Saab Q4’25 flash comment: Record orders, targets upgraded

Source: Inderes & Infront consensus (30.01.26, 9 estimates)

The quarter was the best that Saab has ever delivered, with record order bookings, and group revenue of 27.7 BSEK, up 33% year over year, much above our estimate. Adjusted EBIT was 2.9 BSEK, corresponding to a 10.6% margin, beating our estimate too. Growth and profitability were driven mainly by volumes and project execution in Surveillance and Dynamics. EPS came in at SEK 4.73, while we had expected SEK 3.73.

Demand Shows No Mercy

Order bookings in the quarter were ~100 BSEK, implying a book-to-bill of 3.6x, meaning orders covered ~361% of quarterly sales and that the backlog continues to grow. Meanwhile, we were expecting an order intake of ~90 BSEK. Backlog ended the year at a record high 274.5 BSEK, up 47% compared to year-end 2024, which equals ~3.5 years of sales based on last twelve months' revenue. The quarter’s order bookings skewed toward large, long-cycle orders in Kockums, Surveillance, and Aeronautics. Key wins included France’s GlobalEye order of ~12.3 BSEK, Colombia’s Gripen order of ~35 BSEK, and Sweden’s extension for the final A26 production phase of ~9.6 BSEK. We view these as primarily medium- to long-term revenue and earnings drivers, while also improving visibility and reducing downside risk to a meaningful share of current market expectations.

All the Divisions Are Performing Outstandingly

Dynamics and Surveillance led the quarter with very strong performance. Dynamics delivered revenue of ~8.4 BSEK, up 50% year over year, while EBIT was ~1.4 BSEK, implying a 16.9% margin. Sales growth was driven by high deliveries, while the margin decline was mainly explained by project mix. Order bookings in Dynamics amounted to ~10.8 BSEK, up 110% year over year. Meanwhile, Surveillance posted revenue of ~10 BSEK, up 53% year over year. Reported EBIT was ~1.5 BSEK for a 14.9% margin, including a 336 MSEK capital gain from a divestment. Adjusted EBIT was ~1.1 BSEK for an 11.5% margin. Sales growth was supported by solid project execution and higher deliveries, including Giraffe 1X radars. Order bookings came in strong at ~33 BSEK.

Aeronautics reported revenue of ~5.7 BSEK, up 3% year over year, with EBIT of 349 MSEK and a 6.1% margin. EBIT grew 38% supported by good project execution, partly offset by T-7A program start-up costs and higher R&D amortization, which continues to burden the operations. On the positive end, order bookings were ~45 BSEK, driven by the Colombia Gripen E/F order and Gripen maintenance orders.

Kockums revenue was ~3.1 BSEK, up 20% year-over-year, with EBIT of 253 MSEK and an ~8.1% margin. Sales increased on robust project execution, while the margin decreased from a high-level last year due to project mix. Order bookings were also strong at ~10.9 BSEK, driven by the A26 completion order from Sweden.

Finally, Combitech delivered revenue of ~1.4 BSEK, up 10% year-over-year, with EBIT of 162 MSEK and an 11.3% margin, which in our view was very strong.

For full year 2025, the report looked strong on all important points, order bookings were ~168 BSEK, up 74% year-on-year, compared to our expectation of ~159 BSEK. Revenue was ~79 BSEK, up 24% year on year, above our ~76 BSEK estimate. Meanwhile, adjusted EBIT was ~7.7 BSEK, equivalent to a strong adjusted EBIT margin of 9.8%, compared to our ~7.4 BSEK expectation.

Cash Flow Showed Resilience

Operational cash flow in the quarter was a very strong ~6.3 BSEK compared to ~3.6 BSEK last year, supported by customer milestone payments and working capital release. For 2025, Saab closes the year with positive operational cash flow of ~5.3 BSEK, in line with the management’s communication in Q3.

Working capital was a net source of cash in the quarter, mainly driven by contract liabilities and milestone advances. However, there was some offset by contract assets, inventories, and receivables. Net liquidity was ~4 BSEK at year end 2025, up from ~2.2 BSEK. Capital expenditure in the quarter was ~2.3 BSEK as Saab continued investing in capacity to support backlog conversion.

Guidance Provides Clarity on Performance for the Coming Years

One thing that struck us was that the company did not provide an explicit outlook for 2026. Instead, it upgraded the 2023-27 medium-term targets to ~22% organic sales CAGR from 18%, while reiterating that EBIT growth should be higher than organic sales growth and that cumulative cash conversion should be above 60%. Additionally, the Board proposed a dividend for 2025 of SEK 2.40 per share, lower than our 2.67 per share expectation.

Following a much better-than-expected Q4 report and the target upgrade, we see upward pressure on our near-term revenue and earnings assumptions, but the lack of a 2026 outlook keeps capacity as a key aspect to watch for in our view.