Saab's results January-June 2014

Defence and security company Saab presents the results for January-June 2014.
Statement by the President and CEO Håkan Buskhe:
The security and defence market remains challenging and competition is fierce.
During the first half-year of 2014, Saab has developed and strengthened its
product portfolio. In order to offer products and solutions that our customers
want, the investments in research and development as well as cost efficient
solutions are key. The business area Electronic Defence Systems launched unique
solutions during the period, that give the established Giraffe AMB and Arthur
systems leading functionality and design.

The interest for Gripen remains strong internationally. The development of
Gripen E progress according to time plan and budget and will be delivered to
Sweden, starting 2018. The negotiations with Brazil regarding Gripen NG continue
and both parties’ ambition is to reach an agreement in 2014. In July, a
Memorandum of Understanding was signed with the Brazilian aircraft producer
Embraer regarding joint development and production of Gripen for Brazil.

During the first half-year, Saab strengthened its position as one of the world’s
leading companies in military training systems and received orders from both the
Finnish armed forces and the UK Ministry of Defence.

Order bookings in the business area Dynamics were negatively affected by the
continued challenging market situation, and by delays in customers’ procurement
decisions. We see no change in the market situation short-term, but continue to
develop our offer to safeguard the business area’s long-term potential.

In June, an agreement was reached to acquire ThyssenKrupp Marine Systems AB
(former Kockums). This enables the expansion of the naval offer, as announced
earlier this year, and makes Saab one of few companies in the world with the
ability to develop, produce and deliver comprehensive defence solutions for air,
land and sea. The closing of the transaction is planned for July 2014.

The Swedish Defence Materiel Administration (FMV) has during the first half-year
placed orders for construction and production plans for the next generation
submarines and to conduct a mid-life update of two Gotland-class submarines.
Also, a Letter of Intent was signed with FMV regarding the Swedish armed forces’
underwater capability, comprising potential orders of over SEK 11 billion.

Saab’s order bookings decreased in the period, compared to the same period 2013
where we received development orders amounting to SEK 13.2 billion attributable
to Gripen E.

Sales amounted to MSEK 10,972 (11,748), a decrease of 7 per cent, mainly due to
lower sales within Dynamics.

The reported operating income amounted to MSEK 643 (545) with an operating
margin of 5.9 percent (4.6). The operating income for the same period 2013 was
negatively impacted by a non-recurring item of MSEK 231 attributable to a lost
legal dispute. The operating income adjusted for non-recurring items amounted to
MSEK 643 (776) and the operating margin was 5.9 per cent (6.6). The business
area Electronic Defence Systems reported a positive operating income, while
continuing to invest in development of new radar and sensor technology.

The efficiency measures announced in 2013 progress according to plan and in
total, the number of FTE’s and external consultants has been reduced by approx.
850 since the beginning of 2013.

The operational cash flow was negative, mainly due to timing differences in
deliveries and milestone payments. During the second half-year 2014 we have more
planned milestone deliveries and we therefore estimate that the operational cash
flow will be positive.

Earnings per share after dilution amounted to SEK 3.80 (2.48).

Outlook statement 2014:

  · In 2014, we estimate that sales will be in line with 2013.
  · The operating margin in 2014, excluding material non-recurring items, is
expected to be somewhat higher than the operating margin in 2013, excluding
material non-recurring items.

Excluding material non-recurring items, the operating margin was 6.6 per cent in
2013.

Financial highlights

MSEK                 Jan     Jan     Change,  Apr     Apr    Jan
                     -Jun    -Jun    %        -Jun    -Jun   -Dec
                     2014    2013             2014    2013   2013
Order bookings       8,126   22,036  -63      4,048   3,171  49,809
Order backlog        57,180  44,337  29                      59,870
Sales                10,972  11,748  -7       5,692   5,886  23,750
Gross income         2,896   3,211   -10      1,535   1,599  6,328
Gross margin, %      26.4    27.3             27.0    27.2   26.6
Operating income     1,059    1,042   2        583     398    2,367
before
depreciation/amorti
sation and write
-downs (EBITDA)
EBITDA margin, %      9.7     8.9              10.2    6.8    10.0
Operating            643     545     18       373     149    1,345
income (EBIT)
Operating margin,    5.9     4.6              6.6     2.5    5.7
%
Net income           412     263     57       236     1      742
Earnings per share   3.83    2.56             2.19    0.02   6.98
before dilution,
SEK
Earning per share    3.80    2.48             2.17    0.02   6.79
after dilution,
SEK
Return on equity,    7.7     8.7                             6.3
%*
Free cash flow **    -1,390  -1,073           -1,074  -748   -1,460
Free cash flow per   -12.95  -9.83            -10.00  -6.85  -13.38
share after
dilution, SEK

1) The return on equity is measured over a rolling 12-month period.

2) As of 1 January 2014, free cash flow is reported for the Group. It was
previously named operating cash flow.

Comparative numbers for 2013 have been restated according to the changed
accounting principles for joint arrangements (IFRS 11). See note 13. Where
applicable, comparative numbers for 2013 for some business areas have been
restated following organisational and structural changes, see note 14. The
latter has no impact on the Group as a whole.

Press and analyst meeting
Press and financial analysts are invited to a press and analyst meeting where
CEO Håkan Buskhe together with CFO Magnus Örnberg present the results for
January-June 2014.

Friday, July 18, 10.00 am CET
Grand Hotel, New York, Blasieholmshamnen 8, Stockholm, Sweden

R.S.V.P
E-mail: karoline.sandar@saabgroup.com
Phone: +46 8 463 02 45

Live webcast
If you are unable to attend in person, please visit
http://www.saabgroup.com/en/InvestorRelations where a live webcast of the
presentation will be available together with the presentation material. All
viewers will be able to post questions to the presenters. The webcast will also
be available afterwards at the Saab website.

For further information, please contact:
Saab Press Centre, +46 (0)734 180 018,
 (presscentre@saabgroup.com)presscentre@saabgroup.com
Saab Investor Relations, Ann-Sofi Jönsson, +46 (0) 734 187 214

www.saabgroup.com
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Saab serves the global market with world-leading products, services and
solutions ranging from military defence to civil security. Saab has operations
and employees on all continents and constantly develops, adopts and improves new
technology to meet customers’ changing needs.

The information is that which Saab AB is required to declare by the Securities
Business Act and/or the Financial instruments Trading Act. The information was
submitted for publication on July 18, 2014 at 07.30 CET.