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Swedish defense giant Saab reported better-than-expected third-quarter earnings and revenue on Friday, as new orders more than tripled from a year earlier, boosted by a deal to supply Gripen fighter jets to Ukraine. New orders came in at 65.8 billion Swedish kronor ($6.6 billion), up from 20.9 billion kronor a year earlier, beating FactSet expectations of 56.4 billion kronor. Third-quarter sales reached 20.6 billion kronor, ahead of FactSet expectations of 20 billion kronor. Earnings before interest and taxes (EBIT) came in at 1.95 billion kronor, also beating forecasts of 1.9 billion kronor. Stockholm-listed shares rose about 2% shortly after market open, amid a mixed defense sector. The Stoxx 600 index was down 0.4%. The results come as European governments race to turn defense spending pledges into military capability. Saab's order intake included a 24.6 billion kronor contract for 16 Gripen E fighter jets with the Swedish Defence Materiel Administration for Ukraine, signed in June and booked in the third quarter. Deliveries are scheduled for 2029-2030. "The growing customer demand is reflected in major contract awards, including Gripen for Ukraine, GlobalEye and an order related to Germany's new frigates," CEO Micael Johansson said in a statement. Orders booked in the quarter also include a 10.1 billion kronor order for its military surveillance aircraft GlobalEye to an undisclosed customer in the Middle East, and an 8.7 billion kronor order to equip warships for the German Navy. Saab, whose products range from Gripen fighter jets and submarines to missiles and advanced electronics, has seen exponential order growth since Russia's full-scale invasion of Ukraine in early 2022. Even with an ever-growing order book, booming sales, and increasing profitability, Saab stock, like many of its peers, has taken a hit in recent months as some investors question whether valuations have run ahead of the industry's ability to deliver. Growing order book Rising geopolitical tensions, including recent airspace violations, drone incidents and ongoing conflicts, are driving demand for defense capabilities, Johansson said. He added that Saab is expanding production capacity and investments to help it meet growing customer needs. "The long-term market outlook remains favourable," he said, as Saab reported that the order growth was driven by a more than sixfold surge in large orders to 52.1 billion kronor, while small orders rose 84% and medium-sized orders fell 16%. The total order backlog amounted to 364.2 billion at the end of September, up from 274.5 billion at the beginning of the year, marking a sixth consecutive quarter of order book growth. In July, Saab said it was looking to boost its production of jets from 15 per year to between 20 and 30. "We can go further than that if we now get sort of partners involved in a more substantial way," Johansson told CNBC at the time. Johansson also emphasized that European governments must fundamentally rethink how they buy weapons, moving away from fragmented national procurement toward long-term partnerships with industry.
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