SAAB PRESENTATION TO DEBT INVESTORS - Saab … · SAAB PRESENTATION TO DEBT INVESTORS ... Head of...
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SAAB
PRESENTATION TODEBT INVESTORS
19 SEPTEMBER 2017
Magnus Örnberg, EVP and CFOSaab AB
AGENDA
2
1. Transaction overview
2. Overview of Saab
3. Market & Q2 financial update
• Sales of SEK 30,130m LTM Q2 2017
• Total assets of SEK 40,546m in Q22017
• EBITDA of SEK 2,981m LTM Q2 2017
TRANSACTION OVERVIEW
3
• Tender offer for December 2018 FRN (SEK 950m) and FXD(SEK 450m)
• New 5 year issue subject to market conditions
• Rationale behind transaction‒ Prudent risk management and refinance over 1 year prior
to maturity‒ Financial flexibility and secure long-term funding
AN OVERVIEW OF SAAB (2016)
• World-leading high-tech solutions, products andservices for military defence and civil security
• Sales SEK 28.6 billion and order backlogSEK 107 billion
• 15,465 employees, local presence in 34 countries andcustomers in 100 countries worldwide
• B-share listed on Nasdaq Stockholm’s Large Cap
• Approx. 34,000 shareholders, Investor AB mainshareholder with 30 percent of capital
4
100CUSTOMER COUNTRIES
% 46
20
16
88 2
Air
Land
Naval
Security
Commercial aeronautics
Other
AT THE FOREFRONT OF CHANGE
1941First B17delivered
1979First RBS 15ordered
1990First lasersimulator BT46
1961Viggenintroduced
1955Drakenfirst flight
2002First contractNLAW
1993First Gripendelivered
2005Neuroncontract
2006Saab 2000A&EW
2008First flightGripen Demo
2014Carl-GustafM4 launch
2011RBS 70 NGlaunch
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1990Saab Automobileindependent company
1937Saabfounded
2000Celsiusacquired
2005Grintekacquired
2007SeaEye Marineacquired
2012HITT acquired
2014TKMS Kockumsacquired
1894Alfred Nobelacquires Bofors
1646Boforsfounded
1948First Carl-Gustaforder
1998StriC inoperation
1950-Development offighter radar
1970-Development ofGiraffe radar family
1980-Development ofArthur
1990-Sea Giraffe AMBlaunched
2006Ericsson MicrowaveSystems acquired
1987Celsius
1989Kockums AB
1999HDW
2005ThyssenKrupp
1679ÖrlogsvarvetKarlskrona
1840KockumsMalmö
1977Svenska Varv
COMPETITIVE PRODUCTS, GLOBAL MARKET
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Aeronautics
Asia Pacific
Latin America
North America
Surveillance
Dynamics Support & Services
Industrial Products & Services
Kockums Europe
Middle East& Africa
ORGANISATION
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GroupFunctions
Market Areas
CEO
Business Areas
Europe
LatinAmerica
Middle East& Africa
AsiaPacific
NorthAmerica
ü Sales to 100 countries ü 65-80% of sales outside Sweden ü Presence in 35 countries
MARKET UPDATE
• Increasing demand for cost-efficient solutions
• Short lead times important
• Local partnership for research anddevelopment and production
-1% -4% -2% -1%-3%
11%5%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
2010 2011 2012 2013 2014 2015 2016 Long-termtarget
Sales Organic growth
Execution 2010-2015
Long-term target: Organicgrowth of 5 per cent p.a.
M&A drivengrowth
Target
TODAY: GROWTH OPPORTUNITY MARKET
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OWNERSHIPAS OF 31 AUGUST 2017
Share facts:
Ticker: SAAB BNasdaq Stockholm Large CapMarket cap: ~ SEK 40 bn
74%
8%3%
1%14%
Holding per region, %
SwedenUSNorwayUKOther
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# Owner Capital Votes
1 Investor 30,0% 40,3%
2 Knut and Alice Wallenbergsfoundation
8,8% 7,7%
3 Swedbank Robur Funds 4,7% 4,2%
4 AFA Insurance 2,4% 2,1%
5 Fidelity 2,0% 1,8%
6 Norges Bank 1,9% 1,7%
7 Handelsbanken Funds 1,7% 1,5%
8 Unionen 1,7% 1,5%
9 2 AP-Fund 1,2% 1,1%
10 Lannebo Funds 1,2% 1,1%
Total outstanding shares: 107 243 221
SUMMARY JANUARY – JUNE 2017
• Sustained growth in order bookings
• Improved sales and operating income for all business
areas
• Increase in operating margin, driven by strengthened
profitability in business area Dynamics
• Cash flow negative, in line with expectations
• Continued stable balance sheet
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SAAB FOCUS 2017
• Focus on execution of large projects – project
management
• Build order backlog in selected areas
• Drive efficiency improvements throughout the
organisation
‒ Functional and operational excellence
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NEW MANAGEMENT TEAM FROM 1/10-17
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Håkan BuskhePresident & CEO
Micael JohanssonDeputy CEO & Senior Executive Vice President
Magnus ÖrnbergExecutive Vice President & CFO
Lena EliassonHead of Group Human Resources
Annika BäremoHead of Group Legal Affairs
Ann-Kristin AdolfssonHead of Group Strategy
Sebastian CarlssonHead of Group Communications
Jonas HjelmHead of Aeronautics
Görgen JohanssonHead of Dynamics
Anders CarpHead of Surveillance
Ellen MolinHead of Support
and Services
Jessica ÖbergHead of Industrial
Products and Services
Gunnar WieslanderHead of Kockums
CFO & President andDeputies
Group Functions
Business Areas
FINANCIAL KEY DATA
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MSEK Jan-Jun2017
Jan-Jun2016 Change FY 2016
Order Bookings 20,554 11,462 79 % 21,828
Order Backlog 112,117 111,593 107,606
Sales 15,353 13,854 11 % 28,631
Operating Income 885 611 45 % 1,797
operating margin, % 5.8 4.4 6.3
Net Income 659 414 59 % 1,175
Operational Cash Flow -443 4,193 2,603
Free Cash Flow -532 4,051 2,359
ORDER BACKLOG
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• Strong order backlog in all business areas
• Dynamics received several large orders in the period
Order Backlog Duration BSEK
30 June 2017 30 June 2016 31 December 2016
2017 14.8 2016 13.2 2017 24.5
2018 22.5 2017 19.2 2018 17.0
2019 17.6 2018 13.2 2019 13.5
2020 15.8 2019 12.2 2020 15.8
2020- 41.4 2019- 53.8 2020- 36.8
Total 112.1 Total 111.6 Total 107.6
ORDER SIZE DISTRIBUTION
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0
0,5
1
1,5
2
2,5
3
3,5
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
50 000
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Q1'15
Q2'15
Q3'15
Q4'15
Q1'16
Q2'16
Q3'16
Q4'16
Q1'17
Q2'17
Small orders* Large orders Book-to-bill ratio**
74%
26%
Large Orders
Small Orders*
Jan-Jun 2017
MSE
K
*Small orders = <MSEK 100**Book-to-bill ratio calculated as 12 months rolling
ORDER BOOKINGS & BACKLOG PER BA
01234567
Aeronautics Dynamics Surveillance S&S IPS Kockums
BS
EK
Jan-Jun 2016 Jan-Jun 2017
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• Significant order within theAirborne Early Warning andControl Segment.
• Kockums signed contract formodification and upgrading ofCorvettes.
• Dynamics received order forNext Generation Light Anti-TankWeapon System (NLAW).
• Continued support andmaintenance of Gripen C/Dinvolving several business areas.
0
10
20
30
40
Aeronautics Dynamics Surveillance S&S IPS Kockums
BS
EK
Jun'16 Jun'17
Order Bookings
Order Backlog60
SALES PER BA
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
Aeronautics Dynamics Surveillance S&S IPS Kockums
MS
EK
Jan-Jun 2016 Jan-Jun 2017
+11%
+23%
+11%
+23%
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• Sales increase in all business areas
• Support & Services and Kockumsexperiencing strong growth
• Combitech driving force behind salesgrowth in business area Industrial,Products and Services (IPS)
+5%
+1%
OPERATING INCOME PER BA
0
50
100
150
200
250
300
Aeronautics Dynamics Surveillance S&S IPS Kockums
MS
EK
Jan-Jun 2016 Jan-Jun 2017
3.3 4.8 4.2 4.2
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• Improved operating income for allbusiness areas
• Substantial growth in operating incomeand margin for Dynamics
• Higher activity level in operationsrelated to airborne surveillancesystems
EBIT Margin 5.0 5.2 3.7 9.6 9.0 9.0 5.3 5.4
-1 000
-500
0
500
1 000
1 500
2 000
Cash Flow from OperatingActivities before Changesin Working Capital
Change inWorking Capital
Investing ActivitiesTax and OtherFinancial Items
CASH FLOW JAN – JUN 2017
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MSEK
Cash Flow from Operating Activities beforeChanges in Working Capital 1,517
Change in Working Capital -1,005
Investing Activities -955
Operational Cash Flow -443
Tax and Other FinancialItems -83
Acquisitions and Sale of Subsidiaries andOther Financial Assets -6
Free Cash Flow -532
Acquisitions andSale of Subsidiariesand Other FinancialAssets
MS
EK
FINANCIAL POSITION
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33%Equity/Assets
Ratio
MSEK
Net Liquidity (+) / Net Debt (-), 31 December 2016 -1,836
Cash Flow from Operating Activities 429
Change in Net Pension Obligation -266
Net Investments -955
Dividend -559
Currency Impact and Unrealised Results from Financial Investment -9
Net Liquidity (+) / Net Debt (-), 30 June 2017 -3,196
Net Pension Obligation, 30 June 2017 2,690
Total Interest-Bearing Assets, 30 June 2017 -608
Liquidity -1,114
124Equity per Share
(SEK)
SAAB
19 SEPTEMBER 2017
Stefan Lind VP and Group TreasurerSaab AB
GOVERNANCE – POLICY FOR FUNDING
Policy requirement:
• Free cash, together with committed unutilized creditfacilities, shall always be higher than MSEK 4,000*
• Or the higher of:• 10% of Group turnover• Risk Weighted amount of all guarantees issued by banks
with counter indemnity on Saab.
* Adjusted for loans with maturity within 12 months
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FREE CASH REQUIREMENT
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Saab should always have free cash adjusted for loans with maturity within 12 monthstogether with unutilized committed credit facilities that shall never be less than;
MSEKHighest of 1706 1703 1612 - MSEK 4 000 4 000 3 000 - 10% of Groups turnover (28 631) 2 863 2 863 2 863 - Risk Weigthed Guarantee amount 3 989 4 113 6 151
Present Free Cash & Facility - Liquid Assets 3 714 5 931 5 636 - Unutilized Committed Facility (RCF) 6 000 6 000 6 000 - Short Loans (duration < 12 months) 0 0 0
9 714 11 931 11 636
Headroom 5 714 7 818 5 485
AVAILABLE FUNDING AND FUNDING STRATEGY
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The Saab group funding strategy is focused on minimizing the refinancing risk by adiversification of the funding sources as well as maturities;
900
900
900
900
900
500
500
500Available Funding YTD2017 06 2016 2015 2014
Revolving Credit Facility (RCF) 6 000 6 000 6 000 4 000Available Cash & Commited Facilities 6 000 6 000 6 000 4 000
Receivable Sales Program 1 475 1 475 1 475 1 475 - Utilized 0 0 -1 299 -1 071
Commercial Paper program (CP) 5 000 5 000 5 000 5 000 - Utilized 0 0 -400 0Medium Term Note program (MTN) 6 000 6 000 6 000 3 000 - Utilized -4 150 -4 150 -4 150 -2 000Schuldschein bilateral loans 926 926 926 - - Utilized -926 -926 -216 -Unutilized funding programs 8 325 8 325 7 336 6 404
Total 14 325 14 325 13 336 10 404
Full Year Bank facilities strategyRevolving Credit FacilitiesDerivativesGuaranteesReceivable SalesBridge Financing
Medium and long term funding strategyCommercial papersMTN loansBilateral loans -Schuldschein
MATURITY PROFILE
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The maturity profile should be diversified over time to minimizerefinancing risk. Issue of 5 year loan meets the fundingstrategy well;
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2018 2019 2020 2021 2022 2023 2024
Maturity profile
MTN SSD
MTN SSD RCF Total2018 1 350 1 3502019 1 575 1 5752020 425 4252021 400 759 1 1592022 0 47 6 000 6 0472023 0 142 1422024 400 0 400
4 150 948 6 000 11 098MTN = Medium Term NotesSSD = SchuldscheinRCF = Revolving Credit Facility
MSEK
MSEK
LONG-TERM FINANCIAL GOALS
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Organic sales growthaveraging 5 per cent annuallyover a business cycle.
Operating margin afterdepreciation and amortisation(EBIT) of at least 10 per centannually over a business cycle.
Equity/assets ratio of over 30per cent.
5%
10%
>30%
• Focus on areas with strong market position• Strengthen position in areas with growth
possibilities• Local partnerships
• Project execution• Operational excellence• Continuoulsy develop leaders and employees
• Further strengthen core areas• Invest in research and development• Diversity drives innovation
PERF
ORM
ANCE
INNO
VATI
ON
MAR
KET
OUTLOOK STATEMENT 2017
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• We estimate that sales growth in 2017 will be higherthan Saab’s long-term financial goal:annual organic sales growth of 5 per cent.
• We expect the operating margin, excluding materialnon-recurring items, to improve compared to 2016 andthus the company will take a step towards its financialgoal: an operating margin of 10 per cent.
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