Saab AB (publ) (SAABB) Earnings Call Transcript & Summary

Hello, and welcome to Saab's Capital Markets Day 2023. I'm Merton Kaplan, Head of Investor Relations. And I would like to, within our most warm welcome you to hear live to space arena, and also welcome you all online watching us. It's been a long time since we met like this and had an event like a CMD, it was way back in 2018. And a lot of things have changed. Saab is, today, a company with tremendous growth opportunities, and we would like to share you that story for you. So we have an interesting agenda with great speakers. And I would like to just briefly go through that agenda. So we have our Saab CEO, Micael Johansson here, and he will talk about our growth journey and how we capture the market, and we'll continue with Erik that we have invited here from our U.S. operations, and he will talk about Saab's most of domestic growth strategy. And then we'll also have an interesting fireside chat moderated by Katarina, where we'll elaborate on the topics of capacity, supply chain, competence, how that is important in our growth. And then we'll have a coffee break. You'll have time to mingle with us and also see our exhibition outside. And we also have Saab's -- all of Saab's management here today with us, including heads of the BA. So please take that opportunity to mingle and ask them questions as well. So the second session here after the coffee break, we'll meet and we'll go through with Fredrik Hassel to listen to a bit about the lessons learned from the Ukraine. And we'll continue the program with our Chief Strategy Officer, Christian Hedelin, who will talk about innovation and the importance to drive that for future capabilities at Saab. And then we'll have our CFO, Christian Luiga, go through a bit of more numbers with you and give you a financial update and talk about our new medium-term targets. And we'll try to wrap the short day with a Q&A session for you and with some closing remarks. And then I would like to invite you all to lunch outside again at the Space Club, so we'll continue the dialogue there. And some few remarks on logistics. We have a couple of emergency exits here that you might see if you track the green lights on my right. There's also 1 on the upper right side, there's 2 more doors on my left side. So that is also good to know. So without any further ado, I would like to introduce the first presenter, Micael Johansson.

Good morning, everyone, and also from my side, most welcome to this Capital Market Day. It's been a while, as Merton said, I actually had a slight problem remembering exactly when, but I think it was in 2018. And so many things have happened, including me taking over the role as CEO. So it's a great opportunity for me to talk to you all about where I think we're heading in this context that we see around us. So let me start with the obvious thing in new reality. I mean we -- I didn't think I would live to see what's happening around us right now, of course. We have a tragic war in Europe. We have a big wake-up call in many European countries, specifically, I think, when it comes to important to this to have a resilient society and a threshold and being able to defend yourself. And this is about democracy and our values in the Western world, of course, and we have also a big shift in terms of political tensions between West and East. This is something that affects us as a defense industry dramatically, of course, I can remember now in the beginning of 2022 when we had a discussion about the taxonomy and whether we were a sustainable defense industry as a company and how we were supposed to be perceived and we could attract capital and investments and relationships with banks. And we have some tractions in that debate, I think, in the beginning of '22, but then the tragic war in Ukraine happened and then that sort of disappeared from the table completely. So there's no question about our motive to keep people and society safe has sort of much bigger sort of attention now. And it's not only us, of course, also all the other defense industries. So working for Saab, and I think for all our employees has never felt more important in what we do every day. Then we have the macroeconomic situation, of course, with things to manage in terms of cost increases, inflation, of course, currency exposures, logistical sort of challenges and also supply chain issues that we have to work with, and we'll come back to that during the day. So looking at us from a historic perspective, first, I mean, I just like to say that I think we are -- we have a solid growth record. I mean we have been growing slightly more than 6% average over the last 10 years in this market. And I think the reason for that has been that we have all the time invested in our portfolio embrace new technologies to make sure that we are relevant when it comes to new capabilities for our customers. We have also taken steps to make sure that our market focus is shifting and according to sort of where the businesses emerge. And I think we've done some steps also in consolidating our business, focusing on our core areas, and that has led to this growth going forward. When it comes to where we are right now, I think with this new market reality, including a multi-domestic strategy, more internationalization, building Saab in different key markets, we see, of course, substantial growth opportunities. And I think we showed that last year now with good order intake of SEK 63 billion without actually having a huge sort of one-off big contract supporting that. But, of course, large contracts, medium-sized contracts, we had a few. So it was a successful year, and we also grew in our sales with -- according to our outlook. And you might think that sort of everything has changed because of Ukraine and the tragic war. But actually, as I said Friday, this is maybe in the last quarter last year, Q4, we saw specific contracts related to Ukraine happening. And I think we will see more to come when countries will have to replenish their stocks and also maybe go beyond that, updating that. So we have an order backlog that is record high, SEK 128 billion, and that will, of course, support our growth journey going forward. But we also have more market opportunities for capital going forward. We will never trade off when it comes to R&D. R&D is why we have grown, why we are relevant in the market. So that will always be something that we will focus upon. And I now think that we have a reasonable balance between how much we spend on development and research. And that is, of course, a combination of our own money, but also customer supported development, and how much we have actually in production and support and maintenance. That is a better position going forward than we've seen during a number of years, which is also why we feel more confident in delivering cash flow over time. Going back to Europe then and how this market is changing. And of course, we're basing our intelligence on open sources, but also, of course, lots of customer interactions. And there is a significant increase in defense spending. There's no question about that. We have seen our country taking decisions on going to 2% and all of the European countries are going in the same direction, actually beyond 2% of defense spending of GDP. And I think I wouldn't be surprised if the next thing to summit will have to sort of create a new floor of maybe 3%. There are sort of discussions around that. I don't think we have seen this sort of -- the end of how much different countries will spent. And Germany is, of course, an example of this where they took a huge decision to change the whole sort of view of which roll they will play, but also investing EUR 100 billion extra in improving the defense capabilities. And so many things are happening within EU and Europe in terms of initiatives that will be incentives for us as defense industries to come together and do common projects, which is partly long-term European Defense Fund, new capabilities with new technologies, partly actually coming together to replenish stocks like [indiscernible] as an initiative. And then we have potentially the [indiscernible] initiative, which is sort of midterm. And everything is sort of supposed to create more of a sovereign capability in Europe and not having such a dependency on the U.S. I'm not for the sort of strategic autonomy, closing Europe and not having transatlantic link or a link to the U.K., absolutely not. But it's not a sound balance today that we have U.S. supplying and positioning us with the main portion of the defense equipments and systems that we see in Europe, more than 60% over the last 4 or 5 years is actually coming from the U.S. And that is not a good situation looking into the future, if we are looking at the EU political tensions in the world, I think with the focus U.S. have in the Southeast China region. So I think it will be necessary to have a stronger capability within Europe and EU going forward, and I think many countries are agreeing upon that. So we are putting a lot of focus now supported, of course, with the new direction of the Swedish government also that sort of EU is really important to us. And as you see on this slide, I mean, the growth is substantially looking at the forecast after the war -- the tragic war in Ukraine, when that started. We, of course, will focus our part in Europe in our core areas. And specifically, I would say that sensor systems, Airborne Early Warning, surface radar sensor systems, support weapons, of course, replenishing the stocks that have been depleted to continue to support Ukraine and lots of training is needed to go forward in Europe. So we have a great portfolio supporting this market. And I will come back to our key markets a bit later on here when it comes to U.K., Germany, U.S. and Australia. So a big thing is, of course, also Sweden. And when we look at Sweden now, we're growing towards 2% and how quickly that can be done, can be debated, but now they said that we'll reach that in 2026. And that means that we have over SEK 300 billion in defense spending from '23 to '25 now that we look at. And the majority of that, around 60% will be about acquisitions and procurement of defense equipment. And this is, of course, a market where we have a big stake. We had a 40% revenue 2022 in the Swedish market, and that differs a bit sort of every year depending on what's happening. But we, of course, have the view that we will grow in line with the Swedish defense spending growth going forward. And here we are in all parts of the value chain, so to say, research and development, production, support and maintenance and being an integrated part of the Swedish defense capabilities. Obviously, this is no news to you, of course. And we are involved in all of the branches, of course, in ground forces, the air domain, the naval domain and the ground domain. So there is a huge growth in Sweden as well. And this is not an easy thing to accomplish. And I think we are battling with sort of capacity growth but also the defense forces are doing a lot of initiatives to cope with this. NATO is, of course, a huge decision to sort of after 200 years plus of not being on the line. And that will mean -- I don't think we realized really yet what that will mean to us as an industry, to us as a country, involving ourselves in a way that we are not working with NATO anymore, but we're actually working within NATO. This is a big, big shift. And we already see that we are sort of an invitee. We are invited. We are -- we can participate in different forums now that we were not entitled to work with earlier. So I just want to underline again that I can't see any negative effects of that. I think this will create sort of a trust with Sweden as a country in a long-term defense capability perspective, but also the trust with us as an industry that we will be there long term. And the competition cannot really use the arguments that we're not sort of a credible company because we're not part of an alliance. That will disappear. So of course, it will be a huge competition, but NATO countries tend to buy stuff from NATO countries. So it's a big opportunity for us, of course. And we have again then, if we look at what I hope will happen which is that the Nordic countries, specifically, Sweden will have to take a responsibility in our region, in the air defense of the region and the high north, of course, but also the Baltic Sea. When we have fighter jets and submarines and Airborne Early Warning equipment and sensor systems and advanced weapon systems to support that capability with. We haven't seen the capability targets yet, but they will emerge over time. And we have a great position to take a piece of this, of course, going forward. And we already have discussions with NSPA, the acquisition authority within NATO on certain things like Airborne Early Warning, GlobalEye and so forth, which was not so easy before the fact that we were sort of trying to be ratified going into NATO. But also we have gaps that we have to work with, long-range missile technology. We have drones capabilities, conduct cloud capabilities, and we'll come back to that today also what initiatives are we actually doing in that area. But NATO is going to be a huge thing to now sort of absorb and work within to create new business for us. So the foundation for our growth, of course, and our success is always to have sort of a clear strategy, and it's not easy to summarize the strategy maybe in a slide. But I think to us, it has 4 important components. As you can see behind me, focus on the core areas, which is fighters, underwater systems, command and control sensor systems and advanced weapon systems. That is hugely important to us, but also to continuously think about in -- within these core areas, what future capabilities can we actually see in 5, 10 years? And today, already today, we'll give you a couple of examples later on. We have at least 50 future capability candidates and lots of initiatives when it comes to R&D to work with these areas. The strategic market is important to us to have some sort of focus. And this is not easy. We can't be everywhere. We're not the biggest company in the defense side in the world. So we have to sort of focus our efforts in different markets. And all strategic markets, key markets, those are apart from Sweden, of course, U.S., U.K., Australia and Germany. That's where we build complete operations. Many subs, you can call it, not with a full width of our portfolio, but with a part of a portfolio where we add value to those countries defense capabilities where we want to become an integrated part of their defense capabilities, the same way as we are in Sweden. That is the strategy. And then, of course, we're nothing without our employees. And to attract talent and to retain our excellent employees, it's very, very important everyday work job that we do to reward them in a proper way to have the purpose the code of conduct in place that actually will have people love to work for us. That is incredibly important. And then operational efficiency. I'll come back to that a bit later on. Never give up on sort of ask yourself every day, what is the added value of this process and changes if necessary to become more and more efficient, also sort of being competitive in the market is hugely important that we have writings on going in that. So a couple of words on the core areas, first of all. I think they're quite a little bit different. And when it comes to the underwater side, everyone thinks about submarines and that is a major thing, of course. We have now, since 2014, built a fantastic capability in Sweden. We have a state-of-the-art shipyard, unique competence in this area. I can actually assure you that we're building a more sophisticated conventional submarines there is in the world today. This is something we must make sure that this stays like that, and we develop that over time. But we are completely dependent on Sweden. This is a security interest of Sweden. This is not something you just move to another country. This is something we have to work with emanating from Sweden. We can do partnerships, of course, but we have to be strong in Sweden. And we have a good portfolio today. And as you've seen, [indiscernible] is going absolutely in the right direction in terms of growth and profitability. And this is because we have the mix now with international contracts and Swedish contracts, surface contracts and underwater contracts. So now we're doing well. And looking at the future, of course, priorities will be to deliver our summaries, both the upgraded ones, the Gotland-class submarines, we're doing the third now and then we have the 2 A26s coming along in a few years. And then, of course, there will be continuous maintenance support on these underwater platforms. And I still have -- see an opportunity, even though it's not been clear in the Supreme Commander advice to the government that we should work hard to trait an opportunity for more submarines in Sweden. Looking at NATO, looking at our capability targets in this region, it really makes sense to have submarine capability in the Baltic Sea because that is a threshold, that is really difficult to manage from the other side so to say. Then we have a few campaigns. We're working with the Netherland campaign, as you know. We have a great partnership with Diamond to support that. Sweden and Netherlands coming together, sharing technology in this area can become a very strong thing. And we will see now our offer being delivered in the middle of this year and a down select being done by the Netherlands end of this year and the political decision to start the contract will come sort of during next year. So that's the sort of schedule for that. And then Sweden is already talking about the next generation of submarines. So that is also important. But another area I'd like to mention in this context is the unmanned side of things, the autonomous systems that needs to complement demand underwater systems going forward. And we're working with those as well, of course, and we have contracts in the U.S. now, but we have some [indiscernible] in Sweden. I think we will see more of that coming going ahead. We have also initiatives in Australia, of course, trying to be part again of the extension of the Collins-class submarines in Australia. And we are really looking forward now to see what the defense review in Australia in March will say in terms of how quickly will they be getting nuclear-powered submarines into Australia and in what way that will create opportunities for us, for gap fillers and life of type extension of the submarines in Australia. So based on Swedish capability, but of course, with international business as a possibility. Fighter Systems is a little bit of the same. We need a strong Swedish support to continuously be state of the art in this area, and we are. We've done this now for 8 years plus, and it would be a complete disaster, of course, to go in any direction, then just to continue to make sure that we're strong in this area. I need to underline that the efficiency of what we do in this country and how we do it is incredible. So the discussions we've seen in media and in [indiscernible], it's a bit sort of -- first of all, it's premature. We're going to have the deliveries of the Gripen E/F beyond 2050. And it will be upgraded all the time. It has the architecture to be upgraded with software and great new functionality over time. So it's a fantastic system, and it's cost efficient. It's 30% less costly to buy Gripen than any other aircraft. It is at least 50% more efficient to support over the lifetime. So the life cycle cost, we're looking out for the Gripen system. If you compare, for example, with Norway, I mean, they've now said that they will have to spend SEK 350 billion roughly over the life cycle for 52 F-35s. The same cost for 60 Gripen E is roughly SEK 100 billion. So we are -- and this is not -- we're not having a less comprehensive or sophisticated or less performance with system. This is a great system. So this is something that we should value in our society. It also has a great spin-off effect to many other industries and in our society, high-tech. Now -- so this program will just continue. Of course, we will put all the efforts we can and continue to sell this system on the export market. And believe me, we have campaigns going. So this is not something we give up. This is -- we still see a great opportunity in the marketplace with Gripen E and C/D, Charlie Delta Russian. We should sort of then take care to think about when U.S. with State Department is our competitor, we must make sure that this is not sort of given security politics type of decision, but rather is based on the product before we go into campaign like that. So we have to be selective in where we go. Then the Supreme Commander have said that he will start the process now with a decision at the latest at 2030, where to go beyond the Gripen E/F. And that we support, of course, the main strategy for us, the main conclusion of that must be that we continue to be the OEM and have the systems integration capability to sell fighters. The next area is come under control. Now we're turning into 3 areas, which are a little bit different because here, we can be as internationals as possible, so to say. We can move these things, set up operations in the U.S. and Australia, which we've done. We are sort of -- we are selected as being the supplier in all the surface ships in Australia, for example. Here, it's about moving more and more into new technology, cloud technology, more connectivity. This is the glue in what we do in systems integration. It's not only a platform thing, it's actually also in between platforms. And we're doing great things here as we speak. And we're really strong on the naval side here, but we also have systems on -- in the air domain, of course, and in the land domain. And in the future, everything will be connected. Sensor is extremely strong in this area when it comes to Airborne Early Warning in the surface domain, both the naval and land domain market leader when it comes to sensor technology, I would say, when it comes to Radars, it's just to use this capability now to leverage on what we do in selected markets like U.S., U.K. Germany and Australia to try to get into and move technology into these countries, which is -- Erik would talk about that, how well we've done that in the U.S. And this is sort of a bridge into our internationalization. So we have a great capability here and we are also a key player in electronic warfare. I think I don't know of any electronic warfare capabilities that is stronger than the capabilities we have, specifically on the Gripen side but also in other domains. Now this is a sensitive area. This is not something sort of that you guys give away to other countries. This is something you have to have control over, and that's why we set up shop in all these countries. Last but not least, advanced weapon systems. Of course, advanced weapon systems, we are a market leader when it comes to ground combat and the highest priority for me going forward is to stay as the market leader. So to invest in new type of munitions for the Carl-Gustaf, for example, and AT4, keeping that sort of an analog, keeping that state-of-the-art all the time is really important priority to me. And now -- and we also have a strong position in missiles, but in selected niches, which we need to develop, of course, over time. And here, I see more of the partnership sort of strategy going forward on the missile side, while we're going to continue to work with. Specifically now, it's about capacity increases. How do we create more capacity to deliver more to the market and how do we create redundancy, maybe not doing everything in Sweden. That is what we are investing in right now. And the Board and the corporate management have taken decisions in that direction. So we are working really hard on these issues as we speak. So An example of redundancies to embed this capability on the ground combat side in the U.S. and in India to have manufacturing capability and design capability in these countries. We are a program of record when it comes to Carl-Gustaf and AT4 in the U.S. And the Indian strategy is, of course, to make in India, make sure that they have control of it. And okay, we can own that company to a large extent. I think they've approved now up to 74% or 76% ownership. So there's a possibility to grow in India by sort of doing technology transfer and setting up a factory in India, which we're doing as we speak. Everyone is asking, I'm not going to go through the slide, I promise. I just want to sort of give a flavor of that in these core areas that I've talked about, we continuously fill them up with good programs. This represents probably like 50% of our backlog right now and what we have in our core areas. And as you see behind me, it's the Gripen C/Ds, the E/Fs, the T-7s, it's A26 underwater capability in the U.S. And as examples globalized in Sweden and UAE, and we have [indiscernible] U.K., and we have missile RBS15 missile and so forth. The good thing with this is that we continuously see a growth perspective in all these areas, but we also have a good balance now. The mix between being in a sort of deep development phase and having production capability up and running and support and maintenance, I see a much better balance now looking at our core areas and the programs we have here than a few years ago when we were very much sort of having a center of gravity when it comes to development. This is a sound balance. And I think we will see that over the next coming years now if we'll continue this way. So we have a lot of work to do. The problem -- not the problem, but the challenged corporate management of Saab as today is to make sure that the best brains can be used to think about the future and not only delivering from our order backlog of SEK 128 billion, which is super important but it can't be just here and now. It must also be what's needed over time. And I think we're seeing a few things in Ukraine connected to this. I think we've seen how quickly they had absorbed sort of connecting legacy type of equipment with modern technology. I think we can learn from that, how quickly they actually take decisions by being connected, how quickly they can do new things using drones, for example. And it's about -- as I said, I think it will be about connectivity going forward. This will not -- platforms will be needed, of course, but you're not sure where your functional capability will actually be. It will be more of the cloud-connected capability. Your unsure that you have your software all the time in your own platform. And you're not sure how you deliver either a kill chain capability and how that works in the system and how you also work with protecting yourselves, that will be many more platforms interacting and software sort of dispersed on many platforms going forward. This will entail connectivity, of course, not to standardize links that we see today, like Link 16, Link 11, link 22%, much more broadband and much more accessible. It will entail working with huge data, sort of lots of information using AI, and it will be a lot about cybersecurity to make sure you can protect yourself and do things also in that space. And then you have to work not only in the domains we are used to, but also in the space domain. So we have a lot of initiatives going in this area. And Christian Hedelin, Head of Strategy, will talk to you a little bit more in detail about this later on. And we will continue to invest in this with our own money. And -- but the trade-off will always be to grow, increase our profitability, but at the same time, have the strength to invest in new technology as you see at the slide. A couple of words on the multi domestic approach. I mean, it's no surprise that I've mentioned that already, the different countries where we set up shop. And if you look at these countries, how they grow legacy-wise and what I see going into the future. As I've said, I mean, in Sweden, we will continue to be the main supplier and grow with the Swedish defense spending on acquisitions, and we will work with all the core areas with Sweden. I look forward to sort of see more fighter jets in Sweden. I will never give up on trying to convince them about more underwater capability. They've just recently acquired a GlobalEye, which is excellent, but there is more to do in that area. Specifically, if you look at the Nordic context and how we want to work with the other countries to cover the whole region with Airborne Early Warning will be a huge thing. And then we have the whole sensor chain that needs to be implemented in our country, which has just started. So there are huge opportunities going forward. And then, of course, ground combat and missile technology is also incredibly important because also Sweden have now donated quite a lot of equipment on the missile and support weapon side that we have to work. U.S. is a lot about radars and sensors and underwater technology unmanned. We are, as I said, a program of record on the ground combat side, which we need keep sort of that position. And then, of course, we have the franchise program, T-7, taking off more and more into production. We just started the production in West Lafayette. There's much more to do there. U.K., the focus is also on the radar side and the seabed water operations. We have a capability called CI in U.K., which we now complement with defense technology from Sweden with the U.K. customer, and we intend to set up shop to actually be able to manufacture apart from NLAW also sensor platforms in the U.K. Germany, we're really strong on the command and control side. We have big naval contracts. We're establishing operations as we speak there. And also then we are in a strong position when it comes to electronic warfare, specifically in the air domain. And there are interesting decisions coming in a short time on where Euro fighter is going on that. In Australia, we are a main supplier of all Naval surface ships when it comes to command and control and combat management systems. And we are expanding that also to other areas as we speak, and we need to get back into the underwater business. So we have huge possibilities in these countries going forward. And these are complete operations. We invest, we build IPR, we develop in manufacturing we support. The sustainability area was, as I said in the beginning, something that was really sort of getting attention in the beginning of 2022. This is important to us. This is what we work with every day. And we have taken the approach then that, of course, the foundation of sustainability in my head that we have resilient society, safe societies, peace, so we can actually work with all the other things that are so important to us that environment, diversity and inclusion, anticorruption, all of that is in play every day in our business. The way we have divided it is in 3 pillars, as you can see. And then we have a lot of initiatives within these areas, and it's all connected to the UN development goals. So there is a strategy in this area. And we have just recently now been approved by the scientific-based target initiative on our targets. So we are going to reduce our emissions with 42% 2030 and being net-zero 2050. Also for Scope 3, we are going in that direction. So 25% reduction in Scope 3 2030. And on the supply chain side, actually, more than that 50% 2030. So you realize that we may not know everything our customers do with our equipment. So it's not so easy to go in depth into Scope 3, but the part that we can affect, we worked with diligently and that has now got an approval by SBTi. I just want to say the last couple of parts of our strategy. This is hugely important, as I said. You've seen that we recruited more than 1,000 people net into Saab last year, and I think we will see more coming in this year. It is a battle to find them, but it's also as important to have all the things in place when it comes to retaining people. To have the right experience working for the company, the right reward structure, of course, the purpose, have the continuous learning perspective and being able to develop yourself in the company is as important as attracting people, of course. And that we do every day. And I think this is part of capacity increases. It's not only about duplicating production lines and infrastructure, you also need good people coming into the company. We're doing well in this area, I must say. And the last part, not less important than anything else, and you can talk a long time on this, but I'm looking at how much time I have. I have to sort of summarize it in a proper way. I'd like to comment a couple of parts of this. Every manager in our company has a responsibility to look at the processes you're responsible for in terms of value flow and what is added value to what you do every day and improve every day. And it's lots about digitalization, doing things in a more automated way. That is a lot of effort going into that, both in our sort of ways of working, but also affecting our products. The software part, the software factory is something which will be discriminating us when it comes to efficiency from others going forward. And here it's about using open source, of course, in a proper way, cleaning it up, making that anonymous and how you work with it having a good common software platform structure and doing more in software instead of hardware, that is creating efficiency. I just want to comment that. And then, of course, all the things we're doing on the supply chain side, making sure that we -- well, unfortunately, a bit, we've built a little bit more inventory in working capital, but we also, in depth, understands -- we, in-depth, work with our supply chain, not only sort of the suppliers working with us but also their supply chains to make sure that we understand where the bottlenecks are, where can we create redundancy, where can we do insourcing? And this is a huge effort. And so far, we have done well, and we're well prepared for the growth for the future. So those are a couple of comments on operational efficiency. So final slide from my side. You've seen this morning that we have now published a press release saying that we look at the next 5 years, what we wish we call medium term. And now looking at the market development, our position and what market share we can get and what we have in the backlog, we think we can be more specific on that we will grow more than we've said before over this period, around 10% compounded annual growth, and we will continuously work with growing our profitability more, of course. EBIT is incredibly important to us. So we will grow that more than the sales growth but all the time, making the trade-off again, having the strength to invest and embrace new technology to create new capabilities for the customer in 3, 5, 10 years' time. And then looking at what I tried to say about our sort of core areas and the programs we have in our core areas, we have a much better balance now in terms of payment schedules and where we are in terms of reduction instead of development. So we look at the proper cash conversion over time of more than 70% compared to accumulated EBIT over the next 5 years. So that is a little bit more specific than we've said before, just positive cash flow, but we are confident now that we generate cash all the time looking at what we see in the marketplace, how we have the balance within our core areas and also how we penetrate the market and the new capabilities. So those are our new targets, and those then replaces the sort of 5% growth over the business cycle and the 10% EBIT in -- over business cycle. And this is now a better way of managing targets in of course. And then, of course, we will guide as we did Friday on the yearly side as well. So that's my final slide for now, and I am 2 minutes over time, but I hope that made sense to you and that you have a bit more sort of feeling for where we're headed, and I'll come back and answer questions, of course, later on today. Thank you.

Good morning, everyone. Thanks for coming. I'm Erik Smith. I run the operational country the United States for Saab. You heard Micael talk about our multidomestic strategy and how that ties to our global growth initiatives. I'm going to talk to you a little bit about why being multidomestic is important and how we do it around the globe using the United States as an example. You know that we've established our operational countries in the U.S., the U.K., Australia and Germany, the 4 most dynamic and largest aerospace and defense markets in the free world. These are some of the most dynamic markets out there. Our customers are making decisions every day, changing the way that they buy things, changing the capabilities that they employ, their requirements, their funding streams, in order to stay close to these customers and influence in the way that we need to, we need to be local in these markets. We've made the strategic decision to build local capability, as Micael said, through operational -- full operational capabilities in these countries will also allow us to gain access to markets that we couldn't otherwise access if we didn't have a local footprint. Many of these customers have significant funding streams that are classified or otherwise unavailable unless you have access at a footprint in the local market. Further, these markets are characterized by long-term programs that sometimes carry on over decades to keep those programs sold and to keep them fresh, we need to have the political support that we can gain by being local and creating economic value in the local markets through job creation and capital investments and those kind of things. Also the R&D budgets in these markets are substantial. But there are -- it's R&D that is influenced heavily by the specific problems that these customers are trying to solve. In order to really understand how the customers are trying to direct their R&D spend and develop their products, we need to be local and have a direct tie to the problems that they're going through every day. These are also markets that are characterized by what I would say is an aggressive export support. There are governments that heavily support the A&D industry in their access to global markets by developing products and capabilities and partnership with these customers, we're able to leverage that political support and those regimes to gain access to markets that otherwise wouldn't be available to us. These are also some of the largest defense budgets in the world. That money can be used to develop -- not just develop Saab's organic portfolio, but also to develop new capabilities in country and partnership with these nations. And so it's a way in which we can not only use these nations money to help and missions to help further advance our products, but also to develop organic capabilities right locally based on the mission needs of these customers. So in all these cases, across our multidomestic operations, this is -- it is, I'll say, a strategic imperative for us to be local to gain the kind of leverage and realize the kind of potential that Saab's portfolio has around the globe. I'll start and talk a little about the U.S. business itself. This journey really started for Saab in 2012. It's acquired Sensis Corporation in 2011 -- end of 2011, and that was really the platform to start building a US organization. Since then, we put about $3.3 billion of value into the company over that period of time. We do about $410 million of revenue a year at a Saab level, $300 million of that is organically executed in the U.S. operations. That's a really important dynamic for people to understand because the delta between those 2 numbers is actually the market that is addressable if we didn't have a local U.S. footprint. The rest of it is all cleared classified programs that are done with U.S. citizens in this case, working classified programs for across the DoD and the Federal Aviation Administration. We currently have about 760 employees, that number is growing every day, operating across 9 locations. It's a highly dynamic U.S. organization. I'll tell you we've opened 2 of these facilities just this year, and we'll continue to see that grow as we build out the business in the 4 verticals in which we operate. I think the easiest way to give you a feel for what's going on in the U.S. is to let you watch a video that we've put together that kind of tries to give you a sense of where we are in the development of the U.S. operating company. And so with that, I'll turn it over and watch a quick video. [Presentation]

Okay. Hopefully, that gave you a feel for the exciting buildout that's going on in the United States. It's -- I watched that video probably 5 times now and I get more excited every time I watch it. So that's great. It's great to be a part of. I want to walk you through just a few examples, a little deeper dive on a few cases where -- to illustrate the kind of strategy and -- the multidomestic strategy and action in the United States. And I'll start with surface-based radars. This is the business that we started in 2012 with the acquisition of Sensis Corporation. At that time, the surface radar business was doing about $20 million in revenue a year. Last year, we did about $200 million in revenue. So the growth is -- continues to be substantial over time. At this point, we've sold over 100 radar systems into the U.S. Navy doing 3 different missions across 6 different classes of U.S. Navy ships. This is based on the Saab legacy Sea Giraffe radar adapted by the Cleared U.S. workforce to different missions for the U.S. Navy. We have the biggest subcontractor Northop Grumman on the G/ATOR program, one of the most advanced ground-based tactical radars in the world and one of the top 3 suppliers to the FAA for surface safety sensors and solutions, everything from -- at every major airport, the sensors that are on the airport surface separating metal all the way up to the glass the air traffic controllers are using to operate the air fields. This is a full-scale capability out of -- based out of Syracuse, New York, full life cycle from development -- from R&D and development to whole life cycle support 24/7, 365 around the world. If I look at another example, maybe a little bit different, AT4, one of Saab's flagship programs. We've actually sold 700,000 -- over 700,000 of these systems into the U.S. market over the last couple of decades. As you can imagine right now, the demand for AT4 is as high as it's ever been. The capacity at a global scale needs to be expanded. And so we're doing that in partnership with actual manufacturing, as we mentioned in the video, in Pennsylvania. That will allow us to increase our footprint and increase our value add in the United States and therefore, increase our influence, but we'll also keep this program sold in the U.S. land forces for many years to come. Another more recent example in a completely different way of entering a new market. This is a case where autonomous and undersea systems was about 2 years ago. I went to the company, and I said I need $2.5 million to go acquire a bunch of talent, subject matter expertise and underwater systems, go explore this market and see where we can build the business. Less than 18 months later, that team was able to -- has been able to put over $200 million of backlog into this -- into the U.S. organization, leveraging Saab's global brand in underwater systems and the technical expertise specific to the U.S. market that we were able to go out and hire. This business is, yes, about [indiscernible] and the UUVs and the ASW training market, but it's also captured a number of advanced R&D contracts in artificial intelligence and machine learning algorithm development for the Navy and for the Defense Advanced Research Projects Agencies. So again, building on a diverse portfolio, leveraging the platform and the footprint that the surveillance and surface radar business has given us. It allows us to scale these operations in a way that is very efficient and can bring the most value to Saab. So my last chart, if I could leave you with anything, is that while I've used the U.S. examples as -- the U.S. is an example of our multidomestic growth strategy. The thing I would leave you with is the formula doesn't change, depending on which country you're talking about. Whether we talk about Australia, the U.S., U.K. or Germany, our formula for multidomestic growth is proven and it works in all of those countries. We start with a very focused look at target markets. But it is very much a case that we don't -- we're not going after every market. We're trying to stay in specific niches that are outside of the core focus areas of the big A&D prime. So these are areas where we think we can make inroads without sort of upsetting the strategic balance of the big primes. We look for areas where we have a strong global brand, I would point to underwaters and radars is a great example of that, ground combat we talked about. And so when we find a niche market where we also have -- a niche local market where we also have a strong global brand, then we look at what is the state of the technology in that market in the local country today. And we're looking for markets that have an old or immature capability where we can bring state-of-the-art technology, either organically developed or from the Saab portfolio to provide that unique value proposition that we talked about in the video. Once we have our target markets, we then worry about our market entry strategies and we look at that from 4 perspectives. When I talk about strategic partnerships, I talk about T-7 and AT4 and the action partnership, mergers and acquisitions, you see what we can do with the -- what we've done with the surface radar business. When I talk about technology transfer as a market entry strategy, I look at our live training business down in Orlando, the case where we've taken the global product and we sold it into the U.S. market and the economic value that we create with that product is based on supporting and deploying those -- that product and those assets around the country. In the case of targeted talent acquisition is just what we've done in the underwater business that we just talked about. This is where we're going to go out and we're going to acquire specific subject matter expertise in a given domain, and then we're going to give that -- in an entrepreneurial way, give those people the ability to go out and help us build the business. So the strategies and how we enter these markets is the same and how we evaluate that regardless of which country we talk about. So is the future position. At the end of the day, all of our operational countries are in various states of development. But we're looking for a balanced portfolio of production and development programs, where we can have a broad geographic footprint embedded with our customers every day. If we can do that, we can get access to our locally -- to locally supported R&D and to help to build out our product portfolio. And then ultimately, as those products mature and become embedded with our customers, we can have access to their export markets and the support that they give us around the world as we look to unlock some of those global markets through the FMS process in the U.S. or otherwise in these other countries. So look, the formula is working. We've been able to generate a significant amount of success in the U.S. market as well as Australia, the U.K. and Germany, and we'll continue to do that as we move forward. With that, thank you.

Excellent. Let's get started. We used to have all the time in the world, but no money. Now it's the opposite. That is roughly what Göran Mårtensson, Head of the Defence Materiel Administration, FMV, said at the [indiscernible] conference earlier this year. The demand for Saab's products is rising rapidly. But at the same time, when it comes to increasing productivity, several challenges arise. As you know, post-pandemic supply chain disruptions are likely to continue in some form. The demand and competition for raw materials is substantial. And at the same time, the same is true for personnel, recruiting but also retaining the right staff is a true challenge for several sectors. These are the central questions that we will address in this session being capacity, competence and supply chain. And I will also invite you, the audience to pose some questions here. And if you don't have time to pose all the questions that you have in mind, there will be a final Q&A session at the end of today's program. But I will start with asking some questions myself, and I will start with you, Gorgen.

Gorgen.

Gorgen. Gorgen, of course. I knew that. As Head of Business Area Dynamics, you're the first line of Saab that is experiencing this increase in demand. Do you have the capacity to meet this increase?

If you look at this, we have been under quite strong growth the last 5 years, actually. We have been so successful on the market. So the growth has already taken off, meaning that during that period, we have been able to have a more constant production, produce more of the same and increased our capacity, meaning that we know quite well now, where are the bottlenecks, meaning that we have adjusted all the time now to the new world that we see. But is it easy? No, it's not. It's a fight every day to grow, but we have managed quite well. Then up to the terrible invasion that happened, 24th of February. We then quite quickly realized that much of our products were then donated into Ukraine. We also then saw that they work. They work even better that we have promised, meaning that most likely then, we will see an increased demand, both in replenish what they have donated but also that our product works better than then. So what we did then is to go into our production and see, yes, where are our bottlenecks, where should we invest in order to increase our capacity. And as Micael said, yes, we have a forward-leaning also Board and management team. So I got the opportunity to invest quite much already before last summer when we saw that this will come. So we are on the way now building up new facilities, invest in equipment to produce, building warehouse in order to take care of what we see in front of us. Will this happen directly? No. It will take some time. I'm pushed by Micael, how quickly could this go, and we're doing our best, but it will take a couple of years to again increase what we are working with.

At the same time, this must be a rather difficult balance. I mean, how do you make sure that you increase the capacity and not the reverse that you sort of don't overdo it?

If you look at our business, we are working with around 40 countries -- 50 countries every year. So we know quite well what the underlying demand is. On top of that now, we put what we see will most likely come. And we have a very close cooperation with our customers. How will this play out? Is it easy to scale up quickly? No, it is not. I mean, we see all the time that the capacity in the Western world are not enough. But we will fix this on -- together with our customers. And if we see the customers, we are working with them as well. If they see needs, we invest together to build up capacity because there is a war going on now.

I want to turn to you, Christian, quickly. One of the main challenges, and I addressed this in the beginning, that there are the supply chain disruptions when it comes to increasing productivity. How does Saab work with these supply chain-related challenges?

Well, it's a good question. And we are still paranoid in Saab. We don't leave -- we hear now in the market that things are easing up, but that's the biggest mistake you can do to start to believe that things will be better right now, especially with the growth we have in front of us. When it comes to the supply chain in general, we see the same issues that we had before. But I've said also that the -- I think we actually -- we're lucky that we had COVID. It made a big smash on the company both financially but also it took out some of our capabilities for a short time, but it actually taught us to bring in new ways of working. And that's what also Gorgen was talking about in how to actually excel more now. So one thing we have done is to actually cooperate more between the business areas. We were not that good doing that before. So in electronics, semiconductors, in raw material, we were cross-border more today than we did before. Secondly, like Micael said, we work not only with our suppliers. We work in -- try to figure out -- we can trust you as a supplier, but we don't trust your subsupplier. So let's go there and figure out how you're working with them to see the whole value chain because we are so dependent this so long time before the first delivery of raw material until it ends up in Gorgen's warehouse. So we need to work very early in that chain. And then we work, of course, with also incentives, both with our customers, but also with our suppliers, can we change something in the business model and how we take risk. And that could be that we take risk ourselves. We do that. We built up inventory, especially in dynamics last year. We built up actually a 20% increase in inventory and over SEK 2 billion, and most of it was in Dynamics, part of it in Surveillance. That's the way for us to take risk, but we also try to work with now with the customer. And I think it will be imperative to work much closer to the customer and the suppliers, how can we take risk together in this growing market. And with what you said, Göran Mårtensson said, how do we together figure out now when we don't have time, but we have money, how to deliver on this.

One other key challenge touches on personnel. And we have heard this being mentioned a bit earlier today. But Lena, I want to ask you, you have experienced high growth in personnel during the past year and the ambition remains high. How will you manage to keep this growth and continue?

We just keep on going. We are focusing on a lot on recruiting. We have doubled, almost tripled our recruiting capacity. We have a known search facility now, working with our own, going with passive candidates, using our own brands. We have a lot of different campaigns in social media. We are looking at wide spot where we see we can find capacity. For example, you Gorgen started a hub in Karlstad, close to your Karlskoga facilities. That's one way to do it. And of course, we go for -- accelerate our recruitment in Australia, U.S. and U.K. and Germany as well. And not -- it's not -- as I said so many times, it's not only about recruitment, it's also about retaining people, so important. And we work with excellent people experienced in all aspects, try to do whatever we can do, offering competence development. We are reviewing our reward structure. We have launched a new leadership framework. We are refreshing our facilities. We are looking over our IT tools. So we do a lot.

But the demand first half is substantial, not only at Saab, but in the entire defense sector, including amongst actors such as the armed forces and the Defence Materiel Administration. How do you compete with these types of actors?

Actually, our strategy is not so much to compete with them, rather join forces to bring in more people to this segment. So that is more of the strategy.

I think, I mean, the purpose that we now work with, keeping people and society safe, helps us a lot, and that is the same as our defense forces and FMV, we have -- I mean this will bring in more people into our sector. So I think we could work together, and we are already doing that.

But when it comes to bringing in people that are currently outside the defense sector, I'm sure that you're looking in those areas as well. And we have seen large transformations of the tech sector recently, actors such as Klarna, Google and Spotify have all announced significant layoffs. Is this an opportunity for you?

Yes, it is. And we have recruited some people here in the Stockholm area from these companies. And of course, we compete with our purpose now. We said it's nothing new to us working at Saab, keeping people in society safe. But it's a strong one, and more and more people understand that. So that's a benefit for us. And then also, we can offer great competence development. We have actually invested a lot. We have an own digital university where we create different learning journeys with -- in line now with our future technology areas. And also, I think now and I mean, with the high inflation and many people have high interest rates on their apartment in the private loans, I noticed that actually being -- having a stable and a company with structure, that's kind of the new black, and we benefit from that now.

We hear about all these investments, and I'm looking at you now, Christian, when it comes to recruiting and expanding the workforce, surely, this must have an impact on costs and cash flows. Can you tell us a bit about your thoughts here?

Well, that is absolutely true. But of course, you can't grow if you don't invest. But this is a new mindset, and this is very important. And if you put it from the first point of an angle you need to think about, when you invest something, either it's in people or if it is in machinery and tools, you actually both put a financial investment into action, but you also put a lot of people in action. So you spend a lot of people building that production plant. And if you don't do that at the right time and the right sort of purpose and you do it in the wrong timing, you will actually have wasted people and time that we don't have right now. So first of all, just not thinking about the money, we are really careful of what investment you take in what order, what people we bring in, in what order. So if we bring in the wrong people, we won't meet this strategy. So that's the first thing. And that helps us quite a lot to prioritize. And then secondly, as you say, we need to retain, be competitive, number one. If we're not competitive, that will not work. Secondly, we need to manage our EBIT and our profitability because only as a strong company, we can invest in R&D. And finally, and that also goes for our balance sheet and how we use our money. So we have a new mindset and we have a new way of working to prioritize these investments and the recruitments to secure. And that is something that is shifting, and we're working hard with right now. But you're pointing out something very important in the shift now.

I want to give the audience and our guests an opportunity to pose some questions, too, and I believe we have microphones here, yes, right there in the back. So please just raise your hand if you have a question. We have one here.

Sam Burgess from Citi here. Just a question for Christian. Coming back to kind of supply chains and inventory. In a, I guess, more or less interconnected world, maybe a more volatile world going forward, do you think higher levels of inventory is going to be the kind of new status quo? Or as the economy stabilizes and supply chains normalize, do you see that sort of unwinding and maybe going back to lower levels in the midterm?

I think our first take at this is that trade will be important, and you can't do everything in each country in the world that will not work. So we will have, as a mindset, to try to work with our main suppliers, and maybe they will change to be closer to us or more in our operational countries that we talked about before, but to secure that we have a good supply base within our footprint to work with. And maybe those relationship will have to increase and become more partnership strengthened than just being a normal supply and buyer relationship. But where -- if we can't do that, and we have done that over the last 2 years, we have moved things in sourcing as well. But that's not sort of -- we don't seek that as the first alternative in the journey. And then we don't seek to invest in our own capacity if we don't feel we can find a solution with another partner because we have so much to think about any way to deliver new capabilities and products for the future.

That's very helpful. Just maybe one more if that's okay. Just coming back to recruitment and retention. Have you seen, particularly among younger demographic, with the conflict in Ukraine, obviously, gives a very tangible sense of purpose and of what Saab does and the products that it manufactures, have you seen changing perceptions and maybe recruitment becoming easier among that younger demographic?

Yes. Yes, we have. I mean the purpose means something else to people right now. So -- and we benefit from that. I see the more applicants to the jobs and a bigger interest.

Even in non-engineers we see that. I have more applicants for finance positions today than I had 1.5 years ago.

We have two more questions here in the front. Pretty excellent.

I'll go first. Erik Golrang, SEB. I have a question for Gorgen to follow up on your comments there about capacity expansion. Want to put some numbers on that? I mean how much are you expanding your capacity? And is this a gradual development because I'm guessing Dynamics will probably grow faster than the group average over the next couple of years? Are there step changes in capacity coming into place that could sort of limit growth over a certain period? Or were you able to plan this early enough to make sure that it's a relatively smooth ramp?

To do a ramp-up, there is a balance act that you have to have with your own investment in the capacity, the supply chain and also the people. So yes, there are steps when you build a new facility, there are step where you can see you increase. And as I said, we did started quite large investment last summer, and that will take a couple of years until they are fully up and running. So there I could see a step when that comes. But on the way, we could, of course, squeeze in more into already existing capacity. And that is what we are doing. If you secure the flow as we are working with. That is the key also to increase capacity over time. And that has what we have done the last 5 years, and we will see that also for the coming years. Then I could see when we are ready with the next investment, that, of course, will give us an extra possibility to grow.

So I'll help you a little bit more because I know what you're looking for but -- so Gorgen has an investment frame of around maybe SEK 700 million to SEK 900 million over the next 3 to 4 years to do this capacity shift on top of what we had before. So -- but exactly how that timing is, it depends on how fast we do it, and that's coming back to the storyline that Gorgen had on how we do that and build this. And if it becomes a little bit less, depends also on how we can use companies like actual manufacturing or if it becomes a little bit more, it depends on if we actually invest and help actual manufacturing and take more margin from that or the other way around. So it's actually a balancing act every month in meetings where we discuss these kind of investments.

Björn Enarson, Danske Bank. Also a follow-up on capacity expansion in Dynamics. Is this primarily a Ground Combat? Or is it only ground capacity that you are expanding capacity.

It is primarily now in Ground Combat.

And are there some bottlenecks elsewhere within Dynamics?

There are bottlenecks to come everywhere when you do this. So that's quite interesting to see. I could take some examples. I was out of parking lots in some places. So I mean, lots of things happens when you grow like this when we see, for example, that we could -- yes, we could see two or three in the rooms because we don't have enough facilities. Then the parking lots were -- so yes, that things happens when you grow that quickly that we have done. We are taking it all the time. And of course, if we get other opportunities in other areas, we will work with them as well. But I could really see that we have managed that in a quite good way the last 5 years to grow. We have a fantastic people working in Saab to support us. They are so proud that they are doing whatever it takes to fulfill our obligations to our customers.

So if you would compare capacity 25 versus 5 years ago, I mean then we're talking about more than doubling, I guess?

You said 25 compared to 5 years ago? Yes.

And last question to Christian on you have highlighted the writing of contracts to drive profitability. Can you shed some more light on that how the actual contract writing has -- or is about to help you with profitability?

Well, profitability, I mean, the contract handling with the customer is always also a competitive question depends on what kind of dialogue you're in. But what we try to do in a situation like this is to work with our customers to figure out how we create stability, both for them and for us. And that maybe gives less profit opportunity in certain space of the contract, but it gives you more stability and less risk in the other part. And that comes to the volatility in supply and pricing inflation, et cetera. And what we have today is a lot of index clauses. They are not perfect, but they are taking care of the majority of the problem, and we also are back to back to our suppliers. And here, I think that both from a net working capital point of view and also from a profitability point of view, we work towards more -- we call it with our customers' interest -- noninterest cost contracts where we have a more back-to-back flow and more even flow of the cash flow going through the system. And that means also that we have it closer to our EBIT over time, which gives more predictability. But secondly, also, we work constantly with this risk issue, where it is a battle for our customer and ourselves to figure out how to move that in the right order through the contract. It doesn't answer your question if we're going to be more profitable, but we will be more profitable. And I'll come back to that in my presentation through both scale but also more efficiency and contract management. And the better we can be in contract management with our customers, the better we will also be able to not lose money on a contract we already agreed on the higher profit with our customer, for example.

I saw some questions in the back there.

Sash Tusa from Agency Partners. I just wondered -- I think it's probably one for Gorgen, if you could just talk about the -- how the nature of some of your supply contracts might be changing. Some of the -- probably some of your competitors are going to propellants companies and offering to buy capacity out 5 or even 10 years, which seems -- may well reflect the current up cycle, but it seems a very big financial risk or commitment for them to be making. Are you prepared to make that sort of long-term contractual agreement with some of your key suppliers? Or can existing framework supply contracts actually give you sufficient upside?

We have done that already. And I'll take two examples: explosives and carbon fiber. That is something that Gorgen will need a lot of. And we haven't gotten all the orders that we foresee in that area. And we're quite sure we will use that material. So we have taken contracts. You can put it partly at risk to secure that we have a lot of going forward. Otherwise, those machines that we now install will stand still probably. So that is one area where we do that. But I think with suppliers also is to -- I mean, first, it is to identify what risk we believe they have in delivering to us. And then we can discuss if we want to invest in them or if they can invest themselves on how to this collectively. And it's not a single bulletproof solution for all suppliers because they're so different. I don't know if -- Gorgen, if you want to add something into this context.

Looking at the products that I produce and other parts that Saab produce, they are qualified with certain suppliers, meaning that it's not even for competitors, so easy to change. So we see it in long relations with our suppliers, and we have a very open discussion around the forecast, and we have also long agreements with our suppliers in order just to do what you say, for them also to invest in the growth that we have seen. And I foresee that we have all possibilities to fulfill what we say. If some really big things happens, of course, we are -- we will also invest to secure our supply chain. But we have a very good relation and working very closely with our suppliers.

I want to follow up that question, namely how you work together with your partners in order to address this?

Yes. I usually say in this business that we do is not to be #3. You have to be #1. You have to have the best products, meaning that I'm always looking to be #1. And if I'm not able to be #1, then I partner with someone where we really could take this to create a product that are #1. We are working with the big primes in Europe. We are working with other primes in U.S. in order for us to bring the #1 product to the customer. So -- and we have experienced actually that our -- we Swedes are quite good in cooperation. It's maybe into our mentality that we are quite good in this, so we get a lot in these cooperations. So I think we have a possibility there as well to increase and actually work harder with our partners.

You all seem rather confident. I mean the challenges we addressed in the beginning, they're quite substantial and yet you seem rather confident that you will manage this situation and increase productivity. Where does this confidence come from, Christian?

Well, we are confident, but we are -- as I said, we are paranoid, and we are actually discussing this. I think as I said, COVID was a good starting point for this. We started to talk about how do we really fix this? And how do we make this work with all the problems now out there? And we had a big financial hit to our quarter 3 results in 2020 that made us come in to sort of this crisis mode and start to talk about this. And we have just continued then from that into this growth scenario, which is also a type of positive crisis, but how do we then handle this then together? And I wouldn't be confident if I didn't feel that we had this better cooperation internally, and we work actively. And we turn around things and we think about them again. We change our mind. We go for one solution one day and then we realize we should do something else tomorrow. So in a sense, more agile in that thinking in the same time as we have a very stable operation. I mean this extremeness, as Gorgen says, certified stable operation. But on top of that, we can think outside the box more and more on how to do things. We have challenges every day. We have challenges of semiconductors, we have challenges with suppliers and transportations. We have challenges with some of the production setups that we're doing that becomes a bit delayed. But then we work together to work that around. If we're 1 month late there, could we do something else in between. And that comes back to Gorgen's point, it's super glue internally with the people at Saab. They stand there and say, what can we do together to help to actually fix this in the best way to the customer together? I think -- and that's what makes us confident in this. But we do have challenges. And Surveillance will invest and Gorgen will invest, and that will come first. But then depending on how we get major orders in [indiscernible] and Aeronautics, we may have to see that as well going forward. Gorgen?

Yes. I mean how do we solve this? I mean we are quite open and transparent internally in the company. We are not hiding away that this is tough for us. So I mean if we get out the power out of organization, the -- it makes a difference for us, involving all people in this -- what we really do. So yes, if I could empower more people in my organization to work with this, we have a better chance of doing this. So -- and we have got a lot of good people.

This naturally connects to your area, Lena, we have heard about the importance of people and the personnel, how do you feel going ahead?

Yes. No doubt about that, it's difficult. It's not easy, but I'm confident in my area that we -- I'm confident with the actions we are taking. I'm confident with the focus we have on this issue, and I'm also confident that we are able to be agile and also adjust. But it's a race. It's a race.

I'm very happy about the final tone here that I was touching upon confidence going forward, and believe it or not, we are 3 minutes ahead of schedule. But anyway, I think I'm going to wrap up there because I'm very happy with this ending. And I want to remind you, the audience, our guests that there will be more possibilities to ask questions at the end of program. And now we will take a quick break for coffee. The exit is down here. So you have to walk down the stairs and take the exits to the coffee here. I'll see you again in 22 minutes, 22.5. Thank you. [Break]

Hello, and welcome back to the second part of this of half-day CMD. So we're going to have in this session, continued in good and interesting topics. And I want to actually start with the first one, which is about Ukraine and how does that work in terms of a geopolitical context and sub context, and then we'll continue to speak more about the innovation and our future initiatives, followed by the financial presentations that comes after. And then bear with us for another Q&A session that I hope to be interesting. So the first speaker now, I will introduce Fredrik Hassel from Saab.