Saab's results January-September 2014

Defence and security company Saab presents the results for January-September
2014.
Statement by the President and CEO Håkan Buskhe:
The defence market is characterised by fierce competition and the market
conditions are challenging as defence spending has decreased for a number of
years. However, there is an ongoing discussion, particularly within the EU,
about increasing defence spending, but no decisions have been made. In order to
address this, we are strengthening Saab’s competitiveness by continuously
improving our offering. Our investments in research and development are made to
create long-term growth in several areas.

During the first nine months this year, two large product launches have taken
place; a new generation of the weapon system Carl-Gustaf M4 during the third
quarter, and a new generation of the Giraffe AMB and Arthur radars during the
second quarter. These are important areas where Saab is world-leading and focus
ahead will be on market and sales.

The development of Gripen E for Sweden progresses according to plan and budget.
In August, the Swedish government decided to move forward with Gripen E, also
without a partnering country.

Brazil negotiations on track
The negotiations with Brazil regarding Gripen NG (Gripen E/F) move forward
according to plan and the ambition is to reach an agreement in the near future.
In July, Saab and the Brazilian aircraft manufacturer Embraer, entered into a
Memorandum of Understanding to partner in joint programme management for the
development and production of Gripen for Brazil. This is thought to further
strengthen Gripen’s position in the market.

On 22 July, the acquisition of ThyssenKrupp Marine Systems AB (TKMS, now Saab
Kockums) was closed. Now we focus on efficiently integrating the business,
meanwhile the work with deliveries to the Swedish customer has begun.

Current market conditions and status in procurement processes had a negative
impact on order bookings; this is mainly seen within business area Dynamics.

Order bookings amounted to MSEK 10,199 (25,029) during the first nine months. In
the same period last year, development orders for Gripen E amounting to SEK 13.2
billion was received.

During the third quarter, the Swedish Defence Materiel Administration (FMV)
ordered overhaul of the submarine HMS Halland. This was included in the Letter
of Intent regarding the Swedish defence’s underwater capability totalling more
than SEK 11 billion, communicated on 9 June this year.

Sales amounted to MSEK 16,102 (16,471). During the quarter, sales increased
compared to the same period last year, mainly due to increased sales within
Security and Defence Solutions, where the acquisition of Saab Kockums
contributed.

Reported operating income amounted to MSEK 901 (811) with an operating margin of
5.6 per cent (4.9). The operating income adjusted for non-recurring items*
amounted to MSEK 901 (1,042) with an operating margin of 5.6 per cent (6.3).

The announced efficiency measures progress according to plan and the number of
full time equivalents and external consultants has decreased by approximately
860 since the beginning of 2013.

Outlook unchanged
Despite a market that is difficult to predict and expenses for the Gripen
campaign for Brazil and for terminating the Gripen campaign for Switzerland
during the third quarter, the outlook for 2014 remains unchanged.

The operational cash flow was negative as a result of high activity in large
projects while we are also investing in development for future growth. Our
estimate that the operational cash flow will be positive during the second half
-year remains.

Earnings per share after dilution amounted to SEK 5.36 (4.21).

*The operating income 2013 includes a non-recurring item of MSEK 231 related to
a lost legal dispute.

Outlook statement 2014:

  ·
In 2014, we estimate that sales will be in line with 2013.

  ·
The operating margin in 2014, excluding material non-recurring items, is
expected to be somewhat higher than the operating margin in 2013, excluding
material non-recurring items

Excluding material non-recurring items, the operating margin was 6.6 per cent in
2013.

Financial highlights

MSEK            Jan     Jan     Change, %  Q3 2014  Q3 2013  Full Year 2013
                -Sep    -Sep
                2014    2013
Order bookings  10,199  25,029  -59        2,073    2,993    49,809
Order backlog   54,910  42,407  29                           59,870
Sales           16,102  16,471  -2         5,130    4,723    23,750
Gross income    4,226   4,475   -6         1,330    1,264    6,328
Gross margin,   26.2    27.2               25.9     26.8     26.6
%
EBITDA          1,536   1,557   -1         477      515      2,367
EBITDA margin,  9.5     9.5                9.3      10.9     10.0
%
Operating       901     811     11         258      266      1,345
income (EBIT)
Operating       5.6     4.9                5.0      5.6      5.7
margin, %
Net income      582     455     28         170      192      742
Earnings per    5.40    4.34               1.57     1.78     6.98
share before
dilution, SEK
Earnings per    5.36    4.21               1.55     1.73     6.79
share after
dilution, SEK
Return on       7.6     8.8                                  6.3
equity, %*
Free cash       -2,100  -2,013             -710     -940     -1,460
flow **
Free cash flow  -19.59  -18.44             -6.64    -8.61    -13.38
per share
after
dilution, SEK
* The return
on equity is
measured over
a rolling 12
month period
** As of 1
January, free
cash flow is
reported for
the Group. It
was previously
named
operating cash
flow
Comparative
numbers for
2013 have been
restated
according to
the changed
accounting
principles for
joint
arrangements
(IFRS 11). See
note 13. Where
applicable,
comparative
numbers for
2013 for some
business areas
have been
restated
following
organisational
and structural
changes, see
note 14. The
latter has no
impact on the
Group as a
whole.

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-September 2014.

Thursday, 23 October, 10.00 CET
Grand Hotel, New York, Blaiseholmshamnen 8, Stockholm, Sweden

R.S.V.P
E-mail: Karoline.sandar@saabgroup.com
Phone: +46 8 463 01 48

You are also welcome to watch the live webcast or dial in to the conference
call. It is possible to post questions also over the web and conference call.

Live webcast:
saab-interimreport.creo.se/141023

Conference call:
Please, dial in using one of the numbers below.
UK: +44 2076602077
US: +18 552692606
SE: +46 851999359

The interim report, the presentation material and the webcast will be available
on http://www.saabgroup.com/en/InvestorRelations.

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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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.

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 23 October 2014 at 07.30 (CET).