Saab AB (publ)

Saab said order intake was slightly more than SEK 68 billion in the quarter, with a record order backlog of SEK 318 billion. Management said gross margin was at a record level for a single quarter and expanded by more than one percentage point year over year; EBIT margin improved to 11%, and EBIT grew by 41% in the quarter. On a business-area basis, Surveillance EBIT grew 55%, Dynamics delivered record EBIT, and Naval profitability was hurt by a roughly SEK 200 million write-down tied to the Swedish frigate program. For the first half, cash flow was SEK 1 billion, cash conversion was 53%, net liquidity was SEK 2.5 billion, and cash and liquid investments were approximately SEK 17 billion. Management left medium-term targets unchanged: organic sales growth of around 22% CAGR for 2023-2027, EBIT growth above sales growth, and cash conversion above 60%.

Micael Johansson framed the quarter as one of major commercial breakthroughs and improving execution, especially on submarines, Gripen E for Ukraine, and GlobalEye selections by Canada and NATO. He emphasized that Saab is using capacity investments, hiring roughly 3,000 net employees a year, and higher R&D spending to support future growth and capability development. His tone was upbeat but pragmatic: he repeatedly noted that supply chain resilience and production ramp-up remain the key operational challenges.

Anna Wijkander focused on the financial quality of the quarter, saying sales CAGR is 24% over the period and EBIT has grown faster at 34%, supported by higher gross margin and operating leverage. She highlighted a record quarterly gross margin, EBIT margin of 11%, R&D of SEK 4.4 billion on a rolling 12-month basis, first-half cash flow of SEK 1 billion, net liquidity of SEK 2.5 billion, and cash plus liquid investments of about SEK 17 billion. She also noted S&P reaffirmed Saab’s BBB+ investment grade rating and said the company remains confident in its medium-term targets.

Analysts pressed on the drivers of gross margin expansion, the size and nature of the Naval write-down, Dynamics delivery phasing, production capacity, and how much investment is needed to ramp GlobalEye. Management said the gross margin improvement came mainly from the mix toward Dynamics and Surveillance, while the Naval write-down was roughly SEK 200 million tied to a pre-start/concepting cost after Saab missed the Swedish frigate award. On capacity, management said the biggest bottleneck is supply chain resilience rather than hiring, and GlobalEye capacity should eventually rise from about two aircraft a year to six by the 2030 timeframe.