Hi, and welcome. I'm Merten Kaplan, Head of Investor Relations at Saab. I would like to welcome all of you to our Q3 presentation. With me here in Stockholm, I have my CEO, Mikael Johansson and my CFO, Christian Loehrga. So we'll start with the presentation and as usual, follow with a Q and A.
And I would like to remind all of you to that you can dial in to the telephone conference as well as see the streaming on our website live. And during that, you can also send in your questions from the website. So with those remarks, I would like to give the word to you, Mikael.
Thank you, Maarten, and good morning, everyone, and thanks for joining us this morning. So let me just jump into straight on the numbers for the Q3 and a few sort of overview comments. I think it's a very strong quarter. Looking at the orders first, I think order intake has been great. We have been achieving important significant contracts in the markets, especially in Europe and U.
S, And I will come back to a few of those. Growth is continuing comparing to adjusted growth 6%, but looking at reported 30 2%, which is in line with our expectations. And also, we continue our trend on improving our profitability, which is really important to us to actually have sort of the finances to continue to invest in R and D. Operational cash flow is negative this Q3, but we've Before that, the variations this year looks a bit different. Our larger programs have cash flow milestone payments heavily the first half year this year, and we reiterated the cash flow to be positive this year.
And looking year to date, it's Still SEK1.8 billion positive, which is according to our plans. And if we move to the market It's as I alluded to, the attractiveness of our portfolio and our products have been really strong, especially looking at Sweden and the rest of Europe and the U. S. And examples of contracts that are really important are, of course, this Combat Management System contracts for the German Navy frigates, which is SEK 4,600,000,000 in the core area in Germany, which Shows the attractiveness and the capabilities that we have. And also an important contract, which we have been discussing for some time now that Concluded the Q3 was the 826 Submarine contract, adding capabilities to the submarines and extending the contract, which was It's really, really important to us.
We see a little bit in the marketplace that some countries have more or less sort of boosted sort of Defense Investments, many countries in Europe are increasing defense spending and also in the U. S, which is a huge market to us. While some countries in South America and in Asia have been forced to, I think, because of COVID, to defer a bit of the acquisitions, but that has been compensated a lot by the strong market activities in Europe and the U. S. So all in all, order intake on SEK 15,600,000,000 which is a big increase year on year And driven by a couple of large contracts, of course, I also want to mention that we Continue to have very high activity on the Carl Gustaf system with contracts in many parts of the world.
And we got an important contract in Poland for a complete training solution for the Polish Army with 1 center that We will run and then a few satellites also in the countries to perform training. So that it has been a very good year Quarter when it comes to market activities definitely. Looking at a few comments on the different business areas. As you know, we now reorganized Saab from 1st July. So we have 4 business areas now, which meant that IPS and to support and services.
Parts have been integrated into the other business areas and Combiotech is now reported separately. On the aeronautics side, we have, as you know, very important campaigns ongoing. So we are in exciting times In the next 6 months, I hope we will know the outcome about Finland and Canada when it comes to fighter acquisitions. We have had a very important event this in early October. I want to mention that we have inaugurated our new facility to West Lafayette, Indiana.
So we now have a full fledged facility to transfer the production of our T-7A aircraft or part of that aircraft, which is the aft part of the aircraft. And we are building that production capability as we speak. That will be an aeronautics center, and we will have a Big collaboration also with Purdue University when it comes to sensors, AI and other technologies. So this is a very important establish The civilian operations is still very weak, and we haven't really seen a return on Larger sort of production capacities or demands from our the larger aircraft manufacturers. So we have done everything we can now to find the synergies between our civilian operations and the military part of Aeronautics.
But still, of course, we have an infrastructure that is actually prepared to have larger type of production. So we still need More production in that, of course. So that has been affecting Aeronautics numbers this quarter. Also, I'd like to mention that T7 is in its industrialization phase, and that will become more profitable when we enter into the production phase, and that is also affecting the results of Aeronautics to some extent. When it comes to Dynamics, We have a very favorable market demand.
And as I mentioned on the order intake side, we've seen important contracts also during the Q3. And we are boosting our production capability in Kalsgoga, and I think we have doubled the capability in 1 year's time now, which is very, very good to see that we have that sort of scale capability. Year on year, it is a 27% growth on the Dynamics side, And they are improving their profitability in a very good way according to our expectations and plans. And that is, of course, driven by very good sort of efficiency in production and a few project completions, which have been favorable to us in that area. When it comes to surveillance, we have seen increased order intake, Not the least to the sort of alluding to the contract then in Germany, which I mentioned earlier.
And we see a strong interest also in the GlobalEye in the marketplace. And of course, we have included that in our offer in Finland. And also, as many of you have seen, Sweden has now prepared to be able to acquire the GlobalEye for Sweden, but we don't have a contract yet, but they have announced that they would like to go that direction, which is, of It's really nice to see. So that will, of course, have a good effect on continuous production on that system. Sales improvement has been driven, of course, by the Radar business, and we have An increase when it comes to EBITDA, which is shown in this slide, which is quite good, 30% 37% up actually year on year.
But we also have started now, as you know, to amortize to early investments, which is have an effect on EBIT. When it comes to Saab Kokam, we have during the quarter then received this very important Tractor on the 826, with further capability amendment to that contract, and that gives a good foundation now to Continue and increase profitability in the organization and also growth. And we also, of course, continue to work with other surface ship to activities in that area. So the mix is really good now. We have one of the most modern Shipyard's around, I would say, very digitalized, and we made all the larger investments in infrastructure and in Processes and Tools.
And the competition that organization is really at its peak now. So I look Keep on this in a favorable way, and we are continuing to improving our margins here in this area. And of course, we're continuing also to work on the larger sort of campaigns in the marketplace, especially in Netherlands, which we are in the middle of right now. So the good development in Saab Kokums. I'd like to sort of do a little bit of a deep dive into a certain area.
We talk a lot about our market our strategy when it comes to multidomestic strategy and what that means to us. And I've said earlier that this is about establishing more complete operations in countries like U. S, U. K, Australia and Germany. And this is an example of that, which is really a success story When it comes to the surveillance business, there is a portion of it.
So what we do is that we transfer some technologies from Sweden. We leverage our competence and capabilities in the American organization, and we adapt to our products to the U. S. Market. And we have been really successful on the radar side, and we will continue now on the electronic warfare side And also the air traffic management side is successful.
And some parts of the combat management systems will be applicable as well. We're not trying to sort of do a full We're not trying to sort of do a full Saab portfolio establishment, but we're trying to fill gaps and find our initiatives in the U. S. Sort of demand of capability. So it's both about collaborating with the larger defense companies in the U.
S, but also directly towards the end customers when we find our prime issues. This is absolutely state of the art technology that we have in the U. S, fully digital radar Technology, the most recent one that you can find. Our sales on this side for just the surveillance part is Around US200 $1,000,000 on a yearly basis. We've had continuously grown that during the last 10 years now.
Our complete sort of sales for the U. S, including other parts as well and also what we sell into the U. S. It's around SEK 4,000,000,000 to SEK 5,000,000,000. So this is just a portion of it.
So we have a full fledged manufacturing and engineering capability and test The capability in the U. S. Today, primarily based in Syracuse, New York State, around 500 people and growing. And we have contracts with all the branches in the U. S, the Army, the Navy, U.
S. Air Force, U. S. Marine Corps and the U. S.
Coast Guards. And I won't go into sort of specific recent wins, but I just want to mention and list them here so that you can see that we're talking about Really competent system and high end products. And there is initiatives we invest in R and D in the U. S. Today.
And of course, We want to export also using the U. S. Hub going forward. So this is one example of how we work with the multi domestic strategy. And just sort of a flavor of how many ships we are now on board when it comes to the U.
S. Navy and the U. S. Coast Guard with our adapted sensor seizure off and also the SeroSite. This is actually the big market now.
We have never sold so many seizure offs in Sweden, so U. S. Is a dominating market. And We are around 30 systems now already established, and I think the potential is probably 3x that going forward. So it's a really good business to us.
I also want to underline Our accelerating F4 'twenty comes to sustainability. And firstly, It is so important to reiterate the importance of the purpose that we are all about. I mean, we are here to protect societies and people, And that is what we do every day, and we do that in a very professional way. And this is, of course, in line with the UN Sustainable Development Goal 16 for Peace, Justice and Strong Institution. This is the foundation for sustainability.
Now the environmental part of sustainability is as important to us as a company to as any other So we worked diligently with that. And during this quarter, we have now joined the race to 0 and we're part of establishing science based targets now going forward, which will mean that we have committed to reduce our Greenhouse gas emissions by 50% until 2,030 and reach net 0 by 2,050 as an industry and a company. And already this year, we have year to date reduced our own emission from greenhouse gases with 15%. We work with this in many parts, of course. It's about our own operations, energy efficiency on our sites, our premises.
It is how we Travel, it is about how we work with these different test activities, trying to simulate rather than to do tests in real life. So it is a comprehensive package of things that we accelerate now to continue to support this race. Then we will, of course, work with our supply chain to make sure that they support us in this effort, and we will work with our end users to support them in how they use the equipments that we deliver. But this is also about innovation. There will be business opportunities connected to The demand from our customers when it comes to environmental friendly equipment and products also in this area is huge.
So this will be an integral part of our R and D investment and strategy going forward. So a few final comments from my side where the focus is going forward. And of course, I mean, the growth to us It's essential. And this is a prime objective, of course, to grow the company and also continue this The monthly domestic strategy that I talked about, that is both organically but also looking at M and A activities in key markets. We work diligently with the efficiency and productivity improvements, of course, and the new organization is giving effect on that continuously, and I think we will see more coming on that.
There are many interesting and exciting campaigns, Of course, that we are involved in. And of course, I can't avoid the fact to mention that Finland and Canada is, of course, very, very high on the agenda for us now in the final stage of those campaigns. Execution on our key programs, so essential to create the margins to get sort of the room that is needed for future technology investments. And we have also continuous ramp ups of production activities connected to ground combat because the demand in the marketplace It's very high. And as I mentioned earlier, accelerating the sustainability efforts, making that even more integral part of our business and strategy and operations going forward.
So I look favorable upon the future, and I also support, of course, the outlook that we have mentioned before that Christian and I will come back to. So with that, I will hand over to my CFO, Christian Loehge, to go through a little bit more in detail the numbers. Thank you.
Thank you, Mikael, and good morning, everyone. Welcome to this report and a Stable and strong report that I would say is a good proof point that we are on our way to deliver on our guidance, and I will dip in a little bit to the details with you now before the Q and A. We ended this quarter with an increase in the order backlog of SEK 105 SEK 1,000,000,000 now and it is of the back of the SEK 15,600,000,000 that we received this quarter, as you all know. And looking a little bit of this 54% up And looking at a year to date number instead, we are at 31.4%, and that is 30% up or 29% up compared to last year. So that gives us an orders to sales ratio of 1.15, which means that we are driving orders ahead of sales continuously.
And the backlog now for the last quarter is 10.3%, the planned sales that we have in our backlog. And with that alone, you get a floor on the sales growth. So we have a growth sort of already there. And of course, we will receive some more Orders in quarter 4 that we will also have in sales and that will move us upwards to the sales target for this year of 10%. And even more important then looking forward, we have now an increase also this year as we had last year in the orders for the coming year.
And the coming year orders now are SEK 30,800,000,000 and that is up 17.5% compared to last year at the same period. That means that we also now have a good fundament for our future growth, which we believe in this company should be around 5% over along the period. If we deep into the numbers, and this quarter is a little bit Difficult for many aspects to look at, but it's not because of this quarter. It's actually because of last year, the same quarter. This year, I want to remind us, we haven't made any adjustments on our EBIT or sales, and we have The same reported as adjusted numbers, if you put it that way.
But last year, we had an impact and we had to take an impact from primarily COVID, and that has a substantial effect on the numbers for quarter 3 last year. It was actually as much as SEK 1,500,000,000 on sales, SEK 1,600,000,000 on gross margin. And then looking at gross margin here and gross income, the SEK 5,800,000,000 And 21.3% in gross margin is still a slight increase if you adjust last year. So we are moving steadily up in gross margin, which is not only fun and happy to see that, but it's necessary. This is part of our important journey of improving our profitability to work with both gross margin and the OpEx, and we see a continuous slow But steady and stubborn improvement in the gross margin, and that is my main message on that.
But that said then, the main effect on The gross income and the EBIT comes from also the sales growth. So we have a slight improvement in efficiency, but also get the juice out of our growth in our profitability journey. And that means we end up on a 6.7% EBIT margin, which is in line with last year adjusted and ahead of, of course, the reported number last year. The final comment I want to make here is on the taxes and net income. Last year, we had an impact from a sale of Raikon, which made the tax effect different, but now we're back to the normal tax rate of 22%.
So this year, again, is normal compared to last year when it comes to that item. If we then look into the sales For business area, and Mikael has been into this. I'm not going to dwell on them too much. But looking at Aeronautics, it is a decline if we adjust for the effect we had last year on the project accounting. And that is primarily driven by the Civil Aviation Operations, which is substantially down year on year and is on a very low level, and it will probably take some time to come back.
And until we have more favorable comparable numbers, we will have this difference from the civil aviation operations. And as the effect came early 2020 and then came down during the year, we are soon into those More comparison numbers that are equal to today when it comes to pace in the civil aviation operations. On Dynamics, we have said that we have a more even Quarters in the year and that we can see here as well. We had a 54% increase in the first half, and now we have actually a flat quarter. The year itself will be a solid good year for Dynamics, but we will have much more even quarters.
And that is good. It's good for how we drive efficiency and it's good for how we drive working capital. And it will then help us to be better going forward. And next year, we will see a better like for like numbers when it comes to the growth numbers then this year. So the dynamics is actually in a growth path, even though it doesn't look like that on the quarter.
And then in surveillance, we have a good Radar Solutions quarter compared to last year. And remembering last year, we had actually a strong GlobalEye Effecting quarter 4, but much less in quarter 3, and therefore, we have a sort of opposite effect this year. So nothing dramatic per se. And as you know, in our business, in the defense business, it's very difficult to look at the single quarter and make a conclusion. And therefore, we look at the rolling 12 months and see how we develop.
And if we look at this, we continue now to grow the both rolling 12 month sales and the EBITDA. And now we're actually back on the same number as we were in quarter 4 2019 when it comes to the profitability level of EBITDA. And this is clearly then a result of the COVID impact we have had meanwhile and primarily then driven by the civil aviation to market, which has given us a big turn on the profitability during this period. So That said, we have done cost measures on the civil side, and that has had some impact on The effect from the negatives on the civil aviation. However, the biggest change we have here is the improvement we're doing in the defense industry and where we're actually improving the profitability as we go.
And we continue stubbornly to work with efficiency and both on the OpEx side and the gross margin side. And therefore, we also expect this line to continue upwards over time. And we are taking measures still, but they are within the numbers we have presented. And so far, we have taken SEK111,000,000 on efficiency measures or rightsizing to the right sizing measures this year in both Dynamics, Aeronautics and Surveillance. EBIT and margins per business area.
Here, we still again have these effects from last year, primarily then on Aeronautics, we can see that we have to take we had to take a large write down on or adjustment on the project of Gripen, And that was COVID related, and that had an impact. That said, if we adjust for that, we are down on the EBIT margin for this year. And the prime reason is the impact we have from T7, but also from rightsizing measures. These the T7 program, as Mikael said, is a program that will be negative until we face ourselves into to production in West Lafayette. That is also a little bit uneven between the quarters, and this is a more negative quarter when it comes to T7 then maybe the others, but it will be a negative impact on Aeronautics until the day, which will come soon, we are in to West Lafayette with our production.
The strong improvement in Dynamics is both an effect of the more even production and sales, and it also a very good effect from some project completion we had in primarily Ground And we see positive on the profitability going forward, as I've said before, on Dynamics, but we will also like sales to be more even over the years as compared to whatever it had been before. High margins in Kokom's, slowly taking step by step in our extremely Modern facility, good efficiency work, and it's still on too low levels, but we are taking the steps in a good way that we need to take. A bit on CombiTech. CombiTech is now taken out from the business areas, and it is an independent and It is an independent consulting company with 2,100 employees. It is an asset for Saab both from competence, employee and customer experience aspect.
And it also helps financially, as you can see on the numbers. It is important to understand that this is a consulting company that both works within the defense industry but also in the to other parts of the industry and public sector. And it is really strong in cybersecurity, and we believe we are the number one Cybersecurity Services in the Nordics with over 270 consultants of these 2,100 working there. We have a growth and the growth primarily is coming right now from defense and public sector, but also from many other sectors. We're actually growing in all sectors, but primarily indeed.
And that leads to then a growth of 7.5% year to date and a margin of 9%. Cash flow then. I said when we were standing here in quarter 2 that we had received more of our milestone payments than we expected in the first to Taf. And therefore, the second half would be weaker and even negative. And this is exactly what came out now, and this is exactly what we expected.
We have a SEK1.2 billion operational cash flow in quarter 2. That is quarter 3, that is negative, which is no surprise And nothing we are worried about. This is exactly what we expected. And we still believe and we have a good grip of the full year guidance of a profitable cash flow. And quarter 4 has a tendency to be more positive than negative, and we look forward to deliver something to you by year end.
And as I said in the previous quarter call, I'm not going to give a statement on exact number for the year, but just say it will be a positive cash flow. We had a temporary inventory buildup in Dynamics and Surveillance, nothing strange with that. It is a type of industry where we actually build up then the inventory and prepare for Shipment of larger shipments of Carl Gustaf or ammunition or something else. And then when it ships out, it has a very positive then effect on both sales and the inventory. So nothing strange in that.
The balance sheet remains strong, will give us flexibility. We are now at the adjusted net debt to EBITDA of 0.64% compared to 1% at the end of the year of 2020. We have updated our credit facilities revolving credit facilities during this quarter, and we now have a SEK 6,000,000,000 package where SEK 2,000,000,000 is with maturity in 2023 and SEK 4,000,000,000 in 2026. And the SEK 2,000,000,000 is also having a little bit more Flexibility for Saab to use as it needs if something with good opportunity would show up. Finally, our outlook for this year, sales growth to be around 10%.
That means and implies a negative sales in growth in quarter 4, and that's in line with what we have expected during the year. The EBIT margin should be in line with what was adjusted EBIT margin for 2020, 7.4%, and we are on the path to deliver that with good confidence, and we have an operational cash flow that will be positive for this year, the 2nd year in a row then with a positive to stable cash flow. That's my presentation. Over to you, Maarten. Thank you very much.
So now we are ready to take your questions from our viewers and listeners
on the telephone conference. And before I hand over the voice to the moderator, I would like to remind everybody on the line to please keep your questions to 1 or 2 maximum so everybody gets a chance to ask their questions, and you can always come back to the line to ask more. And also for the viewers on the website, you can continue sending your questions to our website, and we will answer those questions as well. So with that, moderator, could you open the line, please?
Thank you. Yes, sure. You. You. Jon Andersen, Danske Bank.
Please go ahead. Your line is now open.
Yes. Hi. Jon Andersen, Danske Bank. I have two questions, if I may. First one on T7 and If you can elaborate a little bit about your business case there, how much you have invested and if you can touch upon The order size because I guess you are taking a lot of investments.
So it would be interesting to get a little A bit more familiar on your sales and earnings expectations for that project. And second question is you touched upon it, but if you perhaps can repeat it or clarify it, what You see on the civil side in terms of orders and when that situation is more normal for your out of your perspective. Thank you.
So when it comes to T7 then, as you know, we are in the Industrialization phase now and all the investments that we have taken, we've taken sort of to the bottom line. So we don't build any liabilities in the balance sheet. I think that's important to notice. And this is a phase where the margin is low, as we've said. Then the frame contract that we can look upon now, that was 351 aircrafts.
And this frame Contracts which we haven't really taken into our books. We have only taken the EMD contract, to industrialization phase contract into our books. So what we're talking about now is, of course, the expectations to get into first the low rate initial production phase and then the full rate production phase. And that we are now preparing our factory to do during next year in West Lafayette. This is all about also the Congress passing an important in the U.
S. Called Milestone C when they released the money for the serial production. And that milestone is being a bit debated, but Boeing and Saab as partners continuing to push to have that milestone completed during the autumn of 2022. So that's sort of the rough time schedule we're talking about. I mean I won't dwell and I can only say that The overall business case looking at this 351 and of course, the expectations to many more aircrafts to be produced over time, The Air Force will need more.
The U. S. Navy will probably need aircrafts and there is expectations in the international market as well. And we're talking many more than 351 aircrafts. That business case is a solid business case.
I want to sort of pinpoint a number of margin, But it supports our long term goals. That is as far as I can go. On the civilian side, I'm aware of that sort of the larger aircraft manufacturers are now trying to go back to Normal more normal situation when it comes to the production rates, but it hasn't really transferred down to us as a supplier to them, I must admit. So we're still waiting to see what kind of rates they're expecting from us. And it's hard to say.
They sort of They give us indications on a half year on a yearly basis, and we haven't gotten any new one. So we are in this very low level now, but with a setup and an infrastructure that needs more. Now we've taken so many cost mitigation activities into place to use the competence in the Aerostructure side into the aeronautics, the military organization, of course. They are involved in the T7, in the Gripen programs, but still we have this infrastructure that needs to be filled. It is difficult.
If I look at what they say, I hope we will see a better sort of slowly going in the right direction from next year onwards, but that is a little bit speculating because we haven't received really any sort of new directions on the low levels on where we are today. That is a little bit of elaboration, but maybe not giving you the exact numbers that you wanted, but that we don't guide on those numbers, as you know.
Yes. Thank you. And the indications or from the manufacturers on On the civil side, that could happen, I guess, anytime then. Is that correct?
Yes, anytime. I guess they are relooking at The supply chain now and when they're going today to sort of ask them to sort of boost a bit or ramp up a bit. But Normally, we get sort of a discussion with them on a yearly basis, I would say. That's sort of the normal frequency. If there will be something in between, I really don't know.
But we will, of course, talk to them. I mean that we do, but I can't say when they give us new sort of rates.
And on T7, you we should expect low margins, although maybe Q3 was a little bit of A tough situation, but we should expect low margin throughout 2022 then?
As I said, Until we move into the production phase, we will sort of have the lower margin project, yes. That's correct.
Great. Thank you.
Thank you, Bjorn.
The next question is from Ben Heelan, Bank of America. Please go ahead. Your line is now.
Yes. Good morning, everyone. I hope everyone is well. Can I ask one on cash flow? You highlighted in the prepared remarks That Q4 is typically positive.
Should we be expecting a positive cash flow? And if not, can you highlight what Some of the moving pieces are particularly for Q4. I think you mentioned you saw a bit of an inventory build in Q3. Is that going to unwind in Q4? Are there any Specific prepayments that you can think of or payable and ones that we need to be aware of.
That will be the first one. And then secondly, you made some comments in the Presentation as well about supply chain. It doesn't sound like you're seeing anything particularly worrying in your supply chain. But If you could talk a little bit about where you see the pressure points and the risks? And then is inflation something that you're currently seeing and worried about?
Thank you.
So maybe I can start on the supply chain question. I think It's a couple of components in that. I mean, as you know, we have rather long term commitments to many customers And those are, of course, connected to contracts with our supply chain as well. So they are locked in when it comes to price levels and all that. And then we are not just in time type of factory or organization or business.
So we have a bit more in stock than a normal just in time business like car manufacturer or truck manufacturer, I would say. So we are not we have a little bit more of a resilience in this. But of course, we look with concern on lead times and price inflation on components and material. And we work that into, of course, our future contracts. We make sure that we're not by losing margin on those.
So 2 components of this. We're quite resilient on what we have and looking at the stock and the contracts we have with the supply chain, but we make sure that we can manage the lead times and the Potential price inflations that we see going forward in our new contracts. So that's sort of what we can say about the supply chain. It is Something we will work diligently with, of course, as anyone else. Christian, do you want to take the cash flow?
And we've said before, I mean, we don't guide on specific quarters when it comes to cash flow. The first half year was really good when it came to milestones, Not as many payment milestones the second half year, but some, of course. We had some temporary buildup of Working capital in Dynamics and Surveillance and hopefully, we will hopefully, we should be able to deliver some of that to the customers during the second half year. And that would lead to a good positive cash flow. That as far as I can go on that, I don't want know whether you want to elaborate more.
Yes. Let me just Give 2 comments. One is just on the inflation, of course, back to that. There will be inflation probably in most likely in the areas where we also buy to Playa going forward in the future, but that will also affect all our competitors in the market. And in most contracts, we have in quite a good position when it comes to the need we have within those contracts.
So that's one comment. But on the cash flow, let me leave you with 2 comments. And of course, I deliberately said something before, But there's 2 factors to add to Michael's comment. One is that we have volatile quarters in the industry we are in. And in quarter 2, we had payments earlier on big milestone than we expected.
And the volatility is always important to remember and makes it very tricky to guide on a specific detailed number for 1 single quarter and easier to then maybe give a guidance over time. Secondly, the I said that quarter 4 is typically more positive than negative in the past, and that is, of course, To just help you to guide you that, that is the case. So you remember that when you look and try to figure out how to and work with the guidance we have given within what Mikael said.
Okay. Very clear. Thank you.
Thank you. Can we have the next question?
Sure. It is from Erik Gopren,
Thank you. I have two questions. The first one is and I appreciate you won't give any guidance for 2022, but if you could help us a bit with the sort of key margin drivers, both Negative and positive as we move into next year. And then the second question, if you can give an update On the project estimate adjustments and the provisions you did a year ago, I mean, Has it developed down those lines? Or are there any differences or any reason to return to that deal in a positive or negative way?
Thank you.
Well, I mean, on the guidance for 2022, I mean, we will come back to that, of course. But what is important And to note this is, of course, that we continue to support our order backlog with good contracts, And that will support the growth and the trend of improving the margin, and I feel confident in that. That's Really important to say. Then when it comes to the adjustments we made last year, I think That was the absolute right thing to do. It is something that we have to continuously work with, but those provisions that we Has made it possible to stabilize the project in a much better way to be The mitigation actions to make sure that we continue to deliver the margin then on a slightly lower level after the adjustment going forward.
So it is a stable situation now after what we did in Q3 last year, and It was a proactive and a good decision to take that measure. Do you want to elaborate some more on the 22?
Or
No, just remind us, I mean, we have said that scale up in certain areas, T7, we talked about Gripen and others, will be a driver Stability, operational efficiency, of course, something we will stubbornly continue to work with, which gives effects now and we'll give slowly give more and more effect. And then we have the portfolio and certain areas like the Civil Aviation and others that we need to handle separately, which also issues to our income statement that will have to be worked overtime. Those are 3 main drivers of our profitability.
Thank you.
Thank you. There are no further questions at this time.
Great. We have received a couple of questions from our viewers on the web. I will pick one here from Craig Hoyl from Flight International. And Craig wonders about the potential global eye to Sweden, and he would like to know about the timing of this and when we expect to do a contract and the number of globalized they are interested in.
Well, I think it's very positive, of course, to see that Sweden has not the Swedish government to Acquired GlobalEye. And since we have sort of a finalized product that is in production, A contract could be quite speedious when it comes to establish that contract, but it depends on the customer, of course, when they want and can to contract us. But we are, of course, prepared to do that very quickly when they have the decision, which I really don't know when that will be taken, But that's a governmental decision. But for Sweden to go that way, and I don't know the numbers really, but I mean looking at sort of In Sweden and Finland, I guess it will be similar. We have offered sort of to globalize in the Finnish package together with the 64 Griphants, Which is a reasonable number to sort of cover that airspace and that land domain.
So I don't know. This we have to come back with it, but it's a very, very positive development, of course.
That's good. Perfect. And we have another question from one of our analysts In London, Sasz Toucha from Agency Partners. And Sasz wonders about the further capability to contract for the A26 Submarine and would like to know a bit more about the workload and the sales and When that contract and workload will come to the come to our sales rate, is it still is it being fed in at present? Or How does that activity impact the financials of Kockums?
Well, first of all, the contract is It's really important then in terms of sort of finalizing the requirements on the capability for those submarines, and I can't dwell too much on on those capabilities because it's sensitive. But the contract as such will come into play immediately in how we look upon sort of The scope of the contract and profitability of the contract and that is driving the improvement in Saab Kokam's profitability, definitely. So it was really important from that perspective. So that happens as of now and going forward.
Great. I would like to ask, do we have more questions from the line on the telephone?
Yes. We just received another question from Mikael Lazien. Your line is now open. Please go ahead.
Hi. Yes. Just one quick question. If you can say something about the CapEx or investments that you expect to have Going forward, we noted that capitalized development declined year on year now in Q3. And you also mentioned that Kockums is well invested.
So In total, how should we think about the CapEx?
Well, we have level that has gone down primarily based on the capitalized development cost. I have to say that over time, a company like Saab We'll have to invest both in new production facilities and in new technology and R and D. So This will not be a sliding path downwards to something very, very low in the end because then we probably will not Be a strong company in 5 to 10 years. So then it may be going a little bit up and down during the years and depending on what kind of activities we find Interesting, right now, we have had, over the past periods, both a buildup in a very, very modern plant, both in Kokom's and but also in T7 in West Lafayette. And we hope we will have more kind of exciting themes going forward in Saab, and we will continue to, in all core areas, have to develop new IP, and that will cost more.
So the short answer is you shouldn't see this as a trend, but you should See this as it may go up and down a bit between years as we have different phases in the IP development.
In total, thanks. That was a very good clarity there. But in total, could it be stable from these levels? And you can Capitalize the scale on this as a percent of sales or
I think you can always capture No, We'll be able to capitalize on sales, but it will still go up as revenue goes up, and we get more Our multi domestic strategy also involves that we have more R and D locally, both funded by customer, but also funded by ourselves. And that means there will be some limitation to scale in that sense, but scale will give effect, yes, over time.
Thank you.
Thank you, Mikael.
Thank you. There are no further questions.
Okay. Thank you. Then I think we can conclude the Q and A and this presentation. Any final remarks from you, Mikael?
Thank you for joining. And I think I just want to reiterate that we're going absolutely in the right direction, and we are an attractive supplier of equipment in the marketplace, which is extremely exciting. And we have a Few months ahead of us that are really exciting when it comes to the big campaigns also. So looking forward to see you after the Q4 this year.
Thank you. Thank you, Christoph.
Thank you.