SAAB PRESENTATION TO DEBT INVESTORS 19 SEPTEMBER 2017 Magnus Örnberg, EVP and CFO Saab AB
2 AGENDA 1. Transaction overview 2. Overview of Saab 3. Market & Q2 financial update • Sales of SEK 30,130m LTM Q2 2017 • Total assets of SEK 40,546m in Q2 2017 • EBITDA of SEK 2,981m LTM Q2 2017
3 TRANSACTION OVERVIEW • Tender offer for December 2018 FRN (SEK 950m) and FXD (SEK 450m) • New 5 year issue subject to market conditions • Rationale behind transaction ‒ Prudent risk management and refinance over 1 year prior to maturity ‒ Financial flexibility and secure long-term funding
4 AN OVERVIEW OF SAAB (2016) Air • World-leading high-tech solutions, products and 2 8 services for military defence and civil security Land 8 Naval % 46 • Sales SEK 28.6 billion and order backlog 16 Security SEK 107 billion Commercial aeronautics 20 • 15,465 employees, local presence in 34 countries and Other customers in 100 countries worldwide • B-share listed on Nasdaq Stockholm’s Large Cap 100 • Approx. 34,000 shareholders, Investor AB main shareholder with 30 percent of capital CUSTOMER COUNTRIES
5 AT THE FOREFRONT OF CHANGE 1941 1955 1961 1979 1990 1993 2002 2005 2006 2008 2011 2014 First B17 Draken Viggen First RBS 15 First laser First Gripen First contract Neuron Saab 2000 First flight RBS 70 NG Carl-Gustaf delivered first flight introduced ordered simulator BT delivered NLAW contract A&EW Gripen Demo launch M4 launch 46 1937 1990 2000 2005 2006 2007 2012 2014 Saab Saab Automobile Celsius Grintek Ericsson Microwave SeaEye Marine HITT acquired TKMS Kockums founded independent company acquired acquired Systems acquired acquired acquired 1646 1894 1948 1998 1950- 1970- 1980- 1990- Bofors Alfred Nobel First Carl-Gustaf StriC in Development of Development of Development of Sea Giraffe AMB founded acquires Bofors order operation fighter radar Giraffe radar family Arthur launched 1679 1840 1977 1987 1989 1999 2005 Örlogsvarvet Kockums Svenska Varv Celsius Kockums AB HDW ThyssenKrupp Karlskrona Malmö
6 COMPETITIVE PRODUCTS , GLOBAL MARKET Aeronautics Kockums Europe North America Asia Pacific Middle East & Africa Dynamics Support & Services Latin America Industrial Products & Services Surveillance
7 ORGANISATION CEO Group Functions Business Areas Market Areas Europe North America Middle East & Africa Asia Latin Pacific America ü Sales to 100 countries ü 65-80% of sales outside Sweden ü Presence in 35 countries
MARKET UPDATE • Increasing demand for cost-efficient solutions • Short lead times important • Local partnership for research and development and production
9 TODAY: GROWTH OPPORTUNITY MARKET Execution 2010-2015 Target 20% M&A driven 15% growth Long-term target: Organic 11% growth of 5 per cent p.a. 10% 5% 5% -1% -2% -1% -4% 0% -3% -5% -10% -15% -20% -25% -30% 2010 2011 2012 2013 2014 2015 2016 Long- term target Sales Organic growth
10 OWNERSHIP AS OF 31 AUGUST 2017 # Owner Capital Votes Share facts: 1 Investor 30,0% 40,3% Ticker: SAAB B 2 Knut and Alice Wallenbergs 8,8% 7,7% foundation Nasdaq Stockholm Large Cap 3 Swedbank Robur Funds 4,7% 4,2% Market cap: ~ SEK 40 bn 4 AFA Insurance 2,4% 2,1% 5 Fidelity 2,0% 1,8% Holding per region, % 6 Norges Bank 1,9% 1,7% 14% 1% 7 Handelsbanken Funds 1,7% 1,5% 3% Sweden 8 Unionen 1,7% 1,5% 8% US 9 2 AP-Fund 1,2% 1,1% Norway 10 Lannebo Funds 1,2% 1,1% UK Other Total outstanding shares: 107 243 221 74%
11 SUMMARY JANUARY – JUNE 2017 • Sustained growth in order bookings • Improved sales and operating income for all business areas • Increase in operating margin, driven by strengthened profitability in business area Dynamics • Cash flow negative, in line with expectations • Continued stable balance sheet
12 SAAB FOCUS 2017 • Focus on execution of large projects – project management • Build order backlog in selected areas • Drive efficiency improvements throughout the organisation ‒ Functional and operational excellence
13 NEW MANAGEMENT TEAM FROM 1/10-17 CFO & President and Deputies Micael Johansson Magnus Örnberg Håkan Buskhe Deputy CEO & Senior Executive Vice President Executive Vice President & CFO President & CEO Group Functions Lena Eliasson Ann-Kristin Adolfsson Annika Bäremo Sebastian Carlsson Head of Group Human Resources Head of Group Legal Affairs Head of Group Communications Head of Group Strategy Business Areas Jonas Hjelm Görgen Johansson Anders Carp Jessica Öberg Gunnar Wieslander Ellen Molin Head of Aeronautics Head of Dynamics Head of Surveillance Head of Industrial Head of Kockums Head of Support and Services Products and Services
14 FINANCIAL KEY DATA Jan-Jun Jan-Jun MSEK Change FY 2016 2017 2016 Order Bookings 20,554 11,462 79 % 21,828 Order Backlog 112,117 111,593 107,606 Sales 15,353 13,854 11 % 28,631 Operating Income 885 611 45 % 1,797 operating margin, % 5.8 4.4 6.3 Net Income 659 414 59 % 1,175 Operational Cash Flow -443 4,193 2,603 Free Cash Flow -532 4,051 2,359
15 ORDER BACKLOG Order Backlog Duration BSEK 30 June 2017 30 June 2016 31 December 2016 2017 14.8 2016 13.2 2017 24.5 2018 22.5 2017 19.2 2018 17.0 2019 17.6 2018 13.2 2019 13.5 2020 15.8 2019 12.2 2020 15.8 2020- 41.4 2019- 53.8 2020- 36.8 Total 112.1 Total 111.6 Total 107.6 • Strong order backlog in all business areas • Dynamics received several large orders in the period
16 ORDER SIZE DISTRIBUTION Jan-Jun 2017 50 000 3,5 Large Orders 45 000 Small Orders* 26% 3 40 000 2,5 35 000 30 000 2 MSEK 25 000 1,5 20 000 15 000 1 10 000 0,5 74% 5 000 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 '13 '13 '13 '13 '14 '14 '14 '14 '15 '15 '15 '15 '16 '16 '16 '16 '17 '17 *Small orders = <MSEK 100 Small orders* Large orders Book-to-bill ratio** **Book-to-bill ratio calculated as 12 months rolling
17 ORDER BOOKINGS & BACKLOG PER BA Order Bookings 7 6 5 • Significant order within the BSEK 4 Airborne Early Warning and 3 Control Segment. 2 1 • Kockums signed contract for 0 modification and upgrading of Aeronautics Dynamics Surveillance S&S IPS Kockums Corvettes. Jan-Jun 2016 Jan-Jun 2017 Order Backlog • Dynamics received order for 40 60 Next Generation Light Anti-Tank 30 Weapon System (NLAW). BSEK • Continued support and 20 maintenance of Gripen C/D 10 involving several business areas. 0 Aeronautics Dynamics Surveillance S&S IPS Kockums Jun'16 Jun'17
18 SALES PER BA 4 500 +1% 4 000 +5% +23% 3 500 3 000 +11% 2 500 MSEK +11% 2 000 +23% • Sales increase in all business areas 1 500 • Support & Services and Kockums 1 000 experiencing strong growth • Combitech driving force behind sales 500 growth in business area Industrial, Products and Services (IPS) 0 Aeronautics Dynamics Surveillance S&S IPS Kockums Jan-Jun 2016 Jan-Jun 2017
19 OPERATING INCOME PER BA 300 250 200 MSEK 150 • Improved operating income for all 100 business areas • Substantial growth in operating income and margin for Dynamics 50 • Higher activity level in operations EBIT Margin 9.0 9.0 5.0 5.2 3.7 3.3 4.8 9.6 4.2 4.2 5.3 5.4 related to airborne surveillance 0 systems Aeronautics Dynamics Surveillance S&S IPS Kockums Jan-Jun 2016 Jan-Jun 2017
20 CASH FLOW JAN – JUN 2017 2 000 MSEK Cash Flow from Operating Activities before 1 500 1,517 Changes in Working Capital Change in Working Capital -1,005 1 000 MSEK Investing Activities -955 500 Change in Working Capital Operational Cash Flow -443 0 Tax and Other Financial Cash Flow from Operating -83 Items Activities before Changes in Working Capital Acquisitions and Sale of Subsidiaries and -500 -6 Other Financial Assets Investing Activities Acquisitions and Tax and Other Sale of Subsidiaries Financial Items and Other Financial Assets Free Cash Flow -532 -1 000
21 FINANCIAL POSITION MSEK Net Liquidity (+) / Net Debt (-), 31 December 2016 -1,836 33% Cash Flow from Operating Activities 429 Change in Net Pension Obligation -266 Equity/Assets Ratio Net Investments -955 Dividend -559 Currency Impact and Unrealised Results from Financial Investment -9 Net Liquidity (+) / Net Debt (-), 30 June 2017 -3,196 124 Net Pension Obligation, 30 June 2017 2,690 Total Interest-Bearing Assets, 30 June 2017 -608 Equity per Share (SEK) Liquidity -1,114
SAAB 19 SEPTEMBER 2017 Stefan Lind VP and Group Treasurer Saab AB
23 GOVERNANCE – POLICY FOR FUNDING Policy requirement: • Free cash, together with committed unutilized credit facilities, shall always be higher than MSEK 4,000* • Or the higher of: • 10% of Group turnover • Risk Weighted amount of all guarantees issued by banks with counter indemnity on Saab. * Adjusted for loans with maturity within 12 months
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