Defense firm smashes expectations, posts record orders
Swedish defense company saab Earnings expectations were beat in the second quarter as rising demand for military equipment dragged the fighter jet maker into another quarter of record order inventory.
New order bookings for the quarter ended June totaled 68.4 billion Swedish krona ($7.1 billion), above FactSet estimates of 57.1 billion Swedish krona, which included a Polish submarine deal worth 47 billion kroner.
Total backlog reached 317.7 billion crowns, down from 197.6 billion crowns a year ago, marking the fifth consecutive quarter of order book growth.
The development comes as European governments increase defense spending and book orders from companies in the region in response to Russia’s growing threat and invasion of Ukraine.
US President Donald Trump’s transfer of responsibility for defending Europe to the region’s own governments and his threat to withdraw troops from the continent have increased this urgency.
“We operate in a market with structurally increasing demand and we continue to focus on increasing capacity, servicing customers and developing new capabilities,” Saab CEO Micael Johansson said in a statement.
Investors are increasingly focusing on companies’ execution and delivery capabilities, as well as their growing order books.
Sales totaled 25.5 billion crowns, beating FactSet’s forecasts of 23.9 billion crowns; Operating profit (EBIT) was 2.8 billion crowns, compared to expectations of 2.4 billion crowns.
Saab, whose products range from Gripen fighter jets to submarines, missiles to advanced electronics, has seen exponential growth in orders since Russia’s full-scale invasion of Ukraine in early 2022.
Earlier this month, NATO Secretary General Mark Rutte said the alliance would order up to 10 spy planes from Saab in a deal that could be worth around $5 billion based on the price of the GlobalEye plane.
Despite an ever-growing order book, rising sales and rising profitability, Saab shares, like many of its peers, have taken a hit in recent months as investors question whether valuations are ahead of the industry’s ability to deliver.
Europe’s defense stocks have fallen this year.
While defense spending remains unequal among European NATO countries, most countries have made progress in increasing funding for military capabilities.
Sweden only joined NATO in 2024, citing Russia’s increasing aggression and the changing geopolitical landscape. Saab’s country increased its defense spending as a share of GDP from 1.2% in 2021 to 2.5%, according to SIPRI data.
