interim report q2 2020 - saab.com · q2 2016 q2 2017 q2 2018 q2 2019 q2 2020 sales 5% 317 347 458...
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Saab interim reportJanuary-June 2020
Micael Johansson, President and CEOThomas Hendel, Acting CFO
17 July, 2020
• Strong order growth of 45% in the first half
• Continued growth in small orders of 9%
• Organic growth of 5% in the second quarter
• Sales growth in 5 out of 6 business areas
Highlights, January-June 2020
2
Strong order growth
Solid performance
Execution highlights
• Earnings development in line with last year, strong performance in defence
• Cost reduction contributed positively
• Execution of major projects progressing according to plan
• Delivery of the first GlobalEye to UAE in April
• Saab’s new fighter AESA radar successfully completed air trials
• Successful tests with the Saab Lightweight Torpedo
• Start of production of Gripen E/F fighter at the new plant in Brazil
• Divestment of Vricon JV completed
• FCAS-UK partnership intensified in the quarter Saab Gripen C
COVID-19 update
COVID-19 impact
• Limited impact on the defence related business
• Major programs progressing according to plan
• Tangible impact on civil business from the significant decline in
demand in the aviation industry
• Difficult to predict effect on future orders and supply chain
recovery
Actions being taken
• Capacity adjustments in operations impacted by lower volumes
due the downturn in the civil related business
• Implementation of shorter working hours, particularly in IPS
• Tight monitoring of the supply chain and secondary source
analysis to preserve operations
• Strengthened financial flexibility
• Withdrawal of dividend proposal at the AGM 2020
3
Market highlights, Q2 2020
Market development
• Unchanged procurement programs with most customers
• Good market activity despite Covid-19 situation
• Decline in the commercial market affecting industry
Saab key orders Q2
• Contract signed for Saab’s airborne Erieye AEW&C radar
• Carl-Gustaf orders from the U.S., Latvia and Estonia
• Gripen support and maintenance orders from Sweden
• Support agreement for trainer aircraft SK60 for Sweden
• First order of life extension of the heavyweight torpedo
system to Sweden
• G/ATOR radar order from U.S.
4
-2,702-3 000
-2 000
-1 000
0
1 000
Operational cash flow
Jan-Jun 2019 Jan-Jun 2020
235
0
5
10
15
Order bookings
Jan-Jun 2019 Jan-Jun 2020
Financial highlights, January-June 2020
5
0
5
10
15
20
Sales
Jan-Jun 2019 Jan-Jun 2020
1,221 1,212
1000
1100
1200
1300
1400Operating income
Jan-Jun 2019 Jan-Jun 2020
BS
EK
MS
EK
16.9 16.9
9.7
14.1
EBIT-
margin,% 7.27.2
BS
EK
MS
EK
Quarterly development
6
MS
EK
MS
EK
7,0647,772 7,953
8,445 8,836
0
2000
4000
6000
8000
10000
Q2 2016 Q2 2017 Q2 2018 Q2 2019 Q2 2020
Sales5%
317 347
458
630 652
0
100
200
300
400
500
600
700
Q2 2016 Q2 2017 Q2 2018 Q2 2019 Q2 2020
Operating income
7.4%
EBIT
margin,% 4.5% 7.5%5.8%4.5%
10% 2%6%
6,848
10,853
6,5295,228
9,247
0
2000
4000
6000
8000
10000
12000
Q2 2016 Q2 2017 Q2 2018 Q2 2019 Q2 2020
Order bookings
1,137
-1,429
-539-779
1,817
-2000-1500-1000-500
0500
100015002000
Q2 2016 Q2 2017 Q2 2018 Q2 2019 Q2 2020
Operational cash flow
Strategy and long term financial targets remain
7
• Innovation labs in prioritized technology areas
• Increased focus on cybersecurity
• Strategic workforce planning
• AI and 3D research projects
• Continuous cost efficiency measures
• Automation & digitalisation for increased productivity
• Reduced greenhouse gas emissions
• International expansion
• Strategic partnerships
• Local footprint in strategic markets
• Focus on optimizing the product portfolio
• Significantly increase R&D efficiency
• Resource efficiency through product life-cycle
Financial SummaryThomas Hendel, Acting CFO
8
MSEKJan-Jun
2020
Jan-Jun
2019
Change,
%
Order bookings 14,070 9,710 45
Order backlog 90,458 94,236 -4
Sales 16,876 16,941 0
Operating income 1,212 1,221 -1
Operating margin, % 7.2 7.2
Net income 860 826 4
Operational cash flow 235 -2,702
Free cash flow 22 -3,126
Financial summary, Jan-Jun 2020
• Solid performance in the defence related business
• Increased order intake of 45%, small orders up 9%
• Sales in the first six months at a stable level
• Organic growth of 5% in Q2
• Stable earnings with an operating margin of 7.2%
• Positive volume effect in defence
• Impact from cost reduction actions
• Improved cash flow in Q2
• Strong financial position and liquidity maintained
9
Order backlog duration
10
End of June 2020 Year End 2019 End of June 2019
2020: 15,6 2020: 28.9 2019: 14.9
2021: 25.7 2021: 22.3 2020: 22.7
2022: 18.6 2022: 16.1 2021: 18.8
2023: 14.7 2023: 13.2 2022: 14.8
After 2023: 15.9 After 2023: 12.8 After 2022: 23.0
Total: 90.5 Total: 93.3 Total: 94.2
Aeronautics43%
Dynamics17%
Surveillance17%
S&S10%
IPS9%
Kockums4%
Order backlog per business area
Sweden30%
Rest of Europe
17%North America8%
Latin America
33%
Asia8%
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 2020
MS
EK
Small orders = <MSEK 100, Large orders = >MSEK 100
Book-to-bill ratio calculated as 12 months rolling11
50% (67)
39% (33)
11% (0)
Small orders MSEK < 100
Medium-sized orders MSEK 100-1,000
Large orders > 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
• Strong order growth of 45%
• Both small and large orders contributed
• Growth driven by BA Dynamics,
Surveillance and Support & Services
0 500
1 0001 5002 0002 5003 0003 5004 0004 500
Aeronautics Dynamics Surveillance S&S IPS Kockums
Order bookings
Jan-June 2019 Jan-June 2020
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 2019 30 June 2020
BS
EK
12 *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.
*
• Stable sales volumes y-o-y but stronger
Q2 in 5 out of 6 business areas
• High activity level across business areas
• Dynamics deliveries started to pick up
in the second quarter
• IPS downturn related to civil aviation,
slight increase in Combitech y-o-y
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 2019 Jan-Jun 2020
Sales per business area
13
-2%
-2%
8%
1%
-8%
4%
MS
EK
Operating income per business area
14
MS
EK
• Operating income affected by the
downturn in IPS
• Strong improvement in Dynamics and
Surveillance due to continued high
activity level and positive mix
• Aeronautics and Support & Services at
a high stable level, according to plan
• Productivity measures in Kockums
continue
363
273
303322
140
31
330 329
381
295
-54
51
- 100
- 50
0
50
100
150
200
250
300
350
400
450
500
Aeronautics Dynamics Surveillance S&S IPS Kockums
Jan-Jun 2019 Jan-Jun 2020
Operating
margin,%
8.28.9 11.59.3 10.0 11.112.2
-1.8
3.32.1
8.6 4.3
MS
EK
15
Operational cash flow, Jan-Jun 2020
Cash flow from
operations
Change in
working capitalInvestments
• Improved cash generation, good
collection in the quarter
• Lower levels of working capital build up,
POC receivables starting to decrease
• Positive effect from deferral related to
tax and social fees
• Continued investments in fixed assets
and capitalized R&D expenses
• Further deliveries planned for 2020
• Continued ambition to generate positive
operational cash flow for 2020
+1,999
-210
-1,554
January – June 2020
Cash flow from
operationsChange in
working capitalInvestments
+1,168
+1,405
-756
April – June 2020
MS
EK
MSEK
Net debt, 31 December 2019 -7,069
Cash flow from operating activities 1,776
Change in net pension obligation -112
Net investments -1,554
Other -401
Net debt, 30 June 2020 -7,360
Net pension obligation 4,834
Total interest-bearing receivables -463
Lease liabilities 2,526
Net debt excl. net provisions for pensions, lease
liabilities and interest-bearing receivables
-463
16
Financial position and maturity profile
• The cash buffer as of June 30: ~ 16 300 MSEK
• Liquidity: ~ 6 300 MSEK
• Committed unutilized credit facility: 10 000 MSEK 36.2%
Equity/Assets ratio
Focus going forward
17
Execution and delivery of projects
Continue productivity
Secure targeted orders
Cash flow generation
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.
Important information
19
Q&A
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