Swedish defence company Saab aims to increase sales in Middle East

Ukraine conflict is boosting demand for defence products in Europe, its chief executive says

Micael Johansson, president and chief executive of Saab, spoke to The National at Idex 2023. Chris Whiteoak / The National

Swedish security and defence company Saab intends to grow its sales in the UAE and across the Middle East, its chief executive and president has said.

In an interview with The National on the sidelines of the International Defence Exhibition (Idex) in Abu Dhabi on Tuesday, Micael Johansson said Saab hoped to take advantage of new opportunities in the region.

“In the Middle East, UAE is an extremely important customer to us,” he said. "I see a great opportunity to serve with our sensor systems but also other systems going forward.”

Saab designs, manufactures and maintains advanced systems in aeronautics, weapons, command and control, sensors and underwater systems, with major operations all over the world.

Europe is the company's biggest market, followed by the US, Australia, South America and the Middle East.

It reported 42 billion Swedish crowns ($4.05 billion) in sales for last year, up 7 per cent on the previous year, as demand for defence products rose after Russia’s military assault on Ukraine.

The company’s order backlog increased to 128 billion crowns compared to 105 billion the year before and net income rose 13 per cent annually to 2.2 billion crowns.

The Middle East represents 10 per cent of total sales of the company, on par with South America, Mr Johansson said.

“The Russia-Ukraine conflict is creating a situation where many countries in Europe — including the UK, and to some extent the US — have depleted their stocks. So, we need to help them replenish ... and that is going to require capacity.”

He said the company was “investing heavily” in boosting manufacturing capacity in Sweden, as well as in Europe and in the US, amid higher demand for defence products.

The war in Ukraine has raised geopolitical tension across Europe, leading many nations to step up military spending, creating opportunities for defence companies to land major contracts.

“We had a fantastic order intake for 2022 at 63 billion crowns, so we now have an order backlog of 128 billion crowns which is almost three years of revenue,” Mr Johansson said.

Sales this year are projected to rise by 15 per cent, driven by markets in Europe, the US and countries in Asia, he said.

The company opened a development and production centre in Abu Dhabi’s Tawazun Industrial Park in 2017 to boost its presence in the UAE.

“Our plans involve creating products from UAE to be developed and manufactured here,” Mr Johansson said.

The UAE, the Arab world's second-largest economy, is focusing on local manufacturing as it aims to boost the industrial sector's contribution to GDP to Dh300 billion ($81.68 billion) by 2031, from Dh133 billion in 2021.

“We have a couple of examples already, like DeployNet, which is a private network [for communication] to be set up within the defence forces,” Mr Johansson said. "We have the coastal radar technology so … more and more capability in UAE.”

The company is taking a number of measures to address the issues of higher inflation and supply chain disruption by being “more productive and more efficient in what we do”.

It is also focusing on “near sourcing or regionalising supply chains to have more security of supply", Mr Johansson said.