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Annual and Sustainability Report 2021

Increasing our sustainability efforts for greater value

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“I am proud that we are continuing to take steps on our sustainable growth journey, ensuring that we are profitable in the longer term and creating value for all our stakeholders and society as a whole.”
Micael Johansson, CEO and President
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Annual and sustainability report 2021

In 2021, Saab continued to win important contracts, delivered sales growth of 11% and strengthened its position in strategic markets, supported by the company’s global multi-domestic strategy. With a solid operating income and a strong cash flow, several of Saab’s business areas showed improved performance. During the year, measures were also taken towards improving efficiency through a new organisational structure as well as accelerating Saab’s sustainability efforts.

Executing on our growth strategy and contributing to a sustainable society

Societies around the globe are adapting to the new normal and taking measures to mitigate the effects of the pandemic. Despite these challenging circumstances, Saab has been able to continue executing on its priorities, including our efforts with international expansion, operational efficiency, and a contribution to a sustainable society. During the year, we delivered on our financial goals, achieving a sales growth of 11 per cent, well above our long-term sales growth target. Moreover, the operating margin of 7.4 per cent came in line with our guidance for the year as well as the operational cash flow, which was positive for the second year in a row and amounted to SEK 3.3 billion.

A year with strong orders and international growth

Orders continued to grow in 2021 and Saab’s order backlog amounted to SEK 105 billion (100). This is a strong proof-point of our portfolio and the capabilities of the company. We continued to execute on our global multi-domestic strategy and strengthened our position in important markets.

“As we are growing our local footprint in strategic markets, we are continuously supporting key national capabilities and technologies.”

A milestone for Saab’s international expansion during the year was the opening of the new U.S. facility in West Lafayette, Indiana. As we are growing our local footprint in strategic markets, we are continuously supporting key national capabilities and technologies. Saab secured a number of important orders during the year such as the contract to modernise the German Navy’s frigates, further capabilities for the A26 Blekinge-class submarines, extensive Carl-Gustaf orders and several Training and Simulation orders. We also delivered; the third GlobalEye to the UAE, T-7A aft sections for the flight test programme to Boeing and presented the first six serial produced Gripen E aircrafts to Brazil and Sweden.

Innovation and operational efficiency

Our commitment to our customers and to society can only be realised if we maintain our capability edge and stay at the forefront of technology, whilst being more sustainable.

“Saab continues to focus its investment in five core areas and the innovations of tomorrow.”

Saab continues to focus its investment in five core areas (fighter systems, advanced weapon systems, sensors, command and control, and underwater systems) and the innovations of tomorrow. Our employees are instrumental in this journey, and Saab is continuously looking to attract new talent and to invest in our colleagues to maintain this edge. To keep the focus on our core business, we need to make sure that the organisation is equipped to do so. On 1 July 2021, Saab’s new organisational structure came into effect. Six business areas became four, with the aim to create a clearer connection between businesses, core areas and services, and a simplified customer interaction. A new Operational Excellence function was also created in order to make Saab even more efficient in our projects, supply chain, sourcing, and IT. This will contribute to Saab’s long-term goals.

Our sustainability agenda

A commitment to society has been at the core of Saab’s business since its founding; supporting nations to keep people and society safe. This is even more important now when we see increasing instability and tension in the world. Saab reiterates its continued support for the UN Global Compact and its ten principles. An essential part in our engagement for sustainability is also to minimise the environmental impact from all parts of our operations. During 2021, Saab took further steps and joined the Race to Zero campaign, committing to reduce our greenhouse gas emissions to become net zero by 2050, based on Science Based Targets. I am proud that we are continuing to take steps on our sustainable growth journey, ensuring that we are profitable in the longer term and creating value for all our stakeholders and society as a whole. I would like to thank all of Saab’s employees, who were fundamental in our successes during 2021.

Stockholm, February 2022

Micael Johansson
CEO and President

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Financial highlights 2021

MSEK
Order intake
43,569
MSEK
Sales
39,154
%
Adjusted EBIT growth
5%
%
Operating margin
7.4%
MSEK
Operational cash flow
3,276
%
Equity/asset ratio
35.7%

Here for a reason

Since its foundation, Saab has been dedicated to the objective of supporting the Swedish Armed Forces in their mission to defend Sweden, its interests and freedom, and the right of its citizens to choose the way they live. Over time, Saab has developed into a global partner with an increased focus on international cooperation to support countries in their mission to keep societies and people safe. Saab’s contribution to enhanced security and defence capabilities is now evident in many countries around the world, while our commitment to Sweden remains constant.

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How Saab creates value

Saab’s strategic goals are to grow sales and improve long-term profitability. This will be done in combination with generating a positive cash flow. Additional value will be created by accelerating Saab’s sustainability work, which today is an integrated part of how Saab does business and plans to grow. Our strategic framework and shareholder value creation roadmap is supported by four value drivers as illustrated below.

Our key value drivers

1

Targeted growth in strategic markets within core technology areas

Growing sales in home market as well as in international markets, supported by Saab’s global multi-domestic growth strategy.

Read more on pages 16-21

2

Technology leadership for increased competitiveness

Continued investments in R&D and innovation for competitiveness, future growth and capital return.

Read more on pages 22-25

3

Creating efficiency through Operational Excellence and portfolio optimisation

Improved project execution and improvement in gross margin, R&D productivity and portfolio efficiency.

Read more on pages 26-27

4

Sustainability as an integrated part of the strategy to drive value

Through innovation and responsible business practices, Saab will contribute to safe and resilient societies which is fundamental for a sustainable future.

Read more on pages 28-33

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“2021 was a successful year for Saab. The Group strengthened its platform for future growth by growing orders despite the effects from the pandemic. With a consistent focus on project execution and efficiency, Saab also delivered on its outlook for 2021.”
Christian Luiga, CFO and Deputy CEO
Read the full comment from the CFO in the report

Sustainability as a value driver

Sustainability is an integrated part of Saab’s strategy to drive value for customers, partners, employees, owners and society as a whole. Contributing to safe and resilient societies in light of increased instability in the world, Saab is committed to maximising the positive impact on sustainability from its operations while ensuring that research, innovation and technology help enable sustainable development.
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A greater task

Our commitment to society is at the core of Saab and sustainability is the very basis for the company’s long-term development and growth. Peace, security and stability are prerequisites to ensure that we together reach all the UN Sustainable Development Goals. In a world where threats against societies are growing increasingly diverse, and with climate change giving rise to a new instability, Saab contributes to defence and security capabilities as a trusted partner in Sweden and many other countries.

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Responsible business

51%
GHG emission reduction (compared to 2017)
79%
Employee engagement
27%
Share of women managers

Cases