February 7, 2020 / 7:53 AM / in 16 days

SAAB reports fourth-quarter profit fall, strong cashflow

FILE PHOTO: Two Czech Gripen fighter planes demonstrate a flight interception of a Belgian air force transport plane over the Czech Republic, September 12, 2018, as part of NATO drills. REUTERS/Francois Lenoir - RC1D8D73C980/File Photo

STOCKHOLM (Reuters) - Swedish defense company Saab (SAABb.ST) reported a fall in fourth-quarter operating profit on Friday but said cashflow had been strong.

The maker of the Gripen fighter jet said operating profit fell to 1.20 billion Swedish crowns ($125 million) from 1.42 billion a year earlier.

That was lower than the 1.34 billion expected on average by two analysts, Refinitiv Eikon data showed.

“Demand for the company’s products and solutions remains high and the market is expected to continue to grow in the next year,” CEO Micael Johansson said.

“Stock should react positively,” analysts at Citi said in a research note. “Sales/profits (were) weaker on ‘thin’ consensus, but more important is positive cashflow of over SEK 3 billion in Q4, which will be taken well by the market”.

Saab had a positive operating cashflow of 3.06 billion Swedish crowns ($318 million), up from 2.77 billion a year earlier.

The company reiterated its long-term financial targets for annual organic growth of 5% and an operating margin of 10% per year over a business cycle.

SAAB forecast sales growth for 2020 in line with its organic growth target, adding the margin was also seen improving.

Reporting by Colm Fulton; editing by Jason Neely

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