Saab AB (publ)

Good morning, everyone, and welcome to the presentation of Saab's fourth quarter and full year report for 2025. My name is Johan Andersson, responsible for investor relation, and I will be the moderator here today. With me here in Stockholm, I have our CEO, Michael Johansson, and our CFO, Anna Vikander. Michael and Anna will present the report, and then thereafter we will conclude with a Q&A session. And just to remind you, you can either ask your questions over the phone, or you can write them in the web interface. So with that, warm welcome, and I'll leave it over to you, Michael.

Thank you, Johan, and also a warm welcome from my side, and thank you for joining us today. I will start by jumping right into sort of the perspective of last year, looking at how we met sort of our guidance and our growth perspective. So we ended up with almost 80 billion in organic growth, 79.1, which was excellent, 25% organic growth. And then also had a very good development on our operating income, of course, growth 37%. And the cash flow was extremely good in the quarter, the last quarter, last year. So we ended up all in all at 5.3%. So we had an extremely good year last year, meeting all our expectations. And it is, of course, based on very good sort of delivery tips. capabilities and how we actually performed in delivering to our customers over the year and showing that our capacity investments that we have comes into play. Going forward and looking at some highlights, obviously looking at the extremely high order intake in Q4, but also over the year. We see a high customer demand in the market and there's very many initiatives that we're working on, of course. And the product contracts continue to grow, but also we have a strong interest on the sort of bigger platform side. And that's why the balance of the large orders towards the medium-sized orders and the smaller orders have changed a bit. So we still see, of course, volatility in the political tensions around the world, as you all know. But I would say what's dominating the growth right now from our perspective is still that the European nations and the pillar of NATO, the European pillar of NATO, has to sort of expand the capabilities. Also quite clearly stated by the U.S. that we have to take responsibility for our own continent when it comes to the threat environment. So that is driving, of course, lots of spendings in Europe, but not only, to look forward to future growth. And that drives mainly the growth for us, I would say. So we have record order bookings, as I've said, and a very high backlog of 275 billion in Swedish crowns. Now, a big thing that happened during the quarter, of course, was the selection by Poland for the 826 submarines and that is extremely important to us and we really appreciate that and it will be good for our security policy between the countries the Baltic Sea protection of course and a close collaboration between Sweden and Poland but also between industries between Sweden and Poland now we are diligently working that contract of course it's not a contract yet But I really look forward to finalizing that contract during this year. And then, of course, we have shown that we are capable in extending our capacity and expanding that. All the time we get new capacity expansions in play to support our growth. But there's still much more to do, of course, both when it comes to facilities and factories that will come into play. We have a US factory that will be up and running late this year. And we also have an Indian factory, as examples, coming into play next year. So those are a few highlights. Coming back to the market position and looking at what I tried to sort of describe on a very high level, that the mix of the product side of the portfolio, we are very well positioned in the marketplace, I would say, and I'm really grateful that we have a portfolio consisting of both sort of products, but also platforms and also being able to integrate systems together. So, of course, looking at last year, A few very important parts of contracts that happened was, of course, the grip into Colombia, 3.1 billion euros, that we are now executing, of course, according to plan. And then we have the global eye that came in very late last year, which was... Really a good win, of course, to globalize to France. And then the contract in Q4 also on the A26 submarines for Sweden, the extending capabilities that added to that contract. But also things like the electronic warfare capacity for the German Eurofighter is a very important contract to us. And then, as I said, product contracts on the missile side and the support weapons side is adding to an excellent sort of year for us when it comes to order intakes. Order bookings of 169 billion in 2025. And a really good outlook, I think, going forward also because of the market interest that we have. Coming back to the contract. Quarter, last quarter then, 25, the fourth quarter. Of course, we have all noticed the fantastic order intake of 100 billion in the last quarter, which is then a mix of large contracts with many good product contracts as well. So an extreme increase, of course, from the 17 billion we had in the Q4 of 2024. An extremely good quarter, highest ever, of course. But also the sales growth, 35% organic growth, It's really good, including also the EBIT growth of 50%. And then, as I said, the volatility and the operational cash flow side over the year is quite sort of big. So, of course, we had an extremely good fourth quarter to generate the 5.3 over the year, 6.3 billion. And as we've said all the time, we promise good operational, positive cash flow. But over the year, it will vary a lot, of course. So this is absolutely the best quarter. I think that's all that ever generated. Not only the best Q4, but the best quarter ever. So I'm really pleased with that, of course. A few comments on the different business areas then. For aeronautics, the Colombia contract was really the big event, of course, another contract on the Gripen E. So now we have three countries and we're increasing capacity to deliver all these Gripen E fighters. And we have a number of campaigns going forward also, a big interest in the market. So this is an area that is now growing for us going forward. And we are also looking into the next-gen fighter capability. But I think in the beginning we will work to complement a Gripen E fighter with a collaborative combat aircraft, a sophisticated, you can call it a loyal wingman, an autonomous system. And that, I think, is sort of the first thing that will happen in the future fighter sort of avenue that we're running. We have also the T-7 and the first one is now with Randolph Air Base. Now they are using it to start sort of creating the training for the pilots, but there's still many to deliver. And we're still sort of affected by the underabsorption that we had in the facilities in West Lafayette, Indiana. And that will be continuing for a couple of years more, I would say. So that is going to be a good business for us, but we need to ramp up the deliveries. And we have only delivered a few so far of the 350 that we have on contract. And then a very important thing that happened, of course, that we were working diligently to sort of organize a contract around this. And this is a government to government and industry to industry initiative, I would say, was from the letter of intent that was signed between Sweden and Ukraine. regarding fighter capabilities going forward. So of course we would like to see Ukraine flying the Gripen's going forward. But we're working that and we hope that the financing side of that will be sorted and also for us then to prepare for industrial collaboration but also capacity increases. Dynamics still has a very strong demand in the market for their entire portfolio, I would say, from training simulation to camouflage net, but not the least from the missile and ground combat perspective. So we have had quite a few large missile and ground combat orders in the quarter. So they have an amazing order backlog of 90 billion orders. And this is also an area where we have invested heavily to increase capacity to deliver to our customers. There are more to come into play, as I said in the beginning, in both India and the US. But we have also already taken some capacity increases into operations, I would say. And we are booming our expansion also in Sweden, of course. So this looks very good and they had a growth of 50% quarter to quarter over the years. So that's an amazing result. Surveillance did have a very good quarter. I mentioned the globalized from France, from a market and order intake perspectives, but also a strong demand when it comes to our EW equipment, our sensors, the ROF-1X, our fire control sites for the CV-90s, but also other sensors, the weapon locating radars, authors. And they are picking up on the project execution, and we see a substantial growth also here, quarter to quarter, of about 50%. And we just want to mention that we have now divested completely TransponderTech, which affected the EBIT of the operational income of surveillance by $336 million. But even without that, they did a 10% result during the quarter. So that was a very good step for surveillance. Kokums was of course extremely happy and so am I on the selection by Poland so now we are expanding capacity to build more submarines and we have other segments of course in the underwater business which is autonomous systems and a number of things in that area that has a high customer interest and then of course we are working on the on the campaign to be part of the new Swedish frigates or corvettes, but I don't know exactly when that decision will be made. We have a partnership with Babcock, and of course that is something that we worked diligently on the surface side going forward. But we have a growth, very good growth also in Saab Kockum, so 20% and good project execution. And of course also the Swedish 826 contract was important here. So they are developing in a very good way as well. And lastly, we have CombiTech, good momentum. Of course, the total defense perspective and how many things are happening in that area in Sweden now from an industry, from an agency perspective. is supporting the growth of CombiTech. The new agency MCS, the Swedish and also on the civil aviation side generates lots of business for CombiTech and they are good in this area both from a cyber security perspective but also how you set up resiliency in an organization. So that is, of course, the growth is driven by an increased number of consultants, but they are growing in a very nice way. And they are now a $5 billion entity within Saab, which is absolutely fantastic. And they're really important for Saab as well, since they have a number of very important participations in our contracts within the Saab business areas as well. A couple of comments on the sustainability side. We have done a number of important things during the quarter. We have adopted formally now a human rights due diligence policy, supporting our responsible sales policy. And this is something that generates a due diligence every time we do a contract with someone and sell something. We actually go through in detail that we're not affecting anything related to human rights or things that we shouldn't be involved in. That's very important to us. We have a good development on the share of women managers in the organization, which has increased now to 29%. And we have a higher ambition than that, of course, but we are growing all the time, which is absolutely fantastic. And we have done well also on the emission perspective, the environmental perspective. We have reduced our emissions 7% year over year, and we are in a good path supporting the scientific-based targeting initiatives, targets that we have set that we have to be down 42% 2030 and we are now at 36% after 2025, so that's very good. And we have the ambition to be a market leader when it comes to, in our segment, when it comes to sustainability, which is not only environmental perspectives, of course, But we have been highly ranked within the CDP when it comes to climate and water. We're in the highest ranking of 4% of the companies right now, which I'm impressed and I'm really pleased with that development. So I think with that, I will hand over to Anna to go through the numbers in a little bit more detail.

Thank you, Michael, and good morning everyone from my side as well. Yes, it's clear that we have closed yet another successful year, and I will soon go into the details of the financials in the quarter. But before doing that, I would like to take the opportunity to show you some trends on what we have achieved so far. So let's start looking at our graphs and what we have achieved for sales growth. We are growing the company substantially, and during the last three years we have grown an average 24%. And what's so good to see is that we have had double-digit growth in all our business areas during this period. And that is achieved, of course, through our strong offering and our strong portfolio that we have, but also our operation and our ability to grow our operation. And an important factor to that is that we also have increased the number of employees by around 10,000 people and now adding up to the 28,000 employees that we are today. And we have a really strong company culture where we have a good focus on both delivering on our commitment, but also building the company in the future. The EBIT has also grown in this period by 33% compounded average growth rate. And that really shows that we are leveraging and scaling on our growth, growing the EBIT more than we grow our sales growth in average. And we should remember that during this period we have invested substantially both in R&D and in capacity investments. So over this period we have doubled our R&D and we have actually tripled our CAPEX. Now look into the quarter then more in detail. We have increased the EBIT by 50% this quarter. I think one should remember that this is an exceptionally strong quarter. And that is, of course, largely driven by our sales growth. And what's also visible in this slide is that we have a volatility when it comes between quarters. That is really reflected here in this slide. This quarter, I want to highlight dynamics. Here, the EBIT grows by 19%. Although the margin is a bit lower compared to what it was last year in Q4. And that is primarily related to product mix within Dynamics when comparing year over year. But if you look at the trend for Dynamics, it's very strong for the year. The EBIT growth was 46%, and the EBIT margin for the full year was 18.1%, an increase from last year as well. Also, surveillance is worth mentioning this quarter, with the growth of EBIT of 83%, and that was very much driven by high project execution and several deliveries in the fourth quarter. In addition to that, we had a positive effect when we received the order for the Global Eye France contract in the last days of December, since we, in that project, had started some activities already when we got the letter of intent in the summer. I can also mention that we had this divestment of transponder tech that is visible in the numbers of surveillance, but it's excluded here in the figures that you see for the EBIT for the quarter. For the full year then, the financial summary, we grow our sales with 24.1% reported organically, 25.6% impacted by currency, so 79 billion in sales. Good growth also in gross income and EBIT was growing 37% and we ended up with 9.8% EBIT compared to 8.9% last year. That was mainly driven by dynamics and surveillance. Another thing to point out here in this slide is the financial net that improves substantially compared to last year. And here we have a positive impact this year from the seek appreciation where the revaluation of our tender portfolio from currency hedges in the tender portfolio had a positive impact this year. Last year it was negative. So that's why we have a big swing there in the financial net. Also good, the net income and the EPS grow by 51% over the year. We have talked about the cash flow. Michael talked about the cash flow. It was very strong in the fourth quarter where we both had several deliveries and received a lot of customer milestone payments. And as we can see on the slide, we have the cash flow from operations now amount to $12 billion approximately. And we have increased our investments. They are now $7.2 billion this year. If you compare to last year, they were $4.8 billion. And so all in all, we achieved a cash conversion this year of 68%, which is well above our midterm targets. And also our return on capital employed increased to 16.5% this year. So driven also by this strong cash flow, the net cash position has improved this quarter, and we're ending up the year with 4 billion in net liquidity. So our balance sheet continues to be strong, and we have a cash and liquid investment amounting to 18.7 billion. And adding to that, we have an unutilized revolving credit of 6 billion as well. So following this strong financial performance, financial position, the board of directors will propose to the annual general meeting that we increase our dividend by 20% amounting to 2.46 per share. So let's again zoom out a bit and look at some trends on what we have achieved so far in 2023 to 2027. Cumulative over these first three years, we have delivered cash flow before operation of 26.4 billion Swedish crowns. That is a strong enabler for us that we have been able to invest more in capacity expansions, which is important for our foundation growing our company, as we know, investing in new capabilities, new facilities, new production sites, and new products. And in total over these years, we have had investments amounting to 15.5 billion. And measuring of the period, we have achieved a cash conversion of 62% so far and generated approximately 11 billion in operational cash flow for our company. Another parameter that has strengthened this quarter is our backlog. We had a strong order intake this year, 169 billion on the year and 100 billion this fourth quarter. So we have built a substantial order backlog to deliver from going forward. And compared to last year, we have extended both the duration of the backlog for the years to come, but also increased the backlog for the closest years, 26 and 27. So it's increased 29% for 26 and 46% for 27. So this really gives us a good comfort for future growth and a good foundation for growing the company within the years to come. And finally, just look at the trend of the backlog. The growth has been strong over the last years. It amounts now to 275 billion and corresponds to 3.5 times our sales that we had in 2025. So this is really supporting our long-term growth. So by that, I hand over to you again, Michael, to guide us through the mid-term targets.