Saab AB (publ)

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0:01 Good day, and welcome to Saab's Q4 and Year-End Report Presentation. I'm Merton Kaplan, Head of Investor Relations.

And with me in the studio today, I have Saab's CEO, Micael Johansson; and we have Saab's CFO, Christian Luiga. 0:18 So we will start the presentation shortly.

But before we do that, I want to remind you that we will have a Q&A session, as usual after the presentation, and we will take your questions and answer that. Please don't forget to dial-in to the line, and you can also post your questions from the website directly to me, so we will bring them up.

0:40 So without losing any time, I would like to give the word to you, Micael.

0:43 Thank you, Merton, and thanks for joining this call this morning. And let me jump right into the – a few comments on the full year report.

2021 was a strong year. We had great successes in the marketplace.

We have an order intake of SEK43.5 billion. And this is now a year when we don't really have a number of big ones in that number, but we have excelled, I think, in delivering on small and medium sized orders, specifically, orders up to SEK1 billion roughly.

So that's really good. Another year with a book-to-bill above one.

1:24 We also continue to grow, which is incredibly important to us, 11% compared to the reported 2020 and 6.5% if you look at the adjustment for 2020. Profitability also increases in absolute numbers, and we delivered on our targets, and we have a very good year when it comes to cash flow with lots of collections from large milestones during 2021.

1:52 And a number of good things happened during the year. We delivered aircraft, Gripen aircraft to the Brazilian and Swedish air forces.

We had a great event in November doing that. We also inaugurated our facility in West Lafayette, Indiana, which will now start to manufacture the T-720 aircraft.

And we have strengthened our presence in Germany and also in Finland despite the fact that Finland decided to go the US way when it comes to the fighter acquisition, still an important country to us. So that is connected to our multi-domestic strategy, and we are progressing really good in that area.

2:33 Of course, we are putting a lot of efforts also in looking at new technologies that will be embraced by us and developed by us in our core areas. Those technologies are related to autonomy, of course, but also connectivity and defence cloud capability.

And in the cyber space, of course, we work hard to create capabilities that protect our systems resilience, but also creating product offers in our portfolio. 3:04 Sustainability, I will come back to that.

It's an incredibly important area when we have accelerated our efforts and we did join the Race to Zero among other things last year. And looking at the cash flow, of course, our balance sheet has been strengthening during the year, which is really important to us.

And the proposed dividend for this year is now SEK4.90 by the Board. So that's sort of covering the year.

3:34 Quarter four, a few comments on that. A good quarter, solid.

Good order intake despite the fact that we didn't have any large ones. If you look at 2020, we have a big one coming in on the GlobalEye in quarter four 2020.

And that's why it was really big last year, but this is a really solid quarter when it comes to order intake also on sales, high level of sales, high activity and a good margin also and a good cash flow. So looking at the full year, this quarter contributes to a solid and strong 2021, and we have a more even year when it comes to how sales development has been in certain business areas compared to 2020, but still very, very good Q4.

4:27 Looking at the market and orders. I'd like to say that, of course, the unfortunate geopolitical tension that we see and the security situation related to Europe and Ukraine is unfortunate.

It does impact a little bit of the discussion on short-term capability development. And of course, we come into play because we have a big portfolio.

We have things off the shelves when it comes to sensors, we have capability to deliver [Indiscernible] to shoulder weapons and missile systems and strengthening availability of our systems and increase supported services, of course, related to our systems in the marketplace. So there is a tendency to look at short-term capability growth, which is affecting us in the discussions with different end customers.

5:19 Also some discussions on priorities, short versus long term is taking place, which eventually involves us in what we can deliver more short-term. And the trend is continuing when it comes to the defence budgets, they are increasing all over the place, and we are – we have an international presence, which is good for us.

So we continue to grow internationally, but also supporting Sweden, of course, in their growth. 5:47 The defence part of the business is strong, as I've said.

The demand in the civil aviation business is still weak, and I think it will be a slow recovery before it actually comes back into higher volumes when it comes to the aerostructures business on our side. We do as much as we can to sort of cope with that as we speak, to be as efficient as we can.

But I think it's a small portion of our business. So it doesn't affect us much, but it's still weak.

I just want to mention that. 6:24 A couple of examples of orders during this fourth quarter is equipment contracts on the Gripen E for Sweden and also an extension of an upgrade of the contract for the Hungarian Gripen C/D fleet with what we call the next edition of the software for that aircraft.

We are increasing the Hungarian capability. But also on the sensor side, we have had a couple of important contracts, launch contract for the newest radar, the Giraffe 1X, which I will come back to a little bit of a deep dive to that, for short-range air defence applications.

And for Dynamics, the attractiveness of Dynamics products is still very high. So they have plenty of orders from different customers on that side.

7:13 Of course, I need to mention that I am disappointed when it comes to the selection by Finland to go the US way. We had a very strong offer.

I still stand behind that. The team made a great effort to win that contract.

And that would have created an even deeper relationship between Sweden and Finland, industrially as well, of course. We have to respect the decision.

We still stand strong going forward and that – an evidence of that is, of course, our order intake, increasing our backlog despite of this. And we have several opportunities going forward also on the Gripen side.

So everything comes to politics sometimes, and this is not only about having a great product. 8:02 When we look at the different business areas, now 4 of them, as you know, since we changed the organization back in mid last year.

A couple of highlights on the Aeronautics side. We have been down selected in Canada for the Gripen campaign, which is excellent.

We have proven to be viable to go forward when it comes to affordability, capability of the system, but also that we can have a Gripen system within the security context of the two eye and five eyes context and NORAD (ph), which is excellent. So we are waiting now to see which the next step is for Canada as we speak.

8:44 As I mentioned, we have started the delivery phase of the Gripen for both Sweden and Brazil. And -- but we also have sort of a phase when it comes to the training aircraft, T-7 in Aeronautics, where we are sort of finalizing the industrialization phase, and we are approaching now to go into production.

So this has been sort of a slow 2021 when it comes to activity on the T-7, but that will, of course, improve and it's a great case going forward. 9:18 On the Dynamics side, extremely good, favorable -market position as several contracts during the year and in the quarter.

We grow a lot in Dynamics, and they show great margins, as you can see. They have a more even spread now in terms of how their sales looks like during the year, which I think is good.

So we don't have that big variation, but they come up strong for the full year, as you can see when it comes to margin as well, almost 13%. 9:55 Surveillance, they have a very strong backlog, almost SEK30 billion in backlog.

We have a good decision from the Swedish side during the quarter to start the acquisition of the GlobalEye. So we have started our – we made our offering.

We started our negotiation. So that is, of course, tremendously important to have GlobalEye in Sweden as a reference customer and it is also an important force multiplier for the Swedish Air Force.

10:28 We have improved our performance within Surveillance in a couple of business units and the radar side of the business is doing great as we speak. And they provided a lot of good cash flow for the full year because they have big milestone payments related mainly to GlobalEye.

We are still struggling a bit with traffic management on their traffic management side. Also, that has been affected by the pandemic investments on that side, but we're doing good progress, and we have a great offer now with our remote tower system, but also the digital tower systems that we provide to many customers around the world.

So that will improve going forward. 11:11 On the Saab Kockums side, we have had a few – quite a few, actually, several small and medium orders.

We have had a design contract for a country on the naval side, which I can't really talk about which country that is, and a number of other small orders. So they have improved a lot over the year.

And also on the margin side, they had a really good quarter because of high activity within the submarine area related to our newest submarine, A26. And on the market side, of course, the focus is to try and win the Dutch campaign on the submarine side, which is called the Walrus.

So that's a few highlights from the business areas. 11:57 Just a couple of comments and words about the capability.

I normally do a slight deep dive in certain areas. Our newest development, which is really a digital software-driven sensor, which creates situation awareness in many different applications has now come into the marketplace, and we've sold this to a few customers now, and it will be a very cost-efficient way of creating situation awareness, both within the military field, but also to protect infrastructure.

12:32 This can be connected into a network, of course, creating a complete situation awareness picture, and it has an agility when it comes to being connected mobile wise to air defence systems or you can have it fixed, of course, to different infrastructures or you can have it on ships and boats and several different platforms. So it's very agile in that sense, and you can update it in a very simple way to create new functionality with software and not hardware-driven.

So this is a multifunctional type of system doing surveillance and also acquisitions or potential targets at the same time in – at good distances, long distances going forward. And you can specifically, it's very adaptive to find small drones in very difficult environments.

13:31 You see a picture here of a flock of birds with small, small drones within that flock and this radar can immediately pick up which is a bird and which is a drone that can be a threat to something. So this is something we provided into the marketplace now and a good sign of how we develop technology with new capabilities involving AI and software-driven functionality.

I just want to mention this, this is going to be a success in the marketplace. I'm sure of that.

14:04 We have, as I said, accelerated our sustainability work, and we have consolidated a sustainability strategy. We build that, of course, on the UN development goals, where we are sort of working with several of them.

We have put our focus into a few areas. One is, of course, responsible business, which is absolutely super important to us.

Anticorruption, we have zero tolerance. We have extremely strict process and I think we are a market leader in that area.

We have now also adopted a responsible business policy, responsible sales policy, I should say. 14:46 Environmental aspects of the Sustainability part is as important to our industry and as any other industry.

We signed up to Race to Zero last year. In this quarter we're going now to work to set the scientific-based targets during 2022 and report in this framework going forward.

So you will see how we limit and we reduce our greenhouse gas emissions as anyone else working in that area with Scope 1 and 2 and eventually also with Scope 3. So I just want to underline that this is a super important area to us when it comes to environment.

15:24 Then of course, innovation and technology is part of sustainability as well, which we are really forward-leaning doing that. But basically, what we do as a company is to provide equipment and systems that protect societies and people and protect borders.

This is the foundation for sustainability in my head and so important to remind ourselves about. And this is something we communicate now to make sure that people understand this and not at least connected to what we see in Brussels, where they work on this taxonomy, now the social taxonomy.

And I get a bit concerned and frustrated to see that there is a tendency to classify our type of business as being socially harmful as it has been stated. I hope this now is not going to go through the political decision chain, of course, because we stand for something where countries have decided in a democratic way that there is actually geopolitical tensions, there is a need for defence capabilities, we have to have the defence and the proper security policy.

And then you have to have companies, serious professional companies delivering equipment and systems to our customers. And that is what we do.

And that is an incredibly important foundation for sustainability. 16:57 It is as important to us also to explain to people how it works with sustainable finance.

And we do need to be an industry that can attract capital in the same way as other businesses, and we stand for something that is important. So I urge us to communicate more properly, which we'll continue to do, but I also want sort of investors and finance institutions to -- not to make a too shallow analysis of what we actually do as a company.

This is important to us. 17:37 So my last slide for now, focus going forward.

We have six lines of actions in our strategy to continue to deliver in our core areas, and we have a backlog of SEK105 billion now. To do that in as an efficient way as possible, improving our profitability continuously is very, very important to us.

And we can do that. We have a good trend.

We have many large programs, and we must continue to deliver on those. But at the same time, we will continuously grow this company.

We will have to invest in innovation and new capabilities – and as I mentioned, autonomous systems and connections and collaboration with manned systems in the air domain, in the naval domain, will be incredibly important to us going forward in our portfolio, but also these distributed sensor change that I mentioned connected to Giraffe 1X, and connectivity and proper secure defence cloud capabilities, so that the different domains in the defence areas from their domain to the naval domain and the ground domain can communicate and get the same information and have the same situation. Awareness picture is going to be capabilities that we put a lot of efforts going in into the future.

And as I've just mentioned, sustainability and our agenda and commitment to society will be really high on our agenda. So this is more from a strategic perspective.

19:12 Very shortly then lastly, our outlook for '22. We will continue to grow in line with our long-term target of 5% of our business cycle.

We will continue to improve our profitability in the range of 8% to 12% compared to last year. And this is now a new way of guiding, but much connected to the trade-off between – connected to our growth, of course, but also a good way of governing our organization in terms of trends of improving our profitability.

19:47 Our cash flow will continue to be positive. However, it will be on a lower level than 2021, as I see it and what we see right now.

But we have started to generate great cash flows, SEK3.3 billion last year now, 2021 and a very strong 2020, and that will be the future to deliver positive cash flows, but it will vary a little bit from year-to-year. We stand behind our long-term targets, so that has not changed, continuously growing as a company, 5% over the business cycle.

And we have not changed our long-term target of reaching 10% at least over a business cycle when it comes to profitability. And we just sort of reiterate also our equity assets ratio of exceeding 30%.

So with that, those few words, if not few, many, I will hand over to our my CFO, Christian Luiga.

20:48 Thank you.

20:48 And you will get the control here as well.

20:50 Thank you very much. I just want to reiterate what Micael said that this is a strong year and the Q4 was one part of that strong year and helped us to deliver on our promises and our outlook.

If we step in first on the order backlog, it is a positive year. We increased our orders with 3%.

We have a Q4 that is impacted by the GlobalEye previously. But if you look over the year, we are growing.

And we are growing, meanwhile, we also grow sales. And still, we get an order backlog to increase with 5% up to 105%.

21:37 And interesting is that the Swedish and European business has been very strong this year. Sweden is growing with more than 17% in orders and Europe, very much driven by one of our new focus countries.

Germany is growing above 65%. And that will help us going forward.

The interesting part of this picture is that the backlog to sales conversion for 2022 for the coming year has increased with 8%. And that is, of course, going to help us delivering on our 5% revenue growth target for next year.

22:22 The financial summary for the year. EBITDA grew with 13% on a like-to-like comparison, which is important.

And if you look at the EBITDA growth in margin, it also grew also on a like-for-like, that is not stated here, but it did grow also on a like-for-like basis. And then the EBIT margin like-for-like came out 7.4% as last year.

In this, we have an increase of depreciation between EBITDA and EBIT of SEK420 million. That means approximately 1% increase or taken away from the EBIT margin this year.

And still, we managed to increase the -- or be flat on the EBIT margin. That means that we have increased gross margin and got effects from our growth into our earnings.

23:22 Next year, we estimate the depreciation and amortization to not grow that much. It will be much more in line with the revenue growth than it was this year, and that should give a support to our earnings growth target of 8% to 12%.

Finally, I want to just remind us that we have not done any adjustments to the 2021 numbers. But in those, we still have SEK167 million that we have declared was related to the closure of one of the production plants in Barracuda, which was in the US, but also rightsizing measures when it comes to reduction in force.

24:06 If you look at the sales per business area, starting with Aeronautics, it is hampered and it is having a tough time on the civil market, as we've said. And it still is a bit negative, but the Gripen business is actually growing.

And there, we have both the Gripen E, the Gripen C/D, and also supporting services around this that is helping up the growth. And as we know, we are slowly ramping up the production of the Gripen E programs into Sweden and Brazil.

24:39 In Dynamics, we have a much more even sales in 2021, and this is something we declared already last year that we will see a much more even dynamics over the year. So 5% negative should not be seen as something negative.

It should be seen as a positive that we have 14% growth in Dynamics over the year. 25:02 In Surveillance, we had a very big hockey stick in Q4 in 2020.

And we had the follow-on order on the GlobalEye that made this happen. And if we take away the GlobalEye business both this year and last year, Surveillance is growing with actually high single digits.

So it is a positive rest of the business there. And GlobalEye if of course, also a positive business, but it will come a little bit more in chunks and still very good margin.

25:40 Kockums is driven by good performance in submarine, but it is a special quarter a little bit, but the production, of course, in that program and all the other medium-sized and small orders that we also received in Kockums is helping up the growth. And Combitech is growing, and I'll come back to that.

Interesting to see is this picture. This is an important picture for us internally and hopefully for you also externally.

This is the historical pattern. And here, we can see that we have proven to have a sales growth of about 5% for the last 4 years.

26:20 And we expect also to have 5% forward not only for next year but also over the business cycle. And that is, of course, a fundamental piece of growing the shareholder value, growing the strength of the company and making us more important and also growing shareholder value.

On top of that, we need to improve also our performance, our efficiency and we need to get a little bit more out of the earnings than just revenue growth. And that's why we also look at the development of EBITDA.

And then on top of that, we need to do sound investments and that will create depreciation, but those business cases we need to follow very carefully, of course. And here, we can see that we had a [Indiscernible] in 2020, very much related to the pandemic situation.

27:11 And now we are back on track, and we should continue to drive this curve upwards on both these elements, metrics. The EBIT and EBIT margin per business area, it is very difficult, not because of this year, but because of last year to understand what was the real adjusted numbers and not.

But I would like to say that the year end, the quarter has been impacted by the both civil market and T-7 from a negative impact point of view. It is somewhat better in some of the parts from our work and stabilizing both the performance, but also the cost structure of our business in aerostructures, et cetera.

But we have a negative impact in absolute numbers. Still, we have a 7% margin in aeronautics, and it comes from the good development in the Gripen business.

28:19 Dynamics is on a high level, somewhat lower than last year, which was a record quarter, but it also comes from the lower sales and more even sales in the year. And then in Surveillance, we have a big impact on the EBIT margin from the development of sales.

And as I said, GlobalEye was quite large in the quarter last year. 28:46 The only thing on Kockums, we have reported numbers between 5% and 6% during the year, and it has been steadily growing, and now we come out with 10%.

This is not a new benchmark for where we are actually running at this point, but we have a quarter that is impacted by project results. And we are still growing the margin slowly from our performance increase and the revenue increase in Kockums, but it is from that 6% level rather than from the 10% level, and you should see that continue upwards next year as well.

29:28 Combitech, a couple of things about that. The year was coming out on a weaker note in the last quarter, but despite that, we had a growth of 10% for the full year.

We grew EBITDA with 11%, and that is also leading to an EBITDA margin improvement. The fun thing with Combitech and what is interesting is that we are growing in very important areas for our civil customers, and that is cyber security, digital transformation, smart manufacturing and in connectivity.

And if we look at our key civil customers, we are growing close to 10% to 15% actually right now with those. And that is a very important market for us going forward.

One of the tough things, of course, in this market right now is to secure that we retain and recruit competencies so we can deliver on this fantastic growth. 30:36 Cash flow, we guided on a positive cash flow for the year, and we did deliver that.

We had several good inflows in the end of the year. It came out a touch better maybe than we expected, but it was a great year from a cash flow point of view.

As you all know, cash flow in our industry, also in Saab is impacted by larger milestone payments. And what we have said is now looking ahead is that we will still continue to be positive.

But compared to this great year where we had 135% cash conversion, it will be a lower level for the next coming two years, and then we expect it to come back up higher. And that is actually something we estimate and assess based on the milestone payments we can now see that we have in our projects.

31:36 We have also built and it comes back to the securing our ability to deliver, it's more on the margin than it is a big chunk, but we have built a bit higher inventory during 2021, than we maybe should have done in a normal sort of year, but that comes back to securing that we can deliver on our projects and not be too dependent on shortages or difficulties in transportation. 32:10 With the strong cash flow for the last two years, we have improved our net debt to EBITDA and -- but it also comes from an improvement in the EBITDA.

So it's not just coming through cash. It's coming through also our improvements in our operational results.

And now we are at a strong 0.44x and I feel that with that, I can really say the statement that we have a strong, good position when it comes to our balance sheet. We have a maturity of SEK1.4 billion for the next 12 months, and we look forward to talk to our financial investors about how to refinance that.

32:52 We have a strong equity asset ratio, and the Board has proposed to the AGM then to increase the dividend with 4% to SEK4.90, which is a payout ratio of 34%. And we have guided that we should be over a cycle between 20% and 40% to net income in payout ratio.

Finally, Micael has mentioned and explained our outlook. This is a change in our EBIT guidance when it comes to metric.

We have changed it to better align with how we challenge the business internally, but also better to align with EBIT growth and earnings growth over time. That said, it should not mistaken that we are very keen and we know that a good company needs to have an improved EBIT margin, and that's why we keep our EBIT margin long term, and we are very committed to that.

And another comment is, of course, that if you have a higher number on EBIT improvement growth compared to organic sales growth, that implies that we are going and having an aim and target for a growth in EBIT margin as well for next year. And cash flow, I have talked about, so I'll leave that and hand over to you, Merton.

34:29 Thank you very much, Christian, and thank you very much, Micael. So we have a good time to open up a Q&A session here, and I believe we have the moderator live on the line as well.

But I would like to remind everybody to -- if you have questions, please dial in and put yourself on the line so you can ask your questions. And please do so two questions at a time.

And we have received some questions here on my iPad as well. So we'll take those later.

So yes, please, the moderator.

35:26 Yeah. Morning, guys.

Thank you for taking the question. So the first one I would have would be on M&A.

How are you thinking about which areas and which geographies do you see potential M&A and kind of how you're thinking about the strategy there? And then the second question would be on the cash flow.

Is there any more color that you can give on how we should think about the cash flow in '22 and '23? Is it going to be significantly below?

Are we talking below SEK1 billion? Are we talking below SEK2 billion?

Just is there any more color that you can give us, I mean, how you see the cash flow playing out over the next couple of years?

36:07 Thank you. Let me start with the M&A question.

I mean, we have a number of focus countries, I would call them, like US, UK, Australia and Germany within EU, apart from Sweden being an important country in EU, of course. And I will mainly say it's in those countries we look for options of growing also by acquisitions.

We want sort of an acquisition to add value to either the market penetration as such or it could add to our portfolio, of course or to our general capability. So of course, we have a few things in the pipeline that we're looking at, nothing that I can talk about, but it's definitely on the agenda continuously for us to look at those options and important to us, apart from also growing organically.

So kind of a generic answer, but very high on the agenda for us. 37:11 Cash flow wise, I think we guide on saying it's lower.

We've had exceptionally good sort of conversion now on cash flow, years '20 and '21. Of course, we want to have that as high as possible, of course, but I don't want to speak about the number as such.

I'm not, however, whatever that sort of creates confidence is that we are very confident that we will generate positive cash flow and positive is positive, of course, not sort of close to zero. Do you want to add something?

37:52 No, I'm sorry. I have to -- we have to leave you in the dark there like we did last year.

We -- it fluctuates and then we try to sort of narrow in where we can feel comfortable and express that. And I think Micael put it very well.

We feel very comfortable with the statement that it will be positive, but we don't want to go further than that at this point.

38:17 Okay. Great.

Thank you.

38:19 Thank you, Ben.

38:28 Okay. Good morning.

Yes. My first question is about the EBIT growth guidance, 8% to 12% for '22.

Can you explain a bit more in detail why you have this range for the first time and the operating reasons, the swinging factors or high and low end in that range?

38:51 Well, let me start by saying what reiterating a bit what Christian say in terms of how you create the mindset and governing our business. I mean you have different starting points in parts of our business, and we don't give guidance on that level, of course, but it creates a better drive on the trend of improving your earnings in all parts of the business.

That's a very important part in changing this. And then how we put the range is, of course, in connection to how much we can grow, and that will still generate a good sort of trend – a good trend on specific EBIT margins as well going forward into '22 and onwards.

So do you want to elaborate more, Christian?

39:43 No. What I'd like to say also and maybe you don't believe us because we were so spot on this year, but this business comes with, as we have said, and we've seen larger deals that can come through and impact both revenue and earnings, extremely positive, but also on the margin sometimes not negative, but lower the average.

You could get a very good order at a lower margin at the end of the year and the opposite that you want to bring in. And that can happen easily in this business.

And therefore, it is necessary to have a range to cope with that. But the range is still in all its elements, a positive journey on EBIT margin in our outlook for next year.

40:35 Okay. Got it.

And also if you can say something about the seasonality in 2022, it was a bit more sort of even in what last year, and that will it go back to be more back end loaded again or be more even as it was in '21?

40:51 We hope seasonality will continue to call it, improve or be more even, it depends on how you -- of course, I don't say one is better than the other for certain reasons, but it is better for us to have a more even delivery in production. And we don't foresee it going back in this year.

And that said, we have maybe the luxury of getting some large orders, and that could impact. So you never know.

But if it does, then it's from a positive note, not from a negative note.

41:29 Okay. Thank you.

41:45 Thank you. Good morning.

I've got two detailed questions just about the net income. The tax rate in Q4 was significantly lower than in Q3.

Is 21% your ongoing working tax rate? Or was that -- was there a particular issue that kept that low?

And then the second issue is, could you just describe what the minorities relate to and how we should think about modeling those going forward?

42:18 I can say – I can answer that the tax rate around 21% is where we believe we -- you should calculate with going forward. On the minority, I think we should come back on that, Merton.

I don't know -- I don't have the answers here right now.

42:39 Okay. Thank you.

Let me ask a broader question. I missed some of what you said initially about civil aerostructures.

But Airbus is clearly raising aircraft production rates, Boeing not so much. But it's taking some time for that to feed through to your business, which would imply that Airbus is using up stock held internally at the moment.

Do you have any sense, clearly, not visibility yet as to when Airbus's internal stocks might run out and therefore, when you might start actually seeing the benefits of their production rate increases?

43:18 Specifically, I don't know exactly when. However, we have seen that there is a tendency of sort of a few guidances from Airbus and [Indiscernible] per year, and the recovery have seen slow.

So we don't build our sort of forecast on a rapid recovery, and we look at forecasts in terms of when will they get back into delivering aircraft and so forth. But it's not that it's just because we now see restrictions going away and flying has started to go back to reasonable levels that we immediately get sort of an up sort of – they don't up our volumes immediately.

That takes some time. But it's really difficult to say.

I don't see that we will recover immediately this year on that. This is not a big portion of our business totally, but I would be happily surprised if that happens, of course.

And meanwhile, we'll just do it as efficiently as we can. If it happens this year, I'm really happy about that, of course.

But really, it's taken sort of a couple of years before they actually return to something. And when they get out of stock, I don't really know.

But we continue to try to find out, of course.

44:44 And just if we would get an answer tomorrow, pick up the volume, then it's a lead time on that as well. It's not like the next day we go in and build the double number, so…

44:58 There is some uncertainty as you hear around this, but it's slow recovery.

45:05 Okay.

45:08 Thank you, Sash.

45:21 So maybe we should take a break from the line, and I have received some questions here from the website from some of our listeners in, and I think there's a couple of interesting questions. One relates to the T-7 business and the potential of this business again.

Could you remind us, Micael, a bit more what we expect from the T-7 when those orders come in, both in terms of our production and -- but also financially, what's the -- in terms of revenue and profitability? How would you see that?

45:53 Well, in terms of timeline, we have now been during '21 in finalization phase. We're still a little bit in that in the industrialization of these T-7 aircraft, the trainer.

We are moving into low-rate initial production phase. And then back in -- I mean, '23, '24, that will start to ramp up into full rate production.

So we are a little bit sort of in between right now before we see revenues picking up. And we think that this year, we will start sort of long lead type of things and production in our facility in West Lafayette that we inaugurated last year, but it will take some time before the volume ramps up to higher levels.

And I mean, we can remind ourselves about that this immediate option that the Air Force in the US can sort of start with us is 350 aircraft, which is quite a lot. And the business case is a lot bigger than that according to Boeing.

47:10 So this is going to be a great business going forward. But exactly how that will sort of move up over time, I don't want to sort of give numbers on that, but we are going into now the production on a slow rate, which is good to us.

So we move out to industrialization. Very important program to us, will be done completely in the US, good supply chain setup, and I really look forward to having this as a great foundation for our business going forward.

47:45 Good to hear. We have another question related with the current environment that we are in.

Could you specify a bit the geopolitical situation in Europe right now, how is that affecting sales? Is it about additional sales?

Or is it about speeding up the delivery schedule? It's one comment we got from one of our viewers.

48:08 I think it's a little bit of both. I think definitely, there are customers now looking at sort of how can we quickly improve capability in terms of better stock on ammunitions, our shoulder weapons, missile system, but also creating better situation awareness by applying our sensor technology.

Those things we can support and deliver very short term. And that may improve our sales, absolutely.

But then also, they take a little bit of a longer look at things to see, okay, if we provided the defence bill over five years, do we need to rethink that we assess the priorities in that, which may change sort of the profile of the defence bill. I don't know anything about that.

But of course, we know from media and discussions that they sit down and reassess that in our country. And we – of course, defence forces will do training and exercises in a much -- on a higher level, which affects the need to use our equipment in terms of training and simulation equipment, but also the services and support of the systems that we deliver will increase.

So we are unfortunate, the situation is unfortunate when it comes to the security situation. It will have effects on our business in terms of higher activity, both when it comes to products, I think, and support and services.

49:38 Thank you very much. Moderator, do we have more questions on the line?

49:54 I have 1 more question here, which is an interesting one from flight global here, who's asking, with politics playing a role in fighter decisions in Finland and Switzerland last year, do you have any confidence now that you might get a different outcome in Canada?

50:14 It's a very good question, a very difficult question to answer, of course. The only thing I can say is that, as I mentioned, I mean, we had a great offer in Finland in all aspects.

I don't see how we could have sort of done it better than we did. And we know that security politics and political assessments comes into play in these big decisions.

They do take sort of important decisions for a long time going forward. So of course, commitments between countries are extremely important in these decisions.

And then you never know, depending on timing, what is the political situation, what are the relationships and what is important when it comes to politics right then and there when the decision must be taken. So there are different things comes into place, my view, and it's extremely difficult to predict how that looks like.

51:14 We can only do what we're best at, delivering great proposals, and we give countries also sovereign capability. That is the key point.

We transfer technology, we set up shop in countries for aerospace centers and capability to manufacture and further develop our system because we have that type of open architecture, and it's a win-win to us. So we offer great things, and that is a trade-off versus sort of relationships between countries.

51:51 So you expect something to hear something from Canada this year?

51:54 Yes. We are really happy to see that we are down selected, and we're one of two.

And so we have sort of a clear answer from the Canadians that we have passed sort of certain requirements and affordability, capability and also the security requirements when it comes to actually having our system working [Indiscernible] within the two eye, five eye and NORAD context. That's great.

So we're now waiting for the next steps from them.

52:30 Thank you very much, and thank you, Christian, for being here today. And with that, I think we are done with the presentation and the Q&A.

52:37 Thank you.

52:38 Thank you so much.