Saab CEO confident about Brazil jet deal despite crisis

The Swedish defence company is keeping a close eye on the political turmoil in South American country

Sweden's Saab is keeping a close eye on political turmoil in Brazil, which has ordered 36 of its Gripen jet fighters, but does not expect the crisis to threaten orders or undermine its key programme, Chief Executive Hakan Buskhe said on Tuesday.

"All of us are looking at what is happening in Brazil, but I am not having sleepless nights," Buskhe told reporters, asked whether the crisis could crimp its growth there. Brazil has said it is interested in buying two further batches of Gripens.

Speaking on the eve of a rollout of Saab's new Gripen E, ordered by Brazil and Sweden, Buskhe reaffirmed a target of 400 to 450 Gripen orders including more from Brazil.

Saab is competing in Belgium and believes Switzerland will revive a previously abandoned fighter contest, he said.

Saab is meanwhile in talks to sell the Gripen to Slovakia while monitoring potential fighter purchases in India and Canada, officials at the Swedish defence company said.

Buskhe told reporters Saab was carrying out a continuous review of its 600 mainly defence products, weighing 10 parameters, and aimed to reduce its catalogue while remaining a "broad company". He said Saab would probably make more disposals than acquisitions as it adjusts its portfolio but that the value of acquisitions would be higher. A spokesperson said Saab was conducting a rolling product review, with no fixed date for completion.

Buskhe also said the group would maintain its research and development (R&D) at 25 per cent of turnover.

"We will continue to grow our sales and we will increase our R&D in absolute terms," Buskhe said.

Saab revenue grew 16 per cent in 2015, driven by fighters and submarines after seven relatively flat years, while the company almost doubled its order backlog.

Buskhe took a swipe at rivals that have decreased R&D and invested significantly in share buybacks or higher dividends.

"It would be very easy as a CEO to double the profit margin just by reducing some of our R&D spending, but then this company would probably be out of the market in five-six years."

Buskhe said Saab would continue to invest heavily on items such as sensors.

In maritime defence, Saab has identified a potential global market to replace 50 submarines over the next 25 years and hopes to win "a fair portion" of that for its A26 stealth subs, Buskhe said, adding this could mean "one, two or even three countries".