YEAR-END REPORT 2017 16 February, 2018 Hkan Buskhe, President and - - PowerPoint PPT Presentation

16 February, 2018

YEAR-END REPORT 2017

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

MARKET DEVELOPMENT

• High global spending on defence and security
• Geopolitical tensions and improving economic conditions

driving factors for increased spending

• Global defence spending in 2018 expected to increase vs

2017

• The US and Europe expected to grow defence budgets
• Several European countries estimated to meet the NATO

target of 2 per cent of GDP spending on defence in 2018

• Next generation technologies in focus
• Cyber security

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HIGHLIGHTS 2017

• High interest globally in Saab offering
• Several strategic partnerships formed to strengthen

local market position

• Offers US, based production capability for T-X trainer

aircraft, if Boeing/Saab selected*

• Slovakia became first customer to deploy the Carl-

Gustaf M4 System

• Australia pointed to Saab for Control Management

Systems (CMS) in future Naval platforms

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Sweden 45% RoE 17% North America 9% Latin America 3% Asia 18% Africa 2% Australia, etc 6%

Order bookings

Sweden 37% RoE 9% North America 4% Latin America 35% Asia 12% Africa 1% Australia, etc 2%

Order backlog

*Saab together with Boeing are competing to win the tender process to supply the United States Air Force with an advanced trainer aircraft

MARKET

HIGHLIGHTS 2017

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• Strong order bookings, increase of 41 per cent y-o-y*
• Strengthened sales and operating income
• All business areas improved sales
• Improved operating margin
• Good cash flow; strong balance sheet
• Taken a step towards our long-term operating margin

target of 10 per cent

PERFORMANCE

*Year-over-year

HIGHLIGHTS 2017

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• 23 per cent of sales invested in R&D
• Succesful first flight Gripen E in June; supersonic flight

in October

• Order for New Generation anti-ship missile system

from Sweden (FMV*)

• Saab Digital Air Services, provide remote digital air

traffic control to further airports in Sweden

• Order for delivery of a Special Purpose Ship for Signal

Intelligence (SIGINT) to Sweden

*The Swedish Defence Material Administration

INNOVATION

ORDERS RECEIVED IN 2017

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FINANCIAL HIGHLIGHTS YEAR-END 2017

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5 10 15 20 25 30 35

Sales

FY 2016 FY 2017 0,5 1 1,5 2 2,5 3

Operating Income

FY 2016 FY 2017 BSEK BSEK BSEK BSEK 5 10 15 20 25 30 35

Order Bookings

FY 2016 FY 2017 20 40 60 80 100 120

Order Backlog

FY 2016 FY 2017

21.8 30.8 28.6 31.4 107.6 106.8 1.8 2.2 EBIT-margin 6.3 6.9 +41% +10%

CONTINUED EFFICIENCY IMPROVEMENT

• Continuously focus on efficient project execution
• Digitalisation drives efficiency improvements

‒ Automation ‒ IT-infrastructures ‒ Aligned organisational setup

• Focus on improved cash conversion
• Shorten lead-times

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OUTLOOK STATEMENT 2018

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• Sales growth in 2018 is expected to be in line with

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

• The operating margin in 2018, excluding material non-

recurring items, is expected to improve compared to 2017, bringing Saab a further step closer to its financial goal: an operating margin of 10 per cent over a business cycle.

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 and portfolio mgt
• Continuoulsy develop leaders and employees
• Further strengthen core technology areas
• Invest in research and development
• Diversity drives innovation

MARKET PERFORMANCE INNOVATION

FINANCIAL UPDATE

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SUMMARY 2017

• Strong order backlog; good level of medium-sized
• rder bookings
• Continued strong sales growth, sales increase in all

business areas

• Strengthened operating margin; Dynamics, airborne

surveillance operations and support business good margin development

• Good cash flow, with large milestone payments related

to large projects received

• Balance sheet strong

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FINANCIAL KEY DATA

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MSEK FY 2017 FY 2016 Change

Order Bookings 30,841 21,828 41 Order Backlog 106,849 107,606

• 1

Sales 31,394 28,631 10 Operating Income 2,155 1,797 20

• perating margin, %

6.9 6.3 Net Income 1,438 1,175 22 Operational Cash Flow 1,388 2,603 Free Cash Flow 852 2,359

ORDER BACKLOG

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Order Backlog Duration BSEK

31 Dec 2017 31 Dec 2016 31 Dec 2015

2018 25.0 2017 24.5 2016 21.8 2019 20.0 2018 17.0 2017 15.9 2020 17.0 2019 13.5 2018 12.3 2021 17.0 2020 15.8 2019 11.7 2021- 27.8 2020- 36.8 2019- 52.1 Total 106.8 Total 107.6 Total 113.8

ORDER SIZE DISTRIBUTION

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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 Small orders* Large orders Book-to-bill ratio** 65% 35% Large Orders Small Orders* FY 2017 MSEK

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

ORDER BOOKINGS & BACKLOG PER BA

2 4 6 8 10 Aeronautics Dynamics Surveillance S&S IPS Kockums

BSEK

FY 2016 FY 2017

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• Significant orders within the

Airborne Early Warning and Control Segment

• Kockums signed contract for

modification and upgrading of Swedish Corvettes

• Dynamics received orders for

Next Generation Light Anti-Tank Weapon System (NLAW)

• Continued support and

maintenance of Gripen C/D involving several business areas

• Good level of medium sized
• rders

10 20 30 40 Aeronautics Dynamics Surveillance S&S IPS Kockums

BSEK

FY 2016 FY 2017

Order Bookings Order Backlog

60

SALES PER BUSINESS AREA

1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000 Aeronautics Dynamics Surveillance S&S IPS Kockums

MSEK

FY 2016 FY 2017

+7% +22% +12% +17%

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• Sales increase in all business areas
• Dynamics delivering growth from

record high order backlog

• Support & Services had strong growth

in airborne surveillance operations

• Combitech, part of IPS, delivered

strong growth +2% +5%

OPERATING INCOME PER BUSINESS AREA

100 200 300 400 500 600 700 800 Aeronautics Dynamics Surveillance S&S IPS Kockums

MSEK

FY 2016 FY 2017

5.9 7.4 3.7 3.4

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• Substantial growth in operating income

and margin for Dynamics, Support and Services and Surveillance

• Higher activity level in operations

related to airborne surveillance systems

• Support business strong profitability
• Lower operating earnings related to

Gripen C/D due to changed projectmix

EBIT Margin

7.5 6.6 9.1 10.9 8.9 10.9 5.8 5.8

• 2 000
• 1 000

1 000 2 000 3 000 4 000

Cash Flow from Operating Activities before Changes in Working Capital Change in Working Capital Investing Activities Tax and Other Financial Items

CASH FLOW JAN – SEP 2017

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MSEK

Cash Flow from Operating Activities before Changes in Working Capital 3,593 Change in Working Capital

• 73

Investing Activities

• 2,132

Operational Cash Flow 1,388 Tax and Other Financial Items

• 356

Acquisitions and Sale of Subsidiaries and Other Financial Assets

• 180

Free Cash Flow 852

Acquisitions and Sale

• f Subsidiaries and

Other Financial Assets

MSEK

FINANCIAL POSITION

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32%

Equity/Assets Ratio

MSEK

Net Liquidity (+) / Net Debt (-), 31 December 2016

• 1,836

Cash Flow from Operating Activities 3,164 Change in Net Pension Obligation

• 222

Net Investments

• 2,132

Dividend

• 559

Currency Impact, Unrealised Results from Financial Investments and Acquisition of operations

• 249

Net Liquidity (+) / Net Debt (-), 30 September 2017

• 1,834

Net Pension Obligation, 31 December 2017 2,646 Total Interest-Bearing Assets, 31 December 2017

• 468

Liquidity 344

133

Equity per Share (SEK)

FOCUS 2018

• Continued focus on execution of large

projects – project management

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

the organisation

‒ Functional and operational excellence

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