Saab AB Aktie

Good morning, everyone, and welcome to the presentation for Saab's report for the first quarter of 2026. My name is Johan Andersson, responsible for the Investor Relations, and I will be the moderator here today. Here in Stockholm, I have our CEO, Micael Johansson and our CFO, Anna Wijkander. Micael and Anna will present the report, and thereafter, we will have a Q&A session.

And I remind you that you can both ask your questions over the telephone conference or you can write your question in the web interface and I will read it out here in Stockholm. So with that, warm welcome, and I'll hand over to you, Micael.

Thank you, Johan. And also from my side, most warm welcome to this quarter 1 report. Let's jump right into some highlights. I think we can conclude that we have started this year in a very strong way, substantial organic growth, 23.6% and also creating scale gives us a good profitability. Good cash flow and still very intensive in the market. The momentum is very high in the market. So we have many avenues. And the order intake, as you've seen, is on par with the quarter 1 last year. So a strong quarter.

A couple of sort of examples of important things that happened, and I will come back to deliveries and stuff like that. But the contract from Sweden on the Counter-UAS system called Gute is very important. We have created an agnostic sort of very flexible Counter-UAS system, and that I will get a little bit into that later.

A very big event that happened this quarter is, of course, the delivery of the first Gripen E from the Brazilian facilities, the factories in Gaviao Peixoto, which got lots of interest from the Brazilian side, and they are really proud of having this sovereign capability now in country. And it's good for us as well, having a hub so we can ramp up the capacity, of course, in terms of Gripen deliveries.

We also see that looking at the growth that our investments in production capacity comes into play. We have still lots to do on that side, but we have now a couple of production lines that have opened in Sweden to support the Dynamics business specifically. And that's very important to us since we have a substantial backlog, as you know. And then, of course, the restructuring that we've done 1st of April of creating a new business area called Naval, including now Naval Combat Systems together with the former Saab Kockums business is a very important step to establish a whole offer in the market when it comes to combat system integration, design capability of surface ships, but also creating the systems of systems capabilities, unmanned teaming on the Naval side.

More specifically on the numbers, as I said, the order intake and the momentum is good. We increased the medium-sized orders with 28%, almost a book-to-bill of [ 1.95 ]. And of course, a certain quarter, you can't sort of look at specific sort of order intake volume since we have digital large contracts being negotiated. You never know when they actually will happen in which quarter, but this is good from a foundation perspective, small- and medium-sized orders. And the growth was excellent organically, SEK 19.2 billion, growth in all business areas, double-digit numbers.

And specifically, Surveillance had a very good quarter in terms of growth. Also, the EBIT growth is 32%, SEK 1.9 billion in numbers. And that is, of course, an effect of the increased top line, creating scale effects and giving us a 10% margin, which is excellent. And also a good quarter when it comes to the first quarter, looking at the cash flow -- operational cash flow of SEK 1 billion, which is about, of course, deliveries and payments from the customers. And that is, of course, something that we always look into diligently that we -- and we've guided to positive cash flow also going forward, of course. So that's where we are after the first quarter.

And then I'll give you a few comments on each business area. And the growth in Aeronautics is, of course, much from the Gripen programme, where we have lots of intensity and also deliveries ramping up. And then we had this fantastic event in Brazil now. So we have 2 factories that can actually deliver Gripen aircraft. And that will also, of course, be a good relationship increase between Brazil and Sweden when it comes to the further development of the Gripen E, which is -- the aircraft is incrementally possible to develop through software and so forth. So it's not only about production.

Then we have a couple of contracts on the T-7, the Lot 3 and 4 of the T-7, which increased the backlog, of course, but we still have a burden of the -- sort of the burden of not having the production and ramping up quickly enough. And as I've said before, this will take a couple of years before we actually get to the right numbers, but many hundreds of aircraft are in play for this. And in the end, there will be probably a couple of thousand aircraft. So this will be a good program, but it's a bit of a fight to get this fantastic facility delivering more aircraft out of the facility, but they are delivering now at least. And then, of course, we've launched the Gripen Colombian programme, which is very important to us, which we did win then in December last year.

Dynamics, excellent demand in the market, 1.2 (sic) [ 1.2x ] book-to-bill. So good order intake and good growth as well and a mix of combat -- Ground Combat orders and Missile Systems orders. But remember, the Dynamics is support weapons, it's missiles, it's training and simulation, it's also camouflage nets, signature management, which is a good mix of things. So all the parts in Dynamics are doing really well. And deliveries are important. And here, we have the production facilities, a couple of them in Sweden sort of now up and running in the Karlskoga area, which is really good to us.

And also, I must say that the profitability is, of course, excellent in the quarter as well, which Anna will go into more detail about later.

Surveillance, very strong demand in the market across the whole portfolio. We have a pipeline of discussions on the GlobalEye with different countries, and I think that has potential going forward and also, of course, the ramp-up on the sensor side. And I want to highlight specifically the Giraffe 1X, where we talked about that we actually manufacture these sensor systems on a bit of speculation rather than only on contracts, and that's good for us because we've been able to deliver a number of systems to the Middle East countries that needs to find and detect all the missiles and the drones coming in over the territory. So that's good for us, and we will now aim for ramping up that production to over 300 a year. So that's a good sort of volume business on the sensor side.

And then, of course, this Counter-UAS system that Sweden contracted us with is a big initial contract and important one, which will -- I think that area will develop into also not only being military applications, but also protecting critical infrastructure in the total defense perspective going forward. And as you can see, the growth in Surveillance was excellent, over 30%.

And a couple of comments then. This is actually the Counter-UAS system is a very modular system in terms of the vehicles, the sensors to command and control, and also then agnostic when it comes to which actually effectors you use. But it is a sensor to shooter system, which we put together in a very short time since we had the different products and components of it and integrated it to be operational extremely quickly. And that is the key. We can do this with existing things that we have to provide things that will make a change in the deterrence and the defense very quickly.

And we continue then to adapt different type of effectors going forward, either it's the 40-millimeter from Bofors -- from BAE Bofors or whether it's the Trackfire with a 30-millimeter cannon or whether it will be the Nimbrix going forward. So this is important to be flexible on the effector side, and it's proven very effective.

When it come to Saab Kockums, which will be the last time I say Saab Kockums because this now will be a new business area named Naval going forward, but this is the last quarter we reported like this. And they also had good growth. And we are, of course, in intensive discussions with Poland on the submarine programme, and we hope to finalize that, of course, in the next quarter, but I can't promise exactly when, but it's intensive discussions and according to plan.

Also on the Polish side, there was a new -- the next SIGINT ship was launched in January, a very important programme to us, of course, and also good security politics collaboration thing between Sweden and Poland. And then we have now a more consolidated business area going forward, offering a combination of Naval capabilities and also being able to do the combat system integration between all the components in the same area and offering that in a different way, which I think will be very good for the business going forward.

Combitech is also doing really well. Good order momentum. And of course, it is the total defense perspective and how much we have to do in terms of creating better deterrents and processes in different parts of the Swedish society that drives growth, but also the military side and the contracts we get from the Defense Material Administration. So this is excellent performance, growth of 16% with good profitability. And of course, it's all about getting sort of the competence and the skills in the organization growing, which has gone really well to grow this business. So I'm really pleased with this.

On the sustainability side, a couple of important things happened, of course, during the quarter as well. We have done now compliance sustainability statement report in our year-end report and the annual report, I mean, for '25, completely in compliance with the requirements then the CRSD (sic) [ CSRD ] requirements, and that has all the details about the metrics, the targets and what have you -- if you want to dive into that.

And then we've looked into a Life Cycle Assessment when it comes to our Giraffe 1X because I mean, okay, we can have control over the Scope 2 and -- 1 and 2, but Scope 3 is also very important, how you use the system. And we have concluded and we are in discussions with the end users that if they do go from supporting the system from a diesel sort of fuel perspective or going to electrical power or a biofuel type of setup, you would sort of gain a lot when it comes to the emissions, of course, and that is what we are pushing now. And this system can be connected to any normal 220-volt sort of outlet. So it's really flexible in that side. So we've done something that is prepared to do a big effect on sustainability if the end customers choose to use it that way.

And then, of course, we're looking into how we -- when we get volumes in production like in Dynamics, of course, how we use the packaging and how we reuse materials for that and not sort of wasting that adds lots of savings on the emissions, but also cost, of course, for us. So we're changing that. If you look at the quarter sort of emission perspective, we have an increase due to more flight tests compared to the last quarter last year.

And we have more business travel also because of the intensity in the market, but it's also a period of cold temperatures. So looking at all the sites, of course, when a new site comes into play, you get a slightly higher footprint. But we are on the right track towards our targets. We are 36% down when it comes to the reference year 2020, when it comes to emissions towards our targets. So we're doing well on that side.

So with that, I will hand over to the details, and Anna will walk you through a little bit more of the financial results.

Thank you, Micael, and good morning from my side as well. It is clear that we have started the year with a strong first quarter, and I will soon go into the details of the financials, but before doing that, I think it's good to look at some trends and what we have achieved so far.

So over the recent years, we have achieved strong sales growth, and that is supported by our leading offering and the trust from our customers. And consistent with our profitable growth strategy, we have scaled our operations, we have expanded our capacity, and we have continued to deliver on our customer commitments. On top of this, we also have a healthy backlog that -- and we are continuously working on efficiency, which will support our performance going forward.

So looking at how the trend has developed after this first quarter 2026, we have now delivered an organic sales CAGR of 24% so far in our medium-term target period. And importantly to note here is that we have had double-digit sales growth in all our business areas. We have also continued to deliver profitable growth, and that is shown that we are driving our operating cost leverage and our EBIT growth is more than our sales growth. So it's now 33% for this period. And to note here, it's also important to say that we have increased our spendings in R&D to be able to be relevant to have future capabilities in our portfolio. So with that, we are progressing well towards our medium-term targets.

With that then, now let's take a closer look at the quarter. The EBIT increased by 32%, largely driven by the sales growth and leverage on operating expenses. We can see that marketing expenses are flat compared to last year and the administrative expenses are slightly lower, and we continue to ramp up the R&D efforts as planned. So all in all, we have an operating margin of 10% compared to 9.2% last year.

Aeronautics. Here, we had good sales growth of around 16%. However, we can see that the margins decline, and that is due to somewhat increased R&D amortization and we also had a negative currency effect impacting. Also, as Micael said, the T-7 programme has still challenged with profitability and ramp-up, but we have good order intake here in the quarter, but that is impacting the EBIT margin negative in Aeronautics.

In Dynamics, we continue to expand capacity and to deliver on our backlog, and we have a favorable mix this quarter together with the sales growth, and that drives the EBIT growth to 38% growth this quarter and an EBIT margin of 17.5%. As always, when we talk about Dynamics, it's important to remember that the EBIT margin varies between the quarter depending on mix and what deliveries we have.

Surveillance also had a very strong quarter with good progress across all business. And one good example of that where we had particularly good performance was in the surface sensor area with several deliveries. So overall, sales grew by 32% and the EBIT grew 52%, and that is driven by the mix and also the leverage in operating costs.

And Kockums also growing. But here, we can see an impact of the high activities that we have in the marketing area with the campaigns ongoing, for instance, in Poland. So here, the marketing cost has increased compared year-over-year. So that is why we have a small decline in the EBIT this quarter.

Not visible here in the slide, but worth mentioning is also Combitech that has also a good development and high activity through their increased number of consultants, and they have an operating margin of 11.3% this quarter. And also within corporate, we have improvements compared to last year in our small Skeldar business and also in the minority portfolio, which improves the margin in corporate.

As you already know, we have established a new business area from 1st of April, the business area Naval. The purpose is to consolidate and to strengthen our total Naval offerings to deliver greater value to our customers. And from the second quarter, Q2, we will report financially in this new structure. And you find more details on our website, and you can also find the restated financials to facilitate your comparison.

The key change is that we have moved or transferred the business unit Naval Combat Systems from Surveillance into this business area Naval. It's largely a system integration business driven by projects. And historically, they have had around SEK 6 billion per year in sales. And since 2024, they have, in average, had an operating margin of 6%. When you look into the details, you will notice that there are 2 quarters in 2025 with significantly lower margins in this business unit. And this is due to the nature of this business where we have this project mix depending on how the margin is every quarter and also that we had some margin adjustments in a few projects within Naval Combat Systems. But looking ahead, this is a business with future growth, and we see potential for profitability over time. But more details are shown in our homepage.

Next slide is the income statement for the quarter. And the organic growth was 23.6% reported was 21.4%. Same here this quarter as last quarter, the currency impacting us negatively with 2% (sic) [ 0.2% ] point on the sales growth. Gross income is increasing, but margin is flat, and that is due to mix. But if we look at the business areas, we can see that they are improving year-over-year in gross margin.

Let's then -- I talked about the EBIT that has improved, but let's then turn to the financial net. Here, we have a difference since last year because we are now increased the application of hedge accounting to also include derivatives that hedge currency in the tender portfolio. So from now on, you will see currency gains and losses from the tender portfolio in the other comprehensive income and not in the financial net. So with that, we will have less fluctuation in the financial net going forward. Important to note here is that we have not changed our hedging principles. It's just that we have changed the application of how we use hedge accounting. Finally, we have growth in our EPS driven by the EBIT growth and also the net income is growing this quarter.

Turning into cash flow. We had a strong cash flow from operation of SEK 2.8 billion this quarter. Main contribution came from Surveillance and Dynamics. And the largest reason for that is several customer payments, but a bit offset by inventory buildup, and that is also what's impacting the change in working capital. The investments increased compared to last year, which is totally according to our plan, and they were up from SEK 1.6 billion to SEK 2 billion this year. And we now have an operational cash flow of SEK 1 billion after this quarter. The free cash flow is impacted by higher tax -- we have higher supplementary tax related to income taxes paid for 2025. So that's the main reason why that is negative SEK 1.3 billion and the free cash flow slightly negative of minus SEK 300 million.

All in all, we have an improvement also in return on capital employed, driven by our improved profitability, but also on our improved capital turnover. So it's now above 16%. And the cash conversion is 53% after this quarter. So progressing well towards our medium-term target to have a cash conversion above 60%. The net liquidity position and balance sheet is still strong. We have a net liquidity of SEK 4 billion, almost unchanged since last quarter. Cash and liquid investments amounted to SEK 18.1 billion. And in addition, we have an unutilized revolving credit facility of SEK 6 billion.

Let's turn to the future and our order backlog. Over time, we have built a solid order backlog, which is currently SEK 274 billion. And this, of course, positions us for a good position for long-term growth. Compared to last year, we are in a better position and have strengthened the backlog for all years ahead. In particular, for the remaining 9 months here, the backlog has increased 28% compared to where we were last year. And for next year, it has increased by 56% compared to last year.

Also to note in the backlog is that we have a good balance between our business areas. Aeronautics has now increased their share. So they are around 30% and then it's Dynamics and Surveillance, which add up to most of the backlog. And the international orders is around 72% of this backlog. So all in all, this underpins a good position to support for future growth going forward.

And then finally, before ending my presentation, let's just remind us about our medium-term targets. We are going to deliver around 22% sales CAGR for the period '23 to '27. We will have an EBIT growth that is higher than organic sales growth and the cash conversion of more than 60% during this period.

So thank you very much. And with that, I hand over to you, Johan, to open up the Q&A.

Thank you very much, Anna and Micael. So let's open up and start the Q&A session. And please, operator, do we have any questions over the telephone conference?

[Operator Instructions] The first question comes from the line of Yassin Moktadir, UBS.

So firstly, could I start with Aeronautics. So you cited several ongoing Gripen campaigns. Could you talk us through those and your confidence around winning potential orders there? And then within Surveillance on GlobalEye, you also mentioned some discussions that you're having and have been seeing kind of increasing press releases or articles around the E-3 replacement. Is there any further developments there too?

Okay. Thank you for that question. On the Gripen side, of course, I mentioned we're still in discussions with Canada, which is, of course, about the decision on sovereignty in the Canadian industry and how we would do a tech transfer and setting up a hub and all that, but it would also mean sort of a potential contract with Canada. Hard to say exactly when that sort of decision will be taken. It's an evaluation ongoing, as you know, and it's probably on Prime Minister level to sort of go either way. So it's hard to predict, but it's intensive. We have discussions all the time with them.

Then, of course, since we had the President Zelenskyy in Sweden last year, agreeing with Ulf Kristersson that they will go for the Gripen. We are in discussions with Ukraine to move that forward. Those are two potential big ones, of course. But to say exactly sort of confidence level and exactly when that can happen is difficult, of course. It's always political, but we're moving ahead on those two. There is an interest from Portugal and some other sort of earlier campaigns, but -- so there is an interest. We have a ramp-up of capacity ongoing. We're going to deliver more aircraft, many more to both Sweden and Brazil and then Colombia and Thailand. So lots of intensity in that area.

On the GlobalEye side, you know that France contracted us last year. There is an option for another two in that contract that we're discussing. And of course, we are -- we have given information to NATO connected to the IFSC programme. Let's see what happens there. That's an opportunity, of course. And then there's an interest from Germany, from Poland. So there's a pipeline of opportunities in different stages, of course. But I must -- I would say it's a big interest for both platforms right now.

Please operator, do we have the next question?

The next question comes from the line of Bjorn Enarson, Danske Bank.

But first of all, on -- you touched upon corporate and other items there. I mean you have a solid result overall, but I'd like to argue that a quite big deviation was within corporate. Can you talk a little bit about that and how we should think about that going forward? And also Dynamics had a good quarter in terms of deliveries, obviously good for profitability. Can you talk a little bit about how the profile for Dynamics looks for the year?

Do you want me to start with the corporate question? I mean in corporate, there we have different costs that can vary between quarters, so we have some periodization impact. Cost that comes here is could also be shareholding programme, which, of course, nothing that we can predict where the share price is going. And then also cost for IT and security that has more coming up later during the year that we had last year. So I think when you look into the corporate, a good rule of thumb could be to look at the level where we were last year.

For the full year?

For the full year. Yes.

Okay. On the Dynamics side, I mean, they have a huge backlog, of course. And it's a good sign that they have now good deliveries and investment, as I said, in capacity is coming into play, which is really important to us. There's a good foundation for deliveries going forward. But I would -- sort of I've said before that they will grow, but we'll not guide on that level, so to say, on the business area level.

And we've said that sort of mid-double-digit numbers is still depending on the mix of things within Dynamics, which contracts, the mix of missile support weapons, training and signature management that defines sort of a couple of percentage up and down in each quarter, so to say. But we had a good mix this quarter, but they should be really profitable, which they are. So that's as much as I can say. Better and better foundation for deliveries though on volume side.

Again one last question on the order that you touched upon received in early April C-UAS, super interesting. Can you talk a little bit about the market potential, number of units or countries or anything you touched upon that it has a good export potential?

I think Counter-UAS, if you're having sort of efficient and cost-efficient systems, especially on the effective side and that you can actually be a bit agile when it comes to which one you use, you will have a good market opportunity. Everyone is asking for this kind of systems. So I think there will be good potential. I don't want to go into numbers, but it's, of course, an export potential. But also in the total defense perspective, you have to have systems protecting critical infrastructure. And that is more of a governance problem, I would say, because it's not that the defense forces can protect every critical infrastructure in a country. It's more about how the country is structured.

So there will be quicker sort of, I would say, more expedited contracts in certain countries doing that, and it will be a bit slower because of regulations in other countries, but extremely good potential on this system. We have a very cost-efficient sensor, an excellent command and control, a low footprint and now we're having different versions of effectors. And I look forward to when Nimbrix come into play because that will be an important reasonably long-range capability with good cost level. So there's more to do here and good potential, absolutely.

And I think, public [indiscernible].

Sorry, go ahead if you had a...

No, it was just a quick one on -- when [indiscernible] in the public sayings are on when this is going to be operational in Sweden? A quick ramp-up or is it...

Yes. I mean a version of it is already operational from the Air Force perspective. The deliveries on this one will be in the next year time frame, roughly.

Thank you very much, Bjorn. And let's take two questions from the web interface here. One was on -- from an order intake and growth side, do you see any challenges in the market? Anything that hampers you when you look at market demand?

I would say no, not really. I see the demand is still high there. And I mean, it's a bit of different sort of investment sort of paces or speed in different countries depending on where you are. I think the region where we are in, Germany, Poland, Baltic states, Nordics, U.K., is moving a bit quicker maybe than other countries, but still good demand in the broader perspective.

What is really important, of course, is, again, as I've said many times, you have to work diligently with your supply chain at depth, not only sort of the Tier 1s, you have to look into, okay, how resilient are you in the depth of the supply chain. When you come down to component level, material level, how do you make sure you have this in stock or they have it in stock to be able to deliver. And this is something we work really diligently upon to make sure that we have protection.

It's not sort of here and now really because we have quite a lot in inventory in stock. But over time, I mean, we have to create more resilience. And that's the same thing for all the defense industries and broader than that actually when it comes to dependency on China when it comes to raw material and looking at the data sensors and the memory components that now are in huge demand to build up these things. Of course, that makes it important to be on your toes and secure deliveries early.

Yes, absolutely. Another question we have is that Anna described that you have grown with 24% now CAGR during the period. Are you investing enough to really support that growth or getting capacity out there in, to say, in a decent way? What's your opinion there?

I think we are. I think we will continue to invest that much I can say. I mean we invest on the level of SEK 8 billion to SEK 10 billion a year in increasing capacity, and that continues now. And we will adapt that, of course, to when we have everything in place, which we don't have yet. We have facilities in U.S. coming into play this year and in India next year. And we will continue to invest, as we've shown already in the first quarter to make sure that we can handle our backlog, but also the demand in the market. So we are forward-leaning.

Absolutely. Please, operator, do we have the next question from the telephone conference?

The next question from the phone comes from the line of Henric Hintze, ABG.

This is Henric at ABG. So first of all, I just wanted to ask on the Aeronautics margin here. So it was down year-on-year. And I think even if you exclude the increased R&D amortization, it was still down a bit. At the same time, you're saying that Gripen is ramping while T-7A start-up costs are still impacting negatively. So I'm just wondering how we should think about that margin development there given those things.

From a generic perspective, I would say that -- I've always said that sort of without the underabsorption and the start-up things we have on the T-7 and the mix of other things, this business has the potential to have sort of high single-digit numbers on the EBIT side. So that's what we're aiming for in the end. Now we had the higher amortizations. We had the effects of the T-7 and then we had currency effects at the same time. Nothing sort of major happened elsewhere in the organization. They are ramping up and they are growing. So -- but that's sort of the trend view one should have going forward. So that's what we are aiming for, and we will get there.

Just to add on, on the currency, we had in the quarter -- comparing quarter Q1 2025, we have a positive currency impact. And this quarter we had a negative. So the effect is double, so to say, figure.

Okay. So it's mainly the currency impact.

Yes, yes.

Yes. And then now that you mentioned you usually say high single-digit EBIT margin for Aeronautics. Does the move of the Naval Combat Systems business unit in any way alter what you have previously said about the margin potentials in Surveillance and Kockums?

Well, we don't really guide on margins like that. But if you look at the mix of the business, of course, that changes a bit. Now the Naval Combat Systems, which you can actually dig into a bit, has the potential to be higher than the average 6% that we've shown in the slides here over time. It depends a lot on sort of the project setup and whether you have sort of a couple of problematic projects, which we've had and we've taken actions now to secure for the future that we don't get into more problems. So it has potential.

If you look at what can be done from a business perspective, having both sort of manned platform and unmanned capability in the naval domain connected to a combat management system, that is an offer that has potential to increase the margins going further. And since literally just pure facts is, of course, that if you remove sort of the Naval Combat Systems business from Surveillance, you automatically get a little bit of higher margin, since we've said that it had 6% average since 2024. So that's sort of the effects that we've seen so far. But the business will tell what the Naval business area will go when it comes to margins going forward. But it has potential. That's what we -- that's why we've done it as well to do more comprehensive business with combat system integration involved.

Okay. Very good. Maybe one final one from me just on Peru because there's been some news in the past couple of days here of the U.S. saying that Peru has decided to go with the F-16. Have you heard anything concrete from Peru?

I've looked at media the last sort of 24 hours. And if it's true that they have selected the F-16, of course, we have to respect that. We still think we have a better cost-efficient, better offer, but it's up to Peru to decide which one they want. We're looking into details, of course, to find out more, but I don't know more than that right now.

Thank you very much, Henric. We got another detailed question here in -- from the web chat, and it's about Skeldar. You wrote about that you had a good growth in Skeldar and that also you had an improved result from that part. What is Skeldar actually?

Skeldar Is a rotary midsize -- not a midsized helicopter, but it's a rotary midsized drone, you would say, that can do surveillance or yes, it can actually carry effectors as well. And it has had sort of an uplift in terms of contract because it's needed in Ukraine. So it's been part of the packages from Sweden donations to Ukraine. So that's was it is. It's a rotary drone, but a little bit bigger size and it's often used in the naval domain from ships to the surveillance and even actually checking what kind of fuel in the commercial market ships are using because it can sort of what you call it, smell the fuel type of that. So it has potential application-wise.

Okay. Good. Thanks for the clarification. Operator, do we have any more questions on the telephone?

The next question comes from the line of Tom Guinchard, Pareto Securities.

A question on the, let's say, new Surveillance division without Naval Combat Systems. So in terms of mix and margin here on the Giraffe programme. You said the 1X is ramping to 300 a year. How much could that contribute to margins? Because my guess is that the smaller systems have -- tend to have higher margins than the, say, the 4As. Is that a correct assumption? Or how should we look at the sort of mix moving forward?

It's very good to have sort of volume on that side. You're absolutely right. It does have good margins, and it is really cost efficient also from the customer side in terms of how capable that sensor is, and that's why the demand is so high. However, it's not -- as I'm trying to allude to, in the most expensive sensors. So if you look at the portfolio of Surveillance, of course, the GlobalEye business and a more long-range type of sensor capability, is, of course, creating sort of higher volumes in terms of revenue, but the more sort of G1Xs that we get out of the house and sell, of course, that helps the margin. No question about it. But how that will balance sort of the other parts of the portfolio is a little bit hard to say right now. When you get big contracts on the GlobalEye, that will be dominating also good margins, but maybe not as good as a G1Xs. But it helps that much I can say.

And in terms of R&D, are you looking at radar systems that are even more long range? Or are you sticking with the sort of existing platforms and building on them?

Well, I mean, we're not in the line of sort of those super big long-range systems, but we do systems up until sort of 500 kilometers on the land-based side, same on the Naval side. And then we have the whole portfolio to the G1X, which is 150 kilometers to 200 kilometers in terms of range. But -- so that's where we are, and we are investing, of course, in fighter sensor capability, which is important to us.

And then other versions of unmanned capability when it comes to airborne early warning. So there's lots happening on the sensor side for sure. But that's sort of where the R&D is going. And the other big portion of the R&D is, of course, autonomous systems in all domains, when it comes to the air domain, land domain and -- but especially now the air domain and the naval domain. And using AI is another big thing in terms of R&D right now is to give you a flavor of where R&D is going.

Thank you very much, Tom. Operator, do we have any final question in the telephone conference?

The last question comes from the line of Afonso Osorio from Barclays.

Micael, you had -- I think you mentioned before that you expect positive cash flow going forward. Is that on the annual figures? Or would you expect positive cash flow from a quarterly basis this year as well? Just double checking on that.

And then on the T-7 program, I appreciate it's still quite difficult to see the phasing of this in the coming quarters. What is the current run rate on the profit loss from this contract?

And then just one final one quick on the Middle East situation. When do you probably see this incremental demand flowing through your numbers? Is it going to be mostly from 2027? Or do you expect something extra in 2026 as well?

Well, on the T-7, I mean, you can look at last year, roughly SEK 100 million a quarter sort of on average and under-absorption, that will improve when we get more platforms out of the facility, of course. So that's roughly the run rate, if I remember correctly. Then the Middle East is -- we have some sort of business in Middle East. It's sort of Airborne Early Warning. It's some command and control, but -- and then sensors. And there is substantial demand on the sensing side right now and how much that -- where that will go, some deliveries is happening as we speak, and then there will be more deliveries coming. We've already delivered from demand and delivered within 2 weeks. So that's why it's important to manufacture sort of G1Xs on speculation rather than on contract. The first one was...

Was that, do we promise a positive cash flow every quarter? Or is it more than a year?

The guidance we have is, as you know, sort of cash conversion higher than 60% over the period of '23 to '27. There are always fluctuations between quarters when it comes to cash flow, depending on where the payment milestone lies and how our investments comes into play. So I can't sort of -- I can't give you any specifics on each quarter. But I can conclude that despite substantial investments this quarter, we had a good operational cash flow, which is excellent, which means that we get payments from our customers as well continuously.

And it's important to develop that way, either sort of advanced payments to finance initial things in programs or dense milestones in the contracts that doesn't mean that we have to be sort of acting as a bank towards the customer, and we're moving in that direction. So cash flow positive is important and more than 60% over the period.

Perfect. Operator, I think we have a final question. Is it from Morgan Stanley? Or do you have anyone left in the queue?

Yes, Marie-Ange Riggio from Morgan Stanley.

I have two actually. The first one is on Aeronautics. Can you just describe your production ramp-up of the Gripen because I think like you have quite a target internally to go to 20 aircraft, 30 aircraft in the future. So maybe just can you remind us what is your current production rate? And where are you in this journey to increase the rate?

And the second question is on Ukraine because we have seen increasingly [indiscernible] increasing conversation about the EUR 90 billion loan for Ukraine from Europe recently. So what will imply for Saab as a whole for the whole portfolio? And probably have you seen any progress in your discussion with them about the size of this contract? And can this EUR 90 billion loan be a source of funding for at least a first batch?

Well, when it comes to Ukraine, you're right. I mean, positively -- positive news on that sort of the funds will be released, of course, the EUR 90 billion. And from that, the EUR 60 billion is supposed to be used for military investments. And I assume it's not up the industry to create a funding structure of a deal on the fighter aircraft, but some of that money must be used, of course, for the fighter acquisition and then it has to be supported from other countries like Sweden and others that want to support Ukraine with fighter capability going forward.

So that's moving in the right direction now, but we don't sort of wait for that in terms of the discussions with the end user on the fighter discussion. We are, of course, working on the proposal and the negotiations as we speak on how to, over a period of time, get fighter capability to Ukraine as quickly as possible, which means that we are also looking into investments for that sort of ramp-up that, that would mean if they go for in the end over many years, of course, at 150 aircraft, that would mean that we have to sort of ramp up for deliveries on that from '28, '29 going forward. So that's we're doing as well. The first one, once again?

First one was -- the target capacity for Gripen, as we said it [indiscernible].

So, let's say, we are at roughly 15 a year now. And then we have now started to deliver from Brazil hub. And then we are looking at depending on the contracts that we get to be sort of somewhere between 20 to 30 and more likely to the higher end of that span. So that's how I see it. And that is as quickly as possible. But I would say sort of to be around 20 in a year's time is quite possible or a couple of years' time, a little bit higher than that. So that's sort of the time frame a bit generically speaking.

Thank you very much. Are you right with that, Marie-Ange?

Yes. Thank you so much.

Thank you very much. And I think we also have -- did we have a final question also, operator?

The final question is from Daniel Djurberg, Handelsbanken.

Sorry if this question has been asked already, I had to jump into another call for a minute and ask some questions there as well. But the improvement seen in corporate and other primarily related to the UMS Skeldar operations and high operating income from minority portfolio. Is that sustainable? Or was it one-time items more or less or how to think?

I can answer -- we had that question earlier, but I can answer it again. No worries at all. No, what we think is when you look at corporate, one good level to look at is the level that we had last year for the full year as a rule of thumb. In corporate, we have several costs that are depending on prioritization and costs that come later in different quarters. So -- and it's cost related to IT security. We're also building up our digitalization units and also costs related to the share matching plan and shareholder programme that we have. So different types of costs in corporate and changes over the quarter -- varies over the quarter, I would say.

Okay. Operator, do we have any further questions or...

We have no more questions at this time.

Okay. So I think with that, we thank you, everyone, very much for listening into our presentation of the first quarter of 2026. We will be on the road now first in Stockholm, then we are going to Copenhagen. You can meet us also at the Eurosatory show in Paris later. And then we will also be in Frankfurt. And then we will have the Q2 report in July.

So thank you very much for listening in, and have a nice day. Thank you.

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 Relations, and I will be the moderator here today. With me here in Stockholm, I have our CEO, Micael Johansson; and our CFO, Anna Wijkander. Micael and Anna will present the report, and then thereafter, we will conclude with a Q&A session. [Operator Instructions].

So with that, a warm welcome, and I'll leave it over to you, Micael.

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 SEK 80 billion in organic growth, SEK 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 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, 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 geopolitical tensions around the world, as you all know. And -- 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 a record order bookings, as I've said, and a very high backlog of SEK 275 billion.

Now a big thing that happened during the quarter, of course, was the selection by Poland for the A26 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 sort of during this year.

And then, of course, we have shown that we are capable in extending our capacity and expanding that. We -- 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 U.S. 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 Saab, 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 Gripen to Colombia, EUR 3.1 billion that we are now executing, of course, according to plan. And then we have the GlobalEye that came in very late last year, which was really a good win, of course, the 2 GlobalEyes 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 weapon side is adding to an excellent sort of year for us when it comes to order intake. So order bookings of SEK 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 quarter -- last quarter then '25, the fourth quarter. Of course, we have all noticed a fantastic order intake of SEK 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 SEK 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 is really good, including also the EBIT growth of 50%. And then as I said, the volatility in the operational cash flow side is over the year is quite sort of big.

So of course, we had an extremely good fourth quarter to generate SEK 5.3 billion over the year, SEK 6.3 billion. And as we've said all the time, we promised 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 Saab has 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 3 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, sophisticated, you can call it a loyal wingman and autonomous systems.

And that, I think, is the 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 we're still sort of affected by the under absorption that we have 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're 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 Gripens 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 SEK 90 billion. 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 U.S., 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 year. So that's an amazing result. Surveillance did have a very good quarter. I mentioned the GlobalEye from France from a market and order intake perspective, but also a strong demand when it comes to our EW equipment, our sensors, the Giraffe 1X, our fire control sites for the CV90s, but also other sensors, the weapon locating radars, Arthurs. And they are picking up on the project execution, and we see a substantial growth also here quarter-to-quarter of above 50%.

And we have -- we just want to mention that we have now divested completely TransponderTech, which affected the EBIT of the operational income of Surveillance by SEK 336 million. But even without that, they did a 10% result during the quarter. So that was a very good step for Surveillance.

Kockums 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 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 work diligently on the surface side going forward. But we have a growth -- very good growth also in Saab Kockums of 20% and good project execution. And of course, also the Swedish A26 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 cybersecurity perspective, but also how you set up resiliency in an organization.

So that is, of course, the growth is driven by increased number of consultants, but they are growing in a very nice way, and they are now a SEK 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. 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 are 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 on a good path supporting the scientific-based target 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 are 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.

And we -- 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 really -- 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, Micael, 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 the sales growth. You know we are growing the company substantially. And during the last 3 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, 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 more 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, that 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 grew by 19%, although the margin is a bit lower compared to what it was last year in Q4, and that is primarily related to project 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 a growth in 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 GlobalEye 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 TransponderTech 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 SEK 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 improved substantially compared to last year. And here, we have a positive impact this year from the SEK appreciation, where the revaluation of our tender portfolio from currency hedge 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 grew by 51% over the year. We have talked about the cash flow. Micael 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 SEK 12 billion approximately. And we have increased our investments. So they are now SEK 7.2 billion this year. If you compare to last year, they were SEK 4.8 billion. 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 SEK 4 billion in net liquidity.

So our balance sheet continues to be strong, and we have a cash and liquid investments amounting to SEK 18.7 billion. And adding to that, we have an unutilized revolving credit of SEK 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 SEK 2.40 per share.

So let's again zoom out a bit and look at some trends on what we have achieved so far, '23 to '27. Cumulative over these first 3 years, we have delivered cash flow before operation of SEK 26.4 billion. That is a strong enabler for us that we have been able to invest more in capacity expansions and 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 SEK 15.5 billion. And measuring of the period, we have achieved a cash conversion of 62% so far. and generated approximately SEK 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, SEK 169 billion on the year and SEK 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% '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 that has been strong for -- the growth has been strong over the last years, amounts now to SEK 275 billion and corresponds to 3.5x our sales that we had 2025. So this is really supporting our long-term growth.

So by that, I hand over to you again, Micael, to guide us through the midterm targets.

Thank you so much, Anna. And yes, coming back then to our medium-term targets, I mean, one has to reflect a bit upon that this is our way of measuring progress over time, of course, and our best assessment of how this business will evolve over time. And we have performed really well.

As you know, Anna mentioned, we have had 24% in average growth over the period of '23 to '25. And as I will show shortly, we are increasing our now target to 22% in average over the period of '23 to '27. We think we have a very strategically positioned portfolio, of course, that is fitting the market demand in a very good way.

And now when we see the product offering growing and the contracting order intake on that side growing, in combination with better performance on the platform side, even though I recognize the fact that many of these sort of campaigns are not only about the great offering that we have, but also political decision. I think we have a very good position having both in our company.

And we have shown now during the last few years that we are able to ramp up both from a sort of increasing our company in terms of great employees supporting us, and we have a very attractive company to come and work for, but also our capacity increases when it comes to production and getting a lot of the backlog sort of delivered to our customers, which is incredibly important.

We will continue to invest and never compromise sort of anything that has to do with the future when it comes to R&D and new capabilities, embracing new technologies. and continue to expand capacity, of course. So we will continue to invest to make sure that we can meet this market demand.

And now also going into the target upgrade that I will show you, we -- of course, as Anna showed just shortly before, we have a record order backlog of SEK 275 billion, which has now also increased in terms of how that is spread over the years. So all in all, this is a very good position that has led us to going from a previous target perspective of 18% average growth over the period '23 to '27.

We have upgraded that now to 22%, quite a step for the full period up until '27, which implies then, of course, that we will generate roughly 20% average over the next 2 coming years, including '26 and '27. We continue to reiterate our targets of growing our EBIT more than the sales growth, and we also continue to reiterate our target of having a good cash conversion of more than 60% despite all the investments that we are doing now and going forward. So that's a good sort of sign of that things look very good going forward.

And from that, I am pleased to take questions.

Thank you, Micael and Anna, and let's go over to the Q&A session. [Operator Instructions] So please, operator, do we have the first question from the telephone conference?

[Operator Instructions] The first question comes from the line of Daniel Djurberg, Handelsbanken.

Congrats to the stellar performance. I would like to ask a little bit, you obviously have a great order visibility on both volume and mix for '26. And I was wondering if you could give -- share any more information about how to think on operational margin development in '26 based on this visibility perhaps on group level or possibly in some of the business areas. That would be grateful.

Well, thank you. First of all, I mean, I think we -- as I said, we have a good market position. And we, of course, see a good trend in terms of growth on the product side. When I say product side, I mean, Giraffe 1X, the RBS 70, the support weapons side, training and simulation, you name it. It's lots of products that is growing in a very good way. But then there are sort of a number of campaigns that are quite big, and they are, of course, more difficult to sort of assess when they -- when the decisions will be made and how political they will become and all that.

So I mean, an obvious one is that we must contract now Poland on the submarine side, which is roughly, as we've mentioned before, a SEK 30 billion type of contract. But that's sort of something everyone knows. Apart from that, of course, there are an assessment of the GlobalEye within NATO that will come to a decision hopefully now in the first 6 months of this year. But I can honestly not sort of predict completely how the mix will look like in the end of the year. But broadly speaking, we have quite a few campaigns that sort of can generate good order intake, supported by the continuous growth on the product side.

I won't go into talking about operational margins and what have you more than that we continue to grow this top line and we continue to grow the EBIT more in terms of growth. And obviously, I think we are we are doing well on that side. The mix will define and there will be different mixes in different quarters exactly where we will be. But sort of that's the trend that we have right now. And this is something we are careful about also looking into the investments we have to do and the R&D efforts we have to sort of continue to perform really well in to be capable going forward. So you won't get sort of a specific number or a range or anything. You have to, unfortunately live with sort of the guidance that we've given on growth of EBIT, I think.

The next question comes from the line of Ian Douglas-Pennant, UBS.

So on your medium-term guidance, so there's some language in the press release saying it's implied 20% growth expected in 2026 and 2027. Could you help us understand the phasing within that? I mean, I know you don't want to give 2026 guidance, but can you just help us roughly understand, presumably, there's more growth in '26 and '27. And then related to that, again, how much of that guidance is secured by orders you've already received and where any risk around that guidance?

Well, as you saw, I mean, from what Anna showed on how the backlog is spread over the years, it's high numbers already in the backlog, both for '26 and '27. And then, of course, it's up to us to generate sales new orders. And that is sort of varying every year, but it gives us quite a confidence that we can reach sort of an average, as I said, 20% growth over this year and next year.

And I won't sort of go into any sort of specifics on '26 versus '27 because then we go into guiding for both years simultaneously. And that we've decided not to do that. But take a look at the backlog, how it's spread and you can have a view of sort of what can we achieve in terms of sales new orders, which can be also looked upon in a retrospective perspective, of course. But that's where we are. So I won't divide '26 with '27 in a more sort of detailed way. This is where we are. And 20% average is good.

Perfect. Thank you very much for your question, Ian. Do we have a next question from the telephone conference?

The next question comes from the line of Tom Guinchard, Pareto.

A question on Surveillance margins here just looking into '26, '27, '28. You mentioned on the Capital Markets Day earlier last year that you had some unprofitable business that you're managing? And how much of that has been dealt with as of today and sort of margin potential there for surveillance going above the 10% EBIT margin line. Can you comment anything on that?

Well, I think, I mean, as we're showing right now, surveillance should be a profitable business. I'm not going to guide in detail on that, but they should be on or above 10%. So that's sort of the business they have in the mix. And I would say that we have taken steps to sort of either mitigate loss-making business or sort of making sure that we have a sort of a crossroad decision on whether that business should be within surveillance or not. But we're not done yet. That will continue a bit this year to improve even further.

So if you're asking, have we divested the loss-making business yet or sort of stopped sort of the losses completely? No, not yet. We're working it. And we'll tell you when we have done it completely.

Perfect. And just a quick follow-up on the T7. You said a couple of years ahead with negative numbers here and increasing cost. You said throughout '25 that costs actually accelerated for the T7 program. are we looking at '28, '29 or mid-'27 that you previously indicated?

I think we're looking at '28, '29 actually. But with one sort of comment on that, this is based on the numbers we have now in our contract and how quickly the U.S. Air Force wants to receive sort of the aircraft going forward. This can change a bit depending on renegotiations between Boeing and the U.S. Air Force that will sort of flow down to us, and it can change from a margin perspective overall in terms of getting additional contract into the business. This has not happened yet.

But as we speak, I mean, you have to think we have probably 25 to 30 aircraft in the pipeline in the factory right now. And it's just sort of to get the flow out of the customer that we need to achieve. And it's a bit sort of -- I can't be sort of exactly sure on which year we will now pass sort of going positive perfectly, but it's not this year, I would say, if I'm going to be honest, but Aeronautics as a whole will improve. But this is where we are on that program. It will be a good program to us.

There will be many, many aircraft delivered to U.S. Air Force and others. So this is numbers that we're not used to on aircraft side. This is 1,000 aircraft and beyond that in the end. And we're just in the beginning having delivered a handful of aircraft. So yes, that's where we are. So it will be a good thing, but it unfortunately takes some time.

Many thanks, Tom. Let's take 2 questions that we have received over the web here. One is around Canada in Gripen, and it was a lot of discussions and media around that for a couple of months ago. Are we seeing any progress? Or have we -- is that relation progressing?

Well, Canada is, of course, looking into -- looking to a crossroad decision, I would say. There are 2 parts of Canada. One is campaigning to win a global business in Canada, and we're waiting for sort of that procurement to happen. That's a campaign. Then Canada is looking into, do we want to have sovereign capacity when it comes to aeronautics having more of a -- not to be too dependent on the U.S. by having a dual fleet, maybe both F-35 and the Gripen.

And there, we are providing all detailed information that they need to understand what it would mean to Canada. How quickly would we do a technology transfer? How quickly can we build up a Gripen hub in Canada for manufacturing? And how would they be involved in the full export market perspective of the fighter business. We're providing that, and they're asking questions.

We are providing that, but it's sort of a very high-level political decisions that they have to make. And exactly when they will make that decision, I don't know. But of course, we have intensive discussions around this, absolutely.

Perfect. Many thanks, Micael. Another question on that is that we have seen media figures that you're ramping up the Gripen production capacity to around 2030 in the coming years. Are we progressing with that? Is that going according to plan?

We are. We're taking many, many initiatives and investments to make that happen. And we already now have 3 contracts to deliver to Sweden, Brazil and Colombia. So that is going according to plan, and you will see more and more aircraft leaving the factory in Link�ping, but also in Brazil. And if we are successful in the market, maybe we'll build another hub somewhere. But right now, we're focusing on the Swedish and the Brazilian hub, of course, to expand that. And that is going according to plan.

Perfect. Thank you very much. Operator, do we have any further questions on the telephone conference?

The next question comes from the line of Carlos Iranzo Peris, Bank of America.

On the GlobalEye, how should we think about the delivery time line of the 3 GlobalEyes to Sweden? Any chance you could put forward those 3 deliveries? And if you can share any time line to go to 4 per year on the GlobalEye?

Well, on the GlobalEye contract to Sweden, I'm not sure we're going to say an exact delivery date on that, but it's not far away. We are working diligently on all 3 aircraft now. So Sweden quickly needs the capabilities. In the next couple of years, they will have it. And that's sort of what I can say about the Swedish contract. And then if the question was the pipeline on GlobalEye going forward, there are quite a few.

I mentioned the NATO initiatives. We have provided information, a request for information from NSPA, the acquisition authority within NATO. And because there are 9 countries now, the partner countries that want to have a common -- use a common NATO capability. And I think we have a great offer there with a great schedule, and there is a gap here, so they need it. So that's an obvious one. The Nordic perspective, I think it's interesting how can the Nordic countries combine efforts in using an airborne early warning capability. It hasn't materialized yet. Sweden has contracted 3.

Let's see if we can get the other countries involved in that. Then we have an interest. France actually contracted 2, but there is an option for 2 more in France. We have an interest from a couple of countries in the Middle East for this capability. So yes, there is a great interest for GlobalEye, and we're also increasing our capacity to deliver a number of aircraft per year also on that side.

Perfect. Thank you, Micael. Sounds promising. Operator, do we have next?

The next question comes from the line of Bj�rn Enarson, Danske Bank.

A question on Dynamics and the capacity expansion that you are doing in India, also Sweden and United States. Are there any -- how would that impact the profitability like near term, midterm? Or are there anything that will distort the picture? Or will it be a good drop-through from day1?

I think the mix of things will -- we haven't taken into account that, that will have sort of a moment effect somehow at a specific moment, an effect on our profitability. I think it will be a very automated setup in the U.S. and also to some extent in India. And then it more depends on the mix of how the contract looks like in our facilities there going forward.

When the individual salt munition production comes into play in Grayling in Michigan, of course, it depends on volume rather than whether the facility is efficient and also combine that with Ground-Launched Small Diameter Bomb. It will be good contributions to capacity. We haven't sort of taken any assumptions on that it will affect profitability really.

We will, of course, have some sort of learning curve in these facilities, but the Dynamics will still sort of have good numbers going forward in terms of the mix that we see. I wouldn't sort of connect a specific factory that comes into play to any effect on Dynamics as such. It's not on that level anyway, that it will affect us.

I think I can just add...

Normal business basically.

And the capacity increases are really happening stepwise. It's not just a big boom. It's happening in different places and different steps gradually.

Good. Thank you very much, Bj�rn. Operator, do we have another question from the telephone conference?

The next question is from Afonso Rosario, Barclays.

Micael, can I just follow up on this backlog situation? Given the significant number as of today, can you tell us the average duration of the contracts that go beyond 2029? I'm just looking at this Slide 21, where you showed the phasing over the coming years, and it will be super helpful to have your views on the story beyond 2029. That would be great.

Yes. Anna showed a slide on that, but it stretches, of course, until 2029, right? Yes. Okay. So well, I think it's a good spread over the years. I mean, already, if you look at '29, it's like after that, we have still like SEK 35 billion to SEK 40 billion in backlog to deliver. So it's a good spread, but it's also quite high level sort of during the first few years that has increased substantially from sort of the same position we had last year. So it looks good from a long-term perspective.

I mean the big platform contracts are adding to the long-term perspective, while the product side of things is very much more short term, like sort of within 2 years. So when we get contracts on the platform side, submarines, GlobalEyes, Gripens, of course, that sort of extends our backlog over many years to come. And that's good for us. So that's why the balance is important. But then you can't predict in the same way exactly when you get more product contracts. You don't get 10-year contracts on Karlskoga ammunition, for example. That's not what we have. But the platform contracts are quite sort of beyond 5 years in terms of how they spread.

So I can only say we have a very good market position, as I tried to say, and we are confident that the capacity increases that we're now taking into the operations will sort of give us a possibility to meet the market demand. And we don't see that sort of diminishing in any way as we speak. And as I said, difficult to say exactly when the bigger contracts will come into play and how political they will be. So this is the world we live in every day. But it's a good spread and a good backlog.

The next question comes from Mikael Las�en, DNB Carnegie.

Okay. I have a question around the order backlog and the capacity situation. I'm wondering if you can say something about where you are most capacity constrained today and where are the 2, 3 concrete bottlenecks that you could fix in '26? And also comment on the CapEx coming couple of years.

Well, when it comes to where are we most constrained, I mean, I would say if there's one thing that we work diligently now, it's maybe not our factories or capacity increases as a prime that we're worried about them being set up. It's the material supply, it's the supply chain that we work diligently. So we know that the ecosystem of companies we work with supports us in this growth journey. There are pain points there.

That's sort of -- but I wouldn't point to any specific, we have certain issues on the missile side. We have certain issues on the ground combat side, but we also have issues on the sort of fighter side. So everything, if it's summarized, comes down to we have to be extremely diligent on making sure that we have a balance by sort of what kind of inventory level do we have to have to support our commitments and how can we assure that we have commitments from our supply chain to support us in this growth journey. I wouldn't point to any specific area where we have more problems or possibilities than any other areas, I would say.

We're doing well, but I'm just saying that this is a huge ecosystem of companies in the supply chain at different tier levels that everyone uses. So it's not only us. So we also have to make sure that we are sort of proactive in how we work with our suppliers. So we get priority.

To add on the -- regarding your question regarding investment levels, I mean, we have increased investment substantially this year, and we see continued need for high investment levels going forward as well. So...

Absolutely. Good. Let's take another one here from the...

It won't be less than the 7.2% that you saw this year. That much I can say. But still with good sort of -- as you've seen good targets.

Good. Another question here from the web. You were selected by Poland in quite fierce competition. Why do you believe you won there? What's your edge on the submarine side?

Well, first of all, this is about sort of how do we, in this region make sure that we protect the Baltic Sea and create returns through acting in the Baltic Sea. And of course, the A26 is a fantastic conventional submarines with capabilities that are adapted to that environment.

And then, of course, Poland and Sweden have -- both countries have naval capabilities that can work together in an interoperable way. And we can train together, of course, if we use the same submarines. So it's both a security policy perspective, defense and deterrence perspective, adding to the capability in the Baltic Sea. But then it's about that we have a great product as well.

And on top of that, we want to establish industrial collaboration so we can have redundancy in capacity at both sides of the Baltic Sea. So it's a number of parameters, of course, that are really logical to sort of make this happen between Sweden and Poland and between Saab and Polish industry. So -- but in the sort of the foundation of everything is that we have a great product.

For sure. Yes. Good. Another one, you talk a lot about innovation. Can you give 1 or 2 examples, either of something you just have released or something that's really keen about that's coming out?

I hope that people understand what we did sort of during '25, during the summer, and we're continuing to do that to have an AI agent supporting a pilot in a fighter aircraft like the Gripen E is something quite unique and how much that can add to the work sort of load of a pilot in different types of emission.

It's a fantastic innovative example of innovation example of what we quickly can achieve with existing air forces. But then, of course, as anyone else, we have innovative sort of R&D that has led to counter-UAS systems, for example, the local system, which is involving our C2 systems, our radars and our track. We're part of what was launched this week, Sweden and Denmark spending SEK 2.6 billion on counter-UAS systems for Ukraine.

And of course, our C2 and sensors are part of that as well. And then we have SOM technology on the quadcopter level, so to say, that can do missions for the Army. And we're working sort of specific autonomous systems also in all domains. So we have many, many innovation initiatives that we are spending money on to embrace new technology and work with partners on.

Great. Operator, do we have a final question on the teleconference?

We have a follow-up question from Renato Rios, Inderes.

Congratulations to your team on a great quarter. So you keep growing a lot and you have increased your medium-term target for the revenue. In absolute terms, that means that you -- from an observant point of view, it's quite challenging in terms of absolute values that have to be delivered like volume-wise.

And in the industry, it just -- it takes a bit to align capacity, sometimes it takes years and you have to build factories. So obviously, you are ahead of that because you are hiking your medium-term revenue targets. So based on that, could you give, I guess, as much context as you can on the capacity requirements to deliver the growth that you're expecting through 2027?

I mean, is the capacity and the supply chain already fully or mostly aligned to deliver on that? And included in that answer, you could just -- it would be nice to hear you reflect out loud about the constraints that would make it difficult for Saab to deliver on the new targets.

Well, it's, of course, impossible to say that this specific capacity in terms of a facility or a factory needs to come into play for us to deliver this portion of our backlog. It is not happening sort of like a one-off thing. It's happening gradually. And specifically in Sweden, when we invest heavily in the Karlskoga area, where we have 40 sort of construction projects ongoing, one by one, they come into play to support this backlog.

Now we have capacity to do lots of the backlog. Our investments are also meant to take us even further, of course. It's not that we have -- everything we've talked about in terms of investment do not have to come into play fully for us to deliver this backlog. It's not that much connected on that level. We can do lots of this with the capacity we have, but we also need to have more going forward. That's our view of things. I don't know how to elaborate more on that.

Of course, the factories we've talked about with that capacity, but they also need to be filled with new orders. So we have both in this. That's all I can say. I mean, we are taking a big responsibility from the demand perspective in the market to be proactive to provide capacity, which all politicians are saying that we have to because the growth will continue. So it's not 100% clear answer.

But you can look upon, we have up until now, in certain areas, four, fivefolded our capacity compared to what we had like in '22 in terms of ammunition and sensor capability, it's a lot higher already. But we think more will be needed. And some of it is needed to sort of deliver on the customer commitments that we have in our backlog, but some of it will be devoted to future contracts. I don't know how to answer the question in a more detailed way.

Operator, do we have any final questions on the telephone conference?

The final question is from Ian Douglas-Pennant, UBS.

You mentioned that late in the quarter, you booked some GlobalEye milestones. Could you help us size that effect, please? Just -- I'm sure you're not going to give us an exact number, but just roughly how important was it in terms of driving the outperformance versus expectations in that division, please?

Yes. In Surveillance, we did have an effect of recognizing revenue and profit from the contract we got in France, obviously, but it's not super substantial. I don't want to give an exact number to it. It would have been good numbers anyway, but there is some revenue recognition and profit recognition from that contract because we have been selected and we had agreed to start sort of our work to make sure we keep the schedules and that we did. And that we could, of course, recognize then when the contract was formally signed. But it was not so substantial, so that drives this fantastic quarter in any sense.

And operator, I don't think we have any further questions in the telephone conference. Do we?

There are no more questions at this time.

Okay. But I think with that, we will conclude the presentation of the Q4 and the full year results from us here at Saab. Importantly, we will be on the road now for both here in Stockholm, Paris, London and Helsinki as well during the coming weeks here. So looking forward very much to see you out there, and then we report the Q1 then in April. So thank you very much for listening in today, and have a nice day.

Good morning, everyone, and welcome to the presentation of Saab's Q3 Report for 2025. My name is Johan Andersson, and I'm honored to have been appointed Head of Investor Relations here at Saab. With me here in Stockholm, I have our CEO, Micael Johansson; and Anna Wijkander, our CFO. Anna and Micael will present the report, and thereafter, we will start the Q&A session. And you can either ask your questions over the phone or you can enter them in the web interface, and I will read them out loud here in Stockholm.

So with that quick intro, I will hand over to our CEO, Micael.

Thank you so much, Johan, and thank you all for joining us this morning for the quarterly 3 report and the first 9 months. I want to welcome Johan as well as Head of Investor Relationship. So you're most welcome to the company. And I also want to thank Merton Kaplan for an excellent job during so many quarters and back old -- looking backwards. And then I wish him luck, of course, in his continued journey within Saab.

Before I go into the highlights of this quarter, I just want to say a few words about the day we had Wednesday in Linköping, where we the had honor of receiving President Zelensky and his delegation and also our Prime Minister and his delegation to host them for this important statement and letter of intent that they signed in the direction of creating a strong air force in Ukraine going forward.

This was, of course, a unique day and it was an important statement which we have been waiting for to now continue our journey in exploring scenarios and planning for how an establishment and delivery so quite a few aircraft will look like in Ukraine. And it also adds to our assessment of investments that we need to do looking into that. With all due respect, I mean, there's no contract yet. Still a lot of work to do. You heard the President Zelensky and also Prime Minister Kristersson talking about sort of the financing solution and what needs to be established there. And then, of course, there are a couple of other things. But we will start doing our work to sort of support this going forward.

And it was great to see our employees in Linköping spontaneously applauding and sharing when President Zelensky stepped out of the car, and we're so much committed as a company to support Ukraine going forward. That was a unique and fantastic day. And now we will work hard to sort of make this happen as well, of course.

So with that, I just want to go into a few highlights then of the quarter. It has been a strong demand in the market. We still have lots of geopolitical tensions, of course, around us and strong demand from many countries in all avenues of our portfolio and we develop contracts really well. We had a strong quarter when it comes to order intake, as we've seen. But it's also timing. It's sort of on the same level as the quarter last year. But in October, only after the closing of this quarter, we have SEK 16 billion in order intake. So we're looking toward a really strong year when it comes to contracts as well.

We have a number of campaigns apart for our product sort of demand in the market that we are running, of course, both when it comes to the Gripen side, and we'll come back to that; and also GlobalEye, where a number of countries have a huge interest in our system. As you know, we've been selected by France, and now we're just waiting to sort of -- them to sign the contract in that country as quickly as possible. And then we have interest actually from NATO and from Germany and from Denmark, and a number of other countries is looking into our GlobalEye system.

So there is still a need to continue to invest in capacity, which we're doing in a diligent way, I think. And looking at the execution this quarter, which has been solid in sort of a normally weaker quarter, but it's really been stronger this quarter. And as you've seen, I mean, the first 9 months is now an organic growth of 21%. So we've done really well also adding the third quarter to the first two ones here. And we will continue to look at our development of our profitability, which has also been good. But we'll also never trade off versus sort of investing in capacity to sort of meet the demand in the market, of course, but also being relevant when it comes to new technologies that we have to invest in going forward.

All in all, it's been a strong quarter, and we have, as you've seen now, upgrading the outlook for '25. I will come back to that in the end. But we're now sort of raising our guidelines on top line to 20% to 24% from 16% to 20%.

So back to the numbers. As I said, almost SEK 21 billion in order intake, a good increase in the medium-sized story. It looks a bit different between the quarters. And I think, as I said, we added SEK 16 billion only in October, which we have press released. So it looks really good going forward as well. We have a book-to-bill of 1.3x and a very strong organic growth in this quarter, the strongest quarter we've ever had on top line and also in absolute numbers when it comes to EBIT. So the margin is now 8.7% in the quarter but 9.3% looking at the first 9 months.

Cash flow is on the same level. If you look at the first 9 months, sort of minus SEK 1 billion roughly. We have still the same view as last year. We will generate a positive cash flow. We have a number sort of important payments coming in now during the fourth quarter. So I'm confident that we will meet our guidelines on that as well.

A few statements about the different business areas as usual. Yes, of course, a big interest in the Gripen conversion now. We have contracted Thailand during the quarter, the first 4. And they are looking into further contracts as well, of course. The batch 2 and batch 3 of their contract is being discussed already. And then, of course, we have been selected by Colombia and we are negotiating a contract there. We have no contract yet but we are moving ahead in a good pace in Colombia. And then, of course, the interest now from Ukraine is something we will sort of take into account and start planning for, as I mentioned.

We have a good strong quarter from Aeronautics. They have gone 34% up sort of compared to the quarter last year. So they had really good project execution in the Gripen program mainly. But still, the profitability level is affected by ramp-up costs that we have mainly in the T-7, the trainer aircraft in the U.S. in West Lafayette. So that is still sort of a burden to Aeronautics, but they're moving in the right direction definitely.

Dynamics, again, good growth. A quarter that is normally quite weak for Dynamics has been quite strong actually. If you look at the first 9 months of Dynamics, they have grown 34% or something, maybe even 36%, if I remember correctly now. It's an extremely strong year for Dynamics. They have had a number of medium-sized orders but also a large one from the Czech Republic when it comes to the medium, short-range air defense system RBS 70. So there is still a big demand in the market and we are investing heavily, as you know, to increase capacity in this area. I think we have only in the Karlskoga sort of 40 projects ongoing to expand everything and building factories in the U.S. and in India, as you know. And they have a huge backlog now of almost SEK 90 billion as we speak.

Surveillance, also a very interesting portfolio. I said that the campaigns for the GlobalEye are a number of them now. So we are intensifying that, of course. I hope that we will see this GlobalEye system, which is the state-of-the-art system, most modern one, taking a bigger position also within the Alliance with multiple countries going for GlobalEye. So that's what we're working. And the first one that we were selected upon is, of course, France that you know all about. So there is not only on the GlobalEye side, but the surface side, the surface sensors, the sensor side of Surveillance is really strong and getting more and more contracts. And they deliver quite well as well, growing 8%.

And honestly, the quarter 3 of Surveillance is the strongest ever top line-wise. So they are doing well also when it comes to project execution, and they have a huge potential going forward, I would say.

I also want to mention that we are divesting TransponderTech, which is communication and automatic identification system type of entity, as we have also already press released. And we will close that deal now in quarter 4. Also a very big backlog on the Surveillance side, as you can see, SEK 55 billion.

Saab Kockums also have a big interest in many segments. We're working campaigns now on the submarine side with Poland, and that we're putting a lot of effort into, of course. And it makes lots of sense to have Sweden and Poland work together to protect the Baltic Sea. But also on the surface side, we have the Swedish corvette/frigate program coming out, which is called Luleå class, which we are also seeing as a big potential going forward. But there are many other export contracts where we are involved. And we have also now invested but also got the contract to look to design and test a large underwater unmanned vehicle with the Swedish Navy, which is great to see that we're moving in that direction. Because also on the Navy side, it's not only in the air you will see collaborative combat entities working with manned entities. That will also happen on the surface and subsurface going forward.

We also got a task, which is a fantastic honor, to lead the project within NATO when it comes to underwater battlespace project, connecting and creating interoperability between manned and unmanned systems. So that, we look forward to execute. And the growth is really good, 17% year-on-year when it comes to the quarter, and they are really moving in the right direction. And they have a substantial backlog. I need to mention, of course, that after the quarter in October, we got an additional contract, as you've seen, on the submarine side for SEK 9.6 billion, adding to the backlog now going forward.

And then finally, when it comes to our business area, Combitech. We have, of course, a very well moving forward Combitech, our technical consultant entity. They are growing also rapidly year-on-year 17%. It's all about sort of employing new people, of course, and getting utilization into the operations that create these numbers. And I think we've employed 200 people up now only in this quarter from the Combitech side, and that adds to the growth, of course. We're doing well as a consulting company. We're absolutely in the right areas, in the right niches right now, cybersecurity, critical infrastructure, critical communication, creating security operation centers for many type of industries and also from the -- in the public side, the authorities. And everything connected to total defense in terms of resilience is something that sort of generates business now for Combitech going forward. So they had a good quarter as well, definitely, and they're growing quite a lot over the year as well.

So I just want to say a few words about something that's been discussed every day, every week in terms of what's happening in Ukraine when it comes to drones and what kind of drone capability do we need going forward and counter-drone capability. And also the EU Commission have launched projects now during the last few weeks, which is sort of a drone wall, making sure that we have resilience versus big drone capabilities coming from the East. And I just want to mention that this is something we really are investing in, and we already have solutions in place. We don't talk so much about this, but we have already used these solutions in NATO missions in Poland.

We call one system -- the way we approach this, I say, is to make sure that we are quite agnostic when it comes to what effectors or interceptors do we use. We can use everything from Bushmaster Gun to an electronic warfare type of effectors to nets or kamikaze drones or actually RBS 70, and we are now investing in a new missiles that you've heard about called Nimbrix, which is in a segment between the guns and the RBS 70. So that's sort of agnostic. We can sort of integrate the system that would manage different types of threats.

And the Loke system is sort of a brand name of the system includes, of course, a sensor capability with the Giraffe 1X, which is excellent and the most state-of-the-art radar, that you'll find everything from micro drones to larger drones and cope with many threats at the same time, a commander control system, which is really compact and then an interceptor vehicle that would have sort of the chosen effector on it. That -- a counter UAS system already established in Sweden and used in NATO missions.

The loitering munition side or actually having a known swarm technology capability. We have already released that we have something that is self-organized in terms of software and using AI to have swarm of drones during different types of missions. And I think we are focusing, among other things on not only surveillance but also loitering munition. That is important because of how you would manage an aggressor going forward, not only with support weapons that called Gustav and anti-tank weapons, but you can also use drones to accomplish part of the mission and work together with support missions. So we are involved in this area and ramping up our capabilities, and we already have existing systems.

A couple of highlights from the sustainability area, a very important area to us. We have this quarter established a biogas facility in our site, which is the Barracuda entity in the Gamleby, which is doing camouflage and signature management. which reduces our energy dependence on fossil fuel, of course, dramatically. And if you compare year-to-year in the first 9 months to last year, we have reduced 4% on the CO2 emissions. And we are on a good track now to support our SBTi targets, where we have said we will be 42% down 2030. And if you look at the base year compared to where we are now, we are 33% down.

We have a good progress on operational health and safety. We really make sure that we have a safe operational environment within the company, and we measure this all the time. And we must report every incident to mitigate everything that could happen.

And another thing is, of course, diversity and inclusion. We are happy to see that we are now moving up when it comes to our female employees in the company, now at 27%. That is a very good step, and we want to go further also, of course, when it comes to female managers. But we are moving in the right direction. And since we have employed 2,700 people net up during the first 9 months, 34% of that employment is actually female. So we're going in the right direction. I'm really happy to see this.

So last but not least, I already said that at my first slide that we have -- because of the good progress this year, the first 9 months, organic growth of 21% and also good visibility, of course, into the backlog which is now over SEK 200 billion, and we know what we need to deliver the remaining part of the year, we have now said that we will take this step from 16% to 20% growth rate to 20% to 24% instead. So that's our new guidance. And we still retain the other portion, saying that EBIT will grow more than the organic sales growth. And we will generate a positive cash flow and we are confident doing that going forward.

I just want to thank all our employees for doing a fantastic job during the first 9 months and supporting this growth and the commitment to creating societies and having people in societies safe is a strong sort of purpose of the company, which is supported by our employees. I'm really pleased to see that.

With that, I think if I have not forgotten anything, I will hand over to Anna, our CFO.

Thank you, Micael, and good morning, everyone. Yes, as you have heard, we are delivering a strong third quarter especially from a sales growth and EBIT growth perspective. So I think now it's time to dig more into the financial numbers.

And we start with the order backlog. We left the third quarter with a strong backlog, increasing it to SEK 202 billion. In particular, it was the medium-sized orders that increased during this quarter. They more than doubled actually this quarter. So we booked SEK 21 billion. And we have, since the quarter closed -- we booked additional SEK 16 billion in order intake. So the start of Q4 looks promising. 73% of our orders in the backlog are international, and its Dynamics and Surveillance that is the majority of the order backlog, 71%.

If you look at to the left in the graph, you can also see that we are increasing our deliveries from the backlog for the fourth quarter with 35% compared to the last year. And we can also see that we're increasing the deliveries from backlog the year 1 and 2, that is '26 and '27 compared to last year. So that really shows that we have -- we are in a growth journey and that we are also expanding our production capacity to deliver on our commitments.

Let's turn into some more comments on the drivers of our sales and profitability then. And yes, as you have heard us saying, this was our highest sales and EBIT ever in a third quarter. And we have strong sales growth, 17% reported or 18% organic for the group. And the EBIT grew 16% in the quarter. What's also good to see is that the gross margin is increasing in all business areas in the quarter due to high project activities.

And looking in then to more in each business area, Aeronautics, 34% growth this quarter, driven very much from the Gripen deliveries and high activities in the business areas. Also, we see improvements in the commercial business in the sales growth. However, the EBIT is still impacted by the startup costs that we have in the T-7 factory as well as a bit higher marketing cost for all the Gripen campaigns, and also we're starting to do amortization on a capitalized R&D that's impacting the EBIT.

Dynamics, again, continued the strong growth from Q2. It grow 12% this quarter and also delivered a higher EBIT margin, 19.3% in the quarter. And that is a result also of project execution, several deliveries, a mix situation. You know in Dynamics, we had a lot of delivery projects. And in this quarter, lots of deliveries from ground combat that is impacting the margin in a positive way.

Also, Surveillance grew 8% in the quarter. Good project execution and EBIT level at the same level almost as last year. Here, it's very much deliveries from also the Giraffe 1X radar production that's impacting in a positive way, but also good project execution in the business area. However, on Surveillance, we can mention that there are still negative impact from the Civil business impacting their margins.

Kockums, also a high activity level and a very significant growth in their EBIT margin year-over-year. That is very much driven this quarter from both high project execution and, in particular, in their export business. To mention also Combitech, they grow 17% in the quarter. High utilization, high activity, and as we heard, that they are in -- working very much in an area which is growing as well. And their EBIT margin was on par with their EBIT margin last year if we deduct the divestment that we made in the Norwegian operation last year.

And from a group perspective, mentioning also that on a corporate level, we have some corporate costs that are SEK 200 million approximately higher this quarter, and that is something that we expect to continue. It was driven very much of these share-based incentive program but also somewhat higher costs for IT and security as we're growing the company.

The financial summary then. I think I mentioned all items above EBIT. So I think focus more here on the financial net that turned negative this quarter. And the reason for that is mainly because of the revaluation of shares in a financial investment of around SEK 50 million that impacted the financial net, and we had also a lower result from currency hedges related to the tender portfolio if we compare it to last year. This revaluation that I talked about impacting also the tax rate this year. So compared to last year, it's a bit higher. And then all in all, the group net income is in line with last year and as well as the EPS.

Let's zoom out then to 9 months and look how it looks for us after 9 months has passed. On a group level, the sales increased 20% or organic 21% related to effect on currencies. All our business areas have double-digit growth year-to-date. So that's very positive to see. Also our gross margin is improving 70 basis points, and it's all business areas that are contributing to this gross margin increase, but in particular, its Dynamics and Surveillance where we see the improvements.

So after 9 months, our EBIT is up 30% and we delivered a margin of 9.3%. Year-to-date, the financial net is positive. And here, it's supported by the appreciation from currency hedges related to our tender portfolio. And following that, we also have a lower tax rate decrease due to lower share of taxable income from foreign operations. So net income and EPS improvement driven by the EBIT growth and also the improvement then in the financial net.

Next, our cash flow. I think we can say that we have a strong cash flow from operations despite increased working capital that is driven by our business growth. After 9 months, we have generated SEK 7.3 billion in cash from operations. That's SEK 1.9 billion more than last year. Also in line with our sales growth, we are building working capital, and we're doing that in line roughly with the same amount as we did last year. So if you look at the operational cash flow and deduct the change in working capital, we actually have a positive cash flow of SEK 3.9 billion after 9 months.

But as you know, we need to do our investments. That's something that we have communicated earlier in the Capital Markets Day and continue to communicate. It's important for our growth. And we have increased our investments. SEK 4.9 billion is the amount now. That's SEK 1.7 billion more than last year. And so we end up with a negative cash flow year-to-date. But we expect the operational cash flow to be positive this year since we are expecting several large customer payments by the end of the year.

Finally, on this slide, I just want to mention also that it's very positive to see that we are improving our return on capital employed, it's now almost 15%, and that's driven both by our profitability but also by increased return on capital turnover.

Finally, our balance sheet. We have a strong financial position and a solid balance sheet. Our net debt-to-EBITDA is on a healthy level, 0.1x. This quarter, we have a net debt of SEK 700 million, and that was mainly due to that we have a new -- the lease of our newly opened office in Solna here in Sweden, and that's impacting around SEK 1.3 billion in the third quarter. We have cash and liquid investments of SEK 12.2 billion. And during the quarter, we had issued total bonds of SEK 2 billion additionally. Additional to that, we have an unutilized revolving credit of SEK 6 billion. So all in all, that puts us in a strong position to capitalize on future growth opportunities both through increased investments and also enable us to do potential acquisitions.

So in summary, I think a strong quarter both in sales and EBIT across the business. The group has a solid financial position and we have a strong order backlog to deliver on.

So with that, I hand over to you, Johan, to open the Q&A.

Thank you very much, Anna and Micael, for a great presentation. So let's start the Q&A session. And we will start with the questions from the phone conference. [Operator Instructions]

So please, operator, do we have any questions from the telephone conference?

[Operator Instructions] The first question comes from Daniel Djurberg with Handelsbanken.

Then I will go to Aeronautics, I think. You had a good quarter, nice growth. A little bit lower EBIT margin versus last year's quarter, [ 30 basis point ] I believe. But it's still the -- as you mentioned, the T-7A program lingering. Can you both give us an update on this in terms of both the cost or margin impact and also how -- for how long we should expect this to linger and if it will increase in size or the opposite.

Thank you. No, I think when you look at Aeronautics, I would say that a normal Aeronautics with a reasonable scale of Gripen contracts and what have you should be sort of in -- I don't guide, but we talked about this before, sort of high single-digit numbers. So the effect is still there from T-7, absolutely. We've turned around the commercial business in a good way. We're not sort of adding lots of profitability really yet, but it's still okay.

So I would say still a couple of years, it don't -- it won't go in the wrong direction, it will go in the right direction. But before it's actually a good addition to our Aeronautics business, it will be sort of 3 years ahead from now, roughly, I would say. But it will go in the right direction over time, of course.

The next question comes from Ian Douglas-Pennant with UBS.

So I've got several questions but I'll limit myself to one on Gripen, please. Could you expand on the comments that we've read, I think, in the press this morning that you could expand Gripen capacity very rapidly if required? I wonder if you can just educate us on this group as to what we said there and how quickly that could happen. And in order for that to happen, do you need to see deposits coming in before you consider making those investments? Or would you consider investing elsewhere?

Well, as I've said, I mean, we still need sort of set a scenario, that is, if we now get sort of the financing in place, if the politicians sort that and you get support refinancing Ukraine to go into contract on the Gripen E and expanding the production will be important. The way I see it is that, and I've said that this morning that right now, we are looking at expanding production with investments that we've taken to somewhere between 20 and 30 aircraft a year. And of course, as you know, with the numbers that was stated in the Wednesday's meetings, that sort of would add a lot to that.

So that we're looking into that now, how quickly can we take another step because this investment we're talking about is sort of look to be implemented sort of next year and the year after that, roughly get to that level, and then you can take another step, of course. It will be adding more to the Linköping production lines if we do that, and that's sort of a few years ahead. But it would also mean that we would sort of expand our hub in Brazil. And we are initiating, as we speak, other sort of partnership discussions in countries that would have an interest for the Gripen, of course. So this will mean that we would need another hub beyond sort of the hub we have in Brazil and expanding in Linköping as well.

Well, we said that, okay, if Ukraine push the button, we would deliver the first one in 3 years' time, and that is sort of what we commit to. And then it depends on what is the stretch of the delivery schedule with Ukraine and when we have to have this capacity in place. Normally, it takes like 2 to 3 years to get sort of improved capacity in place, I would say. That's sort of the view I have on how quickly we can do this. But there is absolutely an opportunity to implement this.

Will we -- yes, I would like to see sort of a more solidified financing solution in place before we take the big step to start sort of adding huge sort of investment to this. But since we're already moving in the investment direction, we can add a little bit more maybe at risk to actually make sure that we keep the lead times. That's the way I see it without quantifying exactly.

The next question comes from Aymeric Poulain with Kepler Cheuvreux.

Clearly, the demand outlook is great. And it's the third year you're going to be growing at 20% or 25%. So the question is, do you expect that rate to be maintained? Or are the supply chain challenges, especially regarding the staffing or specific material that are starting to emerge given the very strong demand situation?

Well, it's a bit sort of premature to sort of talk about sort of the next years beyond, I would say, this year right now. You know we've committed to a midterm target of 18% CAGR over the time period of '23 to '27. We will come back and refresh -- revisit that, not refresh it, in the year report quarter, I would say, in February next year. And then we will have a new view from our perspective on how quickly we can continue to grow. So that's where we are right now.

If you look at what is the pain points, what's the limiting factors to grow, you are touching upon the right things. We need to bring with us the supply chain and maybe sometimes invest in supply chain. But they have to invest also. To find a whole ecosystem supporting us is absolutely necessary. And there are a few pain points there but manageable, I would say, going forward. And then I am assuming long term, of course, that we will resolve the rare earth elements discussions we have with China and also start to invest to have sovereign capacity on that side. But then we're talking years ahead because that will affect every industry, I would say, if that is not sorted. But yes, that's the way I see it.

Excellent. Thank you. Let's take a couple of quick ones from the web. One is, what's the difference between Gripen and E and F? And when can we see the first Gripen F?

Okay. Yes. We are maybe a bit of nerds using all these acronyms. But as you know, we have the Charlie, Delta version in operations right now. And yes, we have delivered an Echo version as well. The C is -- the E is a single-seat version. The F is a dual-seat version. And we will deliver this dual-seat version to Brazil in '27. So that's where the first aircraft is being manufactured right now. This has been a design that's been done together with the Brazilian industry and Brazil and that is in line with the plan that we have. Sweden has not contracted any dual-seat versions of the Gripen F. I hope I was not too complicated here. It's simple, actually. Single seated version, dual-seated version.

I think it was pretty clear. Another one. You talked a lot about your drone capabilities in your strategy there. How much are you doing and developing by yourself? And how are you looking and doing things with partners? How do you think strategically there what's important?

That's a really good question. I think from a software-defined perspective, we're doing everything ourselves and then, of course, when it comes to sensors and effectors, we have also things in-house. Then we are looking into how can you scale something quickly either yourself, lots of 3D printing or storing, parts that you can actually assemble quickly and how many partners do we need there. So I think on that side, when it comes to platforms, there will be more partnerships. But it's a bit different depending on what kind of drone you're talking about, of course.

Good. Excellent. And we had a quick one for Anna. Do you expect your backlog to continue to increase going forward?

With our growth that we're foreseeing, I think that is something that we can assume that today's backlog will increase going forward. Yes.

The next question from the phone comes from Björn Enarson with Danske Bank.

Yes. On Dynamics and the super solid backlog and -- but the mix is very, very important. Can you give us some color on how you look upon the mix situation in the backlog? As profitability can swing quite a lot. We have seen that over the years depending on what Dynamics you have.

In the Dynamics area, you mean.

Exactly.

Well, I think I won't go into exact details on the mix as such, but of course, it's quite dominated today by support weapons and missiles. Both have a substantial backlog in that and both will add good profitability numbers. I will sort of -- we have always talked about what's the ambition level in terms of sustained EBIT level on Dynamics side. And I've always said that depending exactly on the question you asked, the mix between the different portfolio entities in Dynamics, but it should be always sort of in the mid-double digit numbers, around 15%.

Now we've had good quarters now. So we are above that. And of course, that's very nice to see. But it will always be on that level, so to say. But I won't go into exactly a part of the SEK 87 billion, what's what there. But the main parts are absolutely support weapons and missile capability, and you can probably sort of draw that conclusion from contracts that we have received.

And it varies, of course, between different contracts, also within the same business unit within a Dynamics. So it differs. So that could also impact. But I think it's a good, as you say, Micael, in the mid-teens mid-15s, what you say...

Mid-double digit numbers, the number between 10 and 20, not sort of between 10 and 100.

The next question from the phone comes from Carlos Iranzo Peris with Bank of America.

I just want to ask on the GlobalEye because it looks that it's having a strong commercial momentum recently. So can you help us to understand how big the GlobalEye opportunities could be for you midterm?

Well, I mean, this is one of the mega deals that always will take sort of a Prime Minister or a Defense Minister to decide in the end. But I mean, we have campaigns ongoing. As you know, France have selected and they will start with 2. We have 3 in production for Sweden. There is an interest for a number of aircraft when it comes to Germany and NATO. We have a couple of interest also in the Middle East. So it adds up to a number of platforms with a strong potential.

But I would hesitate to sort of bring too much of mega deals into our growth. And this is not part of our growth this year or sort of a big portion of our business plan going forward. We look upon mega deals in a careful way. They are adding substantially when they happen. But it has to be continuous growth anyway. So I just want to say that, yes, there are many platforms that could come into play, but I wouldn't sort of jump into conclusions because they are megadeals campaigns. And political decisions will also be involved in that. But I look very positively upon sort of the future of GlobalEye. That's what I can say. And I mentioned a few countries now that have an interest.

The next question comes from Tom Guinchard with Pareto.

A question on the risk guidance here. Any changes in delivery pace across the different business areas? Or what's changed since your last guidance? If you could break that down, please.

Well, I think everyone is actually picking up nicely when it comes to expediting deliveries and pushing sort of things from the backlog into sales. And also some of it is connected to that we get our capacities coming into place. And also seeing, yes, that we have added 2,700 people to the company net up this year adds lots of push into this. And we are sort of optimizing our way of working and automating production.

So it's a number of things that comes together that sort of had lacked visibility in the beginning of the year. But now we are more confident that we have actually succeeded in many things that we put ourselves forward to do. So it's actually in all areas. And of course, I mean, Dynamics is growing dramatically. You see 36% growth over the first 9 months. So it's an engine in this. But also the other business areas are growing, and there's lots of potential in Surveillance, and Aeronautics have now really stepped up in terms of growth.

So I wouldn't sort of point something specific, but you can see from the numbers 9 months now what's driving this and what comes into play first.

The next question comes from Sasha Tusa with Agency Partners.

It's Sash Tusa here. I've got a couple of questions. First is just to R&D. On a 9-month basis, it's doubled over the last 4 years. Going forward, if you have investments, particularly in counter-UAS, do you expect continued growth in R&D? Or is there just going to be a shift in the mix probably towards the counter-UAS area and away from other areas? I wonder if you could just give some color on how the R&D is expected to develop.

No. What I can say is I want to grow the R&D investments as much as I can but still keeping to the guidelines that we have, the trade-off between sort of here and now, top line growth, increasing our profitability but still having the strength to grow our investments in R&D. And we need to do that when it comes to AI, autonomous systems in all domains and also, of course, in the way we develop software.

We have established a common tech organization that is pushing sort of software out on the business unit in a different way with sort of solidified architectures and stuff. So we need to continue to invest, make no mistake. So if we continue to grow, it will not only be a mix and shift in that, so to say. We have to do a number of things going forward in all core areas both when it comes to sort of autonomous systems in the air, which we call collaborative combat aircraft, the unmanned underwater vehicles. We have, as you know, a collaboration with General Atomics to do an autonomous sort of airborne early warning capability.

So there are a number of things that we have to do and which I look forward to do. So it will continue to grow. But I won't quantify it how much. It is always this trade-off between the different pieces I mentioned.

Just maybe I can add. We have also some capitalized R&D that we have started to depreciate now that is also impacting. And that's something positive because we are delivering in our projects and, therefore, we can -- we depreciated the capitalized R&D. So that's also going to increase during the year.

Excellent. Thank you. The next question -- sorry, did you have a follow-up there?

Yes, please. That's helpful. Yes, I just wondered if you could elaborate on the Luleå frigate program, which seems to be in a degree of flux. You clearly said that it's now more of a frigate than a corvette. Corvette was probably a bit of a euphemism anyway. But could you just give us some color on where that program is? And in particular, the reported bid by France to export frigates directly to Sweden, possibly as part of the offset for the GlobalEye program, how do you see that developing?

I think it's a question you should ask to Swedish customer mainly. And I want to underline it's probably -- I mean, it's probably corvette, of course. I mean, maybe it's my ignorance. But listen, we have put forward a very strong offer together with Babcock, our main partner here. And I hope that, that will prevail and be the selected thing.

Yes, the Swedish customer has opened up, as I know, for other sort of proposals. And it's up to them now to select. But I still think we and Babcock have the strongest proposal. Now it's up to the Swedish Navy, Swedish FMV, the defense material organization to make a selection. And exactly when that is going to be done, I'm not sure. But time is of essence, of course, since they want the frigates to be operational sort of '29, '30 something.

The next question comes from Marie-Ange Riggio with Morgan Stanley.

The question that I have is on your current capacity expansion. Clearly, we see that 25 is quite a record level for you. you announced some capacity expansion at your last CMD mainly for Dynamics and Surveillance. I'm just wondering, given the level of backlog that you have today and the demand that you are seeing in the coming years, are you already increasing further the capacity compared to the guidance or like compared to the indication that you gave at your CMD? Or you are still expecting basically the orders before like moving forward from those targets?

I would say for the year, we are in line with what we talked about at the CMD. It's not sort of a walk in the park to get everything executed. So that is really sort of a high ambition to invest all that money into capacity increases that we talked about. And we're looking into what do we need to do next year, of course. And we'll come back to that next year.

But we will continue to invest in capacity increases, obviously, because of the demand in the market. But what are we doing right now is supporting what we talked about in the support area going from sort of below 100,000 units to somewhere in between 400,000 and 500,000 units when we get all the capacity in play. And I look forward to getting the factory in Grayling, Michigan up and running in the end of next year and also then India, of course, to add to this.

So we'll come back on that, but we will see more -- again, we stick to our guidelines. But we will not compromise, making sure that we have the capacity to support the demand in the market and not compromise to make sure that we invest in the right technologies to be relevant all the years to come. And this is the sort of the puzzle that we work with all the time to make that sort of really efficient going forward. But we will need more capacity investments, absolutely. But we'll keep to the CMD statements that we had.

If I may, on that, I mean, are you afraid about the lead times for your policy? Because like -- are you afraid basically that the lead time about increasing the capacity can limit further growth going forward given the fact that, I mean, it will take time. If I'm correct, you have drone combat where you can increase the capacity pretty quickly. But for the rest, I think that takes a bit more time. So that's why I was saying like if you are trying to be ahead of the curve in terms of adding capacity because clearly, the backlog would support further growth or not. Can you probably just remind us a bit the lead time for any other projects that is not ground combat if you increase the capacity?

If you talk about the lead times to get increased capacity into play when it comes to ground combat, it's like roughly 2 years. So we started early, fortunately. But there are different movements. As I said, there are 40 building projects ongoing in the Karlskoga area only. So they are not in the same sort of schedule as we speak, all of them. But it's roughly to get to full-fledged sort of big step-up on the capacity of support weapons, I would sort of simplify it to say it's roughly 2 years.

Excellent. Thank you very much for the questions. I think we need to move on to some of your colleagues. But just take one question from the web here. Micael, in your CEO statement, you write right that Colombia has selected the Gripen and that you are in negotiations. Do you dare to set a time frame here? Or how should we view that?

As I said before, I hope to conclude that during this year. That's sort of what I've said before. I'll stick to that. I won't give a week or a month or so, but we've been doing good progress and I'm pleased to see that. So I hope we will conclude this year.

Good. Another one is on your drone capabilities. Should we start to see that, that also can be some larger orders here? Or will it be more of test and trials and so forth? Or in the future, would you see that this can also grow to more products and bigger-sized orders?

No, I anticipate that to happen because I think also looking at what capabilities the commission has stated as flagship projects, if you want to implement that, of course, you need plenty of counter-UAS systems. And if you want to have another capability sort of more aggressively, you also need quantities. But we're not really there yet, but we're seeing contracts coming now. So I think that's an avenue that will grow, absolutely. But exactly how and when it's -- I can't say. But we're in that race.

Good. Okay. I think we have a number of more questions over the telephone conference so let's spend the last 5 minutes there. Please, operator, next question.

The next question comes from Renato Rios with Inderes.

This is Renato of Inderes. Congratulations on very good results today. Great work. It's similar to the question that was just asked regarding drones and AI. Looking ahead to, say, 2026 to 2030 or even beyond, how do you see drones technology and AI-driven unpowered products and systems moving from development to sort of recurring revenue and contracts? How significant a share do you think this could become in the medium to long term? And would be interesting to hear your view on the revenue mix, how it could look like across the ground, air and marine domains and the largest product categories.

Good questions. I think looking into the crystal ball and trying to understand how quickly AI and autonomous capabilities will take an operational role and great quantity is really a difficult one, I must say. It's all connected to also the end user, how quickly are they prepared to change a bit of their concepts of operations from doing what they're doing now to using these capabilities in a new way. I mean, it's different looking at Ukraine, which are moving really quickly ahead with short iteration cycles, upgrading the drone capability on a weekly, daily basis, very decentralized to keep trying winning the war. And they take a bit of a risk, of course.

It's different in an environment where you change the CONOPS of a defense force or an army to do things. It will take a little bit of time, I think, but it will definitely prevail and be there going forward. Technology was developed much quicker than I think we understand. And how much you can do on an autonomous basis and how much support you will have from AI agents, agentive AI going forward will be tremendous. But to quantify the share is -- I can't do that today. I have to make sure that we are part of that journey and that we invest in that going forward.

Between the domains, I think the land domain will continue to grow and will be substantial if you look at the company from our side. Maritime and air is a bit sort of dependent on the mega deals, of course, a bit different in that domain. But then it will be a sustained business, of course, in the background as well. So I think land domain is more sort of sensors and products and weapons will continue to grow. And also, we hopefully will continue to grow a lot in the air domains as well. But that will be a bit dependent on the mega deals, honestly.

Excellent. Operator, do we have a final question from the telephone conference?

Yes and It comes from Afonso Osorio with Barclays.

I just wanted to come back to this Gripen deal with Ukraine. I mean the 100 to 150 jets is a massive potential order here. So firstly, what will be the total length of these contracts, assuming the delivery starts 3 years from now, as you just said? And then what would be the profitability of that contract compared to the other contracts you have within the Gripen family?

Good questions that I'm sure you understand I can't sort of nail that down completely. But I mean, I've said before, I mean, that size of the contract would of course create scale and improve the profitability of the Aeronautics domain. Then it depends on many other things, what kind of availability do they need, what kind of flexibility and agility do they need, ground support equipments, training and all of that in terms of the whole contract. But you can sort of look at Brazil and then you do your mathematics on what sort of 100 or 150 contract. It's in that ballpark, but it depends on the number of things that we haven't nailed down yet to look at the size of the contract.

But everything that adds that scale to the operation would, of course, add profitability. That's for sure. But I won't sort of say how much today. That's not sort of possible. We will start working this now and look what the expectations are from Ukraine comes to schedule, delivery rates and when the first aircraft needs to arrive and then offer them something that needs to be discussed. And apart from that, all these things around financing must come into play as well. So we will work that diligently, of course, no question about it.

And I look forward to it.

Can I say one thing before we end, which I forgot actually. You've seen probably the press release that I just want to say that we have now appointed a new position in our corporate management, strategy and technology. And it is Marcus Wandt, who is a great technology guy and a visionary guy, a good leader that will take that role. And we do this because there are cross-company initiatives that we have to have a thorough discussion about in corporate management and all the initiatives that comes from me or NATO, of course, as well. But technology is moving so fast. So we need to be sure that we have the right discussion in corporate management. So I look forward to welcome Marcus Wandt 1st of November to my corporate management.

Thank you very much, Micael. And with that, good ending. We finalized this call for the third quarter, and very much look forward to the Q4 call that we will have then in beginning of February. So thank you again very much for listening in and also joining over the web. And if you have any further questions, do not hesitate to reach out to us at the Investor Relations department. And have a really, really nice day. Thank you.

Thank you.

Thank you.

Hi, and welcome to Saab's Q2 earnings presentation. I'm Merton Kaplan, Head of IR. We're guided here to go through our presentation and results of the quarter, which was really strong. And we'll start again with some slides and then open up for questions. You have the details to the conference call on the presentation and the press release from this morning. So with that, I want to hand over to my CEO, Micael Johansson.

Thank you, Merton, and good morning, everyone. Thanks for joining this quarterly report from, I think, a very strong quarter. And I'd like to start with some highlights as I see it from the quarter. And as all of you are aware of, of course, we still have continued geopolitical tensions and we have the war in Ukraine just going on without sort of any real view of how it will end. And hopefully, it will end with a ceasefire and a reasonable peace deal, and that's all what we want, but we can't really see that happening right now.

And we have had just recently a NATO Summit in The Hague and a big step was taken from all the countries in the alliance to now agree on spending up to 5% on defense going forward, where 3.5% is sort of purely on defense capabilities and 1.5% is supporting infrastructure for defense buildup. I think that is an incredibly big step. And of course, there will be different sort of schedules for different countries achieving these 5% going forward. Some countries like Sweden is sort of aiming to go quickly into that towards 2030 and other countries maybe sort of looking at 2035.

So we're not sure about the schedules, but there is a lot of sort of spending to increase deterrence from the alliance now and also the focus on the European perspective that Europe has to take a bigger responsibility for our own security and doing more in Europe also from the European defense industrial base is really clear. And the statement from The Hague Summit is super clear, defense industries have to step up. You have to invest for capacity. We will need more, and there is incredibly strong demand now in the market.

And that we see. We had a strong quarter on order intake. I'll come back to that. I think we have a great portfolio, looking at what we can achieve, a mix between sort of important sophisticated platforms like the Gripen fighter and the GlobalEye, but also advanced weapon systems and sensors as examples of sort of volume things that are needed in the market. And that we've seen in this quarter, specifically on the medium-sized and the small type of contract that we have achieved. But we're doing a lot of progress also on the key campaigns for the Gripen and GlobalEye. And one example is, of course, the French declaration of interest now to go into a contract finalization on up to 4 GlobalEyes, 2 plus 2 in an option, which is a very big step to us in the European perspective on the GlobalEye.

We have managed really well now on executing from our backlog, and we had specifically an extremely strong quarter on the Dynamics side, unusually many deliveries, I would say. So they grew 72% compared to the same quarter last year, which is exceptionally good. But we are actually ramping up our capacity, and that's also why we have now, and we will come back to that, we have now upgraded our guidance because we have a strong first half of the year, and we see that we can now manage deliveries from our backlog in a good way. So we've stepped up that 16% to 20% from 12% to 16%.

We will continue to build capacity, of course. We have seen some coming into play and some will come next year as well, the big sort of factories that we're building in India and the U.S. specifically, but also a number of things in Sweden. R&D will always be super important to us, and we will never compromise sort of not investing in research and developing. The pace of technology is really high. So we have to embrace these things to create autonomous capabilities to use AI. And we are in the process of now creating a new organization, consolidating the way we actually develop software and also how we use AI going forward. So many important things happened during the quarter.

Looking at the numbers, as I said, SEK 28 billion roughly is a really good order intake without any sort of really big ones. If you remember, last quarter -- same quarter last year, we had 2 big contracts, SEK 13 billion for ground support weapons to Poland and another big contract, roughly SEK 8 billion that also was in the Dynamics and the Surveillance area. And without sort of these big ones, we still delivered SEK 28 billion, and we have a number of campaigns going, that I will come back to, that I hope will sort of also materialize in rather big contracts going forward. So this is a really good order intake. Substantial growth, 32% compared to the same quarter last year, and a really good EBIT margin now growing, as we've said, growing more than the top line that is the trend all the time.

Cash flow is better than last year, but still a bit negative. We are confident that we will deliver a positive cash flow also this year. But one has to remember that it's important now because of the supply chain perspective of all the ecosystem of suppliers that needs to support the primes in growing in this market that we have to keep some sort of high inventory levels to be sure that we can deliver to our customers. And then, of course, we need to spend money on investing, as we've said. We've said that we will be a bit front-loaded going forward. But still, every year, we will deliver a positive cash flow, and that will happen also this year. And this is all based on sort of when we have our payment milestones over the year and how our cash is going out from the investments we're doing on inventory and also on capacity increases. So a really strong quarter.

A couple of comments on the campaigns and sort of what we call mega deals, which is really difficult to predict when they will actually be contracted, because it always is Prime Ministers, Presidents or Defense Ministers in the end will have to sign them, and there is a parliamentary process normally in countries to sort of eventually decide. So that's why it's a bit difficult to say when. I hope that we will see now. On the Gripen side, we are in negotiations with Thailand and that hopefully will happen in the next couple of months that we will sign that one. And then we have been selected by Colombia and going into negotiations also there for 16 to 24 aircraft. We're not sure yet how many they will acquire in the first step.

And so we are selected in 2 countries, and that's all about sort of finalizing the contract and then that will be sort of going through the parliamentary process for approval. So that's big steps and really positive to us. So also in the area of the Gripen fighter production, we need to sort of ramp up capacity going forward.

Then we have campaigns, of course, a number of them going and a couple of them are mentioned here, Philippines and Peru, and there's been lots in media on Peru lately. So I just want to comment on that to say, yes, we have a fantastic offer for Peru. They are still in evaluation phase, and they have not selected which type of aircraft they will go for. And hopefully, they will do that shortly, but we are, of course, in that race.

Also on the GlobalEye side, I see lots of potential. As I said, we've signed this declaration of interest from the French side, and that is all about now sort of finalizing the small details in the contract and having sort of the French parliamentary taking the decision on acquiring the GlobalEye. And hopefully, that will also happen during this year. So we're looking at a number of months ahead and hopefully seeing a couple of mega deals coming in. But there is a big interest for GlobalEye in the market.

From the European and NATO perspective, since there is a gap now because the E-3 version of an airborne early warning is not really reliable or available for many countries, we see a window of opportunity to go and sell more of these aircraft in a number of countries, and we have that interest as we speak. So I just want to comment that even though we talk a lot about medium and small type of orders now coming in, there is a lot of effort being put into these rather big campaigns also.

A couple of comments on each business area. We have received contracts on the Gripen side, complementary contracts from the original one in 2013, because, of course, you want to add sort of ground support equipment and things that will create high availability of the aircraft, and that's what we've received this quarter. I just want to mention that we had a fantastic sort of event flying, and we continue to fly, of course, an AI agent in the Gripen E.

And one has to remember, we take a production aircraft, a serial aircraft and put an AI software agent in the aircraft to manage a specific type of mission that we call Beyond Visual Range that is sort of a complicated air battle, many versus many, where you need really skilled pilots to be seeing the aircraft at the aggressive side, but also launching your missiles at the right moment. And this AI agent is fantastic now being trained like you had a pilot training for 30 years around the clock. Already this AI agent can do fantastic things in this aircraft. But it shows what kind of architecture we have in this aircraft. No other fighter aircraft could have added sort of a software in a few weeks' time and have it flying doing what we did. So that's a fantastic achievement. And that will be something we will see going forward, having AI agents supporting certain types of missions going forward.

We had really good progress on many of the programs in the Aeronautics domain, but we still have under-absorption and a low production rate in the T-7 environment in West Lafayette, Indiana. That will change, as we've said many times, but it will take a couple of years before we are up into sort of the volumes that we want to see, but it will be, long term, a fantastic business for us since we have hundreds of aircraft on contract.

Dynamics, obviously, have had an excellent quarter-to-quarter comparison. I mean, growing 72% is amazing, and they had a really strong delivery period now, unusually good deliveries, as I said. And the capacity buildup is now coming into play in Sweden, of course, but also next year, as I mentioned, in Grayling, Michigan, and also in India. So we're continuing to make sure that we have the capacity to manage the increased demand. And we are working hard with the supply chain, of course, to make sure that we have things in inventory to cope with our backlog that we have right now.

You might think that, and Anna will come back to that, that our backlog is sort of reasonably short and that is because a big portion of the backlog is within Dynamics and the lead times on that type of equipment is shorter than sort of the big platform type of contracts. But of course, it will be refilled all the time because the need in the market is substantial on the equipment that Dynamics have.

Surveillance, also good performance, growing more than 20% year-on-year. We've had also medium-sized and smaller contracts on that side. So it's a good order intake and also a good backlog, but the big sort of breakthrough was, of course, the French GlobalEye decision. And also, we have taken a decision to ramp up capacity for installations on the GlobalEye. We have to ramp up that capability in Sweden in Linköping, of course, but we need partners on that. And that's why we signed a cooperation agreement with Sabena Technics in France. They are excellent in doing these things, and that's good for the whole market since we see more potential for the GlobalEye.

A very important step also on the autonomous side is that we have a collaboration with General Atomics in the U.S. They make sort of big autonomous flying vehicles. MQ-9B is one of them, and that one will carry sort of a couple of smaller versions of the prime sensor that we have on the GlobalEye. So that will be a capability not as a GlobalEye, but a good capability that can act sort of in a way supporting GlobalEye in a mission going forward or fly in swarms by themselves to manage sort of hostile environments going forward. So that is something that will come into the market from us and General Atomics going forward from next year. And we have had really sort of good project activities and deliveries also in surveillance.

In Saab Kockums, we had a great order intake on combat boats. That is a fantastic product that I think will have a great potential. And also in our shipyard in the northern part of Sweden, we are expanding now dramatically to manage all this demand, but also a couple of other contracts on torpedoes and the upgrade of the Visby Corvettes. On the performance side, we had a launch event of the SIGINT ship in Poland, just showing the performance that we have.

This is a similar type of SIGINT ship that Sweden contracted a number of years ago that we have already delivered, but this is now going really well in Poland. So there is a couple of them that will be delivered now. And we have put the last version of the Gotland-class submarine in the water, and they are doing sea trials now, and that's going really well as well.

The only thing that we are working with that has -- not the only thing we are working with, but something that has great potential is the underwater systems business unit with the remotely operated vehicles and autonomous vehicles for the underwater domain mainly. That has great potential, but we still have a couple of contracts that we have to get through the development and certification before that becomes profitable. And that is pulling Saab Kockums as a whole down a bit, but that's really the future of sort of the underwater domain to also have autonomous vehicles in the water.

Combitech is also performing really well. They have a great growth quarter-to-quarter year-on-year. And of course, I mean, this total defense perspective that they are working, protecting critical infrastructure, making sure on the cybersecurity side that there is a good sort of coverage and monitoring and implementation with different agencies and companies with that type of capability, which is Combitech's really capable organization doing, and the more and more demand we see in that area for digitalization, cybersecurity and the connection to increasing the deterrence and protection of critical infrastructure, it's a new sort of avenue that Combitech is taking market share in.

So we see a great growth for them as well, and they are an attractive company to work with. So they, of course, grow people-wise, they grow the revenue as well. So this is an entity that has grown quite dramatically over the last few years now. So I'm really pleased with that performance as well.

A couple of highlights also on the sustainability side. I think it's important to realize that we are working hard on making sure that we reduce our CO2 emissions as much as we can, and we have a target of 42% 2030 and then being Net Zero 2050. We have now, compared to the base year, 2020, reduced our emissions by 34%. So we are on a good path doing this. And a highlight this quarter is that on our special mission side of aircraft, firefighting, for example, or targeting type of aircraft, where we tow things to sort of test things upon, we have now fueled them with sustainable air fuels.

So most of Saab's aircraft that we are operating now can be operating using sustainable air fuels. It's only that we need production of sustainable air fuels and that's sort of -- for the sort of the market of aviation, that's a big problem. As you know, everyone is talking about how do we get sort of sustainable air fuel production up to a level where it becomes reasonably cheap, so we can transition completely. And also, as you know, the Gripen fighter can also fly on the sustainable air fuel to 100%. So technically, we're already there. It's just the availability of the fuel that is still not there yet.

I'm really pleased to see, since we are employing still quite a number of really good talents into our company, adding to our fantastic workforce. We see a trend that the share of women employees are increasing, which is really good for the company. And also, of course, we have an aim to have more female managers in the company, and that is a very good trend. It's good for the company. It's good for our owners that we're going in that direction. It just shows the attractiveness of the company. We have now been ranked #1 by Innovation ranking on the engineering side, which is fantastic to see. And the portion of women starting to work for us is increasing all the time. I'm really pleased seeing that now going forward.

So finally, we have, as I mentioned, upgraded our guidance on the top line. We are now saying we will be somewhere between 16% to 20% when it comes to growth this year compared to what we've said before, 12% to 16%. And that is, of course, based on the fact that we have performed really well. We've shown to ourselves that we can deliver on our order backlog, and we still see a huge demand in the market. So that in combination have led to that we have taken this step. And we continue to say that the EBIT growth will be higher than the top line. And we are confident, as I said, that we will deliver a positive cash flow as well also this year. It might fluctuate over the quarters as you've seen, and that's based on our milestones for payments, but also that we need to carry some inventory to be sure that we can deliver, but also the capacity increase that is a bit front-loaded. But for the full year, it will be positive.

So that's sort of an outlook for the full year '25. And by that, I think I will transfer this to Anna, who will go a little bit deeper into the numbers. So thank you so far.

Thank you, Micael, and good morning, everyone. As you have heard, we are very pleased to report a strong second quarter. We have the sales growth coming from all our business areas. We have a good EBIT margin of 10% in the quarter, also growing in our business areas, and a cash flow -- operational cash flow that has improved from last year, although negative in the quarter.

So I will go into the financials a bit more now in detail. So I will start looking into our backlog that has again strengthened this quarter. It's increasing by 8% year-over-year and is now SEK 198 billion. It is Dynamics and Surveillance that is having the largest share of the backlog, 71% of the backlog comes from these business areas, it's an increase from last year when it was 65%. We also, in the quarter, have a very solid order intake with a book-to-bill of 1.4x. And this quarter is mostly medium and small orders and a large share coming from Sweden. It's more than half of our order intake coming from Sweden this quarter, 57%. So all in all, a good foundation in our backlog, growing our backlog, which is a good foundation for our growth going forward.

And what is very visible here in the slide is that you can see that we're growing our backlog to be delivered in the first 3 years. That's very much driven from the orders coming from the small and medium-sized orders coming from Dynamics. And then in the end of the year, it's decreasing a bit, but reason for that is also that we are also reevaluating the backlog duration as the projects are being executed during the project. So all in all, growing our backlog and a good foundation for growth going forward.

Further then, let's look at the sales growth for the group, as we have heard. It's growing very much year-over-year, 30.4% at group level. And in terms of sales, this is our strongest second quarter ever. And all business areas are growing, including Combitech. And as the most substantial growth is within Dynamics, where we had an extraordinary or unusually strong sales growth, driven by lots of deliveries in the quarter, mainly from ground combat, but also from the missiles business.

Surveillance is also growing with 21% year-over-year, very good project execution across the business area, several business units supporting that growth. So it's good to see that we are ramping up and that we are seeing that in our sales growth. Aeronautics is also growing. And here, it's mainly coming from the Gripen program where we have good pace now in working on our deliveries there. Also Kockums growing, finally not at a high pace, but 9% almost this quarter, primarily driven by the Surface Ship business.

So all in all, we're reporting a strong second quarter and the first half of the year, reporting a sales growth of 21.9%. And as we have heard Micael saying, we are raising our guidance for growth from 12% to 16% for the full year now to 16% to 20% 2025. What I think we should also have in mind by looking at this slide and also remember is that we have seasonality and timing factors in our business. So this was a very strong quarter. We know that the third quarter is often impacted by seasonal factors, and also the sales varies from also the pace where we have in our customer deliveries. So Dynamics is one example of that where we often see the changes between quarters.

Going into then looking at our profitability for the second quarter. EBIT growth at the group level was strong, 48.5%. And of course, that is a result of the strong performance that we have in both Dynamics and Surveillance in this quarter. What's also good to see is that the trend is increasing. We have a positive trend growing up to 9.4% rolling 12 months compared to last year, where we had an 8.4% EBIT margin. What we should also mention in the quarter is that we have a positive impact of SEK 105 million on a nonrecurring contribution from the minority portfolio. But if we exclude that nonrecurring item, we still have an improvement in the EBIT margin.

Looking into Aeronautics, the EBIT margin is decreasing a bit year-over-year. And there, we had start-up costs for the T-7 program. We're also running several campaigns. So marketing costs are up a bit and also doing a lot of R&D and starting also depreciation or increased amortization on the Gripen program in particular. So that's impacting the EBIT in the quarter. Kockums also a bit lower year-over-year. Here, we have the impact, as Micael mentioned, with the underwater business and the project there where we are in the development phase that we are not yet finalized. So we are working on that, and we hope to see that improve going forward. Combitech not visible here on the slide, but I should mention that we have good performance. We had good growth in Combitech, but the margin was slightly down in the quarter mainly due to calendar impact during year-over-year.

Next, the financial summary in the quarter. I have commented quite a lot on sales and the EBIT growth. So I'll focus on the other items that I have not yet talked about. Gross margin is declining year-over-year in the quarter, mainly related to somewhat higher corporate costs due to IT security and also this digitalization efforts that we are starting up now within our group. And then EBITDA was improved, driven by the higher sales volumes.

Financial net, I can mention as well, slightly negative in the quarter, but less negative than last year due to that the krona has been stronger and that we have a more positive impact from our currency hedges related to the tender portfolio than last year, still negative, though. Lower tax rate due to decreased share of taxable results from foreign operation. So all in all, most of our gross net income came from improvement from the EBIT and not so much impacted by the other items that financial net or lower tax rate. So all in all, translated into EPS, that has also increased from SEK 1.85 to SEK 2.83 this quarter, driven by the EBIT growth.

Some words of the summary of the financials for the first half year then. Yes, the organic sales growth, as you have heard, has grown 21.9% with contribution from all business areas. Also on a year-to-date basis, we have a gross margin improvement, mainly driven from improvements from Dynamics and Surveillance, but slightly offset by some higher corporate costs. So for the EBIT, it is definitely Dynamics and Surveillance that are the main contributors and also increasing the profitability, and it's also supported by the mix because they are getting a bigger share of the total group sales and EBIT. So the margin improved 1 percentage point from 8.6% to 9.6% year-to-date. And if we exclude the nonrecurring item that we have in Q2, we still would have seen an improved year-to-date EBIT margin of 9.3%.

We have a huge difference between last year and this year in the financial net, and that is related primarily from the revaluation of the currency hedges that we have in our tender portfolio and due to our strengthened Swedish krona. Last year, we had the reversed impact so we have a negative financial net last year. So with that, the EBIT improvement and the financial net improved the group net income to 56.6% year-over-year, and also EPS increased by 58% this year so far.

Next, cash flow, important to talk about. And I think what we can see here year-to-date, we have a negative cash flow of SEK 1.2 billion for the first half year. You should remember that this is still an improvement compared to last year, where we had minus SEK 4.2 billion at the same period. And as Micael said, we are reiterating that we are going to have a positive cash flow for the full year 2025. So that means that we are expecting stronger customer payments in the second half of the year.

I think it's important to elaborate a bit on the cash flow actually. We are in a period where we know that it's important that we increase our capacity and we are doing investment for future growth. And by that, we also need to be able to secure that we can deliver on our backlog. So working capital will be tied up in a period like this and investments are going to increase. So that's something that we're closely monitoring and working with, but that's something that's the reality that we are facing.

But looking into our cash flow graph, I think it's important to mention anyway that the cash flow from our operations is positive SEK 5.1 billion and is increasing year-over-year, driven by our increased sales and the profitability. And that's a good foundation for our company. So with our high growth rate, as I said, the working capital is going to be growing. But as we deliver in our project, it will gradually improve, because we're going to get paid from our customers and then by then also lowering our inventories.

In the quarter -- in the first year, we have increased our investments as planned, SEK 3.3 billion compared to last year, it was minus SEK 2.2 billion. And by that, we delivered the negative cash flow for the full year -- for this half year, although improved from last year. What's also positive and I think worth mentioning is that we see that we improved our return on capital employed during the year as we are increasing our profitability as well as our capital turnover. So it goes to 15.3% compared to 12.8% last year.

Finally then, our financial position and our balance sheet, a few words on that. I think we have a solid balance sheet, and we can see that we have a cash and liquid investment totaling SEK 10.7 billion in June. Our net liquidity position is positive in the quarter, amounting to almost SEK 700 million, and it showed an improvement year-over-year. It was, as you can see, a bit lower than last quarter. And that is, of course, a fact of that we have higher investments and also more money tied up in working capital. Also this quarter, we paid a dividend of SEK 537 million to our shareholders.

In the quarter, we also signed a new revolving credit of SEK 6 billion. So that's also something that's strengthening our financial flexibility in a situation now where we're growing. So that's good. The net debt-to-EBITDA is also having healthy levels, and we have a solid equity-to-asset ratio of 37.7%. So all in all, a solid balance sheet, I would say.

So with that, I end my presentation and hand over to you, Merton.

Thank you very much, Anna; and thank you very much, Micael. So without losing time, we have quite a lot lined up here in terms of the conference call and analysts ready to ask questions. So I will stop to hand over to you, operator, but I also want to say that please keep your questions short and maximum 2 questions [indiscernible]. So operator, [indiscernible].

[Operator Instructions] The first question comes from the line of Henric Hintze from ABG.

This is Henric at ABG. So first of all, I would just like you to clarify on the Dynamics margin here. You mentioned that it's very strong in the quarter, of course. Do you still stick to the view you've expressed previously that over time this should be a slightly above mid-teens margin segment?

No, absolutely. I think that business and the mix they have, it will fluctuate a bit over the quarters, as we've seen, but it should absolutely be sort of mid double-digit numbers over time if you look at a long period of time, absolutely. It depends a bit on sort of how many sort of frame agreements where we have sort of locked in customers for a long time in a mix with competition contracts that we get in the order book over time, but definitely in the mid double-digit numbers, as we've said before. I have no new view on that.

Okay. Great. And a second 1 for me then as well. There was some news during the quarter that the U.S. put the AUKUS pact with Australia on hold. Could you mention anything on how this might impact your Australian submarine business?

Well actually, the Australian submarine business is mainly supporting together with the Australian submarine company, ASC, the now existing Collins-class submarine business. And that's not a big part of our Australian operations today. But of course, we're doing that. How it will affect sort of the upgrade of the Collins-class submarines is not super clear yet, how far they will go in terms of if they get a gap in the AUKUS program to get nuclear power submarines into Australia. And depending on that, our business might grow on the submarine side in Australia, but it's just a few percentages of we do in Australia today.

The main portion is combat management systems for all the surface ships. But of course, we look into being supporting Australia if they want to upgrade the Collins class, but I have no clear view if that will change because of any delays or something or if the AUKUS program will change. But again, it's not a big portion of the Australian business.

The next question comes from the line of Carlos Iranzo Peris from Bank of America.

I have 2, if I may. The first one, obviously, things have been progressing better than you expected in the first half of '25. So why don't you reassess the 2027 guidance? And then on order intake, any color for the second half of the year in terms of what do you expect on Dynamics and on Surveillance ex GlobalEye?

Thank you. Well, I mean, when it comes to sort of the midterm targets, we had a Capital Markets Day not so long ago, and we said that we will continuously assess that, and we will have to come back on that in '26. And that's still my view. We don't want to take sort of that step right now, and that's sort of only based on sort of a continuous assessment. But of course, when we get into the second of the last year that we've given midterm targets on, I think we will have to roll that and sort of give new guidance on that. So that will happen then. I have no new view today from the Capital Markets Day.

On the order intake, there is still a big demand in the market on what Dynamics is doing in that portion of our portfolio. But it's also exactly how that will look long term. I'm sure it will refill sort of the order backlog. They have 84 in the backlog today. It will continuously be a big demand on that side. What we're looking at order intake-wise, which I hope will happen, as I mentioned, is, of course, that we will get through these negotiations on a couple of megadeals. So we'll get the mix of that into the order intake over the year.

So I'm positive, but I don't want to give a guidance on the order intake specifically, but we have a strong demand in the market, obviously. And everything boils down to everyone is spending more European content, new NATO targets, capability targets for all the countries. So of course, there's high intensity in the market. And I think we are really competitive with a good portfolio. But I'm not going to say a number.

We now have a question from the line of Yassin Moktadir from UBS.

Yassin Moktadir from UBS. If I could turn back to the Dynamics division, please. As you mentioned, there were an unusual number of deliveries in the quarter. And as you continue to build out capacity there through the year and into the next, could you maybe provide some color on how you were able to achieve such a strong result this quarter, please?

I mean, what we're doing in Dynamics is, apart from sort of doing a couple of -- or a number of big investments, building a factory in India and a new factory in the U.S. for support weapons and sort of precision weapons, which will come into play then sort of during '26, we are also, of course, automating as much as we can now in the Swedish perspective. We just opened a facility in Linköping, which is a completely autonomous facility when it comes to manufacturing parts of the support weapons, which we did completely manual before. And that, of course, improves both quality and pace.

Then we employ new fantastic people. So we [ parallelize ] the production lines in our existing facilities. I mean if you would see sort of all the facility improvements and buildings that we're doing in the Karlskoga area, it's amazing how many sort of property things is ongoing to boost capacity there. So you could say that we're sort of doubling, we are improving our existing way of manufacturing things at the same time as we're investing in automating the same things going forward. And that is sort of an evidence now of this quarter is that, that comes into play. We are executing on our backlog in a good way. There will be more to come, but there is a whole host of things that we're doing to boost that capacity both in Sweden and internationally.

Just maybe I can add to that a bit, that I mean, it was also so that we had several customer deliveries planned for that period, so that it was extremely high number of deliveries already planned. So when looking into the next quarter, there might not be so many deliveries planned in the next quarter. It fluctuates, so...

It fluctuates between the quarters. That's a support. But over the year, it's a good sort of performance.

Definitely.

The next question comes from the line of Tom Guinchard from Pareto.

A question on order intake and capacity investments. Are you seeing any increased sort of competition in Dynamics and Surveillance? And are you investing at a fast enough pace to meet demand and order intake moving forward? Are you comfortable with the current levels?

I think we are really forward leaning in terms of investing to meet capacity, both when it comes to making sure that we can catch as much as we can from our Saab suppliers while they are also ramping up. That's an important part, and that's why we're building some inventory. And then, of course, the capacity, as I mentioned before, in terms of production facilities is also coming into play according to plan in a very good way.

We are prepared to invest for the demand going forward, and we've taken proactive steps. And I think we're looking at this all the time. When it comes to competition in this area, of course, it's competition, but we have a very strong position. I mean, we are #1 in the world when it comes to the support weapons from Dynamics, and we are really also good at the sensor side on the Surveillance side. But again, we are investing in R&D to make sure that we will be state-of-the-art also in these areas going forward, both when it comes to managing all the information around it, but it's using sort of AI, but also investing in continuous improvements of our support weapons capability. So we will never compromise sort of the long-term perspective of how we must be competitive with sort of only building capacity for here and now. I must underline that again.

Perfect -- and just a quick question on the GlobalEye in France. Are you seeing any ripple effects in customer discussions here with the GlobalEye or within Surveillance in general?

Yes, I would say so. It's absolutely an interest in the European perspective from a few countries. I don't want to be too specific, but in the Nordic region, I can say. But also in other European countries, there is an interest in GlobalEye, but not only Europe, also in the Pacific region, there is an interest. Because there is a -- I tried to say that there is a sort of a window of opportunity because we have something that is really capable in production today. And there is a gap because of the E3 version of the AWACS is sort of going out of lifetime, so to say, and we can catch a bit of that market.

So yes, there are discussions, but I don't want to sort of predict how quickly they will sort of materialize into contracts. What will happen, of course, we are in a number of campaigns right now. South Korea is one. France is, of course, something that is very far ahead and that I hope will be signed now in the next few months. So I'm very positive about this capability and the performance of this going forward. I am.

The next question comes from the line of Sash Tusa, Agency Partners.

I've got 2 questions on Gripen. And the first is a sort of fairly broad question, but it's about where you are in terms of maturity of the production process. Certainly, before -- I mean, this was before the pandemic and therefore, clearly a very long time ago. But I think as a company, you thought that your learning curve for Gripen E would be far better than the Gripen C, D. I think the numbers that you put out at the time was the learning curve would be 30 aircraft versus 200. Is that still where you are in terms of the cost curve for production of the aircraft?

And then following on from that, how long roughly does it take you to build a Gripen E? And what should we think of as being the time scale for a new customer that orders before you can actually deliver those aircraft for them in service?

That was actually 3 questions. If I start with the manufacturing perspective, yes, I still claim that we have a much better learning curve because of the way we have implemented this from design, development and production in a seamless way. And also because of the architecture of the aircraft as such, where we have done tremendous things when it comes to the software architecture of it. It makes it easier to sort of certify it and get it out of the house. But we need to ramp up also production. I mean it's also about getting the whole supply chain to support that. So we will take steps and we need to take sort of a step also on the production of these aircraft. We didn't have to go that far lately, but now we have a big interest in the market. So it will be a ramp-up in that area also, of course.

And when it comes to the question of how long it takes to produce an aircraft. I mean, it's hard to say. I mean, it's not so interesting to sort of start from a white sheet of paper and then starting ordering things from the suppliers and how long will that take. We normally -- we will aim for at least a production rate of 20 aircraft a year. That's one way of looking upon it. And if you are a customer today, you want to order this aircraft, we have sort of roughly between -- depending on sort of the configuration and the whole system, between 2 to 3 years in lead time. That's sort of rough numbers.

Operator, I would like to do 1 more question from the line, and perhaps Mikael Laséen, if he's available, as he has stated. And then I will do some questions from online viewers, because we have a few that we have to capture there.

We will have one more question from the line please.

Yes. So the last question comes from the line of Afonso Osorio from Barclays.

I just have one final one following up from Carlos' question on the outlook. Micael, you and I, we discussed this recently in terms of the outlook in terms of the timing of the order. We had the NATO Summit recently as well in terms of target to 2035. Just wondering your assumptions in the short term for the 16% to 20% and what kind of needs to happen to reach either side of that range? And then longer term, obviously, you said before that an acceleration in orders from 2027 and revenue coming from 2027. So I know you're not going to update us in terms of your '27 targets, but just broad view as to when you're going to talk a bit more about that? You said 2026. Would that be FY '25 results for an update on the medium-term targets? And would those be to 2030? Or would it be a 3-year view to 2029?

I mean, honestly, on the last one, we haven't really concluded that, but that we will have to roll it a number of years going forward. And exactly when we will step out and talk about midterm targets, I don't honestly know, but I mean, it wouldn't be a surprise to me if we will have to say something about that when we report the full year '25, or a little bit later, but sort of earliest to that occasion. When it comes to '27, I mean, when it comes to the first question about -- what was that, order intake?

It was the outlook of the -- the organic range, 16% to 20% and the assumptions to reach either side of that.

Yes. But I mean that range is, as we said, I mean, we have delivered a strong first half year. We've shown that we are capable of delivery from the backlog as such, and that's almost SEK 200 billion today. So we are more confident now also seeing what deliveries we have during the half year. That all that taken into account gives us confidence in that we will be in that range and not in the 12% to 16%, but rather in the 16% to 20%. So that all comes together. And of course, the majority of that is from the backlog, definitely. A small portion of it will be from sort of sales and new orders, but that is not substantial in the way that it will sort of risk any of our deliveries in that range. So I'm confident that we can make that definitely.

As I said earlier, '27 and beyond, when it comes to the market, I mean, we still need to see now how different countries will have a schedule to fulfill the 5% sort of ramp-up and also how they will implement the NATO capability targets that's been given now to all the alliance countries. That will look a bit different in different countries, and we have a reasonable view of that. And of course, I'm confident, for example, that sort of the rather short backlog that we have in the Dynamics area will be refilled all the time because there's a huge need for sort of investing in new stockpiles in different countries and also continuing to support Ukraine and then the own buildup of the sovereign country and on top of that, the capability targets.

So I'm confident that there is a huge need in the market. But it's exactly how each country will implement it is not 100% clear yet, but it's work in progress to see how the defense forces are doing the capability plans for the countries, and we're following that diligently. But the need in the market is tremendous. And I tried to say that being in The Hague during the summit, I mean, the clear message was, okay, now we've stated what we want to do, make sure U.S. industries and especially in the European defense industrial base, start ramping up capacity because the need will be huge. So I'm not worried about sort of '27 and beyond, but I won't say a number on that side either.

I will flip in here. We have a couple of more minutes, Micael. We have Björn Enarson from Danske asking this question, again, connected to a bit of NATO, but here from a Swedish perspective. So what do you expect Sweden to take actions based on the new capability targets that has been decided?

No, I think Sweden will take sort of immediate actions to sort of not revisit, but sort of add to the defense bill that we have and implementing these capability targets in that plan, so to say, and that's not really 100% done yet, but it's work in progress, as I understand. And we have already stated as a country that we want to go quickly towards the 3.5% sort of pure defense spending to 2030. And that's what I'm looking into and what I see.

And I think it will be lots of air defense systems, and it will be lots about protecting the Baltic Sea and critical infrastructure. It will be a lot about sort of the mobility of forces sort of East to West -- West to East. So I'm confident that it's rather high pace in the Swedish system. And I think our position in this region is super important to NATO. So there is high pace around the sort of Nordic countries as a whole, I would say. But Sweden is taking this really seriously. My view.

I have one question here from Niklas, and we didn't talk about that much in this quarter. A bit on the U.S. strategy. Obviously, we have a lot of tech companies in the U.S. like Andrew, a lot of companies focusing on AI and defense here. And then you have also a U.S. perspective on buying U.S. defense equipment. But how is your U.S. strategy? And do you think that we can compete in the U.S. in these domains, unmanned, UAV, et cetera?

No, definitely. We are putting a lot of effort growing our U.S. business, and we are doing good in the U.S. We have a huge manufacturing capability in West Lafayette for the trainer aircraft, hundreds of them will be built there together with Boeing. We have a great sensor capability and underwater capability in Syracuse and Rhode Island. And we are already involved in underwater autonomous capability for anti-submarine warfare training from our Rhode Island facility. So we are absolutely competitive, but we have to be U.S. We have to be perceived as being completely U.S., which we are in the U.S. We are running our operations under a special security arrangement. And we continue to do that and invest in that market, because it's a huge market. So it's definitely a focus for us to be competitive in that market. And I have a good sort of feeling about sort of the underwater capability, autonomous underwater capability that is needed in the U.S., which we have started now to deliver to our customers.

A question to Anna here, M&As. Can you give us an update? Lots of questions on that.

I mean that's something that we talked a bit about when we had the Capital Markets Day, and that's part of our strategy in our growth strategy to really grow via M&As, both to achieve new technology in our core areas. So that's definitely on the agenda. So I can't give you any update more on the details, but it's part of our agenda.

Yes, so a comment on that from my side. It's super important, as Anna is saying, from a strategic perspective, not only to grow organically. M&A is something that might sort of come from also the European perspective that we have to do more in Europe and create scale. It might start with joint ventures to create scale and doing things together to handle all the need, and that might lead to sort of acquisitions. But of course, we have a funnel of companies, objects, companies we're looking at, but the pace of that must increase, because I think that's necessary for us to capture more of the market. So it's super important.

Great. Thank you. We have 2 minutes, and I think -- actually 1 minute. So I want to actually hand back to you again to -- thank you for a fantastic quarter from my side as well. So any last words.

Well, it's been a great quarter and a good half year, and we are pushing on to keep with sort of making sure that we are, long term, really competitive by investing in new technology and creating new capabilities as well as building new capacity, of course, for the existing portfolio and making sure that we manage our capital in a good way and have a return on capital employed that is increasing all the time. That's really important to us, and I think we're managing that well. And the whole market is growing, and I don't think we have seen all the effects of the NATO Summit decisions yet that will come into play going forward.

So I look forward to the future, so to say. And I wish you all a great summer to start with.