12 February 2021

Saab seeks to diversify naval business

by Marc Selinger

Saab’s Kockums business area, which mainly designs and builds submarines and surface vessels for the Swedish Navy, is looking to diversify its workload to improve its financial performance, according to Micael Johansson, the president and CEO of the Swedish defence company.

Saab Kockums’ products include the A26 submarine. (Credit: Saab)

“In this part of Saab, you also have to have a combination of different types of contracts, not sort of one or two large mega-deals contracts with complicated developments,” said Johansson. “You need the support contracts, you need the upgrade contracts on the surface side, you need international contracts.”

Kockums generated SEK3 billion (USD363.7 million) in sales in 2020, up less than 1% from the previous year, Saab reported on 11 February. Kockums’ operating margin improved a full percentage point to 3.9% but remained well below the company’s long-term goal of 10%. “We’re still not pleased with the margin,” said Johansson.

Kockums is eyeing several new opportunities, including upgrades for Sweden’s possible sale of used submarines to Poland. In the competition to replace the Netherlands’ Walrus-class submarines, the Saab business is teamed with Dutch shipbuilder Damen Shipyards to offer a vessel based on the A26.

Kockums is also trying to boost its profitability by performing more efficiently on its current programmes. “We’re on that journey,” Johannson said. “We see a good trend in the programmes.”

Selling Kockums, which Saab acquired in 2014, does not seem to be an option. In response to a question, Johansson said “there are no plans to divest Saab Kockums”.

Saab’s Kockums business area, which mainly designs and builds submarines and surface vessels for the...

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