How we operate
Saab has seen substantial international growth in recent years with an increased presence in key countries and with international partners. This has been possible thanks to the company’s strong Swedish base and a competitive product portfolio. Saab is now taking further steps in its growth journey, while maintaining a focus on sustainability and creating greater value – for society, customers and all of the company’s stakeholders.
Customer capabilities and demands
Since the start, Saab has collaborated with customers and partners in the development of its solutions and products. Based on customer needs, we design, manufacture and deliver products and integrate systems from different suppliers into well-balanced solutions. A core competence is our ability to integrate our cost-efficient and intelligent solutions into system-of-systems. Once delivered, and throughout the product life cycle, we support our customer with continuous capability development.
Local presence for close relationships
In both military defence and civil security, customers are seeking integrated solutions for their needs from suppliers that understand global interdependencies as well as their specific situation. A strong local presence in selected markets gives Saab a better understanding of local needs, capabilities and procurement processes. This creates a good ground for collaboration and technology transfers.
R&D in close dialogue
Saab reinvests a large share of its sales in research and development. A close, continuous dialogue with customers, partners and universities keeps us a technological leader. New technology is utilised to improve our offerings as well as efficiency in delivery.
Sustainability is integrated in all aspects of Saab’s strategy, thereby contributing to long-term technological and economic development in the markets where we are active. Saab’s sustainability work involves concrete commitments and targets that are evaluated and reported annually.
Saab’s business model is adapted to the product area, system complexity, customer group and geographical market.
Complex defence orders
In complex defence orders, Saab directly supplies the customer. These comprehensive solutions, often comprising training, maintenance, support and service, are designed to maintain functionality and cost efficiency over the product’s entire life cycle. Deliveries can continue for several years after development. These systems are configured and designed based on each customer’s specific needs and therefore often have a large share of customer-financed development. In addition, complex defence orders usually entail some form of industrial co-operation. One example is the development and delivery of Gripen.
Service and volume orders
Some products and services are delivered the same day an order is placed, while others have a lead time of over a year. These orders involve less customer-financed development than complex systems. Examples include most of Saab’s civilian offering as well as products sold in large volumes, such as ammunition. Maintenance, support and training can also be sold separately, outside large defence orders. Consumables and spare parts also fall into this category. These products and solutions are usually sold directly to the customer.
Saab can also serve as a subcontractor to a partner with primary contact with the end customer, e.g., when supplying subsystems. Several of Saab’s systems, e.g., command and control systems, are platform independent and can be integrated with Saab’s or other companies’ products and systems. Becoming a subcontractor can also be an effective strategy to build local presence in a market.
Revenue and distribution
Saab’s revenue model is divided into three main parts: sales of products and spare parts, service assignments and long-term customer contracts. In addition, Saab generates a small share of royalties. Long-term customer contracts account for about 60 per cent of sales, but since Saab’s business areas are divided by product and market offering, the distribution differs by business area. As an example, Aeronautics is dominated by long-term customer contracts, while Support and Services and Combitech have a higher share of service assignments. Due to the nature of the sales, income and cash flow fluctuate over the course of the year.
Long-term customer contracts comprise the development and manufacture of complex systems. The orders for the development and modification of Gripen E, to Sweden and Brazil are just two such as examples. Long-term contracts are continually recognised in revenue, meaning that income and expenses associated with the project are recognised at the rate of completion in the project. Cash flows from these contracts depend on the timing of deliveries and milestone payments during the order period.
Service assignments consist of consulting and support services. Examples include training and ongoing maintenance associated with previous deliveries. Sales from service assignments on current account is recognised when the services are rendered, while service assignments as part of fixed-price contracts are recognised according to the same principles as long-term customer contracts.
The third part of Saab’s sales model is the sale of products and spare parts that Saab manufactures and stocks or purchases on behalf of customers. Sales is recognised in profit or loss when ownership has been transferred to the buyer.