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Saab Sees Net Profit in 3Q Drop 8 Pct.

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Saab Sees Net Profit in 3Q Drop 8 Pct.

By LOUISE NORDSTROM 10.19.07, 8:16 AM ET

STOCKHOLM, Sweden -

Swedish aerospace and defense company Saab AB, which makes Gripen fighter jets, reported an 8 percent drop in third-quarter net profit Friday, mainly on the back of higher marketing and research and development costs.

Saab posted a profit of 218 million kronor ($34 million) for the three months ending Sept. 30, down from 237 million kronor in the year-ago period.

Sales rose 13 percent to 4.81 billion kronor ($751 million), from 4.26 billion kronor in the same period in 2006, but could not offset the higher costs.

Chief executive Ake Svensson said that even though the quarter contained few major order bookings, the figure was still high at 4 billion kronor ($625 million), showing "proof of Saab's ability to also win smaller and medium-size orders in all its segments."

Saab shares fell 2.5 percent to 154 kronor ($24.05), in Stockholm.

In its outlook for the remainder of the year, Saab said it expects growth to be in line with 2006 and an operating margin, including structural costs, to be "slightly higher than last year, assuming no negative effect from the recently announced Swedish defense budget cuts."

In its budget proposal in September, Sweden's center-right government presented plans to cut the country's military spending by a total of 1.95 billion kronor ($305 million) by 2010. In addition, it said it could make further cuts of 2 billion to 3 billion kronor ($312 million-$469 million), but did not specify a timeframe.

Svensson said the move called for "further cutbacks and a continued focus on the military's international missions," creating new opportunities but also the need for Saab to finance technological development and increase its international marketing efforts.

Later Friday, and inline with that strategy, Saab named Mats Warstedt as its new marketing director for Saab International and Saab Industrial.

Saab also said it has launched an internal efficiency program to be able to keep its 10 percent operating margin target. The company will aim for savings of around 1 billion kronor ($155.86 million) a year by the end of 2010, Svensson said.

Earlier this week, Thailand announced it wanted to buy 12 Gripen fighter jets for around 34.4 billion baht ($1.1 billion). The jets will replace the US F-5 warplanes that have been in the Thai arsenal for three decades.

Owe Wagermark, spokesman for Gripen International which is part of the Saab group, said negotiations are expected to start "within a week or so."

Saab sold its automobile division to General Motors Corp. (nyse: GM - news - people ) in 2000.

On the Net:

source:

http://www.forbes.com/feeds/ap/2007/10/19/...?partner=alerts

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