Feb. 15 (Bloomberg) -- Saab AB Chief Executive Officer Hakan Buskhe said the Swedish maker of Gripen combat jets will book the first production order for a new version this year after winning a 47.2 billion Swedish kronor ($7.47 billion) development order.
Sweden will sign a deal to convert 60 existing Gripens to the more capable E-model by year-end for first deliveries in 2018, Buskhe said in an interview. A final decision in Switzerland to sign for 22 jets is expected next year.
Saab is pushing Gripen in a heavily contested international market against rival offerings from companies such as Boeing Co., Lockheed Martin Corp. and European Aeronautic, Defence & Space Co. With defense spending declining in the U.S. and Europe, manufacturers are turning overseas for growth.
“I foresee an even tougher market,” Buskhe said as the company reported full-year results. “We are well positioned to meet these conditions with our research and development efforts.”
Buskhe said additional Gripen sales may be agreed this year without naming potential buyers. Talks with the Czech Republic to extend the lease of existing jets continue, he said.
Saab rose as much as 6.1 percent and traded at 143.70 kronor at 9:44 a.m. in Stockholm, the highest since Feb. 10, 2012, giving the company a market value of 15.1 billion Swedish kronor.
Saab posted a 31 percent decline in net income to 1.5 billion Swedish kronor last year after a disposal, the company said today in a statement. Sales rose 2 percent to 24 billion Swedish kronor, compared with the median estimate among analysts surveyed by Bloomberg of 23 billion.
The company had a net cash outflow of 396 million kronor after saying last year it expected to remain cash positive. Additional spending on preparing development work of the Gripen E and acquisitions, such as the purchase of Dutch software company HITT, led to a cash drain in the fourth-quarter, Bushke said.
Saab will seek to prune its product portfolio and drop activities with little growth prospects while continuing to pursue acquisitions, Buskhe said. The company agreed 30 transactions in the past two years, a pace the CEO said may continue.
Buskhe remains open to re-entering the commercial-aircraft market from which Saab has been absent for more than a decade. The company would work with an industrial partner to build on its industrial expertise with the Saab 2000 airliner, he said.
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