Saab’s profits rise

Saab AB said its full year pretax profit rose 45 percent from a year earlier to 2.45 billion kronor ($384 million), boosted by capital gains and stronger sales.

The figure includes 453 million kronor in gains from divestments, and other positive one-offs.

“We can look back at a very eventful year. 2007 was distinguished by a steady inflow of orders and continued sales growth. At the same time, the company must continue to improve efficiencies”, Saab President and CEO Åke Svensson said in a statement.

Market expectations were for a pretax profit of 2.23 billion kronor, including positive one-offs of 481 million kronor, according to SME Direkt.

Sales increased 9 percent to 23.02 billion kronor, with organic sales growth at 4 percent.

“For 2008 we expect development in line with Saab’s long-term financial objectives: 5 percent organic sales growth and an operating margin of 10 percent excluding non-recurring items,” Saab said in its year end report.

Operating margin rose to 11.3 percent from 8.3 percent a year earlier, while adjusted for one-offs it fell slightly to 9.4 percent from 10.9 percent.

The company proposed a full year dividend of 4.50 kronor a share, up from 4.25 kronor a year earlier.

Saab said it plans to cut costs by 1 billion kronor a year through 2010, with 75 percent of the savings coming from the lower cost of goods sold (purchasing, production, development and project implementation).

The company expects the plan will affect gross margins.

Additional cost savings will be generated through reduced operating expenses, mainly in administration.

The program is expected to reduce the company’s overall cost level by 250 million kronor in 2008, another 350 million kronor in 2009, and 400 million kronor in 2010.

The cost of the program is estimated at 250 million kronor.