COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIED Investor Relations | Q3 2016 25 October, 2016 INTERIM REPORT Q3 2016 Håkan Buskhe, President and CEO Magnus Örnberg, EVP and CFO This document and the information contained herein is the property of Saab AB and must not be used, disclosed or altered without Saab AB prior written consent.
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COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIEDInvestor Relations | Q3 2016
25 October, 2016
INTERIM REPORTQ3 2016
Håkan Buskhe, President and CEOMagnus Örnberg, EVP and CFOThis document and the information contained herein is the property of Saab ABand must not be used, disclosed or altered without Saab AB prior written consent.
COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIEDInvestor Relations | Q3 2016
HIGHLIGHTS JAN-SEP 2016
• Market demand for cost-efficient solutions strong• Strong order intake, reflected in a strengthened order
backlog and sales increase of 15 per cent• Contract for RBS 70 NG VSHORAD in third quarter
PROFITABLEGROWTH
• Improved operating margin, reflecting high activity level• Operating income impacted by investments in the
development of a new jet trainer (T-X-program)• Free cash flow continued strong in the period
PERFORMANCE
• In September, Saab and Boeing reveal the first twoaircraft for US air force T-X competition
• Minority stakes in Venture portfolio, early stageinvestments had a negative impact on earnings
• Saab received Swedish award for equality work
PORTFOLIO &PEOPLE
2
COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIEDInvestor Relations | Q3 2016
MARKET SITUATION
• NATO countries targets 2% of GDPspending on defence
• Increased global need for security anddefence capabilities
• Interoperability and collaboration
• Demand for cost efficiency and localpresence
• Need to safeguard and improve supplychain efficiency
COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIEDInvestor Relations | Q3 2016
FINANCIAL HIGHLIGHTS, JAN-SEP 2016
4
62 599
14 960
Jan-Sep 2015 Jan-Sep 2016
MS
EK
Order bookings
17 11619 615
Jan-Sep 2015 Jan-Sep 2016
MS
EK
Sales
553
837
Jan-Sep 2015 Jan-Sep 2016
MS
EK
Operating income
-1 595
1 740
Jan-Sep 2015 Jan-Sep 2016MS
EK
Free cash flow
15%
4.3%3.2%EBITmargin
COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIEDInvestor Relations | Q3 2016
GRIPEN- THE SMARTFIGHTER
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FOCUS ON LONG-TERM FINANCIAL TARGETS
Catch the market momentum‒ Further develop the Saab Market Area organisation‒ Prioritised market efforts‒ Small and midsized orders
Efficient execution and delivery‒ Sales growth - increased utilization‒ Focus on project execution‒ Continouos efficiency improvements‒ T-X-program tender process final in 2017/2018‒ Streamlining of portfolio
COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIEDInvestor Relations | Q3 2016
OUTLOOK STATEMENT 2016
7
• In 2016, we estimate sales to be in line with Saab’slong-term goal: annual organic sales growth of 5 percent.
• The operating margin 2016, excluding material non-recurring items, is expected to be in line with theoperating margin in 2015.
COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIEDInvestor Relations | Q3 2016
FINANCIAL UPDATE
8
COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIEDInvestor Relations | Q3 2016
SUMMARY
• First nine months 2016 in line with our expectations
• Sales growth driven by large projects in order backlog
• Focus on project execution key
• Improved operating margin; earnings still impacted byinvestments in T-X program
• Operating cash flow continued strong in the period,focus on cash flow management a priority
• In the third quarter, net debt impacted mainly byutilization of advances and milestone payments andless sold trade receivables
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COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIEDInvestor Relations | Q3 2016
FINANCIAL KEY DATA
MSEKJan-Sep2016
Jan-Sep2015 Change FY 2015
Order bookings 14,960 62,599 -76 81,175
Order backlog 109,521 105,486 4 113,834
Sales 19,615 17,116 15 27,186
Operating income 837 553 51 1,900
Operating margin 4.3% 3.2% 7.0%
Net income 536 293 83 1,402
Free cash flow 1,740 -1,595 -726
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• Order bookings for Jan-Sep 2016 in line with 2015, excludinglarge orders for Gripen, Airborne Early Warning andsubmarines
• Sales growth driven by Gripen, Airborne Early Warning andsubmarine orders as well as growth in business area Dynamics
• In third quarter cash flow impacted by utilisation of advancesand milestone payments and less sold trade receivables
COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIEDInvestor Relations | Q3 2016
ORDER BACKLOGOrder backlog duration, SEK bn
30 Sep 2016 30 Sep 2015 31 Dec 2015
2016: 8.2 2015: 7.7 2016: 21.8
2017: 21.0 2016: 18.2 2017: 15.9
2018: 14.9 2017: 14.0 2018: 12.3
2019: 12.7 2018: 10.9 2019: 11.7
After 2019: 52.8 After 2018: 54.7 After 2019: 52.1
Total: 109.5 Total: 105.5 Total: 113.8
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020406080
100120
'11 '12 '13 '14 '15 Jan-Sep'16
SEK
bn
Order backlog
35%
65%
Order backlog distribution
SwedenRoW
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ORDER SIZE DISTRIBUTION
0
0,5
1
1,5
2
2,5
3
3,5
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
50 000
Q4'11
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Q1'15
Q2'15
Q3'15
Q4'15
Q1'16
Q2'16
Q3'16
MSE
K
Small orders* Large orders Book-to-bill ratio
12
*Small orders = <MSEK 100Book-to-bill ratio calculated as 12 months rolling
COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIEDInvestor Relations | Q3 2016
ORDER BOOKINGS AND ORDER BACKLOG
0
4 000
8 000
12 000
16 000
20 000
Aeron. Dyn Surveillance S&S IPS Kockums
MS
EK
Jan-Sep '15 Jan-Sep '16
13
36%
9%40%
13%
1% 1%
Regional distribution, Order backlog
SwedenRoEAmericasAsiaAfricaAustralia etc
Dynamics received several importantorders, for example RBS 70 NG in thethird quarter
Support and Services saw strong growthin small orders, 25 per cent increase inthe period
0
10
20
30
40
Aeron. Dyn Surveillance S&S IPS Kockums
BS
EK
Jan-Sep '15 Jan-Sep '16
Order bookings
Order backlog
40 000
60
COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIEDInvestor Relations | Q3 2016
SALES
0
1 000
2 000
3 000
4 000
5 000
6 000
Aeron. Dyn Surveillance S&S IPS Kockums
MS
EK
Jan-Sep 15 Jan-Sep 16
14
43%
17%
17%
18%
2% 3%Regional distribution
SwedenRoEAmericasAsiaAfricaAustralia etc
Sales growth mainly driven by the Gripenprogrammes, Globaleye and thesubmarine A26
Sales in Dynamics strengthened due toorders in 2015 and recent important wins
19%
18%
16%
11%
-
33%
COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIEDInvestor Relations | Q3 2016
OPERATING INCOME
204
-119
132109
247
320
73
218
256
56
85
-150
-100
-50
0
50
100
150
200
250
300
350
Aeron. Dyn Surveillance S&S IPS Kockums
MS
EK
Jan-Sep '15 Jan-Sep '16
2
15
Sales growth in several Business Areashas lead to overall increased utilisation
Operating income affected byinvestments in T-X-programme
Minority stakes in Venture portfolio, earlystage investments had a negative impacton earnings in IPS
4.9 6.5
-4.8 2.5
4.0 4.1 7.2
4.3 2.2
19.8 5.1
COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIEDInvestor Relations | Q3 2016
CASH FLOWJan-Sep, 2016 MSEKCash flow from operatingactivities before changes inworking capital
1,772
Change in working capital 1,338Investing activities -1,188Operational cash flow 1,922
Tax and other financial items -235Acquisitions and sale ofsubsidiaries and other financialassets
53
Free cash flow 1,740
16
0
500
1 000
1 500
2 000
2 500
3 000
3 500
Cash flowfrom operatingactivitiesbeforechanges inworking capital
Change inworkingcapital
Investingactivities
Tax and otherfinancial items
Acquisitionsand sale ofsubsidiariesand otherfinancial assets
COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIEDInvestor Relations | Q3 2016
FINANCIAL POSITIONSeptember 2016, MSEK
Net liquidity (+) / Net debt (-), 31 December 2015 -3,217
Cash flow from operating activities 2,875
Change in net pension obligation -1,033
Net investments -1,188
Sale of subsidiaries 55
Dividend -530
Currency impact and unrealised results from financial investments 71
Net liquidity (+) / Net debt (-), 30 September 2016 -2,967
Net pension obligation, 30 September 2016 2,926
Total interest-bearing assets, 30 September 2016 -575
Liquidity -616
Equity/assets ratio, 30 September 2016 32.5
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COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIEDInvestor Relations | Q3 2016
FOCUS GOING FORWARD
Continue to:
• Focus on execution of large projects
• Build order backlog in selected areas
• Drive efficiency improvements throughout theorganisation
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COMPANY RESTRICTED | NOT EXPORT CONTROLLED | NOT CLASSIFIEDInvestor Relations | Q3 2016