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Earnings shortfall for defence company, Saab

Friday, 19 July 2013
The price for peace is the loss for Defence Company such as Swedish military hardware maker, Saab. Its earnings came in far below expectations with the defence group making a profit before tax of Skr11 million for the second quarter. Saab Grippen
Even the CEO and President, Håkan Buskhe writes in a statement that:
"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."

Saab's Series B shares plummeted by over 7 per cent in the opening trade on the Stockholm Stock Exchange after the interim report for the second quarter. Profit of Skr11 million compared to profit before tax of Skr 732 million in the corresponding period in 2012.
Analysts had on average expected a profit before tax of Skr130 million, according to a compilation of forecasts made by Reuters.
Turnover fell to Skr5.886 million from Skr6.232 million, and orders more than halved to Skr3.171 million from Skr7.644 million a year earlier. Saab's management believes that market conditions will remain challenging for the rest of 2013.
According to the new forecast, sales revenue in 2013 will be in line with 2012. Earlier Saab had thought that revenue would increase slightly.
The forecast for adjusted operating margin was down to the level of the first half of 2013, instead of expected to be in line with the 2012 margin of 7.7 percent.
By Scancomark.com Team

Financial highlights

Amount in Million Swedish Krona (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)
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.

Source: Saab