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STRATEGY
PERFORMANCE
Saab’s long-term profitability goal is an average operating margin of
10 per cent over a business cycle. To achieve this goal, the organisation
must be underpinned by a business culture focused on efficiency.
Saab continues to streamline its operations to
create uniform business processes and achieve its
strategic goals. At year-end 2014, the Group had
reached its planned eciencies of approximately
MSEK 500.
ACTIVITIES DURING THE YEAR
Eciency improvements initiated in 2013 continued
to have an impact in 2014. All business areas and
Group functions were aected and improvements
were made in the form of capacity adjustments
due to declining volumes, clearer prioritisation of
product development and process development,
to reduce development, production and indirect
expenses.
Saab continued during the year to implement
Group-wide processes in the market area organisa-
tion. As a result, underlying marketing and selling
expenses decreased, while expenses for the major
Gripen campaigns in Brazil and Switzerland were
charged against earnings in 2014.
In 2014, clearer prot responsibility was intro-
duced for the managements of various business
units within the business areas. is is in keeping
with Saab’s performance management strategy,
which is an important part of the performance-
oriented culture, where the connection between
each employee’s individual development plan and
of the company’s business plan is clearly spelled
out.
e eects of the personnel reductions initiated
in 2013 became evident in 2014. In total, the num-
ber of employees and external consultants had
been reduced by about 950 at year-end 2014 com-
pared to the beginning of 2013. e Group’s total
number of employees increased, however, due to
the acquisition of Saab Kockums.
e gross margin decreased to 25.8 per cent
(26.6), mainly due to a change in the product and
project mix, where a larger share of customer-
nanced research and development is included in
production expenses. Reported administrative
expenses increased and corresponded to about 5.2
per cent (4.7) of sales. Marketing expenses
increased slightly and corresponded to about
9.1 per cent (8.8) of sales. e operating margin
was 7.1 per cent (5.7).
PRIORITIES GOING FORWARD
Saab will continue to improve eciencies and
create uniform global processes for procurement,
sales, products and quality. e eciency measu-
res aect all operations, from research and deve-
lopment to sales.
e focus is on further improving cash ow,
including through ecient cash collection,
payment terms and ecient project execution.
e aim is also to further improve the Group’s
performance management processes.
EFFICIENCY IMPROVEMENTS IN BUSINESS AREA SECURITY
AND DEFENCE SOLUTIONS
Achieving large, lasting efficiency improvements is not easy. It requires questioning
ingrained procedures and decisions while at the same time ensuring that the long-
term health of the business is not sacrificed for short-term gains. Saab’s business
area Security and Defence Solutions (SDS) offers good examples of successful
measures. The product portfolio, staffing and processes have all been evaluated
and the results have been sales growth, cost savings and increased efficiency.
Work processes have been reassessed throughout the business area. Smarter
processes and the introduction of the Lean philosophy have led to shorter lead
times and less personnel needs. Capacity adjustments have also been made in
the operating area, where demand has temporarily declined. As a whole, efficiency,
measured as sales per employee, has increased by 14 per cent.
In the case of SDS, it isn’t just a few measures that have had an impact, but
many continuous improvements. Efficiency work doesn’t stop and is a natural
part of the business.
+5%
Organic sales growth -8%
Personnel expenses +14%
Efficiency
The effect of efficiency improvements is calculated for the underlying operations, excluding
the acquisition of Saab Kockums and deconsolidation of Saab Grintek Technologies (Pty) Ltd.
28 – SAAB ANNUAL REPORT 2014