Saab to cut 500 jobs after Q3 earnings losses

[Rockville]

STOCKHOLM, Sweden (AP) -- Swedish aerospace and defense company Saab on Friday swung to a third-quarter net loss and unveiled plans to cut 500 jobs, or nearly 4 percent of its work force, in the next two years.
The company mainly blamed the weaker results on steep marketing costs, delayed orders and slow business development in South Africa.
The Stockholm-based company said it was expanding its cost cutting program -- aimed to reduce expenses by 1 billion kronor ($135 million) a year from 2010 compared with the start of 2008 -- by slashing the jobs, but that this would mainly be made through attrition.
The new cuts will start in 2009 and are expected to achieve cost cuts of 1.5 billion kronor ($201 million) by the end of 2010, Saab said.
Net loss in the quarter came to 103 million kronor ($13.8 million), compared with a profit of 225 million kronor in the same three months a year ago.
Sales in the three-month period fell to 4.6 billion ($617 million), or 5 percent, from 4.8 billion, while order bookings plunged 21 percent to 3.1 billion kronor ($416 million).
The company's gross margin received a similar beating, dropping to 20.6 percent in the quarter, from 26.9 percent in the third quarter in 2007.
Saab's Chief Executive Ake Svensson also noted that "global economic conditions continue to impact Saab negatively, with the financial crisis creating further uncertainty for our business operations during the third quarter."
Despite the weaker results, the company still reiterated its 2008 forecast, which it lowered in the beginning of September, saying it expects organic sales to grow between 3-4 percent, and an operating margin of 8-9 percent.
The September guidance cut was partly due to delays in large international order bookings and uncertainty about Swedish military spending. Before the downgrade, 2008 organic sales growth had been estimated at 5 percent, with an operating margin of 10 percent.
Saab sold its automobile division to General Motors Corp. in 2000. It has around 13,400 employees.

AP, 10-17-2008