Analyst Comment

Saab Q1'26 flash comment: Strong delivery capability boosted earnings and margin

Summary

Saab's Q1 report exceeded expectations for revenue and EBIT, with revenue reaching approximately 19 BSEK and EBIT at 1.9 BSEK, surpassing Inderes' estimates of 18.5 BSEK and 1.6 BSEK, respectively.
Order intake was significantly below expectations at around 18 BSEK, due to a lack of large projects, although medium-sized orders showed strong growth.
Organic growth was robust at 23.6%, driven by strong performance across all business areas, particularly in the Surveillance unit, leading to an EBIT margin of 10.0%.
Management emphasized the company's strong delivery capability and ongoing investments in capacity, suggesting upward pressure on profitability forecasts despite the volatility in order timing.

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Group estimates	Q1'26	Q1'26	Q1'26e	Q1'26e	Consensus			Difference (%)	2026e
MSEK / SEK	Comparison	Actualized	Inderes	Consensus	Low		High	Actual vs. Inderes	Inderes
Revenue	15 792	19 164	18 568	19 451	18 285	-	20 812	3.2%	95 849
EBIT (adj.)	1 454	1 920	1 561	1714	1 557	-	1 900	23.0%	10 150
Net income	1277	1 437	1232	1314	1 238	-	1 515	16.6%	7 940
EPS (adj.)	2.34	2.65	2.28	2.42	2.27	-	2.79	16.2%	14.61
Order intake	19 144	18 243	25 046	18 491	11 168	-	25 046	-27.2%	130 235

Revenue growth-%	11.3%	21.4%	17.6%	23.2%	15.8%	-	31.8%	-3.8 p.p.	21.1%
EBIT-% (adj.)	9.2%	10.0%	8.4%	8.8%	8.5%	-	9.1%	+1.6 p.p.	10.6%

Source: Inderes & Modular Finance consensus (20.04.26, 10 estimates)

Saab's Q1 report showed strong operational execution, as the company clearly exceeded our expectations for both revenue and EBIT. Although a lack of large projects left the quarter's order intake significantly below our estimate, the unwinding of the order backlog supported stronger-than-expected organic growth and profitability. Despite the volatility associated with order timing, the company's delivery capability is on a strong footing, which we believe creates upward pressure, particularly on our short-term profitability forecasts.

Delay in large orders left order intake soft

The quarter's order intake decreased slightly from the comparison period, settling at ~18 BSEK, which was significantly below our 25 BSEK estimate. The company reported strong growth in medium-sized orders, but the low number of large orders in the quarter explains the deviation from our expectations. As we have previously stated, the timing of orders in the defense industry is inherently uncertain and causes volatility between quarters.

Order backlog unwinding boosted growth and profitability

Revenue growth accelerated more strongly than we expected as the company successfully converted its strong order backlog, with revenue rising to ~19 BSEK, mildly exceeding our ~18.5 BSEK estimate. Organic growth of 23.6% was supported by double-digit growth across all business areas, and the company highlighted particularly strong performance in the Surveillance unit.

The strength in revenue directly translated to the bottom line, with EBIT of ~1.9 BSEK clearly exceeding our ~1.6 BSEK expectation. We had anticipated the EBIT margin to decrease to 8.4% due to capacity investments and ramp-up costs, but the margin reached 10.0%, even surpassing the comparison period's level (9.2%). We believe that higher delivery volumes supported operating leverage and mitigated cost pressures from the ongoing capacity ramp-up. EPS of 2.65 SEK (Q1'25: 2.35 SEK) also clearly exceeded our 2.28 SEK estimate. In addition, operational cash flow significantly strengthened to 1,017 MSEK from a negative level in the comparison period (-14 MSEK), indicating improved capital management during the current growth phase.

Management emphasizes delivery capability, upward pressure on forecasts

Saab typically does not provide precise numerical guidance for the current year in connection with interim reports. CEO Johansson stated that the company continues to "develop future capabilities and invest in capacity while strengthening our ability to deliver products to customers in the short term." This supports our view that supply chain throughput is currently the most significant constraint on growth. We expect the report to create upward pressure, at least slightly so, particularly on our profitability forecasts for the current year due to strong operating leverage, although the soft order intake reminds us of the risks associated with timing.

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Saab is active in the defense and aerospace industry and focuses on the development, manufacture and distribution of defense and security systems. The company's products include fighter aircraft, radar and surveillance systems. The operations are global with a primary presence in Europe, North America and Asia. Saab was founded in 1937 and is headquartered in Stockholm.

Key Estimate Figures06.02.

	2025	26e	27e
Revenue	79,146.0	95,849.2	113,892.0
growth-%	24.1 %	21.1 %	18.8 %
EBIT (adj.)	7,961.0	10,150.4	12,303.3
EBIT-% (adj.)	10.1 %	10.6 %	10.8 %
EPS (adj.)	11.48	14.68	17.71
Dividend	2.40	2.94	3.54
Dividend %	0.4 %	0.5 %	0.6 %
P/E (adj.)	46.8	38.4	31.8
EV/EBITDA	25.6	22.6	19.2