Interim Report January-September 1999

INTERIM REPORT January - September 1999 *Sales increased 27 % to SEK 6,733 m. (5,288) *Operating income increased to SEK 725 m. (400) *Net income amounted to SEK 640 m. (427) and earnings per share to SEK 6.01 (4.01). *The outlook for the full year remains encouraging. Comment by the President The third quarter of 1999 was another good quarter with continued favorable development of operations in all business areas. The phase-out of regional aircraft production has proceeded considerably better than planned. I expect that both sales and operating income for the whole year will also be considerably better than last year. In addition, there is the positive effect of the surplus funds from SPP. On 15 September, an important milestone was passed when South Africa decided to purchase 28 Gripen aircraft including equipment, training, etc., the first nation outside Sweden to choose Gripen. The agreement is currently under final negotiation and is intended to form part of a larger agreement that includes 24 Hawk aircraft from British Aerospace. Intensive activities in export markets are also being conducted by other business areas, and during the quarter several co-operation agreements have been signed with foreign partners. Another important event was the first delivery to Aérospatiale Matra intended for the Airbus A340-500/600. Our acquisitions have strengthened us in areas that we consider to be interesting growth areas. This includes maintenance, modification and flight services, as well as signature management technology which is part of information warfare. At the same time, we have continued to streamline Combitech, which has increased the focus on core business and improved profitability. We are continuing to invest substantially in research and development on the cutting edge of technology. This is an important reason why the Group is able to achieve a high level of profitability in supplying advanced products and systems based on sophisticated information technology. Applications include military and commercial aviation, defense electronics, industrial electronics and information technology, missile systems as well as space applications. Our intention is to identify further growth potentials in these areas that can be achieved both organically and/or through acquisitions. Business Areas Today, Saab consists of five business areas: Military Aerospace, Space, Training Systems, Commercial Aircraft and Combitech. Regional Aircraft is in the process of being phased out. Military Aerospace. By the end of September, Business unit Gripen had delivered 12 (11) Gripen aircraft, making a total of 77 deliveries out of the 204 ordered by the Defence Materiel Administration, FMV. During the third quarter, Dynamics, with operations comprising high technology products for guided weapons and optronic systems, signed an agreement with German BGT on export collaboration concerning the RBS15 anti-ship missile. Avionics, which develops and manufactures display and surveillance systems as well as electronic warfare systems, had good order bookings during the third quarter. Order bookings for Military Aerospace during the third quarter totaled SEK 614 m. and included electronic warfare systems and jamming equipment for Avionics. Space develops and manufactures onboard computers, antennas and other equipment for the space industry. Order bookings continued to be good and amounted to SEK 170 m. during the third quarter, including a computerised sensor for use on board the new American satellite system for weather monitoring. Training Systems leads the world in simulation systems based on laser technology for direct fire weapons. Order bookings during the third quarter amounted to SEK 86 m. and consisted mainly of further orders from the German and American armies. Commercial Aircraft consists of three business units, Collaborative Programs, Customer Support (Saab Aircraft AB) and Saab Aircraft Leasing. The sale of four aircraft during the third quarter and the expiry during the year of leasing contracts for two aircraft, now returned to the investor, reduced the Saab Aircraft Leasing portfolio to 310 Saab 340 and Saab 2000 at the end of the period, compared with 316 aircraft at the beginning of the year. By the end of the period, eleven aircraft remained uncontracted with airlines, compared with eight at the beginning of the year. Order bookings for Commercial Aircraft during the third quarter amounted to SEK 181 m. and mainly concerned additional orders from Airbus and spare parts for the Saab 340 and Saab 2000. Combitech's operations comprise products in commercial high technology niches. The group now consists of five companies since Combitech Electronics was divested to the Norwegian company Kitron during the third quarter. The largest company in the business area, Saab Marine Electronics, is continuing to develop favorably with increasing market shares in both the marine and oil terminal markets. Order bookings for Combitech during the third quarter amounted to SEK 247 m. Regional Aircraft delivered the last two regional aircraft, two Saab 340 to Japan Air Commuter, during the third quarter. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/11/09/19991109BIT00240/bit0001.doc http://www.bit.se/bitonline/1999/11/09/19991109BIT00240/bit0002.pdf

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