Saab: Q4 announced orders are long-cycle, the focus is on short-term capacity

Saab’s publicly announced ~70 BNSEK Q4 order mix is dominated by long cycle programs, especially Gripen for Colombia and the A26 submarine phase, all of which lift visibility more than they lift near-term revenue. With demand still running strong, the spotlight for 2026 shifts from bookings to deliveries, meaning industrial capacity and execution will set the pace. Our view is that the order momentum strengthens medium-term confidence without forcing an immediate upgrade cycle to 2026 forecasts.

Q4 order intake extends workload into early 2030’s

Already in our post-Q3 update on Saab, we expected the usual year-end acceleration in orders as customers close budgets and sign contracts. By late November, Saab indicated that announced orders were already ~60 BNSEK. The two main drivers were the 3.1 BNEUR Gripen E/F contract with Colombia and the ~9.6 BNSEK A26 submarine production phase order from Sweden, with additional follow-on awards across Gripen support, air defence, and munitions. As of writing, the headline value sum of Q4 orders amounts to ~70 BNSEK, equivalent to ~1.8x Saab’s previous second strongest quarter, Q2’24 (~39.5 BNSEK). Until this quarter, the record quarter was Q3’15. At the time, the Brazil order for Gripen E/F, valued at ~39 BNSEK, lifted total quarterly order intake to 43 BNSEK.

In our view, the order intake we are seeing is not a near-term demand spike. The quarter is dominated by orders for long-cycle programs with deliveries running into 2032, so the economic impact is multi-year revenue visibility through sustained capacity load, not a one quarter delivery pop.

2026 will focus on capacity

Saab booked 68.4 BNSEK of orders in the first nine months of 2025, and the publicly announced Q4 awards imply that disclosed full-year order intake is now ~138 BNSEK, supporting a significant step up in backlog versus the start of the year. With the backlog at ~202 BNSEK per the Q3 report, we estimate that the exit backlog into year-end 2025 plausibly lands in the ~250-270 BNSEK range, depending on Q4 deliveries and orders not separately disclosed. On our current ~89 BNSEK 2026e group revenue base, that implies ~2.8-3.1 years of backlog coverage, which is broadly in line with the ~2.8-year average in 2018-21 (pre-war). The backlog steps up in SEK, but coverage stays ~3 years on our estimates because revenue has also scaled.

With demand still robust and Saab having proven it can grow revenue fast enough to keep backlog coverage roughly stable, the company enters 2026 with strong momentum. In our view, the open question is capacity: whether installed throughput is sufficient to keep deliveries high enough to support another year of very strong growth. Stepping into 2026, we are paying attention especially to the company’s commentary on its outlook for capacity development.

On the capacity front, the company’s execution now depends on supply chain health, delivery discipline, and industrial throughput across labor, suppliers, and test and integration capacity. Management has been explicit that scaling operations and increasing production capacity remains a priority. That said, the risk is that scaling a complex operation is complex and rarely linear, with bottlenecks and working capital absorption before the higher delivery rate stabilizes.

Consensus will likely not raise its 2026 expectations much

As of our Q3’25 update, with Saab guiding 20-24% organic revenue growth for the full year, we currently model ~20%, at the low end of the range. The reason is execution risk. Saab planned for capacity to come online gradually through 2025, which should lift output as the year progresses, but capacity ramp-up timing is still a key swing factor. Even at the low end, 20% growth is a big year for Saab. We also pencil in ~20% year-over-year growth in Q4’25.

For 2026, demand should remain supportive, but as we argued in our initiation report, we expect order intake growth to cool as the spending surge normalizes. NATO’s August 2025 estimates imply real defense expenditure growth for NATO Europe and Canada moderates from ~19% in 2024e to ~16% in 2025e. Against this backdrop, our current, not yet updated, 2026 estimates are ~100 BNSEK of order intake and ~89 BNSEK of revenue. That implies ~16% revenue growth versus our 2025e ~76 BNSEK revenue base, a large ~13 BNSEK volume step up. Our view is that the key downside risks to execution are the defense sector’s supply chain constraints and the non-linear nature of capacity ramping. A second downside scenario is that incremental demand for certain “active war products” cools if a durable peace agreement reduces urgent replenishment.

The Q4'25 contracts help the later years, but 2026 numbers still come down to two things: can Saab physically deliver more systems, and will the capacity ramp-up consume cash flow before it pays back. Overall, we do not expect Saab’s Q4’25 contract wins to move near-term estimates materially, as the underlying programs are long-cycle by design, with deliveries extending several years. The order momentum does, however, increase our confidence in the medium- and long-term revenue path, and it supports the profitability outlook to the extent that higher volumes improve utilization and cost absorption, and lift efficiency over time.