Saab Q1'26 preview: The upcycle is intact. Now comes delivery

Saab will publish its Q1 interim report on Thursday, April 23, 2026. We expect a strong sequential order intake on an unchanged demand backdrop. Revenue should continue to grow at a solid pace, supported by robust backlog conversion. We also expect absolute profitability to increase year-over-year, though the operating margin should come in slightly below the comparison period due to the ongoing capacity ramp-up and internal work-in-progress. Ahead of the report, the key focus remains whether Saab can sustain order momentum and maintain execution quality as the revenue base expands.

Demand unchanged since our post-Q4 2025 update

Underlying demand remains strong. While Middle East tensions continue to dominate headlines, our view of European defense market fundamentals is unchanged. If anything, the geopolitical noise redirects attention rather than demand, and our view is that the structural rearmament case across Europe remains intact. Against that backdrop, we expect Saab's Q1 order intake to reach ~25 BSEK, up sequentially from ~19 BSEK in Q1’25 and ~18 BSEK in Q1’24. Order timing remains inherently uncertain, but our view of the underlying trajectory is not.

Backlog conversion to drive double-digit revenue growth

We estimate that Saab's Q1 revenue will grow by ~18% year-over-year to 18.6 BSEK in the first quarter. This growth is underpinned by the scale of the backlog (~275 BSEK) entering 2026 and Saab’s demonstrated ability to execute across simultaneous large-scale programs. We believe the growth will be broad-based across the group, though Dynamics and Surveillance should again be the primary growth engines as they continue to benefit most directly from the European rearmament cycle and capacity expansion. We expect Aeronautics to grow in the high teens, driven by the Gripen E/F production schedule for Sweden, Brazil, Colombia, and Thailand. Meanwhile, we expect Kockums revenue in the mid-teens and expect it to remain lumpy given the nature of the business, but A26 is now deeper into production, which, we feel, could support a steadier quarterly revenue profile than in its earlier development-heavy phase.

Margins influenced by ramp-up and project mix

We forecast an adjusted Q1 EBIT of ~1.6 BSEK, corresponding to an operating margin of 8.4%. This represents a slight decline from 9.2% in the comparison period. In our view, the near-term margin profile is impacted by significant capacity investments and the associated ramp-up costs as Saab prepares for higher delivery volumes in 2026. We also expect project mix and ongoing investments in next-generation capabilities to keep margin expansion gradual rather than sharp, with the group grinding toward our long-term terminal EBIT assumption of 12%. We expect Dynamics and Surveillance to remain the strongest contributor to group profitability in absolute terms, supported by high utilization and operating leverage from higher volumes.

Focus on the new Naval structure and order momentum

Following the recent reorganization, the new Naval business area, which combines Kockums with Surveillance’s Naval Combat Systems from April 1, is in our view the most strategically important topic for the Q1 call. That is despite the fact that it has no financial impact on Q1. The central question is whether the integrated structure sharpens Saab's competitive positioning in the ongoing frigate procurement, a program valued at ~40-60 BSEK and among the largest defense tenders in Europe. The recently signed cooperation agreements with Polish partners are encouraging, but, in our view, the more important read-through will be management’s commentary on how Saab is positioning the new business area in that process.

Regarding guidance, Saab does not usually provide specific annual revenue or EBIT figures, so our focus remains on the upgraded 2023-27 medium-term revenue growth target (of 22% CAGR) and whether the company still appears on track to deliver against it. We continue to view the demand environment as structurally strong, supported by the higher threat perception across Europe and globally. For Saab, the main constraint still appears to be execution and supply chain throughput rather than a lack of underlying demand. Any commentary on operational cash flow will also be vital, as the company targets a 60% conversion rate over the five-year period despite the current working capital-intensive growth phase.