ANNUAL REPORT 2015 VISION It Is a Human Right to Feel Safe
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SAABANNUAL REPORT 2015 ANNUAL REPORT 2015 VISION It is a human right to feel safe. MISSION To make people safe by pushing intellectual and technological boundaries. It is a basic human need and a human right to feel safe. Safety is subjected to many different types of threats, however. This includes military threats, terrorism, accidents or natural disasters. Saab develops innovative, cost-efficient high-tech systems to increase security for CONTENTS societies and individuals. At the same time there is a realisation throughout the business Saab in brief that some of the systems and solutions that contribute to greater security are not only Saab 2015 1 used in a state of peace, but can also be used Chairman's statement 2 in conflict. This means a large responsibility. CEO comment 4 By acting responsibly in everything we do, we Market 6 build the confidence of customers, employees and society and contribute to a safer world. Strategy 12 Goals 30 The Saab share 32 Administration report 34 Business areas 36 For more information on Saab’s sustain- Risks and risk management 44 ability work, see the separate Sustainabi- Corporate governance report 48 lity Report available at saabgroup.com Board of Directors and Auditors 54 Group Management 56 CALENDAR Financial statements and notes 60 Annual General Meeting 14 April 2016 Dividend motivation 113 Interim Report January – March 21 April 2016 Interim Report January – June 21 July 2016 Proposed disposition of earnings 114 Interim Report January – September 25 October 2016 Audit report 115 Year-end report January – December 15 February 2017 Shareholder information 117 The formal annual report comprises the pages 34–114. Certain figures have been rounded off, due to which tables and calculations do not always exactly add up. Multi-year overview 118 The Annual Report is published in Swedish and English. In the event of differences between the English translation and the Swedish original, the Swedish Annual Glossary 119 Report shall prevail. A printed copy of the annual report can be ordered from [email protected]. SAAB IN BRIEF ABOUT SAAB Saab supplies the global market with world-leading products, services and solutions for military defence and civil security. Saab has operations and customers on every continent. For more information on Saab’s business areas, see pages 36-41. 22% AERONAUTICS 10% INDUSTRIAL 11% PRODUCTS AND DYNAMICS SERVICES ORGANISATION Saab’s operating and management structure is divided into business % areas based on products and 19% 15 technologies. The figure to the left ELECTRONIC SUPPORT AND shows the business areas’ share DEFENCE SERVICES of Saab’s total sales in 2015. 23% SYSTEMS SECURITY AND DEFENCE SOLUTIONS* * The Security and Defence Solutions business area was dissolved as of 1 January 2016 for more information, see page 35. FIVE CORE AREAS Aeronautics Advanced Command and Sensors Underwater Development of weapon systems control systems Airborne surveillance systems advanced military Anti-tank weapons, Systems to control systems, air defence, The A26 submarine and civil aviation missiles and ammu- and co-ordinate surveillance and and autonomous technology, including nition as well as military operations surface-based air vehicles as well as the Gripen combat integrated command as well as traffic defence. underwater detection, aircraft system. and control systems management on land, weapon, self-protec- and network solutions. at sea and in the air. tion and communica- tion systems. For more information on Saab’s strategy, see pages 12–29. STRATEGY • Profitable growth: Effective project • Portfolio: Focus on core areas, Geographical execution, focused marketing invest- market-driven renewal, international distribution ments and winning new orders. focus and sustainable innovations. of Saab’s sales • Performance: Efficient, functional • People: Talent recruitment, skills 2015 processes, strong leadership, global development, increased diversity research and development. and performance-driven culture. 42 SWEDEN 20 18 ASIA 9 REST OF NORTH AMERICA EUROPE 2 AFRICA 6 LATIN AMERICA 3 AUSTRALIA, ETC ON LOCATION CLOSE TO CUSTOMERS Saab has a strong local presence in a number of key markets. They are divided into five market areas: Nordic & Baltic, Europe, Middle East & Africa, North America, Latin America and Asia Pacific. SAAB 2015 Saab reported strong growth and stable profitability in 2015. In addition, the company won a number of major orders for Gripen, A26 and GlobalEye. The focus now is on project execution and delivery. SELF-PROTECTION SYSTEM FOR INDIAN AIR SUPPORT AGREEMENT FOR SK60 FORCE’S HELICOPTER TRAINER AIRCRAFT Saab received follow-on orders for an integrated The Swedish Defence Materiel Administration electronic warfare self-protection system for (FMV) and Saab extended the support and mainte- installation on the Indian Army’s and Air Force’s nance agreement for the SK60 trainer aircraft. This Advanced Light Helicopter Dhruv. means that Saab will remain the principal supplier responsible for all required flight operations, main- SUBMARINE A26 TO SWEDEN tenance and provision of stand-by capacity for all In June, the Swedish Navy ordered the Type A26, SK60 aircraft used by the Swedish Armed Forces. the world’s most modern submarine. Deliveries will start in 2022 and be finalised in 2024. The A26 will AIRBORNE SURVEILLANCE SYSTEM be a unique, high-tech submarine with a proven In November, it was announced that the United modular design, which gives the platform a high Arab Emirates has ordered the Saab's new airborne Order bookings and sales level of availability at a low life-cycle cost. surveillance system, GlobalEye, to expand and MSEK enhance its airborne surveillance capabilities. 90,000 UK ORDERED GIRAFFE RADAR SYSTEM GlobalEye combines Saab's entirely new radar sys- 80,000 The UK Ministry of Defence has ordered additional tem Erieye ER (Extended Range) with Bombardier's 70,000 Giraffe AMB radar systems plus upgrades of existing advanced jet Global 6000. 60,000 British Giraffe systems and associated equipment. 50,000 DIVIDEND 40,000 GRIPEN ORDER FROM BRAZIL For 2015 the Board of Directors is proposing that In September, Saab received an order for the devel- the Annual General Meeting approve a dividend to 30,000 opment and production of 36 Gripen NG aircraft for shareholders of SEK 5.00 (4.75) per share, corres- 20,000 the Brazilian Air Force. In December, the contract ponding to 39 per cent (43) of net income. 10,000 with Brazil for operational capabilities for Gripen 0 11 12 13 14 15 also went into effect. Order bookings Sales Share of sales Financial highlights (MSEK) 2015 2014 2013 Order backlog at year-end 113,834 60,128 59,870 Sales 27,186 23,527 23,750 Operating income (EBIT) 1,900 1,659 1,345 Operating margin (EBIT), % 7.0 7.1 5.7 Net income 1,402 1,168 742 Earnings per share after dilution, SEK 12.79 10.78 6.79 Free cash flow -726 -1,094 -1,460 82% defence-related Dividend per share, SEK 5.00* 4.75 4.50 products and services Equity/assets ratio, % 36.8 38.5 44.0 18% civil products Internally funded R&D, share of sales, % 6.5 5.7 5.6 and services Number of employees at year-end 14,685 14,716 14,140 * Board of Directors' Proposal 2015. Organic sales growth Operating margin Equity/assets ratio 11% 7% 37% Goal: Goal: Goal: 5 per cent per year over At least 10 per cent per year Exceeding 30 per cent a business cycle over a business cycle SAAB ANNUAL REPORT 2015 – 1 CHAIRMAN’S STATEMENT 2015 – A SUCCESSFUL YEAR FOR SAAB My fellow shareholders and others with an interest in Saab, 2015 was a successful year. The company won several important orders, including for the Type A26 submarine to Sweden, the Gripen combat aircraft to Brazil and a new airborne surveillance system to the United Arab Emirates. These successes, combined with the hard work that was done during the year, give the company a strong foundation to further build upon. The security situation in our part of the world deteriorated in 2015 and uncertainty increased. Hundreds of thousands of people were forced to flee their homes to neighbouring countries and to Europe. Terrorism remained a real and serious threat in many parts of the world, including Europe. At the same time, we feel a sense of gratitude as many people and governments joined together to help those in need. The geopolitical turmoil naturally has to be addressed in different ways. It has clearly placed the focus on security needs and each nation’s right to defend itself. Many countries are now strengthening their national defences and evaluating opportunities to cooperate across borders. In the Nordic region, we have seen how countries have become more closely aligned on defence policy, at the same time that France and the UK have announced their intention to raise defence spending in coming years. This is happening while parts of the world are still recovering after the financial crisis in 2008 and 2009. Economic resources are limited. One of Saab’s competitive advantages is the ability to develop and deliver products that stand apart just as much for One example is the Clean Sky Smart Fixed Wing their cost efficiency as their exceptional functional- Aircraft (SFWA). In another technologically ity and innovative technology. This strength is grow- advanced project that Saab has participated in since ing in importance to existing and potential partners. 2008, a team of design engineers, designers, com- posite engineers and aerodynamics engineers have R&D INVESTMENTS ARE ACHIEVING SUCCESS developed a new way to design and manufacture Saab invests heavily in research in order to develop aircraft wings in carbon fibre reinforced composites. world-leading technologies. Despite the company’s The fixed wing, which was delivered in 2015, greatly relatively small size, it can offer a broad and competi- reduces fuel consumption, and with it environ- tive product portfolio thanks to smart thinking, mental impacts.