 -1 000 400 MSEK MSEK -1 500 300 237 -1,654 -2 000 200 EBIT- 3.7 6.5 -2 500 100 margin,% -2,447 -3 000 0 Q3 2018 Q3 2019 Q3 2018 Q3 2019 6
Financial highlights, Jan-Sep 2019 Order bookings Sales 19.1 30 20 24.9 17.2 22.1 25 15 20 BSEK BSEK 10 15 10 5 5 0 0 Jan-Sep 2018 Jan-Sep 2019 Jan-Sep 2018 Jan-Sep 2019 Adj. operating income Operational cash flow 0 2 000 1739 -1 000 1 500 -2 000 1142 MSEK MSEK -3 000 1 000 -4 000 500 EBIT- 5.2 7.0 -5 000 -4,356 margin,% -5,197 -6 000 0 Jan-Sep 2018 Jan-Sep 2019 Jan-Sep 2018 Jan-Sep 2019 7
Sales development Sales YTD 28 000 24 000 MSEK 20 000 16 000 12 000 8 000 4 000 0 Jan-Sep Jan-Sep Jan-Sep Jan-Sep Jan-Sep 2015 2016 2017 2018 2019 Sales quarter 10 000 8 000 6 000 MSEK 4 000 Gripen E 2 000 0 Q3 2015 Q3 2016 Q3 2017 Q3 2018 Q3 2019 8
Cash flow development, Q3 2019 Operational cash flow MSEK 4 000 Estimated range for cash flow in period 3 000 2 000 1 000 0 2016 2017 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 - 779 -1 000 - 1,654 -2 000 -3 000 9
Outlook 2019 Sales growth in 2019 is expected to be in line with Saab’s long -term financial goal: annual organic sales growth of 5 per cent. The operating margin in 2019, excluding material non-recurring items, is expected to improve compared to 2018, bringing Saab a further step closer to its financial goal: an operating margin of 10 per cent. 10
Financial summary Magnus Örnberg, EVP and CFO 11
Financial summary, Jan-Sep 2019 Jan-Sep Jan-Sep Change, MSEK 2019 2018 % Increase of small-sized order bookings by • 19 per cent Order bookings 19,093 17,183 11 Sales increased by 12%, organic growth 11% • Order backlog 96,004 102,400 -6 Sales 24,855 22,138 12 Improved operating income and margin • Adj. operating income 1,739 1,142 52 Good contribution from project execution • Adj. Operating margin, % 7.0 5.2 and continued focus on efficiency Net income 1,121 358 Operational cash flow impacted by few • Operational cash flow -4,356 -5,197 milestone payments, mainly within Aeronautics Free cash flow -4,991 -5,699 12
Order backlog duration Order backlog per business area Kockums IPS 5% 8% BSEK S&S 10% Aeronautics End of Sep 2019 Year end 2018 End of Sep 2018 44% 2019: 9.2 2019: 28.0 2018: 9.2 Surveillance 18% 2020: 26.6 2020: 20.6 2019: 24.6 Dynamics 2021: 20.4 2021: 18.1 2020: 18.1 15% 2022: 15.5 2022: 13.3 2021: 17.6 Order backlog per region After 2022: 24.3 After 2022: 22.2 After 2021: 32.9 Australia etc Africa Asia 3% >1% 8% Total: 96.0 Total: 102.2 Total: 102.4 Sweden 31% Latin America 33% Rest of Europe 16% North America 8% 13
Order size distribution January-September 2019 50 000 3,5 45 000 3 40 000 2,5 35 000 22% 30 000 MSEK 2 48% 25 000 1,5 30% 20 000 15 000 1 10 000 0,5 5 000 Small orders MSEK < 100 Medium-sized orders MSEK 100-1,000 0 0 Large orders > 1,000 Large orders Small orders Large orders Medium sized orders Small orders = <MSEK 100, Large orders = >MSEK 100 Small orders 14 Book-to-bill ratio calculated as 12 months rolling Small orders = <MSEK 100, Medium sized orders = MSEK 100-1,000, Large orders = >MSEK 1,000
Order bookings per business area Order bookings 10 000 8 000 MSEK 6 000 • Small orders grew 19 per cent 4 000 • Squadron 2020 Finland, 4.2 BSEK 2 000 0 Strong order bookings within business area Aeronautics Dynamics Surveillance S&S IPS Kockums • Jan-Sep 2018 Jan-Sep 2019 Surveillance, Dynamics and S&S Order backlog • Two in-Service support contract signed for airborne surveillance systems. 60 50 40 BSEK 30 20 10 0 Aeronautics Dynamics Surveillance S&S IPS Kockums 30-sep-18 30-sep-19 15 *Not including order bookings related to serial production of the TX trainer aircraft developed by Boeing and Saab for the U.S. Air Force. The U.S. Air Force has ordered the first phase from Boeing, the EMD = Engineering and Manufacturing Development, intended to be followed by production orders.
Sales per business area 6 500 +9 % 6 000 +6 % 5 500 • 11 per cent organic growth 5 000 +9 % • Strong growth in business area 4 500 Dynamics driven by high demand +9 % +28 % 4 000 • High activity level within Gripen 3 500 development and production driving MSEK 3 000 growth 2 500 -3 % IPS saw continued good sales in most • 2 000 areas 1 500 1 000 500 0 Aeronautics Dynamics Surveillance S&S IPS Kockums 16 Jan-Sep 2018 Jan-Sep 2019
Adjusted operating income per business area 500 450 400 • Improvement across most business 350 areas MSEK 300 Sales growth and efficiency contributed • positively 250 • Higher level of deliveries in Dynamics 200 • IPS operating margin strengthened 150 100 • Kockums impacted by lower volumes and costs related to production start up 50 Adjusted operating 6.9 8.2 3.9 7.6 5.9 9.1 1.5 1.0 2.9 5.7 2.4 10.9 11.5 margin,% 0 Aeronautics Dynamics Surveillance S&S IPS Kockums Jan-Sep 2018 Jan-Sep 2019 17
Operational cash flow, Jan-Sep 2019 Cash flow from operating activities before changes in working capital: 2,969 Cash flow 4 000 from operations Change in working capital: - 5,324 3 000 Contract assets and liabilities -5,585 2 000 Inventories -1,134 Other current receivables 2,512 1 000 Other current liabilities -967 0 MSEK Provisions -150 -1 000 Cash flow from investing activities: - 2,001 -2 000 Intangible assets -1,141 Change in -3 000 working Tangible assets -860 capital Operational cash flow: -4,356 -4 000 Investing activities -5 000 18
Financial position 33.6% MSEK Net debt, 31 December 2018 -1,460 Effects related to implementation of IFRS 16 (opening balance) -2,190 Equity/Assets Cash flow from operating activities -2,651 ratio Change in net pension obligation -1,190 Net investments -2,001 Repurchase of shares -301 Dividend -601 143.0 Other -143 Net debt, 30 September 2019 -10,537 Net pension obligation 5,289 Equity per share Total interest-bearing receivables -580 (SEK) Lease liabilities 2,531 Net debt excl. net provisions for pensions, lease liabilities -3,297 and interest-bearing receivables 19
Focus 2019 Order intake Productivity improvement Project execution Cash generation
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