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-Jun 2013 | Jan-Jun 2012 | Change, % | Apr-Jun 2013 | Apr-Jun 2012 | Jan-Dec 2012 |
| Order bookings | 22,036 | 11,644 | 89 | 3,171 | 7,644 | 20,683 |
| 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 income before depreciation/amortisation and write-downs (EBITDA) | 1,042 | 1,695 | -39 | 398 | 1,011 | 3,186 |
| EBITDA margin | 8.9 | 14.4 | 6.8 | 16.2 | 13.3 | |
| Operating income (EBIT) | 545 | 1,133 | -52 | 149 | 730 | 2,050 |
| Operating margin, % | 4.6 | 9.6 | 2.5 | 11.7 | 8.5 | |
| Net income | 263 | 841 | -69 | 1 | 558 | 1,560 |
| Earnings per share before dilution, SEK | 2.56 | 8.24 | 0.02 | 5.42 | 15.00 | |
| Earning per share after dilution, SEK | 2.48 | 7.96 | 0.02 | 5.24 | 14.52 | |
| Return on equity, %* | 8.7 | 20.7 | 12.8 | |||
| Operating cash flow ** | -1,091 | 196 | -657 | -742 | 244 | -396 |
| Operating cash flow per share after dilution, SEK | -10.00 | 1.80 | -6.80 | 2.24 | -3.63 | |
| * 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) |
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| 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
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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.