Saab Annual Report 2011

1. ANNUAL REPORT 2011
ANTICIPATE TOMORROW
75 YEARS OF INNOVATION FOR
A SAFER SOCIETY

2. CONTENTS
Saab in brief Innovative technology and cost
Pages efficiency for 75 years
Saab 2011 1 4–5
Events by quarter 2011 2–3 Saab has been supplying innovative,
cost-effective and competitive products
Saab 75 years 4–5 and systems to customers around the
6–7 world for 75 years. The key to success is
Chairman’s statement
to focus on partnerships, alliances and
CEO comment 8–9 information sharing.
Market and driving forces 10–11
Saab’s core competence 14–15
2011 – An important year for Gripen
Strategic goals 16–17 Pages 12–13
Gripen’s success in 2011 demonstrates
– Profitable growth 18–21 the system’s world-leading
– Performance 22–23 capabilities to meet the tough demands
of the international market in terms of
– Portfolio 24–27 function, quality and cost.
– People 28–29
Market segments 32–33
Markets by region 34–35
Sensis – Bridgehead to a global
Saab’s responsibilities – Pages 20–21
Sustainability 36–37 market
Saab’s responsibilities – The acquisition of Sensis of the U.S. is
Business ethics 38 fully in line with Saab’s strategic priorities
Saab’s responsibilities – to create profitable growth, increase its
Employees 39–41 geographical presence and continuously
adapt to portfolio.
Saab’s responsibilities – Society 42–43
Saab’s responsibilities –
Environment 44–47
Financial review 2011 48–49 Local presence around the world Pages 30–31
Business areas 50–61 A local presence is vital to success.
In 2011, we therefore established a
Risks and risk management 62–65 stronger presence in a number of
Other information 66–68 countries, e.g., through new research
and development centres in India, the
Financial statements 69–81 UK and Brazil.
Notes 82–130
Dividend motivation 131
Proposed disposition of earnings 132
Audit report 133
Corporate governance report 134–144
Shareholder information 145–151
Financial information
2012 and contact details 152
Glossary 153
While every care has been taken in the transla-
tion of this annual report, readers are reminded
that the original annual report, signed by the
Board of Directors, is in Swedish.

3. SAAB IN BRIEF
OUR COMPETENCE MAKES SOCIETY S
Saab offers world-leading solutions, products and services for military de- 100 countries. Our most important marke
fence and civil security. We develop, adapt and improve new technology to Australia and North America. We have aro
meet our customers’ changing needs. We are represented in around 30 sales amount to around SEK 23 billion, of
countries, while our solutions, products and services are sold to more than to research and development.
BUSINESS AREAS
Our operations are conducted in six business areas that work together to utilise the Group’s
competencies as effectively as possible.
Aeronautics Security and Defence Solutions
Offers a product portfolio Offers a product portfolio
comprising the Gripen comprising C4ISR sys-
fighter and Unmanned tems, airborne early war-
Aerial Systems (UAS). ning systems, training
Aeronautics also manu- and simulation, air traffic
factures components for management, maritime
Saab’s own aircraft and safety, security and
for passenger aircraft manufactured by others. monitoring systems, and solutions for safe, robust
Examples of products: Gripen and Skeldar. communication. Examples of products: 9LV (combat
management system), remotely operated towers
Dynamics (RT) and tactical systems for communication
Offers a product portfolio integration.
with ground combat
weapons, missile sys- Support and Services
tems, torpedoes and sig- Offers mainly support
nature management sys- solutions, technical
tems for armed forces. maintenance and logis-
The business area also tics, as well as products,
offers military and civil niche products from spinoffs solutions and services for
such as rremotely operated vehicles for the offshore military and civil missions
industry and mapping solutions for the defence mar- in locations with limited
ket. Examples of products: Carl-Gustaf, RBS 70 and infrastructure.
Rapid 3D Mapping.
Combitech
Electronic Defence Systems Combitech is an inde-
Offers a product portfo- pendent, wholly owned
lio comprising airborne, subsidiary that offers
land-based and naval technical and operational
systems in radar, signals consulting services with
intelligence and self- an emphasis on techncal
protection. The busi- systems. Combitech combines technology with
ness area also supplies environmental and safety thinking.
civil and military customers with avionics to increase
flight mission efficiency and flight safety. Examples of
products: Giraffe AMB, Erieye and Arthur. For more information see pages 50–61.
SALES DISTRIBUTION 2011
BUSINESS AREAS MARKET SEGMENT GEOGRAPHICAL MARKETS
4% 3%
5%
6% 8%
14% 6%
25%
9% 37%
45% 22%
22%
17%
31% 8%
18% 19%
1%
Aeronautics Security and Air Civil security Sweden Asia
Defence Solutions
Dynamics Land Commercial EU excl. Sweden Africa
Support and aeronautics
Electronics Services Naval Rest of Europe Australia
Defence Systems Other
Combitech North and
South America

4. SAFER GEOGRAPHICAL MARKETS
The defence market is expected to decline in the West in the coming years as a result of the
sovereign debt crisis and changing defence priorities. At the same time, the global market for civil
ets are Europe, South Africa, Asia, security and commercial aeronautics is expected to grow.
ound 13,000 employees. Annual
Sweden and rest of Nordic region Central and South America
f which about 22 per cent is related The Nordic region accounts for about one per cent of The South American defence market is relatively mo-
global defence spending, a figure that is expected to dest in size. Brazil, one of the strongest economies in
rise slightly in the years ahead. Sweden is the single the region, represents the largest market. We have
largest market for Saab, and it is where the majority of been established in the region for many years. In
our research and development is conducted. 2011, we strengthened our presence by opening a
new research centre in Brazil.
Rest of Europe
After the U.S., Europe is the largest defence market in Asia, Middle East and Australia
the world, representing about 23 per cent of global The region has maintained its strong economic
spending. Economic uncertainty and the sovereign growth. Military spending is expected to continue to
debt crisis have led to delays in many defence pro- increase in the years ahead. The civil security market
jects, due to which the market is expected to shrink in is relatively immature and strong growth is expected,
the coming years. France, Germany and the UK are driven in part by increasing infrastructure needs. A
expected to account for the largest relative cutbacks. growing share of our sales is in the region, and in
The civil security market is anticipating growth. A 2011 we strengthened our presence in India.
large share of our sales is to the rest of Europe, and in
2011 it strengthened our position in the UK through Africa
our new office in London. The African continent has experienced positive eco-
nomic growth in recent years. Several countries face
North America political turbulence and tough economic situations,
The U.S. is the world’s largest defence market, ac- however. Spending on defence and civil security is
counting for about 43 per cent of global spending. expected to increase in coming years. Since the ac-
The market is expected to shrink due to the sovereign quisition of Grintek in 2005, Saab has a strong posi-
debt crisis and changing defence priorities. The U.S. tion in South Africa.
civil security market is also the largest in the world
For more information see pages 34–35.
and is expected to continue to grow. We strengthe-
ned our U.S. position in 2011 through the acquisition
of Sensis.
MARKET SEGMENTS
Saab’s market segments differ in terms of drivers and needs. Our offerings are partly based on the same
basic technologies. Thanks to our expertise in system integration, we can offer our customers entire
systems comprised of various products and solutions that cover the needs of every market segment.
Air by sea, the need to protect these trade flows is gro-
Driven by alliances wing. Technological advances are also driving deve-
and political deci- lopment, including ships with smaller crews and more
sions. Purchasing sensors, which are used, e.g., to monitor and record
decisions are made at traffic along coasts and in harbours.
the highest national
Civil security
level, where custo-
Investments in civil se-
mers demand fighter
curity are made to
aircraft that offer high-
protect citizens, criti-
performance, flexibi-
cal facilities and trans-
lity, economic efficiency and upgradability.
ports of goods and
Land people. The market is
Complex conflicts, in- driven by the growing
cluding in urban envi- awareness of
ronments, are driving society’s vulnerability, tighter regulations and a reali-
demand for new ma- sation that disruptions to society’s flows are costly.
teriel systems and This places demands on sustainability, flow efficiency
technology. The gro- and interoperability.
wing number of multi-
Commercial aeronautics
national missions and
The market fluctua-
alliances between national forces and different types
tes in pace with the
of forces are placing high demands on system inte-
economy and is cha-
gration, interoperability and command and control
racterised by long
capabilities.
development cycles.
Naval High fuel prices and
The trend toward new environmental
broader industrial alli- requirements are
ances is making inte- creating greater de-
gration and lifecycle mand for fuel-efficient aircraft models. The market
commitments more has few dominant players, which are now being chal-
important. Since over lenged by companies from China and elsewhere.
90 per cent of global For more information see pages 32–33.
trade is transported

5. SAAB 2011
SAAB 2011
Key financial ratios (MSEK) 2011 2010
Sales 23,498 24,434
EBITDA 4,088 2,187
EBITDA margin, % 17.4 9.0
Operating income (EBIT) 2,941 975
Operating margin (EBIT margin), % 12.5 4.0
-
Income after financial items 2,783 776
Net income 2,217 454
Operating cash flow 2,477 4,349
Earnings per share, SEK (after dilution) 20.38 3.97
Operating cash flow per share, SEK 22.69 39.84
Dividend per share, SEK 4.501) 3.50
Return on equity, % 18.1 4.1
Equity/assets ratio, % 41.1 39.1
Order bookings 18,907 26,278
Order backlog at year-end 37,172 41,459
Total research and development (R&D)
expenditures 5,116 5,008
OUTLOOK FOR 2012: Internally financed R&D 1,355 1,203
No. of employees at year-end 13,068 12,536
Share of women, % 22.0 22.0
Academic degree, % 54.1 51.4
LONG-TERM FINANCIAL GOALS AND RESULTS
SALES GROWTH OPERATING MARGIN EQUITY/ASSETS RATIO
Long-term goal: Our organic sales growth Long-term goal: Our margin goal is formulated Long-term goal: Our goal is an equity/
will average five per cent over a business as an average over a business cycle. The operat- assets ratio exceeding 30 per cent.
cycle. ing margin after depreciation/amortisation (EBIT)
At year-end 2011, the equity/assets ratio
will be at least 10 per cent.
In 2011, organic growth was -4 per cent (-1). was 41.1 per cent (39.1).
In 2011, the operating margin after depreciation/
amortisation (EBIT) was 12.5 per cent (4.0).
% %
MSEK
15 50
25,000
20,000 12 40
15,000 9 30
10,000 6 20
5,000 3 10
0 0 0
2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2
Trend line Goal Goal
SAAB ANNUAL REPORT 2011 1

6. EVENTS BY QUARTER 2011
EVENTS IN 2011
JAN-MARCH APRIL-JUNE
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2 SAAB ANNUAL REPORT 2011

7. EVENTS BY QUARTER 2011
JULY-SEP OCT-DEC
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SAAB ANNUAL REPORT 2011 3

8. SAAB 75 YEARS
INNOVATIVE TECHNOLOGY
AND COST EFFICIENCY –
75 YEARS OF SAAB
This year marks the 75th anniversary of Saab’s founding An important factor for Saab has been its ability to cooperate with the
in 1937 through a resolution by the Swedish Parliament. Swedish armed forces and to constantly deliver cost-efficient, com-
petitive products and services. Doing more with less has been Saab’s
When it created Saab, the Parliament was of the opinion that Sweden motto for years. It has shaped Saab and the way we work.
should have its own capability to design fighter aircraft, since defence The Gripen fighter aircraft system is an example of this: efficient
materiel were difficult to obtain from other countries at the time. internal processes, close cooperations with partners and a limited
Saab’s creation was a milestone for Sweden’s non-aligned status and number of carefully selected suppliers. Together with the Swedish
for the Swedish defence industry. armed forces and the FMV, we have succeeded in improving per-
Market development MARKET DEVELOPMENT
The concept of security policy has been broadened and today in-
cludes dimensions other than defence. Military attacks are certainly
still relevant from a long-term perspective, and localised military
incidents and operations in the near term cannot be ruled out
either. International crises and conflicts will also continue to call for MILITARY OFFENSES INTERNATIONAL ACTIONS
both civil and military responses. But society’s basic functions are
becoming more complex, which is accelerating questions of vulner-
ability. Saab has therefore continuously broadened its operations to
include civil applications to address this expanded threat scenario,
which today also includes impacts on our environment.
HISTORIC MILESTONES FOR SAAB
1941 1979 1990 1992 1993
First B17 delivered First order – RBS 15 First laser simulator BT 46 ANZAC combat management First Gripen delivered
system for Australia’s frigates First order from U.S. from BOL
1937 1990 2000
Saab is founded Saab Automobile – independent Saab acquires Celsius
company
1646 1894 1948 1998
Bofors is founded Alfred Nobel acquires Bofors First order for StriC in operation
Carl Gustaf
4 SAAB ANNUAL REPORT 2011

9. SAAB 75 YEARS
formance at the same time that operating expenses are significantly The key to success is an approach that focuses on partnership, col-
lower than similar systems. laboration and information sharing. This is because it is not about
Today this capability extends beyond Gripen to include our the number of technologies and systems; it is about having the right
entire portfolio of products and solutions for a range of situations technology and systems for each customer’s specific needs – the
from military attacks and multinational missions to civil security right capabilities at the right price delivered in time.
and environmental and climate threats. Our systems can help coun- This is our history and our future.
tries to better meet security threats today and in the future, while
promoting peace, democracy and development.
THREATS AND RISKS IN SOCIETY CLIMATE AND ENVIRONMENTAL THREATS
2002 2004 2005 2006 2008 2011
First contract – NLAW Installation of RAKEL Contract for NEURON Saab 2000™ AEW&C First flight for Gripen Demo RBS 70 NG – launch
communication system
2005 2006 2011
Saab acquires Grintek Saab acquires Ericsson Saab acquires Sensis
Microwave Systems (EMW) Corporation
1950- 1970- 1980- 1990-
Development of radar for Development of Giraffe AMB Development of Arthur Sea Giraffe AMB is
Gripen launched
SAAB ANNUAL REPORT 2011 5

10. CHAIRMAN’S STATEMENT
A COMPLEX WORLD WITH
CHALLENGES AND OPPORTUNITIES
The sovereign debt crisis, which has been a problem for the West, through acquisitions and
especially Europe, for some time, further intensified in 2011. The expansion in accordance
global economy recovered after the financial crisis in 2008-2009, with our strategic goals. This
but reversed course in 2011 driven by the growing crisis in the euro includes the acquisition of
zone. Fiscal constraints have contributed for several years to shrink- the U.S. company Sensis,
ing defence budgets, a trend which was exacerbated last year. which strengthens our exist-
At the same time, global security conditions have become more ing product portfolio and
complex, causing major transformations, especially in North Africa improves our market pres-
and the Middle East, which are not only important to the world’s ence globally and in the US.
energy supplies but also to global trade. This has also affected Swe- Saab is an open and trans-
den, in part because it decided to participate in the NATO opera- parent company that actively
tion in Libya with aerial surveillance and related support resources. takes part in establishing
The mission was carried out with five Gripen aircraft. global guidelines and rules
2011 was a breakthrough year for the Gripen system by the fact on business ethics. Our code
that the Swiss Armed Forces announced its selection of Gripen in a of conduct is an important
major international procurement. The main reason mentioned was part of how we work and was
the one generally cited as Saab’s biggest competitive advantage: its developed based on the OECD’s guidelines for multinationals. We
solutions provide better value for the money. As part of the offer, also abide by the UN’s Global Compact and its principles on human
Sweden is also able to offer extensive industrial collaborations with rights, labour conditions, the environment and anti-corruption.
Swiss companies, so-called offsets, which will create value for both
Swiss and Swedish businesses. We have to maintain our financial strength
Our long-term financial goals remain firm, and our strong financial
Innovative capabilities are crucial to our competitiveness position is an important asset in the current market climate. Saab
Sweden has historically had an innovative business sector, where will continue to focus on strengthening profitability and generating
Saab is one of a number of key players. Saab has long been one of strong operating cash flow, which will be needed in the future to in-
the country’s most engineering focused and innovation focused vest in research and development. This is critical if we are going to
companies, where around 20 per cent of sales is reinvested in maintain a high technological level, further improve our competi-
research and development. This has not only led to major export tive advantages and create long-term value for our shareholders.
successes and new jobs in our operations but also created a number I am convinced that Saab has major opportunities going
of new operating areas and spinoffs, where technologies that origi- forward. Saab’s strength is being able to deliver high-quality solu-
nated in defence solutions have found broad civil application, e.g., tions that are cost-efficient to buy, operate and maintain, making
in road tolls and web-based mapping solutions. In this way, Saab them competitive in a world where fiscal and economic conditions
has served as an incubator for Swedish high-tech innovation. It is remain uncertain.
important that we remain one.
Staying innovative in a changing financial, geopolitical and Stockholm, February 2012
market landscape is a challenge for both Sweden and Saab. It is in
no small measure a question of access to capital for the necessary
investments in R&D and development work. Faced with shrinking
defence budgets, we must increasingly finance this work ourselves.
This and the large customer projects we are working on are two Marcus Wallenberg
big reasons why Saab has built up a strong balance sheet and cash Chairman of the Board
reserves. Continued success also requires that we can build on the
many international alliances and relationships we have established,
especially in 2011, when Saab’s internationalisation was advanced
6 SAAB ANNUAL REPORT 2011

11. CHAIRMAN’S STATEMENT
“Sweden has historically had
an innovative business sector
where Saab is one of a number
of key players. Saab has long
been one of the country’s most
engineering focused and
innovation focused companies,
where around 20 per cent of
sales is reinvested in research
and development.”
SAAB ANNUAL REPORT 2011 7

12. CEO COMMENT
WITH A STRONG BALANCE SHEET WE
CAN IMPLEMENT OUR STRATEGY
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Profitable organic growth
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On site around the world
Active portfolio management
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8 SAAB ANNUAL REPORT 2011

13. CEO COMMENT
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In 2012 we celebrate Saab’s 75th anniversary
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Cost efficiency is one of our biggest competitive advantages
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Talent management cannot become a problem
SAAB ANNUAL REPORT 2011 9

14. MARKET AND DRIVING FORCES
A CHANGING MARKET IS DRIVING
SAAB’S BUSINESS
Competition for resources and living standards is a strong Competition for raw materials, resources and living standards is a
driver of social development and is clearly impacting de- strong driver of social development. As society develops, competi-
fence and security companies like Saab. Essentially, it is a tion increases for resources such as capital and people, which are
critical to drive innovation and growth.
question of which products and services we will offer the
The competitive picture has become more complex of late. The
market and how we do it. old world order, where the North and West had the upper hand
over the South and East, no longer applies. While Western Europe
According to the UN’s World Population Clock, the global popula- and North America are struggling with tough challenges and slow
tion passed 7 billion on 31 October 2011. In recent years, Africa, economic growth, Africa, Latin America and Asia also face chal-
Asia and Latin America have seen the largest population gains and lenges, but are experiencing higher growth. When this competitive
economic growth, in contrast to the U.S. and Europe, where the dynamic changes, conflict patterns change as well.
population growth and economic growth has been lower. Economic In addition, new economic centres are being created around the
growth is important to social development, and economic stability world such as China, India and Brazil, which are growing in promi-
and social stability are closely interlinked. nence through a combination of population density, education and
vigorous growth, and are leading the way to a multipolar world.
The primary drivers in Saab’s markets are The first dimension is dominated by national
threat scenarios and security needs. This governments and military organisations, while
applies to the defence sector and civil so- the second is dominated by cities, compa-
ciety as well as the grey zone in between. nies, organisations and individuals. Urban
Understanding the development of, and security, efficiencies and sustainability are
overlap between, the two main dimen- essential to a well-functioning society.
sions of security policy is critical to also
understanding the opportunities, breadth The three areas of training, command and
and potential in Saab’s market. control, and maintenance are “links” as well
as the lowest common denominator be-
One dimension of Saab’s markets focuses tween these two security dimensions. For
on traditional security policy, the purpose Saab, these areas originate in a traditional
of which is to maintain national sover- border-protecting military context, but are
eignty by defending borders. Another just as relevant and possible to implement
dimension stresses the vulnerability of civil in an urban-centred, flow-protecting
society, where supply chains and infra- environment.
structure must be protected to safeguard
society’s essential functions.
10 SAAB ANNUAL REPORT 2011

15. MARKET AND DRIVING FORCES
New security and functionality needs and bilateral agreements. Moreover, large defence orders almost
Society today contains global flows of capital, goods and people always include extensive offsets through industrial partnerships.
(flow society), which are strongly interdependent. As a result, major Large development projects are increasingly part of public-private
crises can quickly spread through the system. This is exemplified partnerships.
by the sovereign debt crisis, which is now threatening the financial
system and global growth. New conditions for R&D
The trend toward a global flow economy has increased security International cooperation and system partnerships require open
needs in the civil sector, creating greater demand for systems to systems that can be coordinated and integrated operationally. This
monitor and protect critical flows and hubs such as airports, ports, is why a growing share of development work is being done collabo-
railways, highways, and information and energy systems. As ICT, ratively. As a result, the defence industry can expect less financing
information and communication technology, has become more im- through national defence budgets, alongside the fact that shrinking
portant to society’s infrastructure, our vulnerability has increased. government budgets no longer allow for research and development
ICT is also an important driver behind the integration of military to the same extent as before. To a growing extent, defence authori-
and commercial technology, where there is a growing overlap, espe- ties around the world want access to the best the market has to offer
cially in surveillance and control. regardless of country of origin, and they want it delivered on short
In times of limited resources, the focus is not only on security notice. A larger share of research and development (R&D) therefore
but functionality and efficiency. Customers in both military and has to be financed by the industry itself. On the other hand, gov-
civil markets increasingly want broad-based, integrated solutions ernments around the world are devoting more research resources
that include more services: education, training, support and main- to civil security, energy, the environment and sustainable urban
tenance. Solutions are evaluated based on not only performance development. Access to energy is a critical factor in the develop-
but also in terms of cost of ownership and operation. The trend is ment of living standards and energy security and hence is central to
shifting toward full operational and functional commitments cover- both military and civil strategies. Developing new sources of energy
ing the entire lifecycle. Outsourcing of activities that had previously is now a high priority in both old and new economies. The aim is
been performed internally is becoming more common, including in to become less dependent on undesirable and politically sensitive
the military field. sources, capitalise on the economic benefits of new technology and
reduce global environmental risks. Development and security go
Reduced defence budgets and shift toward emerging countries hand in hand in this area as well.
The deficits and sovereign debts in many major Western economies
require comprehensive austerity programs, which are triggering Local presence is decisive
defence cuts. The U.S. and Canada accounted for the largest share Despite the trend toward international alliances, the need for a
of global defence spending in 2010, approximately 43 per cent, strong local presence is critical to success in both the military and
according to the Stockholm International Peace Research Institute civil markets. Customers want integrated solutions from compa-
(SIPRI). The U.S. is expected to reduce its spending in the coming nies that understand local conditions and can adapt their solutions
years. The biggest increases in defence spending are in China and accordingly. This makes it important to be established locally, build
other countries in Asia, and the trend going forward is expected local competence and understand local conditions if you hope to be
to favour emerging markets over traditional markets. Purchasing successful. It significantly increases your chances of being selected
habits have also changed. Demand is increasing for proven systems as a supplier or subcontractor and to have a portion of your devel-
that offer “more bang for the buck” and work in combination with opment financed through government appropriations.
other systems.
New cooperation and alliances with a regional focus
International cooperation is important to ensure cross-border
flows and keep conflict zones under control. The long-term trend
is still toward alliances for peacekeeping and economic develop-
ment purposes. Right now, however, it is toward regional alliances
SAAB ANNUAL REPORT 2011 11

16. GRIPEN
A YEAR FOCUSED ON GRIPEN
At the start of 2011, the first six Gripen were delivered from Sweden to In November, the Swiss government announced that it had cho-
the Royal Thai Air Force, as planned. Thailand has ordered a further sen Gripen as a potential future combat aircraft – a clear acknowl-
six Gripen C/D aircraft, which are in production. edgement that Gripen is a world-class and highly cost-effective
Last spring, Gripen was involved in a conflict situation for the combat aircraft system. Besides the Gripen system being offered,
first time when the Swedish Air Force joined the NATO-led opera- the programme also includes a long term industrial cooperation
tion in Libya. between Switzerland and Sweden.
“We received confirmation that both the aircraft and the unit Gripen’s successes in 2011 are indicators of the Gripen system’s
performed well. We provided what was asked of us without any world-leading ability to meet the international market’s demands –
damage or losses. For me, this is an affirmation that practice makes in terms of function, quality and cost.
perfect – with realistic training, we can assist in such actions,” said Gripen is operated by the air forces in Sweden, South Africa,
Lt Col Anders Segerby, who was Chief of Operations for the unit in Thailand, the Czech Republic and Hungary. The UK’s Empire Test
Libya, FL01. Pilots’ School (ETPS) uses Gripen for training test pilots from
In April, the Indian Ministry of Defence announced that Gripen across the world. Gripen’s development is supported by the Swedish
would no longer be included in the Indian Multi-Role Combat government and Armed Forces, which has stated that Gripen will
Aircraft (MMRCA) procurement programme. India remains one of form the backbone of the Swedish Air Force until at least 2040.
Saab’s most important markets and we see great business potential Countries that have been offered Gripen are: Brazil, Bulgaria, Den-
within the aviation, defence and security industries. mark, the Netherlands, India, Croatia, Switzerland and Romania.
Throughout Saab’s 75-year history, operations have grown from military
aviation into a portfolio of products and solutions for defence and civil
security. These systems can help countries develop their capacity to
meet current and future security threats.
12 SAAB ANNUAL REPORT 2011
SAAB ANNUAL REPORT 2011

17. GRIPEN – today and in the future Air combat Gripen C/D Facts:
Gripen is the world’s first new generation multi- Gripen is one of the most agile fighters around. Length: 14,1 meters
role fighter that can perform a complete range Its highly developed aerodynamic construction Wingspan: 8,4 meters
of different roles. It is suitable for reconnais- and triplex digital flight control system, com-
sance and monitoring (air policing) missions as bined with its world-beating new-generation Thrust: >18,000 lbs
well as air-to-air and air-to-ground operations. weapons system, gives it enormous advan- Weapons Stations: 8
Gripen was designed with ease of handling in tages in air combat.
mind – both for the pilot and ground crew. Turnaround-time, i.e. the time it takes for
Digital cockpit
an aircraft to land, fill up fuel, change cargo and
The Gripen system Gripen has a state-of-the-art, fully integrated
take off again:
The Gripen system was designed for continu- digital cockpit with clear, manageable displays
Less than 10 minutes with weapons for
ous development. New sensors and weapons and Hands-On-Throttle and Stick (HOTAS)
Air-To-Air Combat, less than 20 minutes with
are easy to integrate, thus making Gripen controls. This, along with the on-board inte-
weapons for Air-To-Ground combat.
flexible and cost-effective to develop further as grated data link capability, gives the Gripen
new technologies become available. pilot total Situational Awareness and, with its
advanced weaponry, the pilot has a decisive Gripen E/F Facts:
Cost-effective system
edge in combat situations. Length: 14,9 meters
Gripen is designed for minimal cost in terms of
Wingspan: 8,6 meters
procurement, logistics support and mainte- Gripen Next Generation
nance. The cost of ownership was catered for Gripen NG is the next generation of Gripen, an
Thrust: >22,000 lbs
in the aircraft design from the very beginning, enhanced version of the well-established multi-
Weapons Stations: 10
since this was one of the driving requirements role fighter. It is the next and natural step in the
set by the Swedish customer. successful development of Gripen, which will
Turnaround-time: Less than 10 minutes with
Operating costs are low due to: secure the system’s life span and competitive-
weapons for Air-To-Air Combat, less than
ness beyond 2040. Gripen NG is equipped
- 20 minutes with weapons for Air-To-Ground
with a more powerful engine, increased range,
nance and fuel usage thanks to the efficient combat.
new AESA (Active Electronically Scanned
single engine.
Array) radar and a new avionic system, giving
the user new and improved capabilities in the
battle arena.
average time to repair is short.
based – so they do not require as many
expensive hardware modifications.
SAAB ANNUAL REPORT 2011 13

18. SAAB’S CORE COMPETENCE
SYSTEMS EXPERTISE
IS OUR CORE BUSINESS
We address the global market and meet traditional defence needs as well as the needs of the growing market for civil
security. Our core offering consists of systems know-how in products and systems to safeguard national borders as
well as the functional and security needs of the global flow society.
OUR VIEW OF THE MARKET OUR CORE COMPETENCE
Our customers increasingly want integrated solutions that Our core competence is systems engineer-
meet local requirements. These solutions are evaluated based ing, i.e., understanding and being able to
on performance as well as the cost to own and operate. De- integrate complex systems: our own and
mand is increasing for proven systems that offer “more bang others’. At the same time we have developed
for the buck” and can be combined with other systems. world-leading technologies in a number of
important areas and today work with open
systems as far as possible.
OUR MARKET POSITION
Our strongest position and good growth
opportunities are in fighter aircraft, com-
mand and control systems, radar, reconnais-
sance and surveillance systems, including
Airborne Early Warning (AEW) systems,
tactical weapon and missile systems, and
Command, Control, Computing Intel-
ligence, Surveillance and Reconnaissance
(C4ISR) systems.
We also have a strong niche position in
commercial aviation and in selected regions
in civil security, support and services, train-
ing and underwater systems, as well as in
niche segments such as signals intelligence
and countermeasure systems. Geographi-
cally we have a strong position in Sweden
and good positions in South Africa and
Australia.
Read more on pages 10–11
14 SAAB ANNUAL REPORT 2011

19. SAAB’S CORE COMPETENCE
OUR VISION OUR STRATEGIC HOUSE
It is a human right to feel safe. Since 2010, our strategy has focused on four priority areas. Our aim
is to create long-term value by accomplishing these strategic priori-
OUR MISSION ties. We will also maintain a solid balance sheet, focus on capital
To make people safe by push- efficiency and generate strong cash flow.
ing intellectual and technologi- Our long-term financial goals since 2011 relate to organic sales
cal boundaries. growth, the operating margin after depreciation/amortisation
(EBIT) and the equity/assets ratio; see also page 48.
OUR BUSINESS CONCEPT
Saab constantly develops, adopts and improves new Profitable growth Performance
technology to meet changing customer needs. Saab We continuously evaluate our We work with efficiencies and
positioning and identify growth continuous improvements.
serves the global market of governments, authorities opportunities. We focus on areas
and corporations with products, services and solu- with a strong market position and People
tions for military defence, commercial aviation and on strengthening in areas with good
growth opportunities. We want to be an employer of
civil security. choice in the global market. Our
Portfolio employees are the backbone of our
offering and our growth.
OUR VALUES We adapt our portfolio to areas
with strong competitive advantages
Expertise – We combine a strong history of and growth opportunities. We also
knowledge with constant learning. target areas with a strong market
position or leading technology.
Trust – We are global citizens, honest and reliable
and we keep our promises.
Drive – We have a passion for innovation, we are
open to change and we are committed to being fast
and flexible.
PERFORMANCE
PROFITABLE
PORTFOLIO
GROWTH
PEOPLE
Read more on pages 16–29
SAAB ANNUAL REPORT 2011 15

20. STRATEGIC GOALS
PERFORMANCE
PROFITABLE
PORTFOLIO
GROWTH
PEOPLE
DELIVERING ON STRATEGIC GOALS
Saab’s four strategic priorities are profitable growth, performance, a focused portfolio and people. In 2011, we took a
number of important steps toward meeting them.
PROFITABLE
1. GROWTH
Activities during the year Outcome/goal attainment Priorities 2012
During the year, we focused on expanding operations Sales decreased in 2011 compared to 2010 as a In 2012, we will continue to focus on a
in priority markets, including through focused acquisi- result of lower activity levels in major projects and the number of key markets, including the
tions. Among other things, we expanded in the UK challenging business climate in South Africa. US, Sweden, India and the UK. Our
through a new office and a design centre for the de- priority is to increase local competence
velopment of Sea Gripen. We also strengthened our and establish a stronger local presence
presence in the US, through the acquisition of Sensis Sales EBIT in selected markets.
Corporation. In addition, we established a research
centre in Brazil and a product and technological MSEK %
development centre in India, where we also signed a 25,000 20
number of strategic agreements with partners.
20,000 16
15,000 12
10,000 8
5,000 4
0 Long-term financial goals and outlook for
0
2009 2010 2011 2009 2010 2011 2012, see page 1.
2. PERFORMANCE
Activities during the year Outcome/goal attainment Priorities 2012
We have continued to focus on standardising opera- Profitability increased in 2011 compared to 2010. In 2012, we will continue to focus on
tions and our functional processes to achieve func- This included capital gains MSEK 1,169 (14), improving tied-up capital and generat-
tional synergies. Our improved processes for project compared to structural costs of MSEK 616 in 2010. ing strong cash flow. It is important to
implementation and risk management have enabled Underlying profitability increased in 2011, with us to have a strong balance sheet and
us to identify savings and improve our forecasting successful project execution as one of the most sound profitability to facilitate growth-
abilities. Our cost base is now more transparent, important drivers. enhancing investments.
which has given us greater flexibility when cost
adjustments must be made. Administrative Gross margin
costs
MSEK %
1,500 30
1,200 24
900 18
600 12
300 6
Long-term financial goals and outlook for
0 0 2012, see page 1.
2009 2010 2011 2009 2010 2011
16 SAAB ANNUAL REPORT 2011

21. STRATEGIC GOALS
3. PORTFOLIO
Activities during the year Transactions Priorities 2012
We completed several transactions during the year First half-year 2011: We will continue to invest in product
in order to focus operations. This included streamlin- development and renewal as well as
ing the corporate portfolio, acquiring companies in Investment in Scandinavian Air Ambulance
prioritise and strengthen our current
growth areas and divesting non-core operations. The Acquisition of E-COM of the Czech Republic competitive position in a number of
divestments included the shares in the 3D mapping Divestment of interest in Grintek Ewation selected markets and a number of
company C3 Technologies AB and the Norwegian technological specialties. In several
Divestment of interest in Denel Saab Aerostruc-
company Aker Holding AS, where we exercised an markets, we are cooperating with
tures (Pty) Ltd
option. In the US, Sensis Corporation was acquired, selected partners to build a local pres-
a transaction that strengthens our offering in air traffic Additional consideration was received from the ence and gain better access to the
management as well as radar and sensors. In the sale of Saab Space in 2008 market.
Czech Republic, we acquired E-COM, a company Divestment of interest in Image Systems AB
active in training and simulation.
Exercise of option to sell Aker Holding AS
In total, more than 10 transactions were completed. Investment in ISD Technologies Int AB
Second half-year 2011:
Acquisition of Sensis Corporation in the US
Divestment of shares in the 3D mapping company
C3 Technologies AB
4. PEOPLE
Activities during the year Results 2011 Priorities 2012
During the year, we started building Saab Academy We will continue to develop Saab
to ensure we have the competence needed to grow HR goals Results 2011 Academy.
now and in the future. Employer of choice – internally We will improve long-term talent
We are continuously evaluating our employees. Dur- (index) 67 management.
ing the year, we implemented a uniform performance Employer of choice – externally
We will develop HR support globally
management process. (ranking by Universum) 12th place
and locally.
Communicative leadership (index) 68
Employee reviews, % 84
Development plans, % 72
Percentage of female managers, % 21
SAAB ANNUAL REPORT 2011 17

22. STRATEGY > PROFITABLE GROWTH
PERFORMANCE
VERKSAMHET
PROFITABLE
PORTFOLIO
PORTFÖLJ
EFFEKTIV
TILLVÄXT
GROWTH
LÖNSAM
MEDARBETARE
PEOPLE
1. PROFITABLE GROWTH
GROWTH THROUGH
MARKET FOCUS
Our business targets markets with strong demand where Priorities 2012–2016: Clearer market focus
our technologies and solutions can meet security needs. Through acquisitions to support our financial goals in defence and
During the year, we continued to deliver on our strategic civil security, we will continue to build a strong presence in key
markets. A focused Gripen strategy is also critical.
goal to focus on key existing markets and strengthen our
Our customers can be found in around 100 countries, at the
presence in selected markets. same time that the majority of order bookings come from around
30 countries where for the most part we also have our own opera-
Saab has a strong position in Sweden. While we expect this to con- tions. We will concentrate our efforts primarily on these countries.
tinue, the large share of future growth will come from outside the Decisions where we operate around the world are based on
country. Becoming a more international business – in both military extensive market analyses of political, regulatory and competitive
and civil security, through investments in selected markets and a conditions and growth potential. We also look at how our product
deeper market presence – is also one of our principal strategies. portfolio fits the local market’s needs.
Our sales outside Sweden have gradually increased in recent years. A stronger local presence is necessary to meet our goals. This
Today, Sweden and the rest of Europe currently account for slightly includes everything from marketing to joint ventures, partner-
over 56 per cent of sales. ships, industrial cooperations and technology transfers. Our local
Profitable growth is one of our financial goals. Our organic sales presence can also be strengthened through acquisitions, with the
growth will amount to five per cent over a business cycle. In 2011, acquisition of Sensis Corporation in the U.S. in 2011 being a prime
our sales decreased slightly compared to 2010 as a result of lower example.
activity levels in major projects and the challenging business cli- Naturally we continue to do business in other countries where
mate in Africa. Despite the decrease, we took a series of steps in line the conditions are right.
with our strategic goals to create a stronger platform for growth. We will also be intensifying efforts to find applications for our
know-how and technologies in new areas such as green technology.
Priorities 2011: Measures to increase our global presence At year-end 2011, we had 13,068 employees, about 79 per cent
To create profitable growth, we are gradually building our global of whom are in Sweden, five per cent in the U.S. and 11 per cent in
presence in priority markets by giving employees in Sweden the South Africa and Australia.
opportunity to work abroad and by recruiting local competence.
In 2011, we signed important agreements in markets where we are
expanding our local presence, e.g., with the Thai Royal Navy, and in
key markets such as the U.S. and Asia.
We acquired Sensis Corporation in the US, broadening our
foundation for growth in the North American market and globally.
Sensis has a strong local presence in the U.S. in radar and sensors
and a world-leading position in the market for air traffic manage-
ment systems; see also page 20.
During the year we also acquired the Czech company E-COM,
which specialises in the development and production of virtual
simulators. We have also established research and development
centres in the strategically important markets of India, Brazil and
the UK; see also pages 30–31.
18 SAAB ANNUAL REPORT 2011

23. STRATEGY > PROFITABLE GROWTH
SALES TREND BY MARKET SEGMENT SALES TREND BY MARKET REGION
MSEK MSEK
12,000 12,000
9,000 9,000
6,000 6,000
3,000 2010 3,000 2010
2011 2011
0 0
Air Land Naval Civil Comm. Other Sweden Rest of North Central and Asia, Africa
Security Aeronautics and Europe America South Middle
rest of America East and
Nordic region Australia
FOCUS ON SELECTED MARKETS
OUR EXPANDING OPERATIONS IN THAILAND
One of our criteria to establish in a new geo-
graphical market is that there is a demand for our
products, services and solutions. We want there
to be in a growing market or a market where we
can gain a strong position. There have to be op-
portunities to build partnerships with authorities
and businesses. In addition, we have to have ac-
cess to engineers and other skilled workers. Another
important factor is that the business environment, in
both the state and private sectors, is trans-
parent and complies with international- ly
accepted principles.
Our operations in Thailand are a successful example
where we have found excellent opportunities for our
civil and military products and services.
Thailand has ordered twelve Gripen in two batches,
two Saab 340 Erieye AEW (Airborne Early Warning),
one Saab 340B and an air command and control
system – a complete air defence concept. Moreover,
we received an order in 2011 for the upgrade of
combat management and fire control systems.
A cornerstone of our Thai venture was becoming part-owner of the Our presence and the deals we have finalised also open up other
Thai company Aviasatcom, which develops and supplies products to business opportunities in Thailand and the region.
the Thai defence forces. This consolidates our presence in the country
and gives us good opportunities to support customers locally.
SAAB ANNUAL REPORT 2011 19

24. STRATEGY > PROFITABLE GROWTH
SENSIS – BRIDGEHEAD TO A
GLOBAL MARKET
In 2011, Saab acquired the U.S. company Sensis Corporation Stronger position in important market
(Sensis), a leading provider of air traffic management solutions Through the Sensis acquisition, we strengthen our offering in
and surveillance technology. The acquisition is fully in line with advanced air traffic management and surveillance. There are
our strategic priorities to create profitable growth, increase our several factors driving demand in this market:
geographical presence and continually adapted our portfolio. Demand for air traffic management and infrastructure is
Sensis has a strong position in the U.S. in radar and sensors driven by growth between and within regions.
and is a world leader in air traffic management, an important Global air traffic is growing, increasing congestion. By 2030,
complement to Saab’s existing offering. For example, Sensis has around 50 per cent of growth is expected to come from
a strong position with major airports, while Saab is a leader in travel to, from and within Asia.
Remote Towers for small airports. With this combination, the
Group creates a stronger product portfolio – and new growth Higher fuel prices and increased security demands.
opportunities in a growing global market. A desire among customers to meet future security, capability
The acquisition of Sensis also gives us a growth platform in and environmental needs.
the important North American market, where a local presence
Access to new technology.
is critical to success. We have also identified operational syner-
gies in both the medium and long term, which we are currently The Air Traffic Management (ATM) market is cyclical,
working to capitalise on. programme-driven, dominated by increased automation and
Sensis has developed and distributed air traffic management characterised by limited growth in Europe and North America.
and air defence systems since 1985. It maintains a global base Emerging regions, on the other hand, will account for a large
of more than 200 installations among over 60 customers in 35 share of market growth, since growing traffic volumes are creat-
countries on six continents. Operations rest on two divisions: ing demand for new systems. At the same time, it remains a fact
Air Traffic Management, which accounts for about 75 per cent that existing systems will not be able to satisfy future needs. A
of sales and has installations at more than 85 airports, and De- large number of players are now planning to modernise their
fence & Security Systems, which works with defence organisa- systems and implement new technology.
tions around the world.
Saab Sensis’ products and
systems are installed with
over 60 customers in 35
countries on six continents.
20 SAAB ANNUAL REPORT 2011

25. STRATEGY > PROFITABLE GROWTH
Strategy for civil security Air Traffic Maritime Safety Security & Safety
Management & Surveillance National Security Management
Investments in products and solutions for civil security are in-
creasing around the world. We have good positions in Sweden,
Central Europe, South Africa and Australia, e.g., through the
new security system SAFE (Situation Awareness For Enhanced
Security), which covers every security need for the protection
of critical infrastructure, prisons and emergency services . For
more information on SAFE, see page 27.
We are well-positioned in the area and our offering is based on
expertise in military technology, with an emphasis on situational
control as well as efficient, safe and secure trade flows.
Our civil security strategy is also based on our role as a system
supplier and integrator with a focus on airports and aviation,
ports and shipping, as well as on having a competitive portfolio
of solutions to measure-analyse-act.
SAAB ANNUAL REPORT 2011 21

26. STRATEGY > PERFORMANCE
PERFORMANCE
PROFITABLE
PORTFOLIO
GROWTH
PEOPLE
2. PERFORMANCE
IMPROVED COMPETITIVENESS
THROUGH COST EFFICIENCY
We will continue at a rapid pace to improve efficiencies in Priorities 2011: Organisation and implementation
the ways we work throughout the Group. The goal is to In 2011, we strengthened cash flow by further improving our
become even more competitive. processes for managing capital employed, finalising divestments
and maintaining our programme to sell account receivables. An
An efficient business means creating the right conditions to be the efficient organisation is especially important to project imple-
most competitive partner possible for our customers and to pave mentation, which we focused on in 2011 and which will remain
the way for growth. In our daily work this means continuously a priority.
developing and refining our processes and work methods. Due to the long lead times between order bookings and the
We are working in a structured manner to increase harmonisa- receipt of revenue, it is critical that we can do more for less,
tion and standardisation within the Group. We also continuously which is already one of our strengths. We have also continued to
re-evaluate and prioritise our activities to ensure the highest pos- improve R&D efficiency through a uniform lifecycle process for
sible return on our efforts. The work is measured, followed up and our products. This work requires that our organisation and man-
communicated internally. To succeed, we have to promote a culture agement model support product development.
that puts the entire Group’s best first.
Since the cost-cutting programme was completed in 2010,
we have continued to work with improvements in day-to-day
operations. An important element are our centres of excellence
in research and development, which we began opening in 2010.
They will support our collective actions while increasing internal
efficiency.
FIVE PRIORITIES PRIORITIES 2011
Strengthen cash flow through divestments
Priorities in our efficiency improvement efforts:
Standardise and harmonise operations to achieve functional Successful project implementation
synergies. R&D efficiency
Focus on contract quality, project implementation and risk Continuous improvements
management to improve project results and forecasting abilities.
Increase the flexibility in our cost base to quickly adapt to
variations in volume.
Focus on cash flow and tied-up capital to facilitate investments
for growth and acquisitions, R&D and marketing.
Develop uniform processes for product management and
development to optimise R&D efficiency.
22 SAAB ANNUAL REPORT 2011

27. STRATEGY > PERFORMANCE
SUCCESSFUL CENTRES OF EXCELLENCE
To increase operating efficienc, not least by eliminating redundancies, In addition to the Optics Design Centre, Saab established three other
we established centres of excellence within various areas of the Group centres of excellence in 2010. As planned, seven new centres were
in 2010. The goal is to make important knowledge more widely avail- added in 2011. All of them are in different stages of development.
able and in that way maintain our desired level of competence in certain
“Before establishing each centre, we analyse detailed calculations and
areas while improving it in others. The resources that are freed up will
arguments,” Göran Johansson continued. “In some cases, we have
be used for investments in our future. After a short time, the benefits of
found commercial applications, where customers have shown interest
the centres have become increasingly evident.
in utilising the competence.”
“We can already safely say that the centres which are furthest along
The work is now continuing. In 2012, around four more centres will be
in their development, such as the Optics Design Centre, have lowered
established, and those already in operation will be re-evaluated accord-
their fixed and variable costs and are seeing greater cooperation be-
ing to various criterias.
tween business areas,” said Göran Johansson, who is leading the effort
to create Saab’s centres of excellence. “This means that we are erasing
the dividing lines within Saab and creating synergies.”
Centres of excellence that Saab has established
2010 2011
Optics Design Centre Power ILS
Common Component Sourcing Centre Aerodynamics Antenna EM Field
Geo Data Centre (digital maps) in a portal, a Technical Test Equipment
central geodata library Publications
Rugged Computers
Power Electronics Design Centre Ballistics
ADMINISTRATIVE MARKETING CASH FLOW FROM OUR PRIORITY 2012–2016:
EXPENSES EXPENSES OPERATING CONTINUOUS
ACTIVITIES IMPROVEMENTS
MSEK MSEK MSEK To achieve our goal of an operating margin
1,400 2,000 5,000 after depreciation/amortisation of at least
ten per cent, we have to work in a structured
1,050 1,500 3,750
manner with continuous efficiency improve-
ments. Maintaining a stable cash flow and
700 1,000 2,500
high capital efficiency make us more com-
petitive and facilitate investments that drive
350 500 1,250
growth. Payment plans in tenders/contracts,
0 0 0
resource-efficient project execution and
2009 2010 2011 2009 2010 2011 2009 2010 2011
reductions in working capital, for example
in account receivables and inventories are
important aspects.
SAAB ANNUAL REPORT 2011 23