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17 Jul 15. Saab’s Results January-June 2015. Defence and security company Saab presents the results for January-June 2015. Statement by the President and CEO Håkan Buskhe: At the end of June, Saab received an order from the Swedish Defence Materiel Administration (FMV) for the construction of two next generation submarines, Type A26, and for the mid-life upgrade of two Gotland class submarines for the Swedish navy. Deliveries of the A26 will begin in 2022 and be finalised in 2024. This marks the historic start of Saab as a submarine builder. Saab is thereby a unique defence company which now manufactures both a new generation of the world’s most modern conventional submarine and the fighter system Gripen.
Continued strong order bookings
The order bookings during the first half-year amounted to MSEK 18,996 (8,126). The increase is mainly attributable to the order for the construction of two submarines for Sweden. Business areas Dynamics and Electronic Defence Systems continue to show strong order bookings, which is expected to have a positive impact on sales in the second half-year.
The order backlog at the end of the period was MSEK 67,853 (57,180).
The agreement made with Brazil in October 2014 regarding 36 Gripen NG has not yet come into force. We expect to receive the order during this year.
Large development efforts
Sales increased by 3 per cent during the first half-year compared to the same period last year, mainly as a result of growth within business area Security and Defence Solutions attributable to the acquisition of Saab Kockums in 2014. The business areas Dynamics and Electronic Defence Systems reported decreased sales following low order bookings in 2013 and 2014.
Due to seasonal variations, Saab often has a stronger second half-year and higher sales are expected during the remainder of 2015.
Reported operating income amounted to MSEK 367 (643) during the first half-year. The decrease, compared to last year, is mainly attributable to business area Dynamics that reports a loss for the period, and continued expenses related to product development within business area Aeronautics. The operating income is also affected by the fact that the contract regarding 36 Gripen NG for Brazil has not yet come into force. Also other expected orders have been deferred.
Saab’s cooperation with Boeing where we together combine great engineering skills with cost efficiency to offer a trainer aircraft in the U.S. T-X program is proceeding according to plan.
Efforts to streamline operations continue in order to increase profitability.
The net income amounted to MSEK 257 (412).
The operational cash flow in the period amounted to MSEK -1,806 (-1,097). The negative cash flow is mainly a result of that the level of sale of trade receivables was lower as at 30 June 2015 compared to year-end 2014, as well as timing differences in deliveries and milestone payments, and product development spending.
Earnings per share after dilution amounted to SEK 2.21 (3.80).
The market is still characterised by challenging conditions. During the period, some areas have been burdened with expenses related to expected orders that have been deferred. Our assessment remains that the market risk has increased during the first half-year 2015, driven by both political positions and the macroeconomic environment. The outlook for 2015 is unchanged.
Unchanged outlook statement 2015
* In 2015, we estimate sales to increase more than Saab’s long-term goal: annual organic sales growth of 5 per cent.
* The operating margin 2015 excluding material non-recurring items is expected to be in line with the operating margin in 2014. In 2015, increased internally funded research and dev