© Reuters. FILE PHOTO: The Saab Technologies logo is displayed during the fifth day of Dubai Air Show in Dubai, United Arab Emirates November 21, 2019. REUTERS/Christopher Pike/File Photo
By Marie Mannes
STOCKHOLM (Reuters) -Swedish defence equipment maker Saab notched up an 8% increase in fourth-quarter operating profit and lifted growth targets as it continues to benefit from increased military spending by many nations since Russia’s invasion of Ukraine.
Profit climbed to 1.42 billion Swedish crowns ($135.6 million). The company cited strong performances from its dynamics division which includes missile systems and ground combat weaponry as well as its surveillance division which includes airborne early warning and naval combat systems.
For the period 2023-2027, it lifted its organic sales growth target to around 15% from a previous goal of 10%.
However, for this year Saab, known to be cautious in its guidance, predicted organic sales growth of 12%-16%, much lower than the 22.6% it had in 2023.
Shares in Saab rose 4% in Friday morning trade. They have more than tripled since Russia’s invasion of Ukraine.
To contend with the jump in demand, Saab has ramped up investment in its business. Last year, it recruited nearly 2,500 new employees and increased capital expenditure more than 50%.
That helped push its operating profit margin down to 8.8% from 9.5% during the quarter.
“We see a further increase in investments as both attractive and crucial, as this will support our growth and longterm value creation,” CEO Micael Johansson said.
In the latest quarter, order bookings climbed 5% to 31.5 billion crowns. For 2023, Saab’s order backlog jumped 20% to 153 billion crowns.
It proposed a 2023 dividend of 6.40 crowns up from 5.30 crowns a year ago.