Swedish defence company Saab (STO: SAAB B) has reported its strongest first quarter on record, buoyed by growing European military spending and strong operational execution across all divisions.
In the three months to 31 March 2025, sales rose 11% year-on-year to SEK 15.79bn (from SEK 14.19bn), marking Saab’s highest-ever first-quarter revenue. Organic sales growth was also strong at 11%, supported by high project activity and backlog execution across all business areas.
Order intake climbed 4% to SEK 19.14bn, including notable wins such as a SEK 2.1bn contract with Latvia for the RBS 70 NG air defence system and a SEK 1.7bn cruise missile upgrade order from Germany. The company’s order backlog reached SEK 189.2bn, up from SEK 158.4bn a year earlier.
Profitability strengthens amid rising volumes
Saab’s earnings before interest, tax, depreciation and amortisation (EBITDA) rose 18% to SEK 2.14bn, lifting the EBITDA margin to 13.6% (from 12.8%). Operating income (EBIT) increased 22% to SEK 1.45bn, improving the EBIT margin to 9.2% (from 8.4%).
Net income surged 63% to SEK 1.28bn compared to SEK 784m a year earlier, and earnings per share rose 64% to SEK 2.35.
Operational cash flow showed sharp improvement, reaching SEK -14m compared to a SEK -1.998bn outflow in the first quarter of 2024, despite ongoing investment in capacity expansion.
The company’s net liquidity position was stable at SEK 2.20bn, slightly down from SEK 2.21bn at year-end.
CEO: Market reality transforming defence sector
Chief executive Micael Johansson said Saab’s strong start to 2025 reflected a “dynamic market reality” driven by heightened geopolitical risks and a collective European push to build up defence capabilities.
“Rapid changes in the global geopolitical climate have continued to underscore the urgent need for a strong European defence industry,” Johansson said. He added that although defence budgets are growing, “the transition from political decisions to defence acquisition will take time.”
Johansson highlighted that Saab is investing heavily in production capacity to meet surging demand, noting expansions in Dynamics and new facilities in Finland for electronic warfare sensors.
Saab reiterated its 2025 outlook, forecasting organic sales growth between 12–16% and operating income growth faster than sales.
Broader market context and challenges
The company acknowledged that uncertainties—including US President Donald Trump’s tariff policies—could impact supply chains and customer timelines. Still, Johansson said Saab remained confident in its growth trajectory, emphasising strategic investments and a focus on customer deliveries.
European defence spending has been rising since Russia’s 2022 invasion of Ukraine, with further pressure following Trump’s calls for NATO countries to increase military budgets to 5% of GDP.
Saab’s diversified portfolio—including the Gripen fighter jet, air defence systems, combat weapons, and submarines—positioned it to benefit from these structural trends.
