Saab profits fall on Gripen marketing costs

Swedish aeronautical and defence group Saab AB has posted a 15 percent fall in first quarter pretax profit to 324 million kronor ($54 million), hit by flat sales and reduced profitability after an increase in marketing costs.

The headline result was below average market expectations of 417 million kronor, as reported by SME Direkt.

Operating profit fell 7 percent to 385 million kronor, and operating margin to 7.7 percent from 8.4.

“The lower operating income is mainly due to higher marketing expenses largely related to tenders for Gripen to a number of countries,” said Saab.

Sales rose 1 percent to 4.979 billion kronor and below market expectations of 5.122 billion. The company said sales were negatively affected by exchange rate fluctuations of about 50 million kronor or 1 percent. Organic sales growth was 2 percent.

Saab expects its full year results to develop in line with its long term financial objectives for 5 percent organic sales growth and an operating margin of 10 percent, excluding non-recurring items.

Order bookings jumped 44 percent to 7.749 billion kronor, boosted by Sweden’s decision to order an air surveillance system valued at 2 billion.

Some 72 percent of orders came from customers outside of Sweden, and 74 percent was from defence-related operations — down from 77 percent a year earlier. Saab has a stated aim of reducing its reliance on the defence business.

The order backlog at the end of the period amounted to 49.608 billion kronor, down 4 percent from a year earlier.

Saab’s marketing expenses for the first quarter increased 15 percent to 442 million kronor.