SAAB PRESENTATION TO DEBT INVESTORS

Transcription

1 SAAB PRESENTATION TO DEBT INVESTORS 19 SEPTEMBER 2017 Magnus Örnberg, EVP and CFO Saab AB

2 2 AGENDA 1. Transaction overview 2. Overview of Saab 3. Market & Q2 financial update Sales of SEK 30,130m LTM Q Total assets of SEK 40,546m in Q EBITDA of SEK 2,981m LTM Q2 2017

3 3 TRANSACTION OVERVIEW Tender offer for December 2018 FRN (SEK 950m) and FXD (SEK 450m) New 5 year issue subject to market conditions Rationale behind transaction Prudent risk management and refinance over 1 year prior to maturity Financial flexibility and secure long-term funding

4 4 AN OVERVIEW OF SAAB (2016) World-leading high-tech solutions, products and services for military defence and civil security Sales SEK 28.6 billion and order backlog SEK 107 billion 15,465 employees, local presence in 34 countries and customers in 100 countries worldwide B-share listed on Nasdaq Stockholm s Large Cap Approx. 34,000 shareholders, Investor AB main shareholder with 30 percent of capital Air Land % 46 Naval Security Commercial aeronautics 20 Other 100 CUSTOMER COUNTRIES

5 5 AT THE FOREFRONT OF CHANGE 1941 First B17 delivered 1955 Draken first flight 1961 Viggen introduced 1979 First RBS 15 ordered 1990 First laser simulator BT First Gripen delivered 2002 First contract NLAW 2005 Neuron contract 2006 Saab 2000 A&EW 2008 First flight Gripen Demo 2011 RBS 70 NG launch 2014 Carl-Gustaf M4 launch 1937 Saab founded 1990 Saab Automobile independent company 2000 Celsius acquired 2005 Grintek acquired 2006 Ericsson Microwave Systems acquired 2007 SeaEye Marine acquired 2012 HITT acquired 2014 TKMS Kockums acquired 1646 Bofors founded 1894 Alfred Nobel acquires Bofors 1948 First Carl-Gustaf order 1998 StriC in operation Development of fighter radar Development of Giraffe radar family Development of Arthur Sea Giraffe AMB launched 1679 Örlogsvarvet Karlskrona 1840 Kockums Malmö 1977 Svenska Varv 1987 Celsius 1989 Kockums AB 1999 HDW 2005 ThyssenKrupp

6 6 COMPETITIVE PRODUCTS, GLOBAL MARKET Aeronautics Kockums Europe North America Middle East & Africa Asia Pacific Dynamics Support & Services Latin America Industrial Products & Services Surveillance

7 7 ORGANISATION CEO Group Functions Business Areas Market Areas North America Europe Middle East & Africa Latin America Asia Pacific ü Sales to 100 countries ü 65-80% of sales outside Sweden ü Presence in 35 countries

8 MARKET UPDATE Increasing demand for cost-efficient solutions Short lead times important Local partnership for research and development and production

9 9 TODAY: GROWTH OPPORTUNITY MARKET Execution Target -1% -4% -2% -1% -3% 11% Long-term target: Organic growth of 5 per cent p.a. 5% 20% M&A driven growth 15% 10% 5% 0% -5% -10% -15% -20% -25% Longterm target Sales Organic growth -30%

10 10 OWNERSHIP AS OF 31 AUGUST 2017 # Owner Capital Votes 1 Investor 30,0% 40,3% 2 Knut and Alice Wallenbergs foundation 8,8% 7,7% 3 Swedbank Robur Funds 4,7% 4,2% 4 AFA Insurance 2,4% 2,1% 5 Fidelity 2,0% 1,8% 6 Norges Bank 1,9% 1,7% 7 Handelsbanken Funds 1,7% 1,5% 8 Unionen 1,7% 1,5% 9 2 AP-Fund 1,2% 1,1% 10 Lannebo Funds 1,2% 1,1% Total outstanding shares: Share facts: Ticker: SAAB B Nasdaq Stockholm Large Cap Market cap: ~ SEK 40 bn Holding per region, % 3% 8% 1% 14% 74% Sweden US Norway UK Other

11 11 SUMMARY JANUARY JUNE 2017 Sustained growth in order bookings Improved sales and operating income for all business areas Increase in operating margin, driven by strengthened profitability in business area Dynamics Cash flow negative, in line with expectations Continued stable balance sheet

12 12 SAAB FOCUS 2017 Focus on execution of large projects project management Build order backlog in selected areas Drive efficiency improvements throughout the organisation Functional and operational excellence

13 13 NEW MANAGEMENT TEAM FROM 1/10-17 CFO & President and Deputies Micael Johansson Deputy CEO & Senior Executive Vice President Håkan Buskhe President & CEO Magnus Örnberg Executive Vice President & CFO Group Functions Lena Eliasson Head of Group Human Resources Ann-Kristin Adolfsson Head of Group Strategy Annika Bäremo Head of Group Legal Affairs Sebastian Carlsson Head of Group Communications Business Areas Jonas Hjelm Head of Aeronautics Görgen Johansson Head of Dynamics Anders Carp Head of Surveillance Ellen Molin Head of Support and Services Jessica Öberg Head of Industrial Products and Services Gunnar Wieslander Head of Kockums

14 14 FINANCIAL KEY DATA MSEK Jan-Jun 2017 Jan-Jun 2016 Change FY 2016 Order Bookings 20,554 11, % 21,828 Order Backlog 112, , ,606 Sales 15,353 13, % 28,631 Operating Income % 1,797 operating margin, % Net Income % 1,175 Operational Cash Flow ,193 2,603 Free Cash Flow ,051 2,359

15 15 ORDER BACKLOG Order Backlog Duration BSEK 30 June June December Total Total Total Strong order backlog in all business areas Dynamics received several large orders in the period

16 16 ORDER SIZE DISTRIBUTION ,5 3 Jan-Jun % Large Orders Small Orders* ,5 MSEK , ,5 74% 0 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 Q4 '16 Q1 '17 Q2 '17 0 Small orders* Large orders Book-to-bill ratio** *Small orders = <MSEK 100 **Book-to-bill ratio calculated as 12 months rolling

17 17 ORDER BOOKINGS & BACKLOG PER BA BSEK BSEK Order Bookings Aeronautics Dynamics Surveillance S&S IPS Kockums Jan-Jun 2016 Jan-Jun 2017 Order Backlog Aeronautics Dynamics Surveillance S&S IPS Kockums Jun'16 Jun'17 Significant order within the Airborne Early Warning and Control Segment. Kockums signed contract for modification and upgrading of Corvettes. Dynamics received order for Next Generation Light Anti-Tank Weapon System (NLAW). Continued support and maintenance of Gripen C/D involving several business areas.

18 18 SALES PER BA % +1% +23% MSEK % +11% % Sales increase in all business areas Support & Services and Kockums experiencing strong growth Aeronautics Dynamics Surveillance S&S IPS Kockums Jan-Jun 2016 Jan-Jun 2017 Combitech driving force behind sales growth in business area Industrial, Products and Services (IPS)

19 19 OPERATING INCOME PER BA MSEK EBIT Margin Aeronautics Dynamics Surveillance S&S IPS Kockums Jan-Jun 2016 Jan-Jun 2017 Improved operating income for all business areas Substantial growth in operating income and margin for Dynamics Higher activity level in operations related to airborne surveillance systems

20 20 CASH FLOW JAN JUN MSEK Cash Flow from Operating Activities before Changes in Working Capital 1, Change in Working Capital -1,005 MSEK 500 Change in Working Capital Investing Activities -955 Operational Cash Flow Cash Flow from Operating Activities before Changes in Working Capital Tax and Other Financial Items Investing Activities Tax and Other Financial Items Acquisitions and Sale of Subsidiaries and Other Financial Assets Acquisitions and Sale of Subsidiaries and Other Financial Assets Free Cash Flow

21 21 FINANCIAL POSITION MSEK Net Liquidity (+) / Net Debt (-), 31 December ,836 Cash Flow from Operating Activities 429 Change in Net Pension Obligation -266 Net Investments % Equity/Assets Ratio Dividend -559 Currency Impact and Unrealised Results from Financial Investment -9 Net Liquidity (+) / Net Debt (-), 30 June ,196 Net Pension Obligation, 30 June ,690 Total Interest-Bearing Assets, 30 June Liquidity -1, Equity per Share (SEK)

22 SAAB 19 SEPTEMBER 2017 Stefan Lind VP and Group Treasurer Saab AB

23 23 GOVERNANCE POLICY FOR FUNDING Policy requirement: Free cash, together with committed unutilized credit facilities, shall always be higher than MSEK 4,000* Or the higher of: 10% of Group turnover Risk Weighted amount of all guarantees issued by banks with counter indemnity on Saab. * Adjusted for loans with maturity within 12 months

24 24 FREE CASH REQUIREMENT Saab should always have free cash adjusted for loans with maturity within 12 months together with unutilized committed credit facilities that shall never be less than; MSEK Highest of MSEK % of Groups turnover (28 631) Risk Weigthed Guarantee amount Present Free Cash & Facility - Liquid Assets Unutilized Committed Facility (RCF) Short Loans (duration < 12 months) Headroom

25 25 AVAILABLE FUNDING AND FUNDING STRATEGY The Saab group funding strategy is focused on minimizing the refinancing risk by a diversification of the funding sources as well as maturities; Available Funding YTD Full Year Revolving Credit Facility (RCF) Available Cash & Commited Facilities Receivable Sales Program Utilized Commercial Paper program (CP) Utilized Medium Term Note program (MTN) Utilized Schuldschein bilateral loans Utilized Unutilized funding programs Bank facilities strategy Revolving Credit Facilities Derivatives Guarantees Receivable Sales Bridge Financing Medium and long term funding strategy Commercial papers MTN loans Bilateral loans -Schuldschein Total

26 26 MATURITY PROFILE The maturity profile should be diversified over time to minimize refinancing risk. Issue of 5 year loan meets the funding strategy well; MSEK Maturity profile MTN = Medium Term Notes SSD = Schuldschein RCF = Revolving Credit Facility MTN SSD MSEK MTN SSD RCF Total

27 27 LONG-TERM FINANCIAL GOALS Focus on areas with strong market position INNOVATION PERFORMANCE MARKET Strengthen position in areas with growth possibilities Local partnerships Project execution Operational excellence Continuoulsy develop leaders and employees Further strengthen core areas Invest in research and development Diversity drives innovation 5% 10% >30% Organic sales growth averaging 5 per cent annually over a business cycle. Operating margin after depreciation and amortisation (EBIT) of at least 10 per cent annually over a business cycle. Equity/assets ratio of over 30 per cent.

28 28 OUTLOOK STATEMENT 2017 We estimate that sales growth in 2017 will be higher than Saab s long-term financial goal: annual organic sales growth of 5 per cent. We expect the operating margin, excluding material non-recurring items, to improve compared to 2016 and thus the company will take a step towards its financial goal: an operating margin of 10 per cent.

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