Saab Earnings: Higher Deliveries, Strong Mix and Execution Drive 41% EBIT Growth

Key Morningstar Metrics for Saab

• Fair Value Estimate
  : SEK 610
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : Medium

What We Thought of Saab’s Earnings

Saab SAAB B’s second-quarter sales rose 29% year on year to SEK 25.5 billion, while EBIT increased 41% to SEK 2.79 billion and margin expanded to 11.0% from 10.0%. Orders rose 141% to SEK 68.4 billion, including SEK 47 billion for Polish submarines.

Why it matters: Shares are up more than 6% as the quarter provided evidence of the execution investors had been waiting for: previous capacity investments are translating into higher deliveries, stronger margins, and improving cash flow.

• The group margin increase was driven by a higher contribution from dynamics and surveillance. Surveillance’s margin rose to 11.5% on radar volumes; aeronautics reached 5.8% despite the pilot training system T-7A under absorption. Dynamics eased to 19.6% on mix. Naval fell to 4.3% on a SEK 200 million write-off, but was around 9% excluding it.
• Operational cash flow improved to broadly breakeven in the second quarter, reaching SEK 1.0 billion in the first half from negative SEK 1.1 billion in 2025. Investment rose by SEK 1.1 billion to SEK 4.4 billion as Saab expanded missile, radar, Gripen fighter aircraft, GlobalEye, and submarine capacity.

The bottom line: We maintain our SEK 610 fair value estimate. The quarter reinforces our view that Saab can convert its record backlog into growth while expanding margins.

• Over the next two to three years, the biggest driver is the conversion of the near-term backlog through dynamics and surveillance capacity. These divisions combine the strongest volume growth with the best margins.
• Beyond this, growth will be supported by Ukraine’s SEK 24.6 billion Gripen order, Polish submarines, and the conversion of potential Canada and NATO GlobalEye contracts. GlobalEye and radar scale offer the clearest earnings upside, while further Ukraine Gripen batches provide the largest long-term revenue opportunity.