Swedish defense company serve A surge in demand for military equipment led the fighter jet maker to another record backlog for the quarter, and second-quarter profits beat expectations.
New orders were worth SEK 68.4 billion ($7.1 billion) in the quarter ended June, higher than FactSet’s estimate of SEK 57.1 billion, which includes 47 billion SEK for Polish submarine contracts.
The total backlog amounted to 317.7 billion crowns, up from 197.6 billion crowns in the same period last year, marking the fifth consecutive quarter of increase in backlog.
This comes as European governments increase defense spending and order more books from companies in the region in response to the growing threat from Russia and the invasion of Ukraine.
US President Donald Trump’s attempts to shift responsibility for Europe’s defense to the region’s own governments and his threat to withdraw troops from the continent have accelerated this urgency.
“We operate in a market with structurally growing demand and remain focused on expanding our production capacity, delivering to our customers and evolving new capabilities,” Saab CEO Mikael Johansson said in a statement.
Investors are increasingly focusing on a company’s ability to execute and results, not just order volume growth.
Revenue was 25.5 billion crowns, exceeding FactSet’s forecast of 23.9 billion crowns, and operating profit (EBIT) was 2.8 billion crowns, compared to the forecast of 2.4 billion crowns.
Saab’s products range from Gripen jets and submarines to missiles and advanced electronics, and orders have increased sharply since Russia’s full-scale invasion of Ukraine in early 2022.
Earlier this month, NATO Secretary-General Mark Rutte said the alliance would order up to 10 reconnaissance aircraft from Saab, and the contract could be worth nearly $5 billion based on the price of the Global Eye aircraft.
Despite a growing order book, strong sales and improving profitability, Saab stock, like many of its peers, has taken a hit in recent months, leaving investors wondering whether valuations are outpacing the industry’s ability to deliver.
European defense stocks have fallen this year.
While defense spending remains unequal among NATO members in Europe, most countries have made progress in increasing the means available to fund their military forces.
Sweden joined NATO for the first time in 2024, citing increasing Russian aggression and a changing geopolitical situation. According to SIPRI data, Saab’s home country increased defense spending as a percentage of GDP in 2021 from 1.2% to 2.5%.
