Håkan Buskhe President and CEO

24 April 2015

INTERIM REPORT JANUARY-MARCH 2015 Gunilla Fransson Head of Security and Defence Solutions

13 May 2015

SAAB NAVAL BUSINESS

SUBMARINES – SWEDISH NATIONAL SECURITY INTEREST

• Control of the underwater domain is of strategic importance

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SHALLOW WATER OPERATIONAL REQUIREMENTS

• An area of expertise for the Swedish Navy

• Submarines with bottoming capability

• Submarines with excellent maneuverability

• Very special hydro acoustic conditions

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AT THE FOREFRONT OF CHANGE

COMPANY UNCLASSIFIED

1941 First B17 delivered

1979 First RBS 15 ordered

1988 ANZAC frigades

1955 Draken first flight

1996 HMS Gotland and HMAS Collins commissioned

1993 First Gripen delivered

2009 HMS Visby commissioned

2008 First flight Gripen Demo

2014 New radar family launched

1990 Saab Automobile independent company

1937 Saab founded

2000 Celsius acquired

2005 Grintek acquired

2007 SeaEye Marine acquired

2012 HITT acquired

2014 TKMS Kockums acquired

1894 Alfred Nobel acquires Bofors

1646 Bofors founded

1948 First Carl-Gustaf order

1998 StriC in operation

1950- Development of fighter radar

1970- Development of Giraffe radar family

1980- Development of Arthur

1990- Sea Giraffe AMB launched

2006 Ericsson Microwave Systems acquired

2013 9LV Mk4 Rauma Finland

1961 Viggen introduced

1968 9LV Mk1 delivered

1987 Celsius

1989 Kockums AB

1999 HDW

2005 ThyssenKrupp

1679 Örlogsvarvet Karlskrona

1840 Kockums Malmö

1977 Svenska Varv

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SAAB NAVAL PORTFOLIO

SHIP SYSTEMS

PRODUCTS AND SERVICES

COMBAT SYSTEMS

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SAAB NAVAL PRODUCTS AND SOLUTIONS

Autonomous Vehicles

Ship Technologies

Communications

Combat Management

Systems

Weapons

Maritime Patrol Aircrafts

Radars and Sensors

Electronic Warfare

System integration and Services - Operational Analysis - Design/Architecture - Combat System Engineering - Integrated Logistics Support - Simulation and Training - Maintenance and Support

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NAVAL COMBAT SYSTEMS

Frigates

Submarines

OPVs/small vessels

Corvettes

Sweden Australia

Export

SCALABLE SOLUTIONS

Combat system integration Sensor-to-actor chains

Interoperability

• From products to turn-key • Platform independent (ship) • Partnerships • After sales support

SAAB NAVAL PRODUCTS

Third party products and customer

furnished equipment

COMBAT SYSTEM SOLUTIONS PROOF OF CONCEPT

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COMBAT MANAGEMENT SYSTEMS MORE THAN 230 SYSTEMS DELIVERED WORLDWIDE

Rauma class, Finland

ANZAC class, Australia/ New Zealand

Al Bushra class, Oman

Hamina class, Finland

Ban Yas class, UAE

Flyvefisken class (SF300), Denmark

Skjold class, Norway

Göteborg class, Sweden

Tariq class, Pakistan

Stockholm class, Sweden

Visby class, Sweden

Gotland class, Sweden

Absalon class, Denmark

Halifax class, Canada

Canberra class, Australia

Chakri Naruebet, Naresuan class and

New Frigate, Thailand

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SURFACE COMBATANTS UNMANNED SURFACE VEHICLE

PRODUCTS AND SERVICES MINE COUNTERMEASURES

SUPPORT AND UPGRADE

SAAB NAVAL SHIP SYSTEMS

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CUSTOMER REQUIREMENTS

• Need to operate anywhere in the world • Focus on littoral waters with effective ocean transit

• Network capabilities • New payload types • Special Operation Deployments will gain

importance • Full spectrum of conventional conflicts -

asymmetric and high/low level • New types of submarine missions • Traditional anti submarine warfare capability

remains • High level of availability

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KOCKUMS A26 KEY FEATURES

• Long submerged endurance – Stirling AIP

• High level of survivability – stealth, shock resistance, safety

• Excellent manoeuvrability and hydrodynamic design

• High performance sensor and communication suite

• Large and flexible payload capacity

• Special operations forces support

• Excellent habitability and working environment

• High level of availability and low lifecycle cost

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MODULAR DESIGN AND PRODUCTION

Hull section production

Manufacturing data from 3D

model

Components and parts

Platform manufacturing

Hull and platform assembly

Hull section joining Launching

Platform outfitting

Testing and trials

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ADAPTATION TO CUSTOMERS’ REQUIREMENT

Extended versions with: • Longer range and endurance • Larger crew • Lower indiscretion rate (more diesel modules) • Longer submerged endurance (more LOX) • Higher AIP speed • New payloads

+ Fuel + Additional systems

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IN THE FOREFRONT OF CHANGE X-RUDDER CONFIGURATION

• Larger, more efficient rudder area • Increased maneuverability • Distance to propeller increased, less disturbance

of the propeller wake • Increased redundancy: two independent hydraulic

systems on each side

X-rudder

+-rudder

Geometrical boundary to provide bottoming capability

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SUBMARINE SIGNATURE MANAGEMENT

• Submarine design with extremely low signatures

• Long experience – result of co-operation with FMV/Swedish Navy, also benefit from access to ranging data

• Advanced modelling capabilities • Stringent signature management

process • Measurement and analysis

capabilities

Radiated noise

Acoustic target strength

Magnetic

Electric

Hydrodynamic

IR/RCS

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A26 SHOCK RESISTANT DESIGN

TESTING SIMULATION

SHOCK REQUIREMENT SHOCK RESISTANT SUBMARINE SHOCK DESIGN

Full scale testing since 1961

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MARKET CHARACTERISTICS SUBMARINES

• Few potential customers

• Few competitors & high barriers to entry

• Low price sensitivity

• Extremely political/strategic

• Relatively integrated product compared to surface ships (difficult to change sub-systems)

• Sonars/sensors, CMS, Weapons, Services, AUV

• Underwater - Swedish National Security Interest ‒ National security interest includes the entire underwater

domain, not just submarines

CMS = Combat Management System AUV = Autonomous Underwater Vehicle

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MARKET CURRENT SUBMARINE PROGRAMS Ongoing conventional submarine programmes 2014-2023 (i.e. ordered)

Order by Total Delivery Manufacturer Germany 2 2013-2014 HDW, Germany

Italy 2 2013-2014 HDW, Germany

Greece 2 2013-(2015) HDW, Germany

Israel 3 2013-2016 HDW, Germany

Spain 4 2013-2016 Navantia, Spain

South Korea 5 2013-2020 Domestic + HDW, Germany

China 13 2013-2022 China

Japan 9 2013-2022 KHI & MHI, Japan Russia 11 2014-2022 Rubin, Russia

Indonesia 3 2015-2017 South Korea

Brasil 4 2015-2018 DCNS, France

India 6 2015-2020 DCNS, France

Turkey 6 2017-2022 HDW, Germany

Pakistan 3 2018-2020 HDW, Germany (unconfirmed) Singapore 2 2020- HDW, Germany Source: Forecast International

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ADRESSABLE MARKET SUBMARINES

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MARKET CHARCTERISTICS SURFACE SHIPS

• Many competitors ‒ Most countries have domestic shipyards, making the

export market small for hulls

• Non-cohesive market ‒ Few vessels per class, normally tailored (shipyards are

more akin to building companies than e.g. fighter aircraft producers)

‒ Great capability and size span, from simple patrol ships to complex carriers

‒ High flexibility in how to combine sub-systems

• Hulls live longer than sub-systems ‒ Most value in sub-systems & support ‒ More opportunities in sub-systems over time

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CONCLUSION MARKET

• The underwater domain is very important for Saab the coming years as it is one of Sweden’s strategic areas

• Saabs product and system are delivered with upgrades and modifications, number of businesses for products and systems are therefor substantially larger than for ship systems

• Saab has the capability of delivering highly complex system solutions including own products

• Product differentiation is of minor importance for surface ships, business success in determined by industry politics rather than technical requirements

• Partnership in the naval business is important for Saab to enable selling products and systems ‒ Large number of shipyards

‒ High customization grade requirements

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BEEING MORE COMPETITIVE

• Negotiations A26 and mid-life upgrade Gotland class

• Partnership with Damen

• Investments in competence and equipment in Saab Kockums

• Cross sales between Saab Kockums and rest of Saab naval business

• Leverage the integration capability within the naval business in Saab

• Efficiency program with Saab Kockums and other parts of Saab

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