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Annual and Sustainability Report 2020

Focused strategy for profitable growth

Micael Johansson
"We are convinced that high ethical standards and responsibility in our operations are also critical to long-term profitability."
Micael Johansson, CEO and President
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Annual and sustainability report 2020

For Saab, as for many others, most of 2020 was a dramatic year. We have had to adapt to the challenging times, and we have had to take substantial actions to mitigate the effects of the Covid-19 pandemic on our business. However, Saab is still on a growth journey and has seen exceptionally strong order growth throughout the year. Moreover, we managed to reach several key milestones in our large programmes. We also accelerated our international expansion, and we continued to optimise our product offering.

A clear roadmap for profitable growth

Saab is on an international expansion journey. Our aim is to become a truly global, multi-domestic company; a technology leader, with increased sales and strengthened profitability. In order to achieve our goals, we work strategically with market priorities and performance efficiency. The portfolio offering is optimised towards our core areas; Aeronautics, Advanced Weapons Systems, Command & Control, Sensors and Under Water Systems.

As a defence and security company, our commitment to sustainability and the UN Global Compact Principles is profound. We aim to deliver sustainable value for customers, partners, employees, owners and society as a whole. Saab’s sustainability commitment serves as the basis for our long-term development and growth.

New ways of working in challenging times

2020 was a year where our agility was tested more than before. We had to find new ways of working to address the challenges posed by the pandemic and to be able to continue our journey even under these circumstances. The pandemic’s impact on Saab’s military business has mainly been associated with uncertainties and disruptions in the supply chains. We therefore took actions to mitigate increased future risks identified in our operations. Our business within civilian aviation has been severely impacted by the lockdowns and the subsequent downturn in travelling. Altogether, this had a negative impact on Saab’s result.

"I am very proud of how Saab as an organisation successfully navigated these challenging times and proved that we can deliver even during global lockdowns."

We achieved some very important project milestones during the year: the historic delivery of the first Gripen E to Brazil and the delivery of the first and second GlobalEye to the United Arab Emirates. We delivered the second upgraded Gotland-class submarine to Sweden, and we completed the first Surface Ship and Submarine Firings of our new Saab Lightweight Torpedo. Furthermore, we completed the maiden test flight of our new Fighter AESA radar. This was all thanks to a great effort by committed employees. I am very proud of how Saab as an organisation successfully navigated these challenging times and proved that we can deliver even during global lockdowns.

Continuous growth and international expansion

Saab has continued to win business throughout the year. We increased our order intake by 56 per cent and a total of 70% of order bookings was related to markets outside Sweden. The demand for our capabilities and innovative solutions is high and we strengthened the order book in 2020. Adjusted for items affecting comparability including Covid-19 one-time effects, sales grew by 4% and the adjusted EBIT margin was 7.4%.

Saab has a clear and focused market approach with Sweden as the home market and we are actively increasing our presence in strategic markets, for example: the United States, Germany, United Kingdom and Australia. Here we aim to build up local production and invest in intellectual property in close partnership with local industry and defence forces.

In 2020 Saab announced the establishment of a Future Combat Air System (FCAS) Centre in the UK. We received the confidence of the Australian government to deliver Deployable Health Modules, which constitutes a major step forward in realising our growth and diversification ambitions in Australia. Construction of the T-7 production facility in USA is progressing according to plan. We are also proud to deliver the RBS15 to Germany together with our partner Diehl. The United Arab Emirates trusted us with a new order for two additional GlobalEye systems, as well as a support contract for the three systems ordered previously.

Innovation leadership

Saab is an Innovation Powerhouse. The speed of technological development is so rapid and we as a company can never lose focus on our ambition to be in the technological forefront. To ensure our customers’ future needs, we daily explore new technologies and innovate. During the year, we have taken further steps in our innovation and technology leadership by establishing Innovation Labs in five areas: Artificial Intelligence, System of Systems, Additive Manufacturing, Autonomy and Sensors. With these initiatives, we will safeguard our position as an innovation powerhouse and a thought leader in new technologies. During the year almost a quarter of our turnover was invested in research and development.

"During the year almost a quarter of our turnover was invested in research and development."

Strategic workforce planning

Thanks to our talented and pioneering workforce, Saab is at the very forefront of technological development. Our aim is to continue to be an attractive employer that supports our employees to grow and break new technological boundaries. Knowing that the speed of change is faster than ever before, we constantly prepare for future business needs by investing in our employees. With our Strategic Workforce Plan, we know what kind of resources and competencies we have today, what we need to have in the future and how to fill the gaps. Diversity is of importance to Saab – by bringing together different experiences and different perspectives, we reach our business objectives.

I want to thank all of Saab’s employees, who with their talents, engagement and ambition – in this exceptionally special and demanding year - are instrumental to our success.

Stockholm, February 2021

Micael Johansson
CEO and President

9LV Combat Management System

Creating value for all our stakeholders

Saab has seen substantial growth in recent years thanks to its strong base in Sweden and innovation heritage with world-leading technology assets. This has laid the foundation for a unique position in the global defence and security market. With its strong order backlog and more focused business strategy, Saab will continue on its growth journey.

For all our stakeholders we aim to create a greater value. This will we be able to do by executing on our strategy in combination with continued investments in R&D and innovation, portfolio excellence, accelerated presence in strategic markets and by driving an active sustainability agenda.

Our stakeholders is our society, customers, employees and shareholders.

%
Order growth
56%
MSEK
Sales
35,431
MSEK
Free cash flow
3,753
Reduction in Green House Gas emissions
-37%
Compared to 2017
Share of female managers globally
26%

Order bookings and sales

MSEK
OrderSales
201621,82828,631
201730,84131,666
201827,97533,156
201927,21635,433
202042,32835,431

Adjusted operating income and operating margin

MSEK, %
Adj. Operating income EBITAdj. Operating margin
20161,7976.3
20172,2507.1
20182,5647.7
20192,9378.3
20202,7387.4

This is Saab

Since Saab was started, we have strived to keep people and society safe. It is a basic human need to feel safe and, as we see it, a human right. Through systems and solutions that increase security, we can make this possible. Today, we serve the global market with world-leading products, services and solutions from military defence to civil security. With operations in most continents, Saab continuously develops, adapts and improves new technology to meet customers’ changing needs.

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Business cases showing how Saab executes in its core areas

Read more about our execution towards our long term financial and sustainability goals