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Covid-19: Saab cancels financial forecast, citing virus uncertainty

Saab is withdrawing its 2020 financial guidance, saying uncertainty about the duration and scope of the coronavirus disease (Covid-19) makes it too difficult to project the pandemic’s impact on the company’s performance.

Saab has flagged down its FY 2020 financial guidance (Credit: Saab)

Saab has flagged down its FY 2020 financial guidance (Credit: Saab)

A major unknown is how quickly Saab’s global supply chain will recover. In some countries, suppliers are generally allowed to work, but in others they face more restrictions.

“It is not possible in this context of Covid-19 to forecast exactly how things will evolve,” said Micael Johansson, Saab’s president and CEO.

The Swedish aerospace and defence firm had earlier estimated that sales from existing operations would rise 5% from last year.

So far, Covid-19’s impact has been limited to Saab’s civil businesses, which have been hurt by the decline in air travel. Saab’s defence businesses, which account for more than 80% of the company’s revenue, are in “excellent” shape, Johansson told analysts on 24 April.

But with the global economy in turmoil and Covid-19 still spreading, “Saab cannot rule out a future impact on its business as regards supply chains, delivery, and new potential orders,” the company said.

Saab reported that its sales and operating income both decreased 5% in the first quarter of 2020 compared with the same period last year. However, company officials attributed the declines to programme timing issues, particularly in its Aeronautics and Dynamics business areas, rather than to weak performances.

“In those two business areas, we are basically running at full speed,” said Magnus Örnberg, Saab’s chief financial officer.

Saab said its order bookings rose 8% in the first quarter to SEK4.8 billion (USD479.7 million), a promising sign for the rest of the year.

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