interim report january-march 2015 jan …...interim report january-march 2015 håkan buskhe...
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Håkan Buskhe President and CEO
24 April 2015
INTERIM REPORT JANUARY-MARCH 2015 Håkan Buskhe President and CEO
23 October 2015
INTERIM REPORT JAN-SEPT 2015
HIGHLIGHTS Q3 • Gripen NG contract with Brazil effective; order intake BSEK 39.3
• First order for Carl-Gustaf M4, UK orders for Giraffe strengthens position in the UK
• Continued investments in T-X program* and a loss in business areas Electronic Defence Systems and Support and Services in the quarter
• Positive operating cash flow in Q3 due to milestone payments related to Gripen programmes and Saab Kockums
• Organisational change as of 1 January: business area Security and Defence Solutions dissolved
• Increased focus on performance management
PROFITABLE GROWTH
PERFOR-MANCE
PORTFOLIO & PEOPLE
*Saab cooperates with Boeing in order to participate in the U.S. Air Force’s upcoming procurement regarding trainer aircraft
STRENGTHENED MARKET POSITION
2 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
MAJOR OPPORTUNITIES IN A CHALLENGING MARKET
3 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
GRIPEN BRAZIL UPDATE
• Order of BSEK 39.3 from Brazil regarding 36 Gripen NG booked in Q3
• Industrial cooperation with Brazilian industry in areas such as R&D and transfer of technology important
• 46 Brazilian engineers and technicians now in Sweden for education and on-the-job training
• The programme will contribute to an independent, advanced defence industrial base in Brazil
• Deliveries planned 2019-2024
4 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
FINANCIAL KEY DATA JAN-SEP 2015
5
2014 2015
54,910
105,486
2014 2015
2014 2015
2014 2015
Order backlog Sales
Operating margin Free cash flow
92%
6%
5.6%
3.2%
-2,100
-1,595
16,102 17,116
COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED © Saab
FINANCIAL KEY DATA Q3 2015
6
Q3 2014 Q3 2015
2,073
43,603
Q3 2014 Q3 2015
Q3 2015
Q3 2014 Q3 2015
Order bookings Sales
Operating margin Free cash flow
>2,000% 13%
5.0%
3.2%
-710
487
5,130
5,787
Q3 2014
COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED © Saab
7 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
• Gripen – a new generation
• World’s most modern submarine programme – A26
• New suite of radars and sensors
• Carl Gustaf M4
• Saab’s Remote Tower operational
• Cooperation with Boeing regarding trainers for the U.S Air Force – T-X program
10%
15%
20%
25%
30%
FY '10 FY '11 FY '12 FY '13 FY '14
INVESTMENTS IN CUTTING EDGE TECHNOLOGY 2010-2015
Total R&D expenses % of sales
TODAY: MAJOR GROWTH OPPORTUNITY
0
20
40
60
80
100
120
2008 2009 2010 2011 2012 2013 2014 2015
SEK
bn
Order backlog development
0
5
10
15
20
25
30
2008 2009 2010 2011 2012 2013 2014 9M2014
9M2015
SEK
bn
Sales
8
Q3
COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED © Saab
YTD: +6% Q3: +13%
ADAPTING ORGANISATION FOCUS ON MARKETING AND EXECUTION
• Greater focus on growth-generating business
• Alignment of functional processes
• As of 1 January 2016 business area Security and Defence Solutions (SDS) dissolved; business units moved into other business areas
• Business unit Saab Kockums to report to CEO
• Strengthened performance management and accountability
• Increased efficiency and value added through internal synergies
• Better adapted organisation and management for increased market focus
• Increased flexibility
9 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
Brasilia, Brazil
Washington DC, USA
Stockholm, Sweden
London, United Kingdom
Bangkok, Thailand
NEW ORGANISATION AS OF 1 JANUARY 2016
Aeronautics
Support and Services now including Critical Systems &
Communication Solutions from SDS*
Dynamics now including Training and
Simulation from SDS*
Saab Kockums* business unit, reporting directly to CEO
Electronic Defence Systems now including Traffic Management and
Combat Systems and C4I Solutions from SDS*
Industrial Products and Services
BUSINESS AREAS
CEO
GROUP FUNCTIONS MARKET AREAS
Asia Pacific
North America
Europe, Middle East & Africa
Latin America
Nordic & Baltic
BOARD
Our headquarters
*changes marked below with an apostrophe
10 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
OUTLOOK STATEMENT 2015
• In 2015, we estimate sales to increase more than Saab’s long-term goal: annual organic sales growth of 5 per cent.
• The operating margin 2015 excluding material non-recurring items is expected to be in line with the operating margin in 2014. In 2015, increased internally funded research and development efforts within Aeronautics will have a negative impact on the operating margin.
11 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
FINANCIALS
MAGNUS ÖRNBERG EVP and CFO
12 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
SUMMARY
• Record high order backlog, focus on execution
• Sales increase driven by Gripen and Saab Kockums
• Margins in the period impacted by loss in Dynamics and continued investments in the T-X program
• Cash flow positive in Q3, driven by milestone payments related to Gripen and A26 submarine programme
• Large orders impact financial position
13 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
FINANCIAL KEY DATA
MSEK
Jan-Sep
2015 Jan-sep
2014 Change,
% Full year
2014
Order bookings 62,599 10,199 514 22,602
Order backlog 105,486 54,910 92 60,128
Sales 17,116 16,102 6 23,527
Operating income 553 901 -39 1,659
Operating margin, % 3.2 5.6 7.1
Net income 293 582 -50 1,168
Free cash flow -1,595 -2,100 -1,094
14 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
ORDER BACKLOG
Order backlog duration, SEK bn
30 Sept 2015 31 Dec 2014 30 Sept 2014 2015: 7.7 2015: 17.8 2014: 6.9 2016: 18.2 2016: 10.2 2015: 14.4 2017: 14.0 2017: 5.7 2016: 8.4 2018: 10.9 2018: 5.6 2017: 5.0 After 2018: 54.7 After 2018: 20.8 After 2017: 20.2 Total: 105.5 Total: 60.1 Total: 54.9
0
20,000
40,000
60,000
80,000
100,000
120,000
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 Q3'15
MSE
K
Order backlog development
40%
60%
Order backlog distribution
SwedenRoW
15 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
ORDER BACKLOG INCREASED IN ALL BUSINESS AREAS Q3 VS. DEC ’14
0
0.5
1
1.5
2
2.5
3
3.5
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Q2'11
Q3'11
Q4'11
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Q1'15
Q2'15
Q3'15
MSE
K
Large ordersSmall orders*Book-to-bill ratio
* Small orders = <MSEK 100
ORDER SIZE DISTRIBUTION
16 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
ORDER BOOKINGS DISTRIBUTION
Brazil order of Gripen, BSEK 39.3, positive impact on Aeronautics, EDS and S&S Continued strong order intake in Dynamics SDS received order for submarine A26 Strong inflow small and midsized orders
501 1,257 1,637
3,900
2,085 1,931
3,530
5,467
12,689
3,813 2,753
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
Aero. Dyn. EDS SDS S&S IPS
MSE
K
Jan-Sep '14 Jan-Sep '15
21%
6%
1% 65%
5% 1% 1%
Order bookings per region
SwedenEU excl SERoEAmericasAsiaAfricaAustralia etc
17 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
40,000 36,350
SALES
3,621
2,045
2,898
3,763
2,531 2,448
4148
1961
2528
4,312
2743 2540
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Aero. Dyn. EDS SDS S&S IPS
MSE
K
Jan-Sep '14 Jan-Sep '15
46%
17%
2%
15%
13%
2% 4%
Sales per region
SwedenEU excl SERoEAmericasAsiaAfricaAustralia etc
Sales increase in Aeronautics due to invoicing related to Gripen
Sales decrease in EDS due to lower order bookings in 2013 and 2014
Strong sales in Saab Kockums (SDS)
18 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
OPERATING INCOME
238
38
125 134
252
33
204
-75
26
170 152
109
-100
-50
0
50
100
150
200
250
300
Aero. Dyn. EDS SDS S&S IPS
MSE
K
Jan-Sep '14 Jan-Sep '15
6.6% 4.9% 1.9% 10.0% 5.5% 1.3% 4.3% 4.3% 1.0% 3.6% 3.9% Continued investments in T-X development, Aeronautics
Dynamics loss in Jan-Sep 2015 due to low level of sales, positive earnings in Q3
19 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
CASH FLOW
Jan-September 2015 MSEK Cash flow from operating activities before changes in working capital
1,019
Change in working capital -1,390 Investing activities -782 Operational cash flow -1,153
Tax and other financial items -428 Acquisitions and sale of subsidiaries
-14
Free cash flow -1,595
-2500
-2000
-1500
-1000
-500
0
500
1000
1500
Cash flow from operating activities before changes in working capital
Change in working capital
Investing activities
Tax and other financial items
Acq. and sale of subsidiaries
20 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
CASH FLOW IMPACT FROM WORKING CAPITAL
21 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
-1200
-800
-400
0
400
800
Q1 Q2 Q3
Cash flow impact from working capital per quarter
-920 -1,013
543
MSEK
• Working capital reduced due to milestone payments in the A26 programme and payments for Gripen Brazil
Q3
FINANCIAL POSITION Development 9M 2015, MSEK
Net liquidity (+) / Net debt (-), 31 December 2014 -2,113 Cash flow from operating activities -799
Change in net pension obligation 383
Net investments -796
Financial lease -444
Dividend -501
Currency impact and unrealised results from financial investments
-57
Net liquidity (+) / Net debt (-), 30 September 2015 -4,327
Net pension obligation, 30 September 2015 2,145
Total interest-bearing assets, 30 September 2015 -292
Liquidity -2,474
Equity/assets ratio, 30 September 2015 35.1
22 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
FOCUS GOING FORWARD
• Secure synergies from new organisational set-up
• Execute on order backlog
• Increase efficiency in project execution
• Strengthened alignment of functional processes
• Reduce overhead costs
• Cash flow improvement
FOCUS ON PERFORMANCE MANAGEMENT
23 COMPANY UNCLASSIFIED | NOT EXPORT CONTROLLED
© Saab
Deliver on long-term targets
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