YEAR-END REPORT 2016 13 February, 2017 Hkan Buskhe, President and - - PowerPoint PPT Presentation

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YEAR-END REPORT 2016 13 February, 2017 Hkan Buskhe, President and - - PowerPoint PPT Presentation

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COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIED Investor Relations | Year-end report 2016 YEAR-END REPORT 2016 13 February, 2017 Hkan Buskhe, President and CEO Magnus rnberg, EVP and CFO This document and the information

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COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIED Investor Relations | Year-end report 2016

13 February, 2017

YEAR-END REPORT 2016

Håkan Buskhe, President and CEO Magnus Örnberg, EVP and CFO

This document and the information contained herein is the property of Saab AB and must not be used, disclosed or altered without Saab AB prior written consent.

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AGENDA

HIGHLIGHTS 2016 MARKET SITUATION AND TRENDS OUTLOOK 2017 FINANCIAL UPDATE

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HIGHLIGHTS 2016

Strong interest in Saab offering globally Record high tender levels Sales growth in line with long-term financial goal of an

  • rganic growth p.a. of 5 per cent

Strong order backlog in all business areas; about 4 times our sales Improved gross margin year-on-year; strong cash flow generation, despite no sold receivables Historic year with launch of three new platforms:

Launched a new generation Airborne Early Warning system, GlobalEye Rolled out new generation of Gripen Rolled out the trainer aircraft for the US Air Force T-X-programme; the T-X aircraft flew in December

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PERFORMANCE INNOVATION MARKET

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AGENDA

HIGHLIGHTS 2016 MARKET SITUATION AND TRENDS OUTLOOK 2017 FINANCIAL UPDATE

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MARKET SITUATION

  • Geopolitical unstable situation
  • Increasing demand for cost-efficient solutions
  • Short lead times important
  • Ongoing focus on improving supply chain

efficiency

  • Local partnership for research and

development and production

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GLOBAL DEFENCE MATERIEL MARKET

North America 40% South America 3% Europe 14% Middle East & Africa

11%

  • 1%

3% 3.0% 3% X%

X%

Share of global defence procurement market, 2016 Compound annual growth rate, 2017-2021 (constant USD) Source: IHS Group, February 2017

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Asia 25%

4%

Australia 2%

3%

Russia 4%

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FINANCIAL HIGHLIGHTS, 2016

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49,8 22,6 81,2 21,8 20 40 60 80 100 120 2013 2014 2015 2016 BSEK

Order bookings

59,9 60,1 113,8 107,6 20 40 60 80 100 120 2013 2014 2015 2016 BSEK

Order backlog

23,8 23,5 27,2 28,6 20 40 60 80 100 120 2013 2014 2015 2016 BSEK

Sales

  • 1460
  • 1094
  • 726

2 359

  • 2 000
  • 1 500
  • 1 000
  • 500

500 1 000 1 500 2 000 2 500 3 000 2013 2014 2015 2016 MSEK

Free cash flow

26,6% 25,8% 23,9% 24,0% 2013 2014 2015 2016

Gross margin

6,6% 6,7% 6,6% 6,3% 2013 2014 2015 2016

Operating margin

Operating margin adjusted for non-recurring items

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OPERATING INCOME AND OPERATIONAL CASH FLOW

  • 2 000
  • 1 000

1 000 2 000 3 000 4 000 5 000 2010 2011 2012 2013 2014 2015 2016

MSEK

Operational cash flow Operating income (EBIT)

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*Free cash flow

* * *

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LONG-TERM FINANCIAL GOALS

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Organic sales growth averaging 5 per cent annually

  • ver a business cycle.

Operating margin after depreciation and amortisation (EBIT) of at least 10 per cent annually over a business cycle. Equity/assets ratio of over 30 per cent.

5% 10% >30%

  • Focus on areas with strong market position
  • Strengthen position in areas with growth

possibilities

  • Local partnerships
  • Project execution
  • Operational excellence
  • Continuoulsy develop leaders and employees
  • Further strengthen core areas
  • Invest in research and development
  • Diversity drives innovation

PERFORMANCE INNOVATION MARKET

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AGENDA

HIGHLIGHTS 2016 MARKET SITUATION AND TRENDS OUTLOOK 2017 FINANCIAL UPDATE

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OUTLOOK STATEMENT 2017

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  • We estimate that sales growth in 2017 will be higher

than Saab’s long-term financial goal: annual organic sales growth of 5 per cent.

  • We expect the operating margin, excluding material

non-recurring items, to improve compared to 2016 and thus the company will take a step towards its financial goal: an operating margin of 10 per cent.

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AGENDA

MARKET SITUATION AND TRENDS HIGHLIGHTS 2016 OUTLOOK 2017 FINANCIAL UPDATE

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SUMMARY 2016

  • Strong order backlog; small orders continued to

increase

  • Sales growth of 5 per cent:

‒ Driven by large projects in order backlog, and; ‒ Strong development in business area Dynamics

  • Gross margin and operating margin stable – in line

with management expectations

  • Operating cash flow strong; no trade receivables

sold

  • Balance sheet continued strong with equity/asset

ratio >32 per cent

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FINANCIAL KEY DATA

MSEK 2016 2015 Change Order bookings 21,828 81,175

  • 73

Order backlog 107,606 113,834

  • 5

Sales 28,631 27,186 5 Operating income 1,797 1,900

  • 5

Operating margin 6.3% 6.6%* Net income 1,175 1,402

  • 16

Free cash flow 2,359

  • 726

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  • Sales growth driven by large orders as well as growth in

business area Dynamics

  • Major advances and milestone payments received, resulting in

strong cash flow; no trade receivables sold in 2016

*Adjusted for non-recurring items

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ORDER BACKLOG

Order backlog duration, SEK bn 31 Dec 2016 31 Dec 2015 31 Dec 2014 2017: 24.5 2016: 21.8 2015: 17.8 2018: 17.0 2017: 15.9 2016: 10.2 2019: 13.5 2018: 12.3 2017: 5.7 2020: 15.8 2019: 11.7 2018: 5.6 After 2020: 36.8 After 2019: 52.1 After 2018: 20.8 Total: 107.6 Total: 113.8 Total: 60.1

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20 40 60 80 100 120 '11 '12 '13 '14 '15 '16 BSEK

Order backlog

35% 65%

Order backlog distribution

Sweden RoW

  • Strong order backlog in all business areas
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ORDER SIZE DISTRIBUTION

0,5 1 1,5 2 2,5 3 3,5 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 45 000 50 000 Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 MSEK Small orders* Large orders Book-to-bill ratio

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*Small orders = <MSEK 100 Book-to-bill ratio calculated as 12 months rolling

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ORDER BOOKINGS AND ORDER BACKLOG

4 000 8 000 12 000 16 000 20 000 Aeron. Dyn Surveillance S&S IPS Kockums

MSEK

2015 2016

18

35% 9% 41% 13% 1% 1%

Regional distribution, Order backlog

Sweden RoE Americas Asia Africa Australia etc

Dynamics received several important

  • rders, for example for the new

generation of the weapon system Carl- Gustaf Support and Services saw strong growth in small orders, 11 per cent increase y-o-y Major order in airborne early warning area received in January 2017

10 20 30 40 Aeron. Dyn Surveillance S&S IPS Kockums

BSEK

2015 2016 Order bookings Order backlog 40 000 60

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SALES

1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000 Aeron. Dyn Surveillance S&S IPS Kockums

MSEK

2015 2016

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43% 17% 17% 18% 2% 3%

Regional distribution

Sweden RoE Americas Asia Africa Australia etc

Sales growth mainly driven by the Gripen programmes, GlobalEye and the submarine A26 Sales in Dynamics strengthened due to good order development

14% 23% 5%

  • 15%

1% 25%

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OPERATING INCOME

509 175 549 213 228 535 447 449 454 134 134 100 200 300 400 500 600 Aeron. Dyn Surveillance S&S IPS Kockums

MSEK

2015 2016

2

20

Dynamics increased volume led to strong margin recovery Operating income affected by investments in T-X-programme Minority stakes in Venture portfolio, early stage investments had a negative impact

  • n earnings in IPS

8.1 7.5 4.4 9.1 5.9 9.1 8.9 6.0 3.7

12.3 5.8

4.4

320 EBIT-margin

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CASH FLOW

2016 MSEK

Cash flow from operating activities before changes in working capital

2,927

Change in working capital

1,421

Investing activities

  • 1,745

Operational cash flow

2,603

Tax and other financial items

  • 194

Acquisitions and sale of subsidiaries and other financial assets

  • 50

Free cash flow

2,359

21

500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 5 000

Cash flow from operating activities before changes in working capital Change in working capital Investing activities Tax and other financial items Acquisitions and sale of subsidiaries and other financial assets

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FINANCIAL POSITION

December 2016, MSEK Net liquidity (+) / Net debt (-), 31 December 2015

  • 3,217

Cash flow from operating activities 4,154 Change in net pension obligation

  • 531

Net investments

  • 1,745

Sale of subsidiaries 28 Dividend

  • 530

Currency impact and unrealised results from financial investments 5 Net liquidity (+) / Net debt (-), 31 December 2016

  • 1,836

Net pension obligation, 31 December 2016 2,424 Total interest-bearing assets, 31 December 2016

  • 560

Liquidity 28 Equity/assets ratio, 31 December 2016 32.3

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FOCUS 2017

  • Focus on execution of large projects – project

management

  • Build order backlog in selected areas
  • Drive efficiency improvements throughout the
  • rganisation

‒ Functional and operational excellence

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