April 25 (Bloomberg) -- Saab AB Chief Executive Officer Hakan Buskhe said he’s confident the maker of the Gripen fighter will reach its financial targets and hopes to conclude orders for the delta-wing jet with Brazil and Malaysia this year.
“We offered a lease to Malaysia; we hope that will settle this year,” Buskhe said in a telephone interview today. “It’s more for a couple of dozen jets than for a handful.” While the Brazilian deal might not lead to order intake until the first quarter of 2015, Saab and the Brazilian government “have a common aim to finalize the contract this year,” he said.
Saab beat Boeing Co. last year to develop 36 fighters for Brazil’s air force in a deal worth $4.5 billion through 2023 following allegations the U.S. government spied on President Dilma Rousseff. It also received a serial production request from the Swedish government, sending order intake to a record while defense markets in Europe and the U.S. remained challenging. Saab offered an unspecified number of jets to Malaysia.
“Last year we had record order intake, and we expect this year to also be a good year,” Buskhe said. “I don’t expect another record level, but we will do good this year. We are very confident on the outlook for this year, and we are even more confident now.”
Saab reiterated today sales this year will about match last year’s 23.8 billion kronor, while the operating margin will slightly improve from the 5.7 percent of revenue achieved in 2013. The Stockholm-based company reported first-quarter pretax profit of 235 million kronor ($35.5 million), missing the average estimate of 272.3 million kroner in a Bloomberg survey of analysts. Sales declined 9.9 percent to 5.28 billion kronor, while net income fell 35 percent to 175 million kronor.
The stock rose 0.1 percent to 199.9 kronor as of 1:13 p.m. in Stockholm, giving the defense company a market value of 21.8 billion kronor.
Saab plans to deliver 500 million kronor in profit improvements by the end of 2014, after cutting about 600 jobs in Sweden last year and another 300 in the first quarter this year, the CEO reiterated today. The majority of cuts have been implemented, he said.
Buskhe said Linkoeping, Sweden-based Saab isn’t doing any business in Russia and has no plans to do so.
Saab said on April 14 it’s in talks to buy a marine defense unit from Essen, Germany-based ThyssenKrupp AG, which would put the submarine and warship production at Karlskrona in the south of the country back into the hands of a Swedish company after 15 years of German ownership. The parties are in talks to settle the transaction “as soon as possible,” Buskhe said.
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