Saab’s Q4, no surprises
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Renato has written his quick comment on Saab’s Q4 results. 
Saab’s best quarter ever, order intake was record-breaking and group revenue was 27.7 BSEK, up 33% year-on-year, which clearly exceeded our estimates. Adjusted operating profit was 2.9 BSEK, representing a 10.6% margin and also exceeding our estimates. Growth and profitability were mainly driven by volumes and project execution in the Surveillance and Dynamics segments. Earnings per share was 4.73 SEK, whereas we had expected 3.73 SEK.
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And here is the company report from Renato.
Saab’s Q4 results were strong across all divisions, and the full-year 2025 results were very solid, exceeding both consensus and our expectations. We see demand continuing at a structurally higher level that is unlikely to return to previous levels in the near future. This strengthens the outlook for defense spending, but structurally higher demand only matters if orders can be converted into delivered capabilities on time. As Saab continuously demonstrates its ability to generate profitable growth with a growing order backlog by being proactive regarding capacity, we believe the company is well-positioned to achieve its updated financial targets and maintain growth. Against this backdrop, we are raising our forecasts from 2026 onwards. Our revised forecasts imply a smaller downside risk, but we still see the expected return as unattractive due to high valuation. We raise our target price to SEK 615 (prev. SEK 550) and upgrade our recommendation to the Reduce level (Sell).
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Here are Renato’s comments on the deal Saab made with the Ukrainian defense industry.
Saab announced that it has signed a Memorandum of Understanding (MoU) with Joint Stock Company “Ukrainian Defense Industry” (JSC UDI) for cooperation in the fields of aviation and air surveillance. Signed at the Munich Security Conference, the MoU aims to support Ukraine’s defense capabilities by leveraging Saab’s aviation and sensor expertise. While the partnership is a significant strategic milestone, we view it as long-term option value rather than a short-term financial driver. This announcement does not lead to changes in our current forecasts.
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Below are Renato’s comments on, among other things, how the shortage of interceptor missile stocks in Europe bodes well for Saab’s business.
One of the key messages from the Munich Security Conference was that long-range air defense stockpiles have been depleted. We see these comments as potentially positive for GLSDB and moderately positive for Saab’s GlobalEye surveillance business, and the impact could increase revenue by approximately 1-2.5 BSEK in 2026, corresponding to about 1-3% growth. The lack of long-range deterrence supports our European sovereignty thesis, which is the foundation of Saab’s investment story, but it does not change our forecasts.
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There is certainly a need for increased missile production. But considering Ukraine’s defense, countering drones with missiles is truly cost-ineffective, and cheaper solutions already exist. Ukraine has developed, among other things, interceptor drones that are now even much cheaper than the drones sent by Russia. One alternative is laser systems where the cost per shot is a euro or two. While acquiring the system is quite expensive, for long-term needs—as seen now in Ukraine—it is also economically cost-effective. At least the Israeli company Rafael already has ready-to-use laser systems, and apparently Ukraine has its own laser system under development.
So, with the development of more cost-effective systems, interceptor missiles are mainly being reserved for countering ballistic/cruise missiles and aircraft. I wonder if Saab has any cost-effective defense systems in its development pipeline?
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Buying air defense the way people buy insurance is how you end up with the Maginot Line problem. You can build something formidable in one place, then get outflanked by the gaps you ignored.
My read is that many of Ukraine’s fast moving solutions sit in short- and medium-range buckets. Lasers also sit there. Light travels far, but combat lasers are subject to geometry or weather. They need line of sight, and the atmosphere degrades beam quality through turbulence, absorption, and scattering. That caps practical engagement ranges, at least over the next few years. We will see how that develops. But even a highly-effective short-range laser still needs long-range sensors to detect threats early and cue the engagement before the target is inside the laser’s limited window.
The shortage, however, sits at the long-range layer. Europe needs more long-range interceptors and the industrial capacity to sustain them, or risk being forever dependent on the US (which by the way the US does not seem to want). But building only that layer is not a cost-efficient answer. You also need the adjacent tiers, short-range defense, counter-UAS, sensors, and command and control, because they increase mission effect per expensive interceptor. The cheapest “kill” is often the one you did not have to take. Cost-efficiency comes from the architecture and the engagement logic, not from piling into one “cheap” effector.
On supplier exposure, Rheinmetall is already well positioned in air defense, including gun based short-range solutions, long-range missiles through partnerships, and has laser exposure via cooperation with MBDA in Germany, which includes plans to establish a naval laser joint venture in 2026 (we’ll see). Saab looks more skewed toward sensors and short-range effectors, which still creates upside, but the mix is different. On the cost-efficient effector side, Saab has Nimbrix, a compact counter UAS missile with intercept range up to 5 km. On the longer-range side, Saab and Boeing have the GLSDB, which Saab markets with a stated range of 150 km. On lasers, the UK DragonFire effort is also moving, led by MBDA with Leonardo and QinetiQ, and the UK has highlighted operating cost below £10 per shot in demonstrations. And, you mentioned Israel there.
Zooming out, nations still need a balanced air defense infrastructure. Decades of underinvestment have left Europe with thin magazines and uneven layering (more short-range when long-range needed and vice versa). At the same time, Europe has leaned heavily on US supply chains and has not kept enough capacity at home. Rebuilding the defense industrial base is hard because it is constrained by skilled labor, qualified sub-suppliers, energy and permitting friction, and long qualification cycles. The implication is straightforward. Policy support and funding will need to persist for years if we want a well-functioning defense industrial base, and that flow will lift primes while also creating room for new entrants that improve the technology base over time. It will not be instant.
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American defense companies have some production (mainly components) in Europe. Do you see an opportunity here to increase the production of end products in Europe to meet the needs of European countries through investments by American companies in Europe? Would this require licensing from the US?
The advantage would, of course, be that the development work has been completed and the products have been field-tested, which could save both time and costs.
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Hey again. Yes. US defense firms employ large workforces across Europe, and incremental European demand can pull some additional capacity into the system, including through US primes and their European subsidiaries.
Europe still wants to build more domestic industrial depth to be independent of the US and therefore a worthy ally, but that is a multi-year project. In the meantime, a meaningful share of higher European procurement will likely flow to US suppliers via off-the-shelf buys and fast replenishment programs.
On US firms expanding manufacturing in Europe, the constraint is less capital and more permissions and incentives. The January 7, 2026 executive order on defense contracting introduces restrictions on buybacks and dividends for firms deemed to be underperforming, and it pushes future contract structures to tie executive incentives to on time delivery and increased production.
Even if a US contractor wants to localize production in Europe, the investment only becomes economically meaningful if it includes controlled technical data and production rights. Those transfers typically require US export control authorizations, for example ITAR manufacturing or technical assistance frameworks, plus the relevant approvals for the specific program. If the policy stance tightens, the authorization timeline and scope can become a binding bottleneck for European industrialization via US technology. And as I said, I think it is much much easier to ramp-up the production of off-the-shelf products in Europe, by US defense primes.
I think that the US wants to help Europe, but it wants to help itself more.
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Here are Renata’s comments on how the Iran situation might increase demand for Saab’s products in Europe.
The United States and Israel launched a major joint military offensive against Iran on February 28, and the conflict continues to expand. Saab has no direct exposure to the region, but accelerating procurement decisions in Europe and the growth in demand for its products could add a few percentage points to near-term revenue expectations. However, following this comment, we are keeping our forecasts for Saab unchanged.
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Let’s consider the Middle East from Saab’s perspective; the demand for various air defense-related sensors is simply massive. In terms of sensors, Saab’s flagship is the GlobalEye, and the UAE operates five of these units.
This caught my eye today:
“Since the start of Iran’s attacks, the UAE has detected 205 ballistic missiles, destroying 190 of them, while 13 fell into the sea and two landed inside the country.
The ministry said it had also detected 1,184 Iranian drones, intercepting 1,110, while 74 drones fell within the UAE’s territory. In addition, eight cruise missiles were detected and destroyed.”
It can be stated that the GlobalEye is a combat-proven system. Prior to the latest conflict, Saab offered the aircraft to Saudi Arabia and Qatar. If the GlobalEye has contributed to the UAE’s high interception rate, more deals are likely on the horizon. Elsewhere, Pakistan’s older Saab Erieye radar aircraft has already been a headache for India on several occasions.
If you want to succeed in modern aerial warfare, you must have a modern radar aircraft, unless you can somehow obtain the same real-time situational awareness from satellites.
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Renata has written some comments regarding the Polish contracts Saab secured.
Saab has signed new cooperation agreements with Poland’s PGZ and WB Group, deepening the cooperation initiated in September 2025 regarding submarine maintenance and autonomous systems. The agreements are letters of intent and do not change our forecasts, but they reinforce our long-term growth and profitability outlook.
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Here are Renata’s comments on Saab combining the Kockums business area and Surveillance’s Naval Combat Systems unit into a new Naval business area starting in April, which should clarify the company’s structure and support synergies.
Saab announced today that it will combine the Kockums business area and Surveillance’s Naval Combat Systems unit into a new business area named Naval, effective April 1, 2026. We view the restructuring as a logical strategic step that clarifies the company’s structure and supports the targeted synergies between platforms and their combat systems. The current head of Kockums will lead the new division. The change has no impact on the group’s revenue or earnings. Our forecasts remain unchanged.
I agree with you, and the current environment has made the argument meaningfully stronger than it was when I last wrote about this.
Ukraine exposed a critical shortage of interceptor missiles across NATO, which created a second-order problem that is easy to overlook. When interceptor stocks run low, the defender cannot engage every incoming threat and must prioritize the most dangerous ones. That selectivity requires better situational awareness, more time to make decisions, and a clearer real-time picture of what is actually incoming. That is precisely what GlobalEye provides. It extends the radar horizon, it is multi-domain meaning it tracks aerial, maritime, and ground threats simultaneously, and it feeds that picture directly into a nation’s broader command and control architecture. The marginal value of owning that capability was already rising before any of the recent events.
Now the problem is wider, and as you correctly point out, that means the marginal value is greater. The Middle East conflict has introduced a second active theater in which allied infrastructure is being targeted by ballistic missiles, cruise missiles, and drone swarms across multiple countries at once. Each of those threat types is exactly what GlobalEye is built to detect early and help manage. A nation reassessing its air defense architecture in light of all this, and there are several that now have strong reasons to do so, will find the case for a system like GlobalEye considerably more urgent than it did twelve months ago.
The export filter remains a real constraint. Sweden must approve any sale, so buyers need to be allies or at minimum non-adversarial nations. But the pool of countries that meet that criterion and are now actively rethinking their air defense posture has grown meaningfully since February 28th, and that has to be reflected in how we think about GlobalEye’s medium-term demand pipeline.
Risk side note: The real risk is not that satellites suddenly replace systems like GlobalEye. It is that the rapid commercialization of low earth orbit radar constellations gradually narrows the addressable market for airborne early warning over a ten to fifteen year period. The more immediate risk is that customers start to price in satellite optionality earlier in the procurement process, which could lengthen sales cycles and raise the proof burden for airborne platforms. To me, Saab’s clearest hedge is therefore to own the data fusion and command layer rather than defend the collection platform on its own. That is what makes its investments in space and autonomy strategically important, even if the revenue contribution still looks modest today.
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Hi,
Saab recently press released that it had entered into an industrial partnership with a Canadian AI company, Cohere. This made me thing of several reasons this is good for Saab, operating at different levels. Link.
The clearest read-through is the Canada GlobalEye campaign. Canada has a well-established industrial participation framework, meaning foreign suppliers need to demonstrate meaningful local economic involvement to be competitive. Partnering with a well-regarded Canadian AI company directly strengthens Saab’s industrial cooperation credentials in that market and improves its competitive position ahead of what could be a significant contract win.
A second dimension is product capability. Cohere builds enterprise-grade AI models designed for secure, on-premises deployment, which is a hard requirement in defense environments. The collaboration targets data-driven mission support and information processing within GlobalEye’s operational architecture, meaning the platform becomes better at helping operators process sensor data faster, prioritize threats more clearly, and act more decisively under pressure. That makes GlobalEye more capable and more competitive in every market, not just Canada.
The third dimension is the most strategically important. As we discussed, one of Saab’s key long-term hedges against the gradual maturation of satellite sensor technology is owning the fusion and decision layer rather than defending the collection platform alone. Embedding enterprise AI directly into GlobalEye is a concrete step in that direction. A platform that not only collects data but interprets and prioritizes it in real time using advanced AI is structurally harder to displace, regardless of how the underlying sensor landscape evolves.
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Hi! Here are my thoughts about the recently announced order that Saab received right before Easter.
The company received an order from the Swedish Defence Materiel Administration (FMV) for a mobile and modular counter-unmanned aircraft system (C-UAS) valued at approximately 230 MEUR (2.6 BSEK). The order strengthens Saab’s position in one of the fastest-growing segments in modern defense (Source: 1, 2) , with deliveries scheduled for 2027-2028. We view this as an expected continuation of Saab’s close cooperation with the Swedish Armed Forces rather than a surprise. Link to the press release.
Drone defense has become one of the defining capability gaps on the modern battlefield. The ordered system is designed to detect, track, and neutralize low-flying small and medium-sized drones; the kind that have reshaped tactics in Ukraine and driven a sharp rise in global C-UAS demand. The system integrates Saab’s own sensors and technologies into a compatible whole, built to protect both military targets and civilian infrastructure. The order will be booked under the Surveillance business area, which grew revenue by 24% in 2025 and sits at the core of Saab’s sensor technology and system integration capabilities.
In absolute terms, 230 MEUR is a meaningful order. In the context of Saab’s current order book, it is a relatively modest addition. The company’s order intake in Q4’25 alone reached a record approximately 8,850 MEUR (100 BSEK). That said, the order does exactly what a steady domestic order flow is supposed to do: it reinforces confidence that Saab can sustain a strong delivery pace and remain on track toward its updated financial targets for 2023-2027.
We expect Saab’s revenue to grow by 21.1% to approximately 8,482 MEUR (95,849 MSEK) in 2026 and by 18.8% to approximately 10,079 MEUR (113,892 MSEK) in 2027. On our estimates, EBIT should grow by 26% and 21% in those same years, while EPS should grow by 28% and 21%. From our point of view, the valuation remains demanding at 2026e P/E 43.5x, but strategic execution and a stable domestic order flow continue to reduce the execution risk that would otherwise make that multiple significantly harder to digest. We believe that modular, easily integrable systems like this C-UAS are a good illustration of how Saab is positioning itself to meet the scale of NATO’s and Europe’s growing defense needs.
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There are a two additional angles, that I can think of, worth considering that connect more directly to the business fundamentals.
The first is the software and scalability angle. The C-UAS system is described as mobile and modular, which is significant from a margin perspective. Modular systems are inherently easier to upgrade, expand, and export without a full redesign, which means the initial domestic order is likely to have a longer commercial tail than the headline number suggests. Each software update or capability expansion becomes a potential follow-on contract, and the recurring revenue characteristics of that model are structurally more valuable than a one-time hardware sale.
The second is the Surveillance division’s margin trajectory. The order books under Surveillance, which already grew 24% in 2025 and is Saab’s largest division. C-UAS systems are sensor and software intensive, which tends to carry better margins than platform hardware. As the mix within Surveillance shifts toward more software-intensive products like C-UAS, the division’s margin profile should improve gradually over time, supporting the group’s path toward our 12% terminal EBIT margin expectation.
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Here are Renato’s preview comments as Saab reports its Q1 results on Thursday, April 23rd.
We expect strong sequential order intake as the demand environment remains unchanged. Revenue should continue its solid growth, supported by the conversion of a strong order backlog. We also expect absolute profitability to increase from the previous year, although the operating margin should remain slightly below the comparison period due to the ongoing capacity ramp-up and internal work-in-progress. Ahead of the report, the key question remains whether Saab can maintain its order momentum and delivery quality as the revenue base expands.
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And here are Renato’s comments on the result.
Saab’s Q1 report showed strong operational performance, as the company clearly exceeded our expectations in terms of both revenue and operating profit. Although the lack of major projects left the quarter’s order intake clearly below our forecast, the unwinding of the order book supported stronger-than-expected organic growth and profitability. Despite variations related to order timing, the company’s delivery capability is on a strong footing, which we believe will create upward pressure, especially on our short-term profitability forecasts.
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