Saab tops second-quarter estimates as defense orders hit new high
The Swedish defense group reported stronger-than-expected sales and profit as European military spending lifted its order book.
By Jordan Bell · Startups & Deals Reporter
· 2 min read
Saab beat second-quarter expectations as demand for military equipment pushed the Swedish defense company’s order book to another record. For everyday investors watching defense stocks, the key signal is backlog: contracted work that can support future revenue if the company delivers on schedule.
The company reported 68.4 billion Swedish crowns, or about $7.1 billion, in new order bookings for the quarter ended in June. That was above the 57.1 billion crowns expected by analysts surveyed by FactSet, according to the figures reported with Saab’s results.
Order bookings are new contracts won during the period. Saab’s quarterly number included a 47 billion-crown Polish submarine deal, a large contract that helped lift the total.
Backlog keeps building
Saab’s total order backlog reached 317.7 billion crowns, up from 197.6 billion crowns a year earlier. The company said the figure marked the fifth straight quarter of growth in its order book.
Backlog is the value of orders a company has received but has not yet fully delivered. For a defense manufacturer, that can include complex programs that take time to build, test and hand over. Investors tend to watch backlog because it gives a clearer view of future activity than a single quarter of sales alone.
The demand backdrop remains tied to government budgets. European countries have been increasing defense spending, which has lifted orders for companies across the region, according to CNBC.
Saab Chief Executive Micael Johansson said in a statement that the company operates in a market with “structurally growing demand” and is focused on expanding capacity, delivering to customers and developing new capabilities.
Sales and profit beat forecasts
Revenue also came in ahead of expectations. Saab posted second-quarter sales of 25.5 billion crowns, compared with FactSet estimates of 23.9 billion crowns.
Operating profit, also known as EBIT, was 2.8 billion crowns. EBIT means earnings before interest and taxes, a measure investors use to look at profit from the core business before financing costs and tax effects. Analysts surveyed by FactSet had expected 2.4 billion crowns.
The results show how higher military spending is flowing into Saab’s financials, from new orders to reported sales and operating profit. The company is best known as a defense manufacturer, including fighter jets, and its performance is being closely watched as governments in Europe place more orders for military equipment.
The main test now is execution. A larger backlog can support revenue over time, but it also requires factories, suppliers and engineering teams to keep pace with demand. Johansson’s comments pointed to that pressure, with capacity and delivery named alongside new capabilities as priorities for the company.
This story draws on original reporting from CNBC.
