Swedish defense company Saab posted record-breaking new order bookings in the second quarter, totaling 68.4 billion Swedish crowns ($7.1 billion), surpassing FactSet estimates of 57.1 billion crowns. This figure included a significant Polish submarine deal worth 47 billion crowns [1]. Saab's total order backlog reached 317.7 billion crowns, up from 197.6 billion a year ago, marking the fifth consecutive quarter of order book growth [1]. Sales for the quarter were 25.5 billion crowns, beating FactSet estimates of 23.9 billion crowns, while operating profit (EBIT) was 2.8 billion crowns, compared to expectations of 2.4 billion crowns [1].
The surge in orders and backlog is attributed to increased defense spending by European governments in response to Russia's invasion of Ukraine and heightened geopolitical tensions. U.S. President Donald Trump's push for Europe to take greater responsibility for its own defense has further accelerated this trend [1]. Saab CEO Micael Johansson stated, "We operate in a market with structurally growing demand and remain focused on scaling capacity, delivering to customers, and advancing new capabilities" [1].
Saab's product portfolio includes Gripen fighter jets, submarines, missiles, and advanced electronics, and the company has experienced exponential order growth since Russia's full-scale invasion of Ukraine in early 2022 [1]. Earlier this month, NATO Secretary General Mark Rutte announced the alliance would order up to 10 spy planes from Saab, in a deal potentially worth nearly $5 billion based on the price of the GlobalEye aircraft [1].
Despite robust sales, profitability, and an expanding order book, Saab's stock, along with other European defense stocks, has declined in recent months as investors question whether industry valuations have outpaced companies' ability to deliver. European defense spending remains uneven among NATO countries, but most have made progress in increasing their military capabilities. Sweden, Saab's home country, joined NATO in 2024 and has raised defense spending as a share of GDP to 2.5% from 1.2% in 2021, according to SIPRI data [1].
CONCLUSION
Saab's record order bookings and backlog underscore the impact of rising European defense spending amid geopolitical tensions. While the company has exceeded earnings expectations and secured major deals, investor concerns about industry valuations and delivery capabilities have weighed on defense stocks. The market takeaway is that demand remains strong, but execution and delivery will be critical for sustaining investor confidence.