Saab Profit Drops as Gripen Jet Export Deals Await Approvals

Saab AB (SAABB) said profit fell 26 percent last year amid sustained European and U.S. budget pressure as the maker of Gripen combat jets waits for export deals from Switzerland and Brazil to be finalized.

Earnings before interest, taxes, depreciation, and amortization fell 26 percent to 2.4 billion Swedish kronor ($370 million) from 3.2 billion kronor a year earlier, the Stockholm-based company said in a statement.

“Market conditions are challenging and the competition fierce,” Chief Executive Officer Hakan Buskhe said.

Saab, which this year expects to complete a deal with Brazil over the sale of 36 Gripen NG, or next generation models, on top of 60 single-seat jets that Sweden is buying, faces a May 18 referendum in Switzerland over the sale of 22 of the jets. The company is cutting jobs and reducing product offerings to compensate for cuts in defense spending in core markets.

Interest in its Gripen yet “has never been greater,” Buskhe said. Order bookings more than doubled last year on the strength of a Swedish government deal for single-seat Gripen E planes and non-fighter orders from Thailand and Brazil.

Sales this year will be little changed from the 23.7 billion kronor recorded in 2013 with operating performance improving slightly from the 6.6 percent of last year.

Earnings were hurt by the writedown of the value of its stake in India’s Pipavav Defence (PIPV) and Offshore Engineering Co. naval equipment provider reflecting the unit’s 46 percent share price decline and a weak rupi. The total impact was 133 million kronor last year, Saab said.

To contact the reporter on this story: Robert Wall in London at rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.