Saab's results January-June 2013

Defence and security company Saab presents the results for January-June 2013.
Statement by the President and CEO, Håkan Buskhe:

For the first time since 1998*, the total global defence spending declined in
2012. The challenging market conditions continued during the first half of 2013,
particularly in Europe and the U.S. The sequestration in the U.S. hit hard
against both the defence sector and other government-funded programmes. As a
consequence, our training and air traffic management operations were affected
negatively.
In light of this, it is especially pleasing to see an increase in order bookings
in four of our six business areas during the period. Among other things, the
Swedish Defence Materiel Administration (FMV) ordered development of the next
generation of the Gripen fighter system, the Gripen E, and Brazil ordered
upgrades of the airborne radar system Erieye.
Sales in the first half-year amounted to MSEK 11,748, an organic decline of 1
percent. As a result of the tough market situation, the activity level was
lower, mainly in the business areas Electronic Defence Systems and Dynamics.
Excluding material non-recurring items, operating income amounted to MSEK 776
(926) and the operating margin was 6.6 percent (7.8) in the period. In the
second quarter the operating income excluding non-recurring items amounted to
MSEK 380 (523) and the operating margin was 6.5 per cent (8.4). Four of our six
business areas improved their underlying profitability. The business area
Electronic Defence Systems continued to make large investments in development to
strengthen the product portfolio at the same time as sales declined, which here
led to an operating loss in the first half-year.
Including material non-recurring items, operating income amounted to MSEK 545
(1,133) and the operating margin was 4.6 percent (9.6). A non-recurring item of
MSEK 231 related to a lost legal dispute in Denmark concerning the command and
control system DACCIS was recorded in the period. It includes repayment of
previous awarded damages, payments received under the DACCIS contract and court
costs. In the first half-year 2012, a positive non-recurring item of MSEK 207
related to a potential earn-out liability was included.
Earnings before tax, excluding material non-recurring items of MSEK 314 related
to DACCIS, amounted to MSEK 679 (918).
Earnings per share after dilution amounted to SEK 2.48.
Measures to increase efficiency were implemented during the first half-year,
primarily in areas where the market situation is tough. It is estimated that
such measures in 2013 will contribute with approximately MSEK 500 in efficiency
improvements during coming years. The measures aim at creating prerequisites to
achieve our long term targets. This includes both volume adjustments and the
introduction of new working practices to reduce development, production and
overhead costs across the company. It also includes an increased focus on
prioritised areas within product development. To remain one of the most cost
effective companies in the industry, it is a must to continuously adjust our
operations.
The assessment is that the global market conditions will remain challenging
during the remainder of 2013.
Due to current market conditions, continued high investments in product
development and costs for measures to increase efficiency the outlook statement
for the year is adjusted.
*Source: SIPRI = Stockholm International Peace Research Institute

Adjusted outlook statement 2013:
In 2013, we estimate that sales will be in line with 2012.
The operating margin in 2013, excluding material net capital gains and other non
-recurring items, is expected to be in line with the operating margin in the
first half-year 2013, excluding material non-recurring items.
Previous outlook 2013: In 2013, we estimate that sales will increase slightly
compared to 2012. The operating margin in 2013, excluding material net capital
gains other non-recurring items, is expected to be in line with the operating
margin in 2012, excluding material non recurring items, of 7.7 per cent.

Financial highlights

MSEK            Jan     Jan     Change,  Apr    Apr-Jun 2012  Jan-Dec 2012
                -Jun    -Jun    %        -Jun
                2013    2012             2013
Order           22,036  11,644  89       3,171  7,644         20,683
bookings
Order backlog   44,337  37,069  20                            34,151
Sales           11,748  11,805  -        5,886  6,232         24,010
Gross income    3,211   3,575   -10      1,599  1,996         7,208
Gross margin,   27.3    30.3             27.2   32.0          30.0
%
Operating       1,042    1,695   -39      398    1,011         3,186
income before
depreciation/a
mortisation
and write
-downs
(EBITDA)
EBITDA margin    8.9     14.4             6.8    16.2          13.3
Operating       545     1,133   -52      149    730           2,050
income (EBIT)
Operating       4.6     9.6              2.5    11.7          8.5
margin, %
Net income      263     841     -69      1      558           1,560
Earnings per    2.56    8.24             0.02   5.42          15.00
share before
dilution, SEK
Earning per     2.48    7.96             0.02   5.24          14.52
share after
dilution, SEK
Return on       8.7     20.7                                  12.8
equity, %*
Operating       -1,091  196     -657     -742   244           -396
cash flow **
Operating       -10.00  1.80             -6.80  2.24          -3.63
cash flow per
share after
dilution, SEK
* The return
on equity is
measured over
at rolling 12
-month
period
** Operating
cash flow
includes cash
flow from
operating
activities of
MSEK -624
(107) and
cash flow
from
investing
activities
excluding
change in
short-term
investments
and other
interest
-bearing
financial
assets of
MSEK -467
(89)
All figures
presented for
2012 are
restated
according to
the changed
accounting
principles
for pensions
(IAS 19).
Financials
for 2011 and
earlier
periods are
not restated.

Press and analyst meeting
Press and financial analysts are invited to a press and analyst meeting where
CEO Håkan Buskhe together with CFO Magnus Örnberg present the results for
January-June 2013.
Friday, 19 July, 10.00 C.E.T
Grand Hotel, Blaiseholmshamnen 8, Stockholm, Sweden. Venue: New York.
Live webcast
If you are unable to attend in person, please visit
http://www.saabgroup.com/About-Saab/Investor-relations/ where a live webcast of
the presentation will be available together with the presentation material. All
viewers will be able to post questions to the presenters. The webcast will also
be available at Saab’s website afterwards.
R.S.V.P
E-mail: susanne.vikman@saabgroup.com
Fax: +46 8 463 01 52
Tel: +46 8 463 00 36
For further information, please contact:
Saab Investor Relations, Ann-Sofi Jönsson, +46 (0) 734 187 214
Saab Press Centre, +46 (0)734 180 018, presscentre@saabgroup.com
www.saabgroup.com
www.saabgroup.com/Twitter
www.saabgroup.com/YouTube

The information is that which Saab AB is required to declare by the Securities
Business Act and/or the Financial instruments Trading Act. The information was
submitted for publication on July 19 at 07.30 C.E.T.
Saab serves the global market with world-leading products, services and
solutions ranging from military defence to civil security. Saab has operations
and employees on all continents and constantly develops, adopts and improves new
technology to meet customers’ changing needs.