April 24, 2020 / 6:56 AM / a month ago

UPDATE 1-Saab beats Q1 profit forecasts, scraps 2020 outlook due to coronavirus uncertainty

(Adds CEO comment, financial details, context)

STOCKHOLM, April 24 (Reuters) - Swedish defence company Saab reported higher-than-expected first-quarter operating earnings on Friday but said it couldn’t reconfirm its financial outlook for the year due to the uncertainty caused by the coronavirus.

Although factories in Sweden have remained open, the company faces disruption in supply chains, delivery and the procurement of new orders from customers including national governments.

“The effect on Saab’s operations has been limited so far, but the uncertainty for 2020 has increased,” CEO Micael Johansson said in a statement.

“Due to the uncertainty related to the scope and duration of the disruption, the previous forecast for the full-year 2020 can currently not be reconfirmed,” he added.

Last month Saab cancelled its proposed dividend for 2019 due to the effect of the coronavirus and the company’s shares are down by a third since the start of this year.

The maker of the Gripen fighter jet said operating income (EBIT) fell to 560 million Swedish crowns ($55.60 million) from 591 million a year earlier, beating the 497 million mean forecast according to a Refinitiv poll of analysts.

Order bookings totalled 4.8 billion crowns, up 8% from a year-ago 4.48 billion.

Saab said it had a negative operating cash flow of 1.58 billion crowns, due to continuing projects and few payment instalments from major projects occurring in the first quarter. However, that was an improvement on a negative operating cash flow of 1.92 billion crowns a year earlier.

Saab’s previous full-year outlook, which it has now dropped, was for organic sales growth of 5% in 2020 and an improved operating margin compared to 2019.

On Thursday, Saab signed a three-year contract with Britain’s ministry of defence, worth 320 million crowns.

$1 = 10.0711 Swedish crowns Reporting by Colm Fulton; editing by Johannes Hellstrom and Susan Fenton

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