Saab interim reportJanuary-June

Håkan Buskhe, President and CEOMagnus Örnberg, EVP and CFO

19 July, 2019

Highlights January-June 2019

• xxxxxxx

2

Strong organic growth

Improved operating income

Cash flow

• Organic growth of 7 per cent

• Continued strong growth in business area Dynamics as deliveries

increased and in several units of business area IPS*

• Execution of major projects progressing according to plan; examples of HMS

Uppland submarine relaunch and 3rd Gripen E aircraft flight

• Continued productivity improvements visible in reported operating margins

• Dynamics strong improvement in operating margin due to increased deliveries

*Business area Industrial Products and Services

Gripen E

• Negative cash flow in line with plan; continued impact of increasing working

capital due to ongoing preparation of deliveries of Gripen E to Sweden and

Brazil

• Saab estimates that the operational cash flow will be negative for the full

year, but on a better level than 2018

Strong market demand

3

Carl-Gustaf M4

C2S*

• Order bookings of small orders increased 21 per cent

• Major framework agreements with U.S. government and

FMV** was signed regarding weapon systems Carl-Gustaf

and AT4

• Five-year framework agreement with U.S. government

for AT4 and Carl-Gustaf ammunition

• 10-year framework agreement with FMV** for Carl-

Gustaf M4

• Surveillance received several orders for Sea Giraffe radars,

e.g. Sea Giraffe Multi Mode Radar (MMR) for the U.S.

Coast Guards’s Patrol Cutters

• First order for operational digital air traffic control tower at

NATO military base in Germany

• In April, Saab was shortlisted as combat system provider

for Finnish Squadron 2020 program

*C2S = Command and Control Systems

**FMV = Swedish Defence Materiel Administration

AT4 Weapon systems

Sea Giraffe AMB on Visby Corvette

4

General market trends

• Total military spending 2018 accounted for 2.1 per cent of global GDP*

• Military spending in 2018 increased by 2.6 per cent in real terms

• Total military expenditure in Europe 2018 increased by 1.4 per cent

• US military expenditure in 2018 increasedby 4.6 per cent

Source: SIPRI

• Increased geopolitical risks

• Continued increase in defence budgets for

NATO countries and other major countries

• Technology advancements and digitisation

• Changing threat situations

• Military strategies are embracing more

digital tools and increasing the use of

space technologies

*GDP = Gross Domestic Products

Market drivers

The governments of Sweden and UK has signed an MoU* regarding co-operation on future combat air systems

Starting point for exploring opportunities for joint development

Saab and UK industry stand ready to support the outlined objectives

Beneficial for the long-term sustainment and development of existing platforms and systems including Gripen

Swedish-UK Future Combat Air

5

*MoU=Memorandum of Understanding

Gripen E

0

5

10

15

Order bookings

Jan-Jun 2018 Jan-Jun 2019

Financial highlights, January-June 2019

6

0

5

10

15

20

Sales

Jan-Jun 2018 Jan-Jun 2019

905

1,221

0

500

1000

1500

Operating income

Jan-Jun 2018 Jan-Jun 2019

-2,750-3000

-2500

-2000

-1500

-1000

-500

0Operational cash flow

Jan-Jun 2018 Jan-Jun 2019

-2,702

BS

EK

BS

EK

MS

EK

MS

EK

15.716.912.7

9.7

EBIT-

margin,%7.25.8

Q2 development

7

MS

EK

MS

EK

7,0647,772 7,953

8,445

0

2000

4000

6000

8000

10000

Q2 2016 Q2 2017 Q2 2018 Q2 2019

Sales

317 347

458

630

0

100

200

300

400

500

600

700

Q2 2016 Q2 2017 Q2 2018 Q2 2019

Operating income

EBIT

margin,% 4.5%7.5%

5.8%4.5%

10%2% 6%

Swedish submarine HMS Uppland

2,603

1,388

-2,424

-1,923

-3000

-2000

-1000

0

1000

2000

3000

4000

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019

Operational cash flow

-779

Cash flow development, Q2 2019

8

MSEK

Estimated range for cash flow in period

Outlook 2019

Sales growth in 2019 is expected to be in

line with Saab’s long-term financial goal:

annual organic sales growth of 5 per cent.

The operating margin in 2019, excluding

material non-recurring items, is expected to

improve compared to 2018, bringing Saab a

further step closer to its financial goal: an

operating margin of 10 per cent.

9

10

Financial summary

Magnus Örnberg, EVP and CFO

Financial summary, January-June 2019

• Increase of small-sized order bookings by

21 per cent

• Sales increased by 8 per cent;

organic growth 7 per cent

• Improved operating margin 7.2 (5.8) per cent

• Operational cash flow negative with Aeronautics

preparing for deliveries of Gripen E to Sweden

and Brazil

• Net debt impacted by IFRS16 adjustment of

BSEK 2.2

11

MSEKJan-Jun

2019

Jan-Jun

2018Change,

%

Order bookings 9,710 12,664 -23

Order backlog* 94,236 104,473 -10

Sales 16,941 15,719 8

Operating income 1,221 905 35

Operating margin, % 7.2 5.8

Net income 826 450 84

Operational cash flow -2,702 -2,750

Free cash flow -3,126 -3,192

*Not including order bookings related to serial production of the TX trainer aircraft developed by Boeing and Saab for the U.S. Air Force. The

U.S. Air Force has ordered the first phase from Boeing, the EMD = Engineering and Manufacturing Development, to be followed by production

orders.

Order backlog duration

12

End of June 2019 Year end 2018 End of June 2018

2019: 14.9 2019: 28.0 2018: 14.2

2020: 22.7 2020: 20.6 2019: 23.0

2021: 18.8 2021: 18.1 2020: 18.2

2022: 14.8 2022: 13.3 2021: 17.9

After 2022: 23.0 After 2022: 22.2 After 2021: 31.2

Total: 94.2 Total: 102.2 Total: 104.5

Aeronautics46%

Dynamics15%

Surveillance14%

S&S10%

IPS9%

Kockums6%

Order backlog per business area

Sweden33%

Rest of Europe

12%North America8%

Latin America

35%

Asia9%

Africa>1%

Australia etc3%

Order backlog per region

BSEK

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 000January-June 2019

MS

EK

Small orders = <MSEK 100, Large orders = >MSEK 100

Book-to-bill ratio calculated as 12 months rolling13

67%

33%

Small orders MSEK < 100

Medium-sized orders MSEK 100-1,000

Large orders

Medium sized orders

Small orders

Small orders Large orders

Small orders = <MSEK 100, Medium sized orders = MSEK 100-1,000,

Large orders = >MSEK 1,000

• Small orders grew 21 per cent

• Five-year framework agreement with U.S. government for AT4 weapons and Carl-Gustaf ammunition, total value appr. SEK 4.2 billion; order received of aboutMSEK 771 in second quarter

• 10-year framework agreement with FMV for Carl-Gustaf M4; initial order of MSEK 330 in second quarter

• One large order booked in first quarter 2018 in Aeronautics

0 500

1 0001 5002 0002 5003 0003 5004 0004 500

Aeronautics Dynamics Surveillance S&S IPS Kockums

Order bookings

Jan-June 2018 Jan-June 2019

Order bookings per business areaM

SE

K

0

10

20

30

40

50

60

Aeronautics Dynamics Surveillance S&S IPS Kockums

Order backlog

30 June 2018 30 June 2019

BS

EK

14 *Not including order bookings related to serial production of the TX trainer aircraft developed by Boeing and Saab for the U.S. Air Force. The U.S. Air Force has ordered the first

phase from Boeing, the EMD = Engineering and Manufacturing Development, intended to be followed by production orders.

*

• 8 per cent sales growth; 7 per cent organic growth

• Higher activity level within Gripen developmentand production for Brazil

• Dynamics saw increased level of deliveries

• IPS saw continued good sales in Combitech and increased sales within business unitsAerostructures and Traffic Management

• Kockums had lower activity level related to mid-life upgrades of Swedish Gotland-classsubmarines, as two submarines now haveconcluded comprehensive upgrades

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

Aeronautics Dynamics Surveillance S&S IPS Kockums

Jan-Jun 2018 Jan-Jun 2019

Sales per business area

15

+5%

+38%

-2%

-3%

+10%

-8%

MS

EK

Operating income per business area

16

MS

EK

• Aeronautics saw increased activities in the Gripen projects and lower T-X spend

• Productivity levels in several business areas improved

• Higher level of deliveries in Dynamics led to increased margin

• IPS operating margin strengthened due to productivity improvements in mainlyAerostructures and Avionics

• In Kockums lower activity level related to the Mid-Life Upgrades of two Swedish Gotland-class submarines

258

90

219

333

81 84

363

273

303322

140

31

0

50

100

150

200

250

300

350

400

450

500

Aeronautics Dynamics Surveillance S&S IPS Kockums

Jan-Jun 2018 Jan-Jun 2019

Operating

margin,% 8.96.6 9.34.2 8.6 12.212.2 4.31.0 2.15.26.1 2.7

-3 000

-2 000

-1 000

0

1 000

2 000

3 000

MS

EK

17

Operational cash flow, Jan-Jun 2019Cash flow from operating activities before

changes in working capital: 2,130

Change in working capital:

Contract assets and liabilities -3,060

Inventories -838

Other current receivables 1,413

Other current liabilities -839

Provisions -96

-3,420

Cash flow from investing activities:

Intangible assets -790

Tangible assets -622

-1,412

Operational cash flow: -2,702

Cash flow

from

operations

Change in workingcapital

Investing activities

MSEK

Net debt, 31 December 2018 -1,460

Effects related to implementation of IFRS 16 (opening balance) -2,190

Cash flow from operating activities -1,479

Change in net pension obligation -638

Net investments -1,412

Repurchase of shares -151

Dividend -601

Other -70

Net debt, 30 June 2019 -8,001

Net pension obligation, 30 June 2019 4,737

Total interest-bearing assets, 30 June 2019 -528

Net debt excluding interest-bearing receivables and net pension

obligation

-3,792

34.0%Equity/Assets

ratio

144.4Equity per share

(SEK)

18

Financial position

Focus 2019

Order intake

Project execution

Productivity improvement

Cash generation

Important information

This presentation may contain forward-looking statements which reflect Saab AB’s current view on future

events and financial and operational development. Words such as “intend”, “expect”, “anticipate”, “may”,

“believe”, “plan”, “estimate” and other expressions which imply indications or predictions of future

development or trends, and which are not based on historical facts, are intended to identify forward-

looking statements. Forward-looking statements inherently involve both known and unknown risks and

uncertainties as they depend on future events and circumstances. Forward-looking statements do not

guarantee future results or development and the actual outcome could differ materially from the forward-

looking statements.