By Niklas Pollard
STOCKHOLM (Reuters) -Swedish defence material maker Saab reported a bigger-than-expected rise in second-quarter operating earnings on Friday and raised its guidance to project even stronger sales this year on the back of soaring military spending.
The maker of the Gripen fighter jet in a statement said operating earnings rose to 1.98 billion Swedish crowns ($204 million) from 1.33 billion a year ago, beating a mean forecast of 1.71 billion seen in a LSEG compilation of analyst forecasts.
Saab, which makes military equipment ranging from missiles and advanced electronics to submarines, said it expected like-for-like sales to grow 16-20% this year, raising its outlook from anticipated growth of 12-16%.
The company, which grew its sales 22% organically in the first half of the year, repeated it expected operating profit to rise even faster than sales.
The group is scaling up production amid soaring military spending in Europe, home to well over half of its revenues, in the wake of Russia's invasion of Ukraine and signs the region will need to shoulder more responsibility for its own defence.
The military boom, further underlined by NATO alliance members committing to a big rise in defence spending demanded by U.S. President Donald Trump, has lifted stocks of military equipment with Saab's more than doubling this year alone.
"We are continuing to invest in capacity increases and are proactively working in close cooperation with our suppliers to secure future deliveries," Saab CEO Micael Johansson said in a statement.
Saab, which also sells civilian products to customers such as Airbus and Boeing, said its backlog of orders rose to 198 billion crowns by the end of the quarter from 183 billion a year ago.
($1 = 9.7292 Swedish crowns)
(Reporting by Niklas Pollard, editing by Essi Lehto)
