Shares of Saab AB (SAABF.PK) are currently trading around 10 percent lower in Stockholm after the Swedish aerospace and defence company said its order intake for the fourth quarter and fiscal 2011 plunged due to continuous delays in customers' decision making processes. However, quarterly net profit surged on higher gross margin despite a decline in sales. The company also expects slightly higher sales and flat margin in 2012.
Fourth-quarter net income attributable to shareholders of 413 million Swedish kronor or 3.78 kronor per share, higher than last year's 8 million or 0.08 kronor per share.
Sales declined to 7.35 billion kronor from 8.05 billion kronor in the prior year, as a result of lower activity levels in major projects and the challenging business climate in South Africa. The company noted that exchange rates had a 1 percent negative impact on sales.
Order bookings for the quarter amounted to 5.11 billion kronor, sharply lower than 11.9 billion kronor last year. 2011 did not include any orders similar to prior year's significant 2.2 billion kronor order from FMV (Swedish Defence Material Administration) for six Gripen aircraft intended for the Royal Thai Air Force and approximately 4.5 billion kronor order for an airborne surveillance system.
Gross margin improved to 30.7 percent from 20.4 percent in the year-ago quarter, positively impacted by several sales transactions by Saab Aircraft Leasing and reversals of risk provisions related to these transactions.
For fiscal 2011, net income per share surged to 20.38 kronor from 3.97 kronor last year, while sales declined 4 percent to 23.50 billion kronor and order bookings plunged 28 percent to 18.91 billion kronor.
President and CEO Håkan Buskhe said, "With the current tough economic conditions in the western world our cost-efficient and cutting-edge technology products and solutions are a clear competitive advantage. We saw an impact from the subdued market situation mainly in the second half of the year, with lower order intake as a consequence of continuous delays in customers' decision making processes."
Looking ahead for 2012, SAAB estimates that sales will increase slightly compared to 2011. The operating margin in 2012, excluding material net capital gains, is expected to be in line with last year's 7.5 percent.
Further, the Board of Directors proposed that shareholders receive a dividend of 4.50 kronor per share, higher than last year's 3.50 kronor per share.
In Stockholm, Saab shares are currently trading at 135.10 kronor, down 14.20 kronor or 9.51 percent.
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