1. YEAR-END report 2016 13 February, 2017 Håkan Buskhe, President and CEO
Magnus Örnberg, EVP and CFO
This document and the information contained herein is the property of Saab AB and must not be used, disclosed or altered without Saab AB prior written consent.

2. agenda
Highlights 2016 Market situation AND Trends Outlook 2017 Financial update

3. Highlights 2016 Strong interest in Saab offering globally
Record high tender levels
Sales growth in line with long-term financial goal of an organic growth p.a. of 5 per cent
Strong order backlog in all business areas; about 4 times our sales
Improved gross margin year-on-year; strong cash flow generation, despite no sold receivables
Historic year with launch of three new platforms:
Launched a new generation Airborne Early Warning system, GlobalEye
Rolled out new generation of Gripen
Rolled out the trainer aircraft for the US Air Force T-X-programme; the T-X aircraft flew in December
MARKET
PERFORMANCE
innovation

5. agenda
Highlights 2016 Market situation and trends Outlook 2017 Financial update

6. Market situation Geopolitical unstable situation
Increasing demand for cost-efficient solutions
Short lead times important
Ongoing focus on improving supply chain efficiency
Local partnership for research and development and production

7. Global defence materiel market7
Global defence materiel market 4%
14%
Russia
Europe -
40% 3%
North America
-1%
25%
Asia
Middle East & Africa
11% 4% 3%
South America
3.0%
According to IHS Janes, total global defence spending grew by almost 1% in 2016 compared to fairly lacklustre growth in The average growth was 6% annually as the US built up the defence budget in order to finance overseas operations. Global spending peaked in 2011 at USD1.59 trillion (USD 2016). Combination of US withdrawal from operations in Iraq and fiscal consolidation particularly among the NATO members following the financial crisis caused spending to fall to USD1.51 billion in 2013 with cuts of 2% and 3% in 2012 and 2013 respectively.
They forecast spending to reach USD1.58 trillion in 2017 and then USD1.60 trillion in 2018.
Until the oil price recovers, growth patterns are likely to remain volatile but the key aspect is that no further global cuts to spending are expected in the next ten years and the growth rate should improve as key markets get back on track. Significant budget revisions in western Europe, the end of cuts in the US and a lower oil price pulling the rest of the world’s growth downward mean that non-NATO spending is forecasted to exceed NATO spending in 2023 3% 2%
Australia
Share of global defence procurement market, 2016 X% 3%
Compound annual growth rate, (constant USD) X%
Source: IHS Group, February 2017

8. Financial highlights, 2016
Operating margin adjusted for non-recurring items

9. Operating income and operational Cash flow9
Operating income and operational Cash flow * * *
*Free cash flow

10. Long-term financial goals10
Long-term financial goals
Organic sales growth averaging 5 per cent annually over a business cycle.
Operating margin after depreciation and amortisation (EBIT) of at least 10 per cent annually over a business cycle.
Equity/assets ratio of over 30 per cent.
Focus on areas with strong market position
Strengthen position in areas with growth possibilities
Local partnerships
Project execution
Operational excellence
Continuoulsy develop leaders and employees
Further strengthen core areas
Invest in research and development
Diversity drives innovation 5%
MARKET
10%
PERFORMANCE
>30%
innovation

11. agenda
Highlights 2016 Market situation and trends Outlook 2017 Financial update

12. Outlook statement 2017
We estimate that sales growth in 2017 will be higher than Saab’s long-term financial goal: annual organic sales growth of 5 per cent.
We expect the operating margin, excluding material non-recurring items, to improve compared to 2016 and thus the company will take a step towards its financial goal: an operating margin of 10 per cent.

13. agenda
Market situation and trends Highlights 2016 Outlook 2017 Financial update

14. Summary 2016 Strong order backlog; small orders continued to increase
Sales growth of 5 per cent:
Driven by large projects in order backlog, and;
Strong development in business area Dynamics
Gross margin and operating margin stable – in line with management expectations
Operating cash flow strong; no trade receivables sold
Balance sheet continued strong with equity/asset ratio >32 per cent

15. Financial key data MSEK 2016 2015 Change Order bookings 21,828 81,175
-73
Order backlog
107,606
113,834 -5
Sales
28,631
27,186 5
Operating income
1,797
1,900
Operating margin
6.3%
6.6%*
Net income
1,175
1,402
-16
Free cash flow
2,359
-726
*Adjusted for non-recurring items
Sales growth driven by large orders as well as growth in business area Dynamics
Major advances and milestone payments received, resulting in strong cash flow; no trade receivables sold in 2016

16. Order backlog Strong order backlog in all business areas
Order backlog duration, SEK bn
31 Dec 2016
31 Dec 2015
31 Dec 2014
2017:
24.5
2016:
21.8
2015:
17.8
2018:
17.0
15.9
10.2
2019:
13.5
12.3
5.7
2020:
15.8
11.7
5.6
After 2020:
36.8
After 2019:
52.1
After 2018:
20.8
Total:
107.6
113.8
60.1
Strong order backlog in all business areas

17. Order size distribution
*Small orders = <MSEK 100
Book-to-bill ratio calculated as 12 months rolling

18. order bookings and order backlog
Dynamics received several important orders, for example for the new generation of the weapon system Carl- Gustaf Support and Services saw strong growth in small orders, 11 per cent increase y-o-y Major order in airborne early warning area received in January 2017
40 000
Order backlog 60

19. Sales 5%
14%
-15%
23% 1%
Sales growth mainly driven by the Gripen programmes, GlobalEye and the submarine A26 Sales in Dynamics strengthened due to good order development
25%

20. Operating income
320
Dynamics increased volume led to strong margin recovery Operating income affected by investments in T-X-programme Minority stakes in Venture portfolio, early stage investments had a negative impact on earnings in IPS
EBIT-margin
8.1
7.5
4.4
9.1
4.4
5.9
9.1
8.9
6.0
3.7
12.3
5.8

21. Cash flow
2016
MSEK
Cash flow from operating activities before changes in working capital
2,927
Change in working capital
1,421
Investing activities
-1,745
Operational cash flow
2,603
Tax and other financial items
-194
Acquisitions and sale of subsidiaries and other financial assets
-50
Free cash flow
2,359
Acquisitions and sale of subsidiaries and other financial assets

22. Financial position December 2016, MSEK
Net liquidity (+) / Net debt (-), 31 December 2015
-3,217
Cash flow from operating activities
4,154
Change in net pension obligation
-531
Net investments
-1,745
Sale of subsidiaries 28
Dividend
-530
Currency impact and unrealised results from financial investments 5
Net liquidity (+) / Net debt (-), 31 December 2016
-1,836
Net pension obligation, 31 December 2016
2,424
Total interest-bearing assets, 31 December 2016
-560
Liquidity
Equity/assets ratio, 31 December 2016
32.3

23. Focus 2017 Focus on execution of large projects – project management
Build order backlog in selected areas
Drive efficiency improvements throughout the organisation
Functional and operational excellence