SAAB: Sales up 21 percent, and demand is still rising

The most important takeaway from this report is that Saab achieved 23.6 percent organic sales growth in the first quarter (Source: Saab AB, Q1 2026 Interim Report, published 23 April 2026.). This is not a fluke or a one-time catch-up effect. It suggests continued acceleration. Total sales reached SEK 19.2 billion, up 21 percent. Operating income, profit after running costs but before interest and taxes, rose 32 percent, lifting the operating margin to 10.0 percent from 9.2 percent a year earlier. Every business area reported double-digit sales growth. This kind of broad-based growth is unusual and indicates that demand is structural rather than driven by a single fortunate contract. 

The order backlog, or the total value of contracts that Saab has already won but not yet delivered, stands at SEK 274 billion. A year ago, it was SEK 189 billion. This figure provides Saab with a clear view of future revenue. At the current delivery rate, it represents over three years secured work. The Surveillance unit, the unit that sells radar systems such as the Giraffe 1X, grew sales by 32 percent and increased operating profit by 52 percent, suggesting that higher volumes are starting to support margin improvement. Dynamics, which makes missiles and ground combat weapons, raised its operating margin to 17.5 percent from 14.7 percent, which is a very strong level of profitability for a manufacturer of ammunition. Earnings per share, what the company earned for each share outstanding, came in at SEK 2.65, up from SEK 2.35. According to the Q1 report, as of April 22, the stock was trading at SEK 564.80. Trailing twelve-month earnings per share are therefore SEK 11.98, a useful starting point for any valuation discussion. 

At first glance, order bookings appear weak, dropping 5 percent to SEK 18.2 billion from SEK 19.1 billion in the same quarter last year. However, a closer look suggests that this is mainly a comparison issue. The first quarter of 2025 included an unusually high number of large orders worth more than SEK 1 billion each. Excluding those orders, medium-sized orders actually grew 28 percent. The book-to-bill ratio, which compares new orders received with revenue delivered, was 0.95 times, meaning Saab delivered slightly more than it booked during the quarter. At this level of delivery, that ratio appears normal and not a warning sign. Meanwhile, the backlog remained at SEK 274 billion, barely moving from year-end. 

Europe’s NATO members are under steady political pressure to raise defence budgets toward 2 percent of GDP and beyond, with several now aiming for 3 percent. Saab primarily serves this customer group, and the active campaign pipeline indicates that the inflow of new orders is likely to continue. On April 1, the company also created a new business area called Naval bringing together its submarine and naval electronics operations. This is more than just a reorganisation. It is also a strategic signal. Saab is positioning itself for a period in which naval warfare, especially submarine capability, could become one of the next major areas of European defense spending, and the ongoing contract talks with Poland on a next-generation submarine program lend real short-term relevance to this review (Source: Saab AB, Q1 2026 Interim Report, published 23 April 2026.). 

The first factor is the margin trend. Saab’s medium-term goal is to grow operating income to grow faster than sales, which it achieved in this quarter. If that continues into the second half of the year, there is a solid case for analysts to raise earnings forecasts. The second is the Polish submarine contract. A formal signing in 2026 could add a programme potentially worth tens of billions of kronor to an already substantial backlog, prompting a quick market reaction. Those are the two key things to watch as the year progresses.