Saab AB (publ)

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00:02 Hi, and welcome. I’m Merton Kaplan, Head of Investor Relations at Saab.

I would like to welcome all of you to our third quarter presentation. With me here in Stockholm, I have my CEO, Micael Johansson; and my CFO, Christian Luiga.

So we will start with the presentation and as usual followed with a Q&A. And I would like to remind all of you to that you can dial into the telephone conference as well as see the streaming on our website live.

And during that, you can also send in your questions from the website. 00:35 So with those remarks, I would like to give the word to you, Micael.

00:38 Thank you, and good morning, everyone, and thanks for joining us this morning. So let me ask jump into straight on the numbers for the third quarter and use of overview comments.

I think it's very strong quarter looking at the orders first, I think order intake has been great. We have been achieving important significant contracts in the markets, especially in Europe and U.

S. And I will come back to a few of those growth is continuing comparing to adjusted growth six percent but looking at reported thirty two percent, which is in line with our expectations.

And also we continue our trend on improving our profitability, which is really important to us to actually have sort of the finance is to continue to invest in R&D. 01:32 Operational cash flow is negative this third quarter, but we've said before that the variations this year looks a bit different.

Our larger programs have cash flow milestone payments heavily the first half year this year. And we reiterate the cash flow to be positive this year and looking year-to-date, it's still one point eight billion Swedish positive, which is according to our plans.

01:59 And if we move to the market highlights, as I alluded to the attractiveness of our portfolio and our products have been really strong and especially looking at Sweden and the rest of Europe and the U. S.

And the examples of contracts that are really important or of course this Combat management system contracts for the here in the Navy forgets, which is four point six billion Swedish Krona in the core area in Germany, which shows to attractiveness and the capabilities that we have and also an important contracts, which we have been discussing for some time now that we conclude the third quarter was A26 Submarine contract adding capabilities to the Submarines and extending the contract, which was really, really important to us. 02:49 We see a little bit in the marketplace that some countries have more or less sort of sort of boosted sort of Defense investments, many countries in Europe are increasing Defense spending and also in the U.

S. which is a huge market to us.

While some countries in South America and in Asia have been forced to, I think because of COVID to defer a bit of the acquisitions, but that has been compensated a lot by the strong market activities in Europe and the U. S.

03:22 So all in all order intake on fifteen-point billion Swedish Krona, which is a big increase year-on-year and driven by a couple of large contracts, of course. I also want to mention that we continue to have a very high activity on Carl-Gustaf System, we contracts in many parts of the world and we got an important contract in Poland for a complete training solution for the Polish Army with one cent that we will run and then few satellites also in the countries to perform training.

So that it has been a very good year – quarter when it comes to market activities definitely. 04:08 Looking few comments on the different business areas as you know, we now reorganized saw from first of July.

So we have four business areas now, which meant that IPS and support and services parts have been integrated into the other business areas and Combitech is now reported separately. 4:31 On the Aeronautics side, we have as you know, very important campaigns ongoing, so that we are in exciting times in the next six months.

I hope we will know the outcome about Finland and Canada when it comes to fighter acquisitions. We have had a very important event in early October.

I want to mention that we have inaugurated our new facility West Lafayette, Indiana. So we have now have a full fledge facility to transfer the production of our T-7A aircraft while part of that aircraft, which is the off part of the aircraft.

And we are building that production capability as we speak. That will be an Aeronautics and we will have big collaboration also with Peru university when it comes to sensors AI and other technologies.

So this is a very important establishment in the U. S.

05:34 The Civilian operations is still very weak and we haven't really seen return on larger sort of production capacity. So demands from the larger aircrafts manufacturers.

So we have done everything we can now to find the synergies between civilian operations and the military part of Aeronautics. But still, of course, we have an infrastructure that is prepared to have larger type of production so we still need more production in that of course.

So that has been affecting Aeronautics numbers. This quarter.

Also, I'd like to mention that T-7 is in its industrialization phase and that will become more profitable when we enter into the production phase and that is also affecting the results of Aeronautics to some extent. 6:31 When it comes to dynamics, we have a very favorable market demand.

And as I mentioned on the order intake side, we have seen important contracts also during the third quarter. And we are boosting our production capability in Carl-Gustaf and I think we have doubled the capability in one years’ time now, which is very very good to see that we have that sort of scale capability.

Year-on-year, it is a twenty seven percent growth on the Dynamics side. And they are improving their profitability in a very good way according to our expectations and plans.

07:13 That is, of course, driven by very good sort of efficiency in production and a few project completions, which have been favorable to us in that area. When it comes to surveillance, we have seen increased order intake not the least to this sort of alluding to the contract and in Germany, which I mentioned earlier.

And we see a strong interest also in the GlobalEye in the marketplace. And of course, we have included that in our offer in Finland and also many of you have seen Sweden has now prepared to be able to acquire the GlobalEye for Sweden, but we don't have a contract yet, but they have announced that they would like to go that direction which is, of course, really nice to see.

07:59 So that will of course have a good effect on continuous production on that system, Sales improvement has been driven, of course, by the radar business. And we have an increase when it comes to Ebit – EBITDA, which is shown in this slide, which is quite good, thirty percent – thirty seven percent up actually year-on-year.

But we also have started now as you know to amortize early investments, which is have an effect on EBIT. 08:35 When it comes to Saab Kockums, we have during the quarter then we see this very important contract on the eight twenty-six with further capability amendment to that contract.

That gives a good foundation out to continue and increase profitability in the organization and also growth. And we also of course, continue to work with other surface shipped activities in that area.

09:02 So that makes is really good now. We have one of the most modern shipyards around I would say, very digitalized, but we made all the larger investments in infrastructure and in processes and tools.

And the competition in that organization is really at this peak now. So I look upon this in a favorable way, and we are continuing to improving our margins here in this area.

And of course, we continue also to work on the larger sort of campaigns in the marketplace especially Netherlands, which we are in the middle of right now. So, it's the good development in Saab Kockums.

09:43 I'd like to sort of do a little bit of a deep dive into a certain area. We talk a lot about our market, on Saturday when it comes to multi domestic strategy and what that means to us and I said earlier that this is about establishing more complete operations in countries like U.

S. UK, Australia, and Germany.

And with that, this is an example of that, which is really a success story when it comes to the surveillance business areas portion of it. So what we do is that we transfer some technologies from Sweden.

We leverage of competence and capabilities in the American organization and we adapt our products to the U. S.

Market. And we have been really successful on the radar side and we will continue now on the electronic [Indiscernible] side and also their traffic management side is successful.

And some parts of the Combat management systems will be applicable as well. We're not trying to sort of do a full Saab portfolio establishment, but we're trying to fill gaps and find our initiatives in the U.

S. Sort of demand of capability.

So it's both about collaborating with the larger Defense companies in the U. S.

But also directly. Towards the end customers when we find our time initiatives.

11:13 This is absolutely state of our technology that we have in the U. S.

Fully digital radar technology, the most recent one that you can find. Our sales on this side for the surveillance part is around Two million U.

S. On a yearly basis.

We've had continuously grown that during in the last ten years now. Our complete sort of sales for the U.

S. including other parts as well, and also what we sell into the U.S.

Is around four billion SEK to five billion SEK. So this is just a portion of it.

So we have a full-fledged manufacturing and engineering capability and test capability in the U. S.

Today primarily based to Syracuse New York state around five hundred people and growing, and we have contracts with all the branches in the U. S.

The army, Air Force, U S. Marine Corps and the U.

S. Coast Guard and I won't go into sort of specific recent wins, but I just want to mention a list than here so that you can see that we're talking about really competent system and high-end products.

And there is initiatives we invest in R&D in the U. S.

today, and of course, we want to export also using the U. S.

Hub going forward. So this is one example how we work with the multi domestic strategy.

12:42 And here sort of a flavor of how many ships we are now onboard when it comes today U. S.

Navy and the U. S.

Coast Guard with our adapted sensors sea giraffe and also the [Indiscernible] site. This is actually the bigger market now.

We have never sold some Sea Giraffe in Sweden. The U.

S. is a denominating market and we are around thirty systems now already established and I think the potential is probably three times start going forward.

So it's a really good business to us. 13:22 I also want to underline our accelerating efforts when it comes to sustainability.

Firstly, It is so important to reiterate importance on the purpose that we are all about. I mean, we are here to protect the societies and people and that is what we do every day.

And we do that in a very professional way. And this of course, in line with the U.

S. Sustainable development coal sixteen for peace just a strong institution.

This is the foundation for sustainability. 13:57 Now the environmental part of sustainability is as important to us as a company to as any other three.

So we work diligently with that. And during this quarter, we have now joined the Race to Zero and we part of establishing Science-Based Targets now going forward, which will mean that we have committed to reduce our greenhouse gas emissions by fifty percent until twenty thirty and reached net-zero by twenty fifty.

As an industry and a company and already this year, we have year-to-date reduced our own emission from greenhouse gases with fifty percent. We work with this in many parts, of course.

It's about our own operations and efficiency on our sites or premises, it is how we travel, it is about how we work with this different test activities, trying to simulate rather to do test in real life. So it is a comprehensive package of things that we accelerate now to continue to support this race.

Then we will course work with our supply chain to make sure that they support us in this effort, and we will work with our end users to support them and how they use the equipments that we deliver. But this is also about innovation, there will be business opportunities disconnect to this.

The demand from our customers when it comes to environmental friendly, equipment of products also in this area is huge. So this will be an integral part of our R&D investment and strategy going forward.

15:43 So few final comments from my side, where the focus is going forward, and of course, I mean, in the growth to us is essential and this is prime objective of course to grow the company and also continue this market, the advanced domestic strategy I talked about, that is both organically, but also looking at M&A activities and key markets. 16:08 We worked diligently with the efficiency and productivity improvements, of course, and the new organization is giving effect on that continuously and I think we will see more coming on that.

There are many interesting and exciting campaigns, of course that we are involved in and of course, I can't avoid the fact to mention that Finland and Canada is of course, very, very high on the agenda for us now in the final states of those campaigns. 16:41 Execution our key programs so essential to create the margins to get sort of the room that needed for future technology investments.

And we have also continuous ramp up of production activities connected to Ground Combat because the demand in the marketplace is very high and as I mentioned earlier, accelerating the sustainability efforts making that even more integral part of our business and strategy and operations going forward. So, I look favorably on the future and I also support of course, the outlook that we have mentioned before that Christian and I will come back to.

17:26 So with that, I will hand over to my CFO for Christian Luiga to go through a little bit more in detail the numbers. Thank you.

17:34 Thank you, Micael, and good morning, everyone. Welcome to this report and a stable and the strong report that I would say is a good proof point that we are on our way to deliver on our guidance and I will depend a little bit to the details with you now before the Q&A.

17:56 We ended this quarter with an increase in the order backlog of one hundred and five billion Krona now and it is of the pack of the fifteen point six billion Krona that we received this quarter as you all know. And looking a little bit of this fifty four percent up, and looking at a year-to-date number instead, we are at thirty one point four and that is thirty percent up, twenty nine percent up compared to last year.

So that gives us an order to sales ratio of one point fifteen which means that we are driving orders ahead of sales continuously. And the backlog now for the last quarter is ten point three the planned sales that we have in our backlog and with that alone you get a floor on the sales growth.

So we have a growth sort of already there. And of course, we will receive some more orders in quarter four that we will also have in sales and that will move us upwards today the sales target for this year of ten percent and even more important than looking forward, we have now an increase also this year as we had last year in the orders for the coming year.

And the coming year orders now were thirty point eight billion dollars and that is up seventeen point five percent compared to last year at the same period. That means that we also now have a good fundament for our future growth, which we believe in this company should be around five percent over a longer period.

19:35 If we deep into the numbers and this quarter is a little bit difficult from an aspects to look at, but it's not because of this quarter is actually because of last year the same quarter this year. I want to remind us we haven't made any adjustments on our EBIT or sales and we have the same reported that suggested numbers you put it that way but last year, we had an impact – and we had to take an impact primarily COVID and that has a substantial effect on the numbers for quarter three last year.

It was actually as much as one point five billion Krona on sales, one point billion on gross margin, and then looking at gross margin here and gross income the five point eight billion Krona and twenty-one point three percent in gross margin is still a slight increase if you just last year. So we are moving steadily up in gross margin, which is not only fund, I'm happy to see that, but it's necessary.

This is part of our important journey of improving a profitability to work with both gross margin and the OpEx, and we see a continuous slope, but steady and stubborn improvement in the gross margin. 20:50 And that is my main message on that.

But that said then, the main effect on the gross income and the EBIT comes from also the sales growth. So we have a slight improvement in efficiency, but also get the juice out of our growth in our profitability journey and that means we end up on a six point seven percent EBIT margin, which is in line with last year adjusted and ahead of course, the reported number last year.

The final comment I want to make here is on the taxes and net income, last year, we had an impact from a sale of [Indiscernible], which made the tax effect different, but now we're back to the normal tax rate to twenty two percent so this year, again is normal compared to last year when it comes to that item. 21:44 If we then look into the sales per business area and Micael has been into this, I'm not going to development too much.

But looking at Aeronautics, it is a decline if we adjust for the effect we had last year on the project accounting and that is primarily driven by the civil aviation operations, which is substantially down year-on-year and is on a very low level and it will probably take some time to come back and until we have more favorable comparable numbers. And we will have this difference from the civil aviation operations and as I came early twenty twenty and then came down during the year.

We are soon into those more comparison numbers that are equal to today when it comes to pace in civil aviation operations. 22:38 On dynamics, we have said that we have a more even quarters in the year and that we can see here as well.

We had a fifty four percent increase in the first half and now we have actually flat quarter, the year itself will be a solid good year for dynamics, but we will have much more even quarters and that is good. It good for how we drive efficiency and is good for how we drive working capital and it will then help us to be better going forward and next year we will see a better like-for-like numbers when it comes to the growth numbers than this year.

So, the dynamics is actually in a growth path, even though it doesn't look like that on the quarter. 23:33 And then in surveillance, we have a good radar solutions quarter compared to last year and then remembering last year, we had actually a strong GlobalEye effect quarter four, but much less in quarter three and therefore, we have a sort of opposite effect this year.

So, nothing dramatic per se and as you know, in our business in the Defense business is very difficult to look at the single quarter and make a conclusion. 24:04 And therefore, we look at the rolling twelve months and see how we develop and if we look at this, we continue now to grow the both rolling twelve-month sales and the EBITDA.

And now we actually back on the same number as we were in quarter four twenty nineteen when it comes to the profitability level of EBITDA, and this is clearly then a result of the Covid impact we've have had meanwhile and primarily than driven by civil aviation market, and which has given us a big turn on the profitability during this period. 24:41 So That said, we have done cost measures on the civil side, and that has had some impact on the effect from the negatives on the civil aviation.

However, the biggest change we have here is the improvement we're doing in Defense industry and where we actually improving the profitability as we go. 25:03 And we continue stubborn to work with efficiency and both from the OpEx side and the gross margin side.

And therefore, we also expect this line to continue upwards over time. And we are taking measures still, but they are within the numbers we have presented and so far, we have taken hundred and eleven million Krona on efficiency measures rightsizing measures this year in both dynamics, Aeronautics and surveillance.

25:37 EBIT and margins to our business area. Here we still again have these effects from last year primarily then on Aeronautics we can see that we have to take a large write down on our adjustment on the project of Gripen and that was COVID related and that had an impact that said, if we adjust for that, we are down on the EBIT margin for this year.

And the prime reason is the impact we have from T-7, but also from rightsizing measures. 26:13 The T-7 program as Micael said is a program that will be negative until we face ourselves into the production in West Lafayette.

That is also a little bit uneven between the quarters, and this is a more negative quarter when it comes to T-7 and maybe the others, but it will be a negative impact on Aeronautics until the day, which will come soon and we are in West Lafayette with our production. The strong improvement in dynamics is both an effect of the more even production and sales and it also a very good effect from some project completion we had in primarily Ground Combat.

And we see positive on the profitability going forward, as I've said before on dynamics, but it will also like sales be more even over the years as a compared to whatever it had been before. 27:13 High margins in Kockums slowly taking step by step in our extremely modern than facility, good efficiency work and it's still on two low levels, but we are taking the steps in a good way that we need to take.

A bit on Combitech, Combitech is now taken out from the business areas and it is a independent and it is a independent consulting company with two thousand one hundred and pleased. It is an asset for Saab both from competence employee and customer experience aspect.

And it also helps us financially as you can see on the numbers. It is important to understand that this is a consulting company that both works within the Defense industry, but also in the other parts of the industry and public sector.

And it is really strong in cybersecurity and we believe we are the number one cybersecurity services in the Nordics with over two seventy consultants of these two thousand one hundred working there. 28:26 We have a growth and the growth primarily is coming right now from Defense and public sector, but also from many other sectors and we actually growing in all sectors but primarily indeed and that leads to them a growth of seven-point five percent year-to-date and a margin of nine percent.

Cash flow then, I said when we are standing here in quarter two, that we had received more of our milestone payments than we expected in the first half and therefore, the second half would be weaker and even negative and this is exactly what came out now and this is exactly what we expected. We have a one two billion Krona operational cash flow in quarter two that is – quarter three that is negative, which is no surprise and nothing we are worried about.

This is exactly what we expected. And we still believe and we have a good grip of the full year guidance of a profitable cash flow and quarter four has tendency to be more positive than negative.

29:36 And we look forward to deliver something to you by year end. And as I said, in the previous quarter called, I'm not going to give a statement on exact number for the year, but just say it will be a positive cash flow.

We had a temporary inventory build-up in dynamics and surveillance, nothing strange with that. It is a type of industry where we actually build up then the inventory and prepare for shipment of larger shipments of cargo staff or ammunition or something else?

And then when it ships out, it has a very positive and effect on both sales and the inventory. So nothing strange in that.

30:22 The balance sheet remains strong, we will give flexibility we are now at a adjusted net debt EBITDA of zero point sixty four and compared to one at the end of the year and of twenty twenty. We have updated our credit facilities revolving credit facilities during this quarter and we now have a six billion package where two billion Krona is with maturity in twenty twenty three and four billion Krona in twenty twenty six.

And two billion Krona is also having a little bit more flexibility for soft to use as it needs, is something with good opportunity would show up. 31:09 Finally, our outlook for this year sales growth to be around ten percent that means and implies a negative sales in growth in quarter four and that's in line with what we have expected during the year and the EBIT margin should be in line with what was adjusted EBIT margin for twenty twenty seven point four percent and we are on the path to deliver that with good confidence and we have an operational cash flow that will be positive for this year.

The second year in [Indiscernible] with a positive stable cash flow. 31:52 That's my presentation over to you Merton.

31:54 Thank you very much. So now, we are ready to take your questions from our viewers and listeners on the telephone conference.

And before I hand over the voice to the moderator, I would like to remind everybody on the line to please keep your questions to one or two maximum. So everybody gets a chance to ask their questions and you can always come back to the line to ask more and also for the viewers on the website, you can continue sending your questions to our website, and we will answer those questions as well.

So with that moderate. Could you open the line please?

33:15 Yes. Hi, this is Björn Enarson from Danske Bank.

I have two questions. If I may first one on T-7 and if you can elaborate a little bit about your business case there, how much you have invested?

And if you can touch upon the order size, because I guess you are taking a lot of the investments, it would be interesting to get a little bit more familiar on your sales and earnings expectations for that project. 33:48 Second question is you touched upon it, but if you perhaps can repeat it or clarify what you see on this civil side in the in terms of orders and when that situation is more normal for your after your perspective?

Thank you.

34:06 So when it comes to T-7 then as you know, we are in the – in industrialization phase now and all the investments that we have taken we will take sort of – to the bottom line. So we don't build any liabilities in the balance sheet.

I think that's important to notice and this is the phase where the margin is low as we've said, then the frame contract that we can look upon now that was three fifty-one aircrafts and the frame contract, which we haven't really taken into our books, we have only taken the EMD contract, industrializations sales contract into our books. So what we're talking about now is of course, expectations to get the first the low rate initial production phase and then the full rate production phase and that we are now preparing our factory to do during next year in West Lafayette.

This is all about also the Congress passing an important milestone in the U. S.

called milestone C when they released the money for the serial production. And that milestone is being a bit debated but Boeing and Saab has partners continue to push to that milestone completed during the autumn of twenty two.

So that's sort of the rough time schedule we're talking about. I mean, I won't dwell and I can only say that the overall business case looking at this three fifty-one of course, the expectations to many more across to be produced all the time.

And air force will need more, the U. S.

Navy, we will probably need aircrafts and there is expectations on Indian National Market as well. 36:01 And we're talking many more than three fifty-one aircrafts and that business case is a solid business case.

I want sort of pinpoint a number and margin but it supports our long-term goals that is as far as I can go. On the civilian side, I'm aware of that sort of the large aircraft manufacturers are now trying to go back to more normal situation when comes to the production rates, but it hasn't really transfer down to us as a supplier to them I must have made so we're still waiting to see what kind of rates they are expecting from us.

And it's hard to say, they sort of give – they give us indications only the half year on a yearly basis, and we haven't gotten any new ones. So we are on this very low level now, but with the setup in an infrastructure that needs more.

Now, we're taking so many cost mitigation activities into place to use confidence in the restructure side into the aero, not takes military organization, of course, they already involved the T-7 in the Gripen programs, but still, we have this infrastructure that needs to be filled. 37:18 It is difficult.

If I look at what they say, I hope we will see a better sort of slowly going in the right direction from next year and onwards, but that is a little bit speculating because we haven't received really and there's sort of new directions on the low levels on where we are today. That is a little bit of elaboration, but maybe not giving you the exact numbers that you wanted, but that we don't guide on those numbers as you know.

37:47 Yes. Thank you.

And the indications from the manufacturers on the civil side, that could happen, I guess anytime then, is that correct?

37:59 Yeah. Anytime, I guess they are relooking up the supply chain now and when they're going to that to sort of ask them to sort of boost a bit or ramp up a bit, but normally, we get sort of a discussion within on the yearly basis.

I would say that's sort of the normal frequency. If there would be something in between, I don't really don't know.

But we will of course, talk to them. I mean that we do, but I can't say when they give us new solar rates.

38:30 And on T-7, we should expect low margin although maybe Q3 was a little bit of a tougher situation, but we should expect low modest throughout twenty-two then?

38:45 Could go as I said until we move into the production phase, we will sort of have the lower margin project. Yes.

That's correct.

38:55 Great. Thank you.

38:56 Thank you Beyond.

39:07 Yes. Morning, everyone.

Hope everyone is well. Can I ask one on cash flow?

You highlighted in the prepared remarks that Q4 is typically positive and should we be expecting a positive cash flow? And if not, can you highlight what and some of the moving pieces are particularly for Q4 I think you mentioned you saw a bit of an inventory building in Q3.

Is that going to unwind in Q4? Are there any specific prepayments that you can think of or payable and ones that we need to be aware of.

That will be the first one. And then secondly, you made some comments in the presentation as well about supply chain.

It doesn't sound like you're seeing anything particularly worrying in your supply chain, but if you could talk a little bit about where you see the pressure points and the risks and then is inflation, it's something that you're currently seeing and worried about. Thank you.

40:06 So maybe I can start on the supply chain question. I think it's a couple of components in that.

I mean, as you know, we have broader long-term commitments to many customers. And those are of course connected to contracts with our supply chain as well.

So they are locked in when it comes to price levels and all that and then we are not just in time type of factory or organization or business. So, we have a bit more stock than a normal just in time business like core manufacturer or truck manufacturer, I would say.

So we are not, we have a little bit more of resilience in this but of course, we look with concern on lead times and price inflation on components material and we work that into of course our future contracts. We make sure that we have not affected by losing margin on those.

So I have two components of this. We're quite resilient on what we have and looking at the stock and the context we have with the supply chain, but we make sure that we can manage the lead times and the potential price inflation that we see going forward in our new contracts.

So that's sort of what we can say about the supply chain. It is something we will work diligently with, of course, as anyone else.

41:40 Christian, you want to take a cash flow. We've said before, I mean, we don't guide on specific quarters when it comes to cash flow.

The first half year was really good when it came to milestones, not as many payment milestones the second half year, but some, of course, we had some temporary build-up of working capital in dynamics and surveillance and hopefully, we should be able to deliver some of that to the customers during the second half year and that will lead to a good positive cash flow that as far as I can go on that. I don't want know whether you want to elaborate more okay.

42:16 Yeah. Let me just give two comments.

One is on just on the inflation of course, back to that there will be inflation probably in the most likely in the areas where we also buy supply going forward in the future, but that will also affect all our competitors in the market and the most contracts, we have a quite a good position when it comes to, they need we have within those contracts. So that's one comment, but on the cash flow, let me leave you with two comments and of I deliberately said something before, but there's two factors to add to Micael's comment.

One is that we have volatile quarters in the industry, we are in and quarter two, we have payments earlier on big milestone that we expected. 43:06 And the volatility is always important to remember and makes it very tricky to guide on a specific detailed number for one single quarter.

And easier to then maybe give a guidance over time. Secondly, the – I said that quarter four is typically more positive than negative in the past.

And that is of course, to just help you to guide you that this the case. So do you remember that when you look and try to figure out how to work with the guidance we have given within what Micael said.

43:49 Okay, very clear. Thank you.

43:54 Thank you. Okay.

Can we have the next question?

44:04 Thank you. I have two questions.

The first one is I appreciate you won't to give any guidance for twenty-two, but if we could help us a bit with the sort of key margin drivers cost? Negative and positive as we move into next year.

And then the second question you to give an update on the project estimate adjustment on the provision you did a year ago. I mean has it developed down those lines or are there any differences to any reason to return to that feeling in a positive or negative way.

Thank you.

44:38 Well, I mean, on the guidance for twenty-two, I mean, we will come back to that, of course, but is important to note this is of course that we continue to support our order backlog with good contracts and that will support growth and the trend of improving the margin. And I feel confident in that, that's really important to say.

45:05 Then when it comes to the adjustment we made last year, I think that was the absolute right thing to do. It is something that we have to continuously work with, but those provisions that we made – has made it possible to stabilize the project in a much better way to be proactive with the mitigation actions to make sure that we continue to deliver the margin then on a slightly low level after the adjustment going forward.

So, it is a stable situation now after what we did in Q3 last year, and it was a proactive and good decision to take that question. You want to elaborate some more on the twenty two or?

45:52 No, I will just remind us I mean, we have said that scale up in certain areas. T-7, we talked about Gripen and others will be a drive of profitability, operational efficiency.

Of course, something we will suddenly continue to work with, which gives effects now and will slowly give more and more effect. And then we have the portfolio and certain areas like the civil aviation and others that we need to handle separately, which also issues to our income statement.

That will have to be worked over time, those are three main drivers of our profitability.

46:31 Thank you.

46:38 Good. We have received a couple of questions from our viewers on the web.

I will pick one here from [Indiscernible] from flight international in Craig Wonders about the potential GlobalEye to Sweden and he would like to know about the timing of this and when we expect to do a contract and a number of GlobalEyes, they are interested in?

47:07 Well, I think it's very positive, of course to see that Sweden, the Swedish government to acquired a GlobalEye and since we have sort of a finalized product that is in production, contract could be quite speed just when it comes to [Indiscernible] that contract, but it depends on the customer of course, when they want and come contract us, but we are of course, prepared to do that very quickly when they have the decision, which I really don't know when that will be taken, but that's a governmental decision. But for Sweden to go that way, and I don't know the numbers really, but I mean looking at sort of Sweden and Finland.

I guess it will be similar. We have offered sort of to GlobalEyes in the finished package together with the sixty-four Gripens which is a reasonable number to sort of cover that base and that land domain.

So I don't know that this, we have to come back with it, but this is a very, very positive development of course.

48:12 That's good perfect. And we have another question from one of our analysts in London, Sash Tusha from Agency Partners and Sash wonders about the further capabilities contract for the A26 Submarine and would like to know a bit more about the workflow and the sales and when that contract and workload will come to the – come to our sales rate?

Is it being setting as present or how was that activity impact the financials of Kockums?

48:45 Well first of all the contract is really important and in terms of sort of finalizing the requirements on the capability for those Submarines and I can't well too much on those capabilities because it's sensitive. But the contract such will come in play immediately and how we look upon sort of the scope of the contract and profitability of the contract and that is driving the improvement in Saab Kockums profitability.

Definitely, it was really important. From that perspective, that happens so now and going forward.

49:25 Great. I would like to ask do we have more questions from the line on the Telephone?

49:42 Hi, yes. Just one quick question.

If you can say something about the CapEx for investments that you expect to have going forward. We know that that capital development declined year now in Q3.

And you also mentioned that Kockums as well enough and so in total how should be? So think about the CapEx.

50:04 Well, we have an investment level that has gone down primarily based on the capitalized development cost. I have to say that over time, a company like Saab will have to invest both in new production facilities and in new technology and R&D.

So this will not be a sliding path downwards to something very, very low in the end because then we probably will not be a strong company in five to ten years. So then it may be going a little bit up and down during the years and depending on what kind of activities we find.

Interesting right now we have had over the past periods, both build up in a very very modern plan [Indiscernible] Kockums and but also in T-7 in West Lafayette. And we hope we will have more kind of exciting themes going forward in Saab and we will continue to in all core areas have to develop new IP and that will cost more.

So the short answer is, you shouldn't see this as a trend, but you should see this as it may go up and down a bit between years as we have different phases in the IP development.

51:24 Thanks. That was a very good clarity there, but in total liquidity stable from these levels and we can capitalize that scale on this [Indiscernible]?

51:37 I think you can always capture…

51:39 And where is it look at the.

51:39 Now you will be able to capitalize on sales, but it will still go up as revenue goes up and we get more our multi domestic strategy also involves that we have more R&D locally both funded by customer, but also funded by ourselves. And that means there will be some limitation to scale in that sense, but scale will give effect yes over time.

52:09 Thank you.

52:07 Thank you Mikael.

13 :

52:23 No. Thank you for joining.

And I think, I just want to reiterate that we're going absolutely in the right direction and then we are an attractive supplier equipment in the marketplace, which is extremely exciting and we have few months of ahead of us that are really exciting when it comes to the big campaigns also. So looking forward to see after the fourth quarter, this year.

52:46 Thank you. Thank you, Christian.

52:46 Thank you.