Saab 2013 Annual Report Download - page 22

18 SAAB ANNUAL REPORT 2013
Saab’s earnings are primarily generated by long-term customer
contracts, service assignments and sale of goods. Margins vary
depending on the nature of the project.
Industrial co-operation – part of our offering
One of the cornerstones of Saab’s strategy is to increase local pres-
ence in prioritised markets where we see growth opportunities. To
achieve this, and thereby develop Saab as a company, partnerships
with local companies, research centres and other social stakehold-
ers are being established or expanded.
Saab’s products and solutions are produced mainly in Sweden, but
subcontractors and component manufacturers are found in many
parts of the world. Saab’s capacity to supply products that combine
high quality with cost-efciency is made possible through its part-
nerships with subcontractors beyond Sweden’s borders.
Saab also includes industrial co-operations in its offering when
requested to do so by customer-countries. With clear requirement
specications and market-oriented terms and conditions, industrial
co-operations are a complement to the systems, products and
services that form the basis of our customer offer. In practical terms,
industrial co-operations involve nancial investments, the hiring of
subcontractors in the market and facilitating local industry participa-
tion in new business opportunities.
Requirements for industrial co-operations in defence industry deals
vary between countries. Some countries have legislation in place,
while other countries do not. In some countries, the customer
decides on a case-by-case basis whether or not an industrial co-
operations will be required under the contract and, if so, how it will
be structured. Either way, Saab’s focus is always market-oriented
and based on creating long-term protability. In this way industrial
co-operations support Saab’s strategy to become more local and
come closer to its clients, for the benet of all parties involved.
Share of revenue, per cent
e main focus of Saab’s business is long-term customer contracts
entailing the development and manufacture of complex systems.
ese account for nearly 60 per cent of Saab’s sales. FMV’s order
in February 2013 for the development and modication of 60
Gripen E aircra is a clear example of this. Saab will be working
on this order through 2026. Long-term contracts are continually
recognised in revenue, meaning that income and expenses asso-
ciated with the project are recognised as the project is completed.
Cash ows for these contracts depend on the timing of advance
payments and milestone payments during the order period.
Service assignments, which account for around 25 per cent of
Saab’s sales, are comprised of consulting and support services.
Examples include training and ongoing maintenance associated
with previous deliveries.
e third part of Saab’s sales model is the sale of products and
spare parts that Saab manufactures and stocks or purchases on
behalf of customers. Examples of this include the Carl-Gustaf and
ammunition for its weapon system.
2013
2014
Market
driving forces Business flow
Saab’s offering
and strengths
Market area
organisation
Business flow
Service assignments
Long-term customer
contracts
Sale of goods
26
61
13
25
58
17