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Saab launches US$665m rights issue to fund bulging order book
[STOCKHOLM] , Oct 23 (Reuters) - Defence firm Saab on Tuesday unveiled plans to raise 6 billion Swedish crowns (S$918.6 million) to bolster its financial muscles in the wake of big contract wins that have swelled its order backlog in recent quarters.
The Swedish company said it needed a stronger balance sheet to develop the large projects in its order book, invest in research and development, and to compete for new extensive contracts.
"Large orders also imply initially increased investments in production and working capital, and at the same time the rapid technology development entails continued investments in research and development," Saab said in a statement.
"Saab therefore needs a strong financial position to create room for continued growth".
The company has developed the T-X trainer aircraft with Boeing, recently ordered by the USAir Force, while large projects in its backlog include orders from Sweden and Brazil for its Gripen E fighter jet.
Saab said shareholders representing 58.9 per cent of votes, including major owners Investor AB and the Knut and Alice Wallenberg Foundation, supported the rights issue.
The Stockholm-based company reported a 22 per cent rise in order intake to 4.52 billion crowns in the third quarter, while its adjusted operating income was 237 million, down from 369 million in the year-ago quarter.
The firm said it booked non-recurring costs of 298 million crowns related to efficiency measures in the quarter.
"They include operating efficiencies and a plan to adapt the product portfolio, improve marketing efficiency and increase the digitisation of internal processes," Saab said.
The company stood by its 2018 outlook for organic sales growth of 5 per cent and a higher adjusted operating margin and said it expected continued strong demand for its products as well as increasing defence budgets in most markets.