©Reuters. FILE PHOTO: The Saab Technologies logo is displayed during the fifth day of the Dubai Air Show in Dubai, United Arab Emirates, November 21, 2019. REUTERS/Christopher Pike/File Photo
By Marie Mannes
STOCKHOLM (Reuters) – Swedish defense equipment maker Saab posted an 8 percent rise in fourth-quarter operating profit and raised growth targets as it continues to benefit from rising military spending by many nations after Russia’s invasion of Ukraine.
Profit rose to 1.42 billion Swedish crowns ($135.6 million). The company cited strong performance from its dynamic division that includes missile systems and land combat weapons, as well as its surveillance division that includes airborne early warning and naval combat systems.
For 2023-2027, it raised its organic sales growth target to around 15% from a previous target of 10%.
However, for this year Saab, known for being cautious in its guidance, has forecast organic sales growth of 12%-16%, much lower than the 22.6% recorded in 2023.
Saab shares rose 4% in Friday morning trading. They have more than tripled since Russia’s invasion of Ukraine.
To cope with the jump in demand, Saab has increased investment in its business. Last year it hired nearly 2,500 new employees and increased capital spending by more than 50%.
This helped push operating profit margin up to 8.8% from 9.5% during the quarter.
“We believe a further increase in investment is attractive and crucial, as this will support our long-term growth and value creation,” said CEO Micael Johansson.
In the last quarter, orders rose by 5% to 31.5 billion crowns. For 2023, Saab’s order book increased by 20 percent to 153 billion crowns.
It proposed a dividend for 2023 of 6.40 crowns compared to 5.30 a year ago.