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Gripen maker Saab eyes higher pandemic risks as Q3 core profit drops

Credit: REUTERS/CHRISTOPHER PIKE

Shares in Swedish defence company Saab fell on Monday after it posted falling third-quarter profits and said it saw increased risks due to the coronavirus pandemic.

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STOCKHOLM, Oct 19 (Reuters) - Shares in Swedish defence company Saab SAABb.ST fell on Monday after it posted falling third-quarter profits and said it saw increased risks due to the coronavirus pandemic.

The maker of the Gripen fighter jet said the slow economic recovery from the pandemic was primarily affecting subcontractors and material supply for the Gripen E/F programme.

Saab, which continued to say it could not currently give a financial outlook for the year, said it had managed increased risks by adjusting project estimates, affecting operating income negatively by 1.1 billion crowns in the quarter.

The firm swung to an operating loss (EBIT) of 663 million crowns ($75.1 million), with adjusted operating profit at 445 million crowns in the quarter, from a 518 million profit a year ago. Order bookings increased 8% to 10.15 billion crowns.

"Due to the ongoing pandemic and drawn-out global recovery, Saab now sees an increased risk related to the effects of Covid-19," the company said in the report.

Saab said that the risks in the supply chain for other business areas than Aeronautics had also increased, adding it had allocated an additional 400 million crowns for adjustments in other project estimates.

The firm stood by its forecast of a high delivery rate in the fourth quarter and positive operational cash flow for this year. It also said it remained committed to its long-term financial goals for growth and profitability.

Saab's previous full-year outlook, which it dropped in April, was for organic sales growth of 5% in 2020 and an improved operating margin compared to 2019.

Saab shares, on track for their worst day since April and at the bottom of STOXX 600 .STOXX, were down 10.8% at 0752 GMT.

The firm, which had cancelled its proposed dividend for 2019 in March, was originally due to post third-quarter earnings on Oct. 21.

($1 = 8.8316 Swedish crowns)

(Reporting by Helena Soderpalm; editing by Niklas Pollard and Simon Johnson)

((helena.soderpalm@thomsonreuters.com; +46 8 700 10 15; Reuters Messaging: helena.soderpalm.reuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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