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Saab interim reportJanuary-June
Håkan Buskhe, President and CEOMagnus Örnberg, EVP and CFO
19 July, 2019
Highlights January-June 2019
• xxxxxxx
2
Strong organic growth
Improved operating income
Cash flow
• Organic growth of 7 per cent
• Continued strong growth in business area Dynamics as deliveries
increased and in several units of business area IPS*
• Execution of major projects progressing according to plan; examples of HMS
Uppland submarine relaunch and 3rd Gripen E aircraft flight
• Continued productivity improvements visible in reported operating margins
• Dynamics strong improvement in operating margin due to increased deliveries
*Business area Industrial Products and Services
Gripen E
• Negative cash flow in line with plan; continued impact of increasing working
capital due to ongoing preparation of deliveries of Gripen E to Sweden and
Brazil
• Saab estimates that the operational cash flow will be negative for the full
year, but on a better level than 2018
Strong market demand
3
Carl-Gustaf M4
C2S*
• Order bookings of small orders increased 21 per cent
• Major framework agreements with U.S. government and
FMV** was signed regarding weapon systems Carl-Gustaf
and AT4
• Five-year framework agreement with U.S. government
for AT4 and Carl-Gustaf ammunition
• 10-year framework agreement with FMV** for Carl-
Gustaf M4
• Surveillance received several orders for Sea Giraffe radars,
e.g. Sea Giraffe Multi Mode Radar (MMR) for the U.S.
Coast Guards’s Patrol Cutters
• First order for operational digital air traffic control tower at
NATO military base in Germany
• In April, Saab was shortlisted as combat system provider
for Finnish Squadron 2020 program
*C2S = Command and Control Systems
**FMV = Swedish Defence Materiel Administration
AT4 Weapon systems
Sea Giraffe AMB on Visby Corvette
4
General market trends
• Total military spending 2018 accounted for 2.1 per cent of global GDP*
• Military spending in 2018 increased by 2.6 per cent in real terms
• Total military expenditure in Europe 2018 increased by 1.4 per cent
• US military expenditure in 2018 increasedby 4.6 per cent
Source: SIPRI
• Increased geopolitical risks
• Continued increase in defence budgets for
NATO countries and other major countries
• Technology advancements and digitisation
• Changing threat situations
• Military strategies are embracing more
digital tools and increasing the use of
space technologies
*GDP = Gross Domestic Products
Market drivers
The governments of Sweden and UK has signed an MoU* regarding co-operation on future combat air systems
Starting point for exploring opportunities for joint development
Saab and UK industry stand ready to support the outlined objectives
Beneficial for the long-term sustainment and development of existing platforms and systems including Gripen
Swedish-UK Future Combat Air
5
*MoU=Memorandum of Understanding
Gripen E
0
5
10
15
Order bookings
Jan-Jun 2018 Jan-Jun 2019
Financial highlights, January-June 2019
6
0
5
10
15
20
Sales
Jan-Jun 2018 Jan-Jun 2019
905
1,221
0
500
1000
1500
Operating income
Jan-Jun 2018 Jan-Jun 2019
-2,750-3000
-2500
-2000
-1500
-1000
-500
0Operational cash flow
Jan-Jun 2018 Jan-Jun 2019
-2,702
BS
EK
BS
EK
MS
EK
MS
EK
15.716.912.7
9.7
EBIT-
margin,%7.25.8
Q2 development
7
MS
EK
MS
EK
7,0647,772 7,953
8,445
0
2000
4000
6000
8000
10000
Q2 2016 Q2 2017 Q2 2018 Q2 2019
Sales
317 347
458
630
0
100
200
300
400
500
600
700
Q2 2016 Q2 2017 Q2 2018 Q2 2019
Operating income
EBIT
margin,% 4.5%7.5%
5.8%4.5%
10%2% 6%
Swedish submarine HMS Uppland
2,603
1,388
-2,424
-1,923
-3000
-2000
-1000
0
1000
2000
3000
4000
2016 2017 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019
Operational cash flow
-779
Cash flow development, Q2 2019
8
MSEK
Estimated range for cash flow in period
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.
9
10
Financial summary
Magnus Örnberg, EVP and CFO
Financial summary, January-June 2019
• Increase of small-sized order bookings by
21 per cent
• Sales increased by 8 per cent;
organic growth 7 per cent
• Improved operating margin 7.2 (5.8) per cent
• Operational cash flow negative with Aeronautics
preparing for deliveries of Gripen E to Sweden
and Brazil
• Net debt impacted by IFRS16 adjustment of
BSEK 2.2
11
MSEKJan-Jun
2019
Jan-Jun
2018Change,
%
Order bookings 9,710 12,664 -23
Order backlog* 94,236 104,473 -10
Sales 16,941 15,719 8
Operating income 1,221 905 35
Operating margin, % 7.2 5.8
Net income 826 450 84
Operational cash flow -2,702 -2,750
Free cash flow -3,126 -3,192
*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, to be followed by production
orders.
Order backlog duration
12
End of June 2019 Year end 2018 End of June 2018
2019: 14.9 2019: 28.0 2018: 14.2
2020: 22.7 2020: 20.6 2019: 23.0
2021: 18.8 2021: 18.1 2020: 18.2
2022: 14.8 2022: 13.3 2021: 17.9
After 2022: 23.0 After 2022: 22.2 After 2021: 31.2
Total: 94.2 Total: 102.2 Total: 104.5
Aeronautics46%
Dynamics15%
Surveillance14%
S&S10%
IPS9%
Kockums6%
Order backlog per business area
Sweden33%
Rest of Europe
12%North America8%
Latin America
35%
Asia9%
Africa>1%
Australia etc3%
Order backlog per region
BSEK
Order size distribution
0
0,5
1
1,5
2
2,5
3
3,5
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
50 000January-June 2019
MS
EK
Small orders = <MSEK 100, Large orders = >MSEK 100
Book-to-bill ratio calculated as 12 months rolling13
67%
33%
Small orders MSEK < 100
Medium-sized orders MSEK 100-1,000
Large orders
Medium sized orders
Small orders
Small orders Large orders
Small orders = <MSEK 100, Medium sized orders = MSEK 100-1,000,
Large orders = >MSEK 1,000
• Small orders grew 21 per cent
• Five-year framework agreement with U.S. government for AT4 weapons and Carl-Gustaf ammunition, total value appr. SEK 4.2 billion; order received of aboutMSEK 771 in second quarter
• 10-year framework agreement with FMV for Carl-Gustaf M4; initial order of MSEK 330 in second quarter
• One large order booked in first quarter 2018 in Aeronautics
0 500
1 0001 5002 0002 5003 0003 5004 0004 500
Aeronautics Dynamics Surveillance S&S IPS Kockums
Order bookings
Jan-June 2018 Jan-June 2019
Order bookings per business areaM
SE
K
0
10
20
30
40
50
60
Aeronautics Dynamics Surveillance S&S IPS Kockums
Order backlog
30 June 2018 30 June 2019
BS
EK
14 *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.
*
• 8 per cent sales growth; 7 per cent organic growth
• Higher activity level within Gripen developmentand production for Brazil
• Dynamics saw increased level of deliveries
• IPS saw continued good sales in Combitech and increased sales within business unitsAerostructures and Traffic Management
• Kockums had lower activity level related to mid-life upgrades of Swedish Gotland-classsubmarines, as two submarines now haveconcluded comprehensive upgrades
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
Aeronautics Dynamics Surveillance S&S IPS Kockums
Jan-Jun 2018 Jan-Jun 2019
Sales per business area
15
+5%
+38%
-2%
-3%
+10%
-8%
MS
EK
Operating income per business area
16
MS
EK
• Aeronautics saw increased activities in the Gripen projects and lower T-X spend
• Productivity levels in several business areas improved
• Higher level of deliveries in Dynamics led to increased margin
• IPS operating margin strengthened due to productivity improvements in mainlyAerostructures and Avionics
• In Kockums lower activity level related to the Mid-Life Upgrades of two Swedish Gotland-class submarines
258
90
219
333
81 84
363
273
303322
140
31
0
50
100
150
200
250
300
350
400
450
500
Aeronautics Dynamics Surveillance S&S IPS Kockums
Jan-Jun 2018 Jan-Jun 2019
Operating
margin,% 8.96.6 9.34.2 8.6 12.212.2 4.31.0 2.15.26.1 2.7
-3 000
-2 000
-1 000
0
1 000
2 000
3 000
MS
EK
17
Operational cash flow, Jan-Jun 2019Cash flow from operating activities before
changes in working capital: 2,130
Change in working capital:
Contract assets and liabilities -3,060
Inventories -838
Other current receivables 1,413
Other current liabilities -839
Provisions -96
-3,420
Cash flow from investing activities:
Intangible assets -790
Tangible assets -622
-1,412
Operational cash flow: -2,702
Cash flow
from
operations
Change in workingcapital
Investing activities
MSEK
Net debt, 31 December 2018 -1,460
Effects related to implementation of IFRS 16 (opening balance) -2,190
Cash flow from operating activities -1,479
Change in net pension obligation -638
Net investments -1,412
Repurchase of shares -151
Dividend -601
Other -70
Net debt, 30 June 2019 -8,001
Net pension obligation, 30 June 2019 4,737
Total interest-bearing assets, 30 June 2019 -528
Net debt excluding interest-bearing receivables and net pension
obligation
-3,792
34.0%Equity/Assets
ratio
144.4Equity per share
(SEK)
18
Financial position
Focus 2019
Order intake
Project execution
Productivity improvement
Cash generation
Important information
This presentation may contain forward-looking statements which reflect Saab AB’s current view on future
events and financial and operational development. Words such as “intend”, “expect”, “anticipate”, “may”,
“believe”, “plan”, “estimate” and other expressions which imply indications or predictions of future
development or trends, and which are not based on historical facts, are intended to identify forward-
looking statements. Forward-looking statements inherently involve both known and unknown risks and
uncertainties as they depend on future events and circumstances. Forward-looking statements do not
guarantee future results or development and the actual outcome could differ materially from the forward-
looking statements.
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