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Defence giant Saab sees surprise fall in profits

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Defence giant Saab sees surprise fall in profits
Saab chief executive Håkan Buskhe at a press conference on Friday. Photo: Sören Andersson/TT
13:00 CEST+02:00
Swedish defence giant Saab announced a surprise drop in first-quarter operating profits on Friday, while the company took a 3.8 percent tumble on the Stockholm stock market.

Saab made a gross profit of 122 million kronor ($14,000) in the first quarter of the year, compared to 234 million kronor in the same period in 2014. Analysts had previously predicted profits by 244 million kronor in the first quarter of 2015, according to Reuters.

But Saab repeated that its prediction to see the year's organic sales grow above its long-term annual five percent target still stood.

"The year starts strong and positive based on on our prediction in February," said Saab boss Håkan Buskhe in a press statement on Friday.

"Our view for the total year still stands," he added and said that the geopolitically unstable situation in Ukraine was by and large beneficial to Saab.

"There's a strong increase in defence spending in Eastern Europe, while the attitude in Western Europe is more reluctant," said Buskhe.

He also said that a deal with the Brazilian government to build and sell 36 Jas Gripen fighter jets worth around 39.3 billion kronor was expected to come into force in the coming months. The company announced on Friday that it has agreed to also provide weapons to the jets at a value of 2.1 billion kronor.

The Local reported earlier this month that Brazilian prosecutors were investigating the Gripen deal, which was officially signed by Brazil's federal government and Saab in October, after a year of negotiations. The total price of the jets had then gone up by $900 million (around 8.3 billion kronor in today's exchange rate), which prompted prosecutors to initiate a probe into why the bill had sky rocketed.

Saab confirmed at the time that Brazil's public prosecutors were investigating the purchase – but underlined that no suspicion of criminal activity had yet been announced.

Saab is one of the world's leading defence and security companies and has around 14,700 staff around the world.

The company recently hit the headlines after it was initially excluded from a major new submarine-building programme in Australia.

The firm reported soaring annual profits in 2014 and forecast stronger arms sales this year in response to conflicts in Ukraine and the Middle East.

It sells the Carl-Gustaf rocket launcher used by US armed forces and this month announced a new multimillion dollar deal to help Norway update its core weapon detection radar system.

The Saab aerospace and defence company is not connected to Saab Automobile.

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