Saab Posts Lower-than-Expected Third-Quarter Profit
Defense and aerospace group Saab on Friday posted third-quarter pretax earnings short of forecasts and said it expected overall 2007 growth would be in line with last year.
Saab, which this week won a major order for its Gripen fighter jets from Thailand, said it earned pretax profit of 317 million Swedish crowns ($49.38 million) on sales of 4.81 billion crowns.
That was down 11 percent from a year earlier and below the mean forecast for earnings of 360 million in a Reuters poll.
"For 2007 we expect growth in line with 2006 and an operating margin including structural costs slightly higher than last year, assuming no negative effect from the recently announced Swedish defense budget cuts," the company said.
The stock was down 0.95 percent at 156.50 crowns.
Saab's margins eroded in the quarter, dropping to 6.6 percent from 8.7 percent in the year-earlier period and below a company target of 10 percent.
The firm said it would start an efficiency program to cut costs by an additional 1 billion crowns by the end of 2010. Saab said cuts in Sweden's military budget meant it would have to finance development more than before and also increase its international marketing.
"To create the necessary resources and sustain our 10 percent operating margin, we have launched an internal efficiency program. The aim is to improve the gross margin by generating annual savings of approximately 1 billion crowns by the end of 2010," the company said.
The company said the third quarter contained few major orders but order bookings totaled nearly 4 billion crowns, showing the company was able to win smaller- and medium-sized orders in all of its segments.