Saab Elevates 48% Quarterly Profit
Saab AB (SAAB-B.SK), Swedish defense and aerospace company, said last Friday that its net profit rose 48% in the second quarter. Accordingly, the increase is driven by robust results from its defense and security solutions, and systems and product divisions.
Maker of the Gripen fighter jet and parts for Boeing Co. and Airbus aircraft, the Swedish company claimed that net profit climbed to 434 million Swedish kronor or $65.37 million from SEK293 million from last year.
According to Market Watch, results were above analyst expectations. Four Dow Jones analysts had expected that net profit will jump to SEK355 million.
Saab is not anymore related to Saab automobile, which is owned by General Motors Corp. But Saab automobile still manufactures Saab axle.
The company said that revenue for the second quarter climbed from SEK5.15 billion to SEK5.94 billion in the same period last year, beating the SEK5.73 billion average analyst estimate. For the second quarter, order bookings totaled SEK2.95 billion as compared with SEK11.43 billion. Due to the year-earlier figures that included an order from Pakistan in the second quarter of 2006 for an airborne surveillance system worth around SEK7 billion, the decrease was incurred.
At SEK630 million operating profit as compared with SEK404 million in the year-earlier period, analyst expectation of SEK528 million was exceeded.
Saab repeated its forecast for the full year, claiming that it anticipates growth to be in line with that of 2006 and the operating margin including structural costs to be a bit higher.
Mats Liss, a Swedbank analyst said that although the order book was somewhat on the negative side, net profit and margins were good. Nevertheless, he said that the orders vary a lot between quarters and that the prospect seems positive. The analyst has a buy recommendation on the share.
Since the year started, shares in Saab have fallen around 14 percent and it is pulled by the inception of an investigation in February by Swedish prosecutors into bribery allegations surrounding the lease of 14 Gripen fighters to the Czech Republic in 2004.
After allegations were uttered in a documentary on Swedish public television, the prosecution was initiated. The journalists also commented in a later program that the bribes had been used to help deals in Hungary and South Africa.
At 0706 GMT, Saab shares were 3 percent higher at SEK187, surmounting a broader higher Nordic market.
Saab said that the sales for Defense and Security Solutions jumped from SEK1.93 billion to SEK2.26 billion in the second quarter, and it claims it is mainly due to the hiked scope of the new business unit Saab Surveillance Systems.
Sales for Systems and Products rose from SEK1.88 billion to SEK2.42 billion, primarily as a result of the buying of Saab Microwave Systems on Sept. 1, 2006.
Second-quarter sales for the aeronautics unit rose from SEK1.53 billion a year earlier to SEK1.62 billion.
About the Author
Michelle Crimson holds a degree in business administration. She is currently working as an editor in New Orleans, Louisiana. This 32 year old mother of two is also a car racing fanatic.
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