Resumption of growth
Saab (L:0GWL) appears to have reached an inflection point. Sales have been relatively static since 2008, but a progressively increasing order backlog now seems likely to start translating into genuine growth. The backlog itself is at record levels following the recent finalisation of the Gripen contract for Brazil, with further large contract potential in the pipeline. As with all defense primes, the key to success is execution of the backlog, but management continues to work on both processes and cost, with a view to delivering improved shareholder returns.
Getting a Gripen
Management continues to evolve Saab’s strategic position. The SEK39bn export contract to Brazil for 36 Gripen NG fighter aircraft became effective in early September, boosting an already growing backlog to record levels. At the end of Q315 it stood at SEK105.5bn, up 76% since the start of 2015 (+10% excluding Brazil). The contract should act as a reference for other sales campaigns, especially those in South America, bolstered by the partnering arrangement with Embraer (N:ERJ). All six business areas reported improved order intake in Q3. In addition, management has reorganised the group further as it pursues identified efficiencies. SDS will be dissolved with its businesses moved to other divisions, improving market focus, reducing admin costs, and facilitating greater centralisation and standardisation of common services and functions.
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