The unexpected surge in global defense spending has positioned Swedish aerospace and defense giant Saab AB for what could be a transformational period. The company recently reaffirmed its financial targets through 2027, citing robust order intake that continues to outpace analysts’ expectations.
Saab recorded a staggering 43% increase in order bookings for the third quarter, reaching 15.2 billion Swedish crowns ($1.4 billion). This impressive figure helped drive a 27% jump in operating profit to 1.05 billion crowns, significantly exceeding the 903 million crowns analysts had projected.
“We’re witnessing unprecedented demand across virtually all our business segments,” CEO Micael Johansson told investors during this morning’s earnings call. “The geopolitical situation has fundamentally altered defense priorities for nations worldwide.”
The Stockholm-based defense contractor has become a notable beneficiary of increased military spending following Russia’s invasion of Ukraine. European nations in particular have scrambled to rebuild diminished arsenals and modernize aging defense systems, creating a windfall for established manufacturers like Saab.
Having covered defense industry trends for nearly two decades, I’ve rarely seen such alignment between geopolitical tensions and corporate performance. The market has taken notice, with Saab shares climbing approximately 4% in morning trading on the Stockholm exchange.
The company maintained its projection for annual organic sales growth of roughly 15% this year, with an operating margin exceeding 13%. Longer-term, Saab expects to sustain organic growth between 8-12% through 2027, with operating margins in the 13-15% range.
Behind these numbers lies a strategic transformation that began well before the current surge in defense spending. Saab has methodically expanded beyond its fighter jet roots into areas like advanced radar systems, naval technologies, and cybersecurity solutions.
Financial Times defense analyst Patricia Keller notes this diversification has proven crucial. “Companies that positioned themselves across multiple defense domains prior to 2022 are now reaping the benefits. Saab’s foresight in building capabilities across land, sea, air, and cyber has given them unusual resilience.”
The company’s Gripen fighter jets remain its most recognizable product, but the current order boom extends well beyond aviation. Saab’s ground-based air defense systems, underwater technologies, and tactical weapons have all seen heightened demand as NATO and non-NATO allies reassess their security needs.
“What’s particularly notable is the geographical distribution of these orders,” explains Magnus Peterson, defense analyst at Stockholm Economic Research Institute. “We’re seeing increased interest not just from traditional European customers, but from Asia-Pacific and North American markets as well.”
This global expansion hasn’t come without challenges. Supply chain constraints continue to pressure manufacturers across the defense sector. Raw material shortages, component delays, and workforce limitations have created production bottlenecks that even the most efficient companies struggle to overcome.
Johansson acknowledged these hurdles during the earnings call, noting that Saab has invested heavily in vertical integration and alternative supplier relationships. “We’ve taken significant steps to secure our supply chain and production capacity. These investments are now bearing fruit as we ramp up deliveries.”
The company’s performance stands in contrast to some industry peers who have struggled to capitalize on increased defense budgets. Several major contractors have reported continued difficulties translating paper orders into delivered products and recognized revenue.
Bloomberg defense industry data shows Saab has maintained better-than-average conversion rates between bookings and deliveries over the past 18 months. This operational efficiency partly explains why the company has consistently outperformed earnings expectations.
Looking ahead, Saab’s management expressed confidence in sustaining this momentum despite economic headwinds affecting other industries. Defense spending typically remains insulated from broader economic downturns, providing a measure of predictability rare in today’s volatile markets.
“The current order backlog provides visibility well into 2026 and beyond,” Johansson stated. “This allows for more precise capacity planning and longer-term investments in both technology and workforce development.”
Industry observers remain generally bullish on Saab’s prospects, though some caution that the extraordinary growth rates of recent quarters will eventually moderate. The question isn’t whether defense spending will continue rising, but rather which companies will most effectively capture and convert that spending into sustainable profit.
For investors, Saab represents an interesting proposition – a company experiencing growth rates typically associated with tech firms, but with the stability and predictability of a traditional industrial manufacturer. This combination has attracted increased attention from institutional investors seeking defensive positions in uncertain economic times.
As global security concerns show no signs of abating, companies like Saab appear well-positioned to navigate an increasingly complex geopolitical landscape. Whether this represents a temporary boom or a fundamental reset of defense spending priorities remains to be seen, but for now, the winds are clearly blowing in Saab’s favor.
