By Niklas Pollard
STOCKHOLM (Reuters) -Swedish defence material maker Saab beat second-quarter operating earnings forecasts on Friday and raised its guidance on expectations of even stronger sales this year as European military spending surges.
The news sent Saab’s shares up 6% in early trading.
The maker of the Gripen fighter jet said in a statement that operating earnings rose to 1.98 billion Swedish crowns ($204 million) from 1.33 billion a year ago, outpacing a mean forecast of 1.71 billion seen in a LSEG compilation of analyst forecasts.
Saab, which makes military equipment ranging from missiles and advanced electronics to submarines, said it expected like-for-like sales to grow 16% to 20% this year, raising its outlook from previously anticipated growth of 12% to 16%.
The company, which grew its sales by 22% organically in the first half of the year, reiterated that it expects operating profit to rise even faster than sales.
The group is scaling up production amid soaring military spending in Europe, where it generates well over half of its revenues, in the wake of Russia’s invasion of Ukraine and signs the region will need to shoulder more responsibility for its own defence.
The military spending boom, further underlined by NATO alliance members committing to defence budget increases demanded by U.S. President Donald Trump, has lifted stocks of military equipment with Saab’s more than doubling this year alone.
The company, which competes with U.S. firm Lockheed Martin, France’s Dassault Aviation and Britain’s BAE Systems, has taken on thousands of new staff even as U.S. tariff threats generate uncertainty.
CEO Micael Johansson told Reuters that Saab had so far not seen any quantifiable impact on its supply chain from the tariff turmoil though there was still little clarity on the extent to which a prioritised industry like defence might be affected.
“Our own capacity development, investment in new production lines and new facilities, that is going fully according to plan,” Johansson said.
($1 = 9.7292 Swedish crowns)
(Reporting by Niklas Pollard; Editing by Essi Lehto and Joe Bavier)
