Saab Maintains Medium-Term Guidance Amid Robust Defense Demand

Swedish defense and security company Saab reported strong financial results for the second quarter of 2026, exceeding market expectations with record order bookings and robust organic sales growth. The company stated it is maintaining its medium-term growth guidance, underpinned by the continued increase in global defense demand. This strong performance was notably bolstered by strategic orders, including a significant submarine deal with Poland.

According to Saab's second-quarter report, order bookings surged by 141% year-on-year to SEK 68.4 billion (approximately $7.1 billion), marking a substantial increase. A significant portion of this growth stemmed from a SEK 47 billion (approximately $4.9 billion) contract to supply Poland with three A26 submarines, which represents Saab's largest export order to date. The company's sales rose by 28.6% annually to SEK 25.45 billion, with organic sales growth reaching 29.8%. Operating profit (EBIT) increased by 41% to SEK 2.79 billion, surpassing analyst forecasts.

Net income climbed by 41% to SEK 2.17 billion, with earnings per share reported at SEK 3.96. Micael Johansson, Saab's President and CEO, emphasized that demand for the company's product offerings remains high as customers continue to invest in both immediate and long-term needs. Saab's order backlog reached a record SEK 317.7 billion (approximately $33 billion) at the end of June, a 61% increase, with international markets accounting for 76% of this backlog. The Aeronautics division posted 31% sales growth, the Dynamics division recorded 36%, and the Surveillance division reported a 47% increase.

The company's robust performance led to its shares rising by as much as 4.5% on the Stockholm exchange, sending a positive signal to the broader defense sector. Saab continues to expand its production capacity to meet the structurally higher demand for its products, including Gripen fighter jets, submarines, missile systems, and surveillance systems. Rearmament efforts by European governments and the increase in defense spending globally are key factors supporting the company's growth momentum.

Global geopolitical tensions and security concerns are driving increased defense expenditures worldwide, creating a favorable environment for defense companies like Saab. Notably, NATO members' increased investments in surveillance, air defense, and naval capabilities are boosting demand for the company's product portfolio. Major agreements, such as the $2.55 billion contract to supply Ukraine with 16 Gripen E fighter jets, further solidify the company's future growth potential in this context.

Despite analysts and market observers noting Saab's exceptionally strong current performance, management has chosen to maintain its medium-term targets for the 2023-2027 period. These targets include an average organic sales compound annual growth rate (CAGR) of approximately 22%, operating income growth higher than organic sales growth, and a cumulative cash conversion rate of at least 60%. This decision reflects the company's confidence in its long-term strategic plans and a prudent approach amidst market uncertainties. Continued focus on capacity expansion and technological innovation in the coming quarters is expected to further strengthen Saab's position in meeting market demand.