Hi, welcome. I'm Merton Kaplan, Head of Investor Relations at Saab. I would like to welcome all of you to our third-quarter presentation. With me here in Stockholm, I have my CEO, Micael Johansson, and my CFO, Christian Luiga. We'll start with a presentation and, as usual, follow with a Q&A. I would like to remind all of you too that you can dial in to the telephone conference as well as see the streaming on our website live. During that, you can also send in your questions from the website. With those remarks, I would like to give the word to you, Micael.
Thank you, Merton. Good morning, everyone, and thanks for joining us this morning. Let me just jump into straight on the numbers for this third quarter and a few 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, 32%, which is in line with our expectations. Also, we continue our trend on improving our profitability, which is really important to us to actually have the finances to continue to invest in R&D. Operational cash flow is a negative this third quarter, but we've said 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. We reiterate the cash flow to be positive this year, and looking year to date, it's still SEK 1.8 billion + which is according to our plans. If we move to the market highlights, 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. Examples of contracts that are really important are, of course, this combat management system contracts for the German Navy frigates, which is SEK 4.6 billion in a core area in Germany, which shows the attractiveness and the capabilities that we have.
Also an important contract, which we have been discussing for some time now, that we concluded the third quarter was the A26 submarine contract, adding capabilities to the submarines and extending the contract, which was really, really important to us. We see a little bit in the marketplace that some countries have more or less boosted 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. All in all, order intake on SEK 15.6 billion, which is a big increase year-over-year, driven by a couple of large contracts, of course.
I also want to mention that we continue to have a 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 one center that we will run and then a few satellites also in the countries to perform training. It has been a very good quarter when it comes to market activities, definitely. Looking a few comments on the different business areas.
You know, we now reorganized from 1st of July, so we have four business areas now, which meant that IPS and supporting services parts have been integrated into the other business areas, and Combitech is now reported separately. On the Aeronautics side, we have, you know, very important campaigns ongoing, we are in exciting times. In the next six 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 in early October. I want to mention that we have inaugurated our new facility in West Lafayette, Indiana.
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. 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. This is a very important establishment in the U.S. The civilian operations is still very weak, and we haven't really seen a return on larger production capacity. Demands from the larger aircraft manufacturers.
We have done everything we can now to find the synergies between our civilian operations and the military part of Aeronautics. Still, of course, we have an infrastructure that is actually prepare to have larger type of production. We still need more production in that, of course. That has been affecting Aeronautics numbers this quarter. Also, I'd like to mention that T-7 is in its industrialization phase, and that will become more profitable when we enter into the production phase. 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 the important contracts also during the third quarter.
We are boosting our production capability in Karlskoga, and I think we have doubled the capability in one year's time now, which is 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. That is, of course, driven by very good 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 alluding to the contract done in Germany, which I mentioned earlier. We see a strong interest also in the GlobalEye in the marketplace.
Of course, we have included that in our offer in Finland. Also, as many of you have seen, Sweden has now prepared to be able to acquire the GlobalEye for Sweden. We don't have a contract yet, but they have announced that they would like to go that direction, which is, of course, really nice to see. 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. 37% up actually year-on-year. We also have started now, as you know, to amortize early investments, which have an effect on EBIT.
When it comes to Saab Kockums, we have, during the quarter, received this very important contract on the A26 with further capability amendment to that contract, that gives a good foundation now to continue and increase profitability in the organization and also growth. We also, of course, continue to work with other surface ship activities in that area. The mix is really good now. We have one of the most modern shipyards around, I would say, very digitalized, and we made all the larger investments in infrastructure and in processes and tools. The competence in that organization is really at its peak now. I look upon this in a favorable way, and we are continuing to improving our margins here in this area.
Of course, we continue also to work on the larger sort of campaigns in the marketplace, especially in Netherlands, which we are in the middle of right now. The good development in Saab Kockums. 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 multi-domestic strategy and what that means to us. I've said earlier that this is about establishing more complete operations in countries like U.S., U.K., Australia, and Germany.
This is an example of that, which is really a success story when it comes to the Surveillance business areas portion of it. What we do is that we transfer some technologies from Sweden, we leverage our competence and capabilities in the American organization, and we adapt our products to the U.S. market. We have been really successful on the radar side, we will continue now on the electronic warfare side, and also the air traffic management side is successful. Some parts of the combat management systems will be applicable as well.
We're not trying to sort of do a full Saab portfolio establishment, but we're trying to fill gaps and find our niches in the U.S. demand of capability. 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 niches. 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 $200 million on a yearly basis. We have 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. is around SEK 4 billion-SEK 5 billion. This is just a portion of it. We have a full-fledged manufacturing and engineering capability and test capability in the U.S. today, primarily based in Syracuse, New York State, around 500 people and growing. We have contracts with all the branches in the U.S., the Army, the Navy, US Air Force, US Marine Corps, and the US Coast Guard.
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. There is initiatives we invest in R&D in the U.S. today. Of course, we want to export also using the U.S. hub going forward. This is one example of how we work with the multi-domestic strategy.
Just sort of a flavor of how many ships we are now on board when it comes to the US Navy and the US Coast Guard with our adapted sensor Sea Giraffe and also the CEROS sight . This is actually the bigger market now. We have never sold so many Sea Giraffes in Sweden, so U.S. is the dominating market. We are around 30 systems now already established, and I think the potential is probably three times that going forward. It's a really good business to us. I also want to underline our accelerating efforts when it comes to sustainability. Firstly, it is so important to reiterate the importance of the purpose that we are all about.
We are here to protect societies and people. That is what we do every day. We do that in a very professional way. 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, as any other industry. We work diligently with that. During this quarter, we have now joined the Race to Zero, 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 2030 and reach net zero by 2050 as an industry and a company. Already this year, we have year to date reduced our own emission from greenhouse gases with 50%.
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. It is a comprehensive package of things that we accelerate now to continue to support this race. 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. This is also about innovation. There will be business opportunities connected to this. The demand from our customers when it comes to environmental friendly equipment and products also in this area is huge.
This will be an integral part of our R&D investment and strategy going forward. A few final comments from my side where the focus is going forward. Of course, the growth to us is essential, and this is a prime objective, of course, to grow the company and also continue this multi-domestic strategy that I talked about. That is both organically but also looking at M&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.
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 investment. We have also continuous ramp-ups of production activities connected to ground combat because the demand in the marketplace is very high.
As I mentioned earlier, accelerating the sustainability efforts, making that even more integral part of our business and strategy and operations going forward. I look favorably upon the future, and I also support, of course, the outlook that we have mentioned before that Christian now will come back to. With that, I will hand over to my CFO, Christian Luiga, to go through a little bit more in detail the numbers. Thank you.
Thank you, Micael. Good morning, everyone. Welcome to this report, a stable and a strong report that I would say is a good proof point that we are on our way to deliver on our guidance. I will deep in a little bit to the details with you now before the Q&A. We ended this quarter with a increase in the order backlog of SEK 105 billion now. It is of the back of the SEK 15.6 billion that we received this quarter, as you all know. Looking a little bit of this 54% up, looking at a year-to-date number instead, we are at SEK 31.4 billion, that is 30% up or 29% up compared to last year. That gives us an orders to sales ratio of 1.15%, which means that we are driving orders ahead of sales continuously.
The backlog now for the last quarter is SEK 10.3 billion, the planned sales that we have in our backlog. With that alone, you get a floor on the sales growth. We have a growth sort of already there. Of course, we will receive some more orders in quarter four that we will also have in sales, and that will move us upwards to the sales target for this year of 10%. Even more important than looking forward, we have now an increase also this year, as we had last year, in the orders for the coming year. The coming year orders now are SEK 30.8 billion, 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 a longer period. If we deep into the numbers, and this quarter is a little bit difficult from 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.
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 three last year. It was actually as much as SEK 1.5 billion on sales, SEK 1.6 billion on gross margin. Looking at gross margin here and gross income, the SEK 5.8 billion and a 21.3% in gross margin is still a slight increase if you adjust last year. We are moving steadily up in gross margin, which is not only fun and happy to see that, but it is necessary. This is part of our important journey of improving our profitability to work with both gross margin and the OpEx.
We see a continuous slow but steady and stubborn improvement in the gross margin. That is my main message on that. That said, the main effect on the gross income and the EBIT comes from also the sales growth. We have a slight improvement in efficiency, but also get the juice out of our growth in our profitability journey. That means we end up on a 6.7% EBIT margin, which is in line with last year adjusted, and ahead 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 Vricon, which made the tax effect different. Now we're back to the normal tax rate of 22%. This year, again, is normal compared to last year when it comes to that item. If we then look into the sales per business area, and Micael has been into this, I'm not going to dwell on them too much. Looking at Aeronautics, it is a decline if we adjust for the effect we had last year on the project accounting. That is primarily driven by the civil aviation operations, which is substantially down year-on-year and is on a very low level. It will probably take some time to come back. Until we have more favorable comparable numbers, we will have this difference from the civil aviation operations.
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, that we can see here as well. We had a 54% increase in the first half, now we have actually a flat quarter. The year itself will be a solid good year for Dynamics, we will have much more even quarters, that is good. It good for how we drive efficiency, it's good for how we drive working capital, it will then help us to be better going forward. Next year we will see a better like-for-like numbers when it comes to the growth numbers than this year.
The Dynamics is actually in a growth path, even though it doesn't look like that on the quarter. In Surveillance, we have a good radar solutions quarter compared to last year. Remembering last year, we had actually a strong GlobalEye effect in quarter four, but much less in quarter three, and therefore we have a sort of opposite effect this year. Nothing dramatic per se. As you know, in our business, in the defense business, it's very difficult to look at the single quarter and make a conclusion. Therefore, we look at the rolling 12 months and see how we develop. If we look at this, we continue now to grow the both rolling 12-month sales and the EBITDA.
Now we're actually back on the same number as we were in quarter four 2019 when it comes to the profitability level of EBITDA. This is clearly then a result of the COVID impact we have had meanwhile, and primarily then driven by the civil aviation market, which has given us a big turn on the profitability during this period. 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, where we're actually improving the profitability as we go. We continue stubbornly to work with efficiency, both on the OpEx side and the gross margin side. Therefore, we also expect this line to continue upwards over time.
We are taking measures still, but they are within the numbers we have presented. So far, we have taken SEK 111 million on efficiency measures or rightsizing measures this year in both Dynamics, Aeronautics, and Surveillance. EBIT and margins per business area. We still, again, have these effects from last year, primarily then on Aeronautics. We can see that we had to take a large write-down or adjustment on the project of Gripen. 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. The prime reason is the impact we have from T-7, but also from rightsizing measures. The T-7 program, as Micael said, is a program that will be negative until we phase ourselves into the production in West Lafayette.
That is also a little bit uneven between the quarters. This is a more negative quarter when it comes to T-7 than maybe the others. It will be a negative impact on Aeronautics until the day, which will come soon, we are in 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 combat. We see positive on the profitability going forward, as I've said before on Dynamics, but it will also, like sales, be more even over the years, as compared to what it had been before. High margins in Kockums, 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 a independent consulting company with 2,100 employees. It is an asset for Saab, both from competence, employee, and customer experience aspect. It also helps us 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 other parts of the industry and public sector. 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. That leads to then a growth of 7.5% year to date and a margin of 9%. Cash flow. I said when we were standing here in quarter two that we had received more of our milestone payments than we expected in the first half, and therefore, the second half would be weaker and even negative. This is exactly what came out now, and this is exactly what we expected. We have a SEK 1.2 billion operational cash flow in quarter three that is negative, which is no surprise and nothing we are worried about. This is exactly what we expected.
We still believe, and we have a good grip of the full year guidance of a profitable cash flow, and q uarter four has a tendency to be more positive than negative, and we look forward to deliver something to you by year-end. 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. Then when it ships out, it has a very positive then effect on both sales and the inventory. Nothing strange in that.
The balance sheet remains strong, will give us flexibility. We are now at an adjusted net debt EBITDA of 0.64%, and 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 billion package where SEK 2 billion is with maturity in 2023 and SEK 4 billion in 2026. The SEK 2 billion is also having a little bit more flexibility for Saab to use as it needs if something with good opportunity would show up.
Our outlook for this year. Sales growth to be around 10%. That means and implies a negative sales growth in quarter four, 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 stable cash flow. That's my presentation. Over to you, Merton.
Thank you very much. Now we are ready to take your questions for our viewers and listeners on the telephone conference. Before I hand over the voice to the moderator, I would like to remind everybody on the line to please keep your questions to one or two maximum so everybody gets a chance to ask their questions, and you can always come back to the line to ask more. Also for you viewers on the website, you can continue sending your questions to our website, and we will answer those questions as well. With that, moderator, could you open the line, please?
Thank you. Yes, sure. So, if you wish to ask a question why the telephone conference platform, please press zero and one on your telephone keypad. If you wish to withdraw your question you may do so by pressing zero and two to cancel. There will be a brief part while questions are being registered. We've received the first question. It is from Björn Enarson, Danske Bank.
Yes. Hi. Björn Enarson, Danske Bank. I have two questions, if I may. First one on T-7, 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. I guess you are taking a lot of investments, so it would be interesting to get a little bit more familiar on your sales and earnings expectations for that project. 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 out of your perspective. Thank you.
When it comes to T-7, 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. We don't build any liabilities in the balance sheet. I think that's important to notice. This is a phase where the margin is low, as we've said. The frame contract that we can look upon now, that was 351 aircrafts, and this frame contract, which we haven't really taken into our books, we have only taken the EMD contract, the industrialization phase contract into our books. 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. 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 milestone in the U.S. called Milestone C, when they release the money for the serial production. That milestone is being a bit debated, but Boeing and Saab as partners, continue to push to have that milestone completed during the autumn of 2022. 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 these 351 and, of course, the expectations to many more aircraft to be produced over time. The Air Force will need more, the U.S. Navy will probably need aircraft, and there is expectations in the international market as well. We're talking many more than 351 aircrafts.
That business case is a solid business case, I won't sort of pinpoint a number and 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 a 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. We're still waiting to see what kind of rates they're expecting from us, and it's hard to say. They give us indications on a half year, on a yearly basis, and we haven't gotten any new ones. We are on this very low level now, but with a setup and an infrastructure that needs more.
We've taken so many cost mitigation activities into place to use the competence in the aerostructure side into the Aeronautics, military organization, of course. They are involved in the T-7, in the Gripen programs. 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 and onwards. 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 we don't guide on those numbers, as you know.
Yeah, I know. Thank you. The indications from the manufacturers on the civil side, they could happen, I guess, any time then. Is that correct?
Yeah, any time, I guess they are re-looking at the supply chain now and when they're going to dare to ask them to boost a bit or ramp up a bit. Normally we get a discussion with them on a yearly basis, I would say. That's the normal frequency. If there will be something in between, I really don't know. We will, of course, talk to them. That we do, but I can't say when they give us new rates.
On T-7, we should expect low margins, although maybe Q3 was a little bit of a tougher situation. We should expect low margins throughout 2022 then?
As I said, until we move into the production phase.
Yeah
we will have the lower margin project. Yes. That's correct.
Great. Thank you.
Thank you, Björn.
The next question is from Ben Heelan, Bank of America. Please go ahead, your line is open.
Yes, morning, everyone. 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? 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 on ones that we need to be aware of? That would be the first one. 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.
Maybe I can start on the supply chain question. I think it's a couple components in that. 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. They are locked in when it comes to price levels and all that. We are not a just-in-time type of factory or organization or business, we have a bit more in stock than a normal just-in-time business, like a car manufacturer or truck manufacturer, I would say. We have a little bit more of a resilience in this, of course, we look with concern on lead times and price inflation on components and material. We work that into, of course, our future contracts. We make sure that we're not affected by losing margin on those.
There are two 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. That's 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? We've said before, 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 should be able to deliver some of that to the customers during the second half year, and that will lead to a good positive cash flow. That is as far as I can go on that. I don't know whether you want to elaborate more, Christian.
Yeah, let me just give two comments. One is just on the inflation, of course, back to that. There will be inflation probably in the most likely in the areas where we also buy supply going forward in the future, but that will also affect all our competitors in the market. In most contracts, we have a quite good position when it comes to the need we have within those contracts. That's one comment. On the cash flow, let me leave you with two comments, and of course, I deliberately said something before, there's two factors to add to Micael's comment. One is that we have volatile quarters in the industry we are in, and in quarter two , we had payments earlier on big milestone than we expected.
The volatility is of always important to remember and makes it very tricky to guide on a specific detailed number for one single quarter, and easier to then maybe give a guidance over time. Secondly, I said that quarter four is typically more positive than negative in the past, and that is, of course, to just help you to guide you that this is the case. You remember that when you look and try to figure out how to work with the guidance we've given within what Micael said.
Okay. Very clear. Thank you.
Thank you. Can we have the next question?
Sure. It is from Erik Golrang, SEB. Please go ahead. Your line is now open.
Thank you. I have two questions. The first one is, I appreciate you won't give any guidance for 2022, but if you could help us a bit with the key margin drivers, both negative and positive, as we move into next year. The second question, if you can give an update on the project estimate adjustments and the provisions you did a year ago. Has it developed down those lines, or are there any differences or any reason to return to that theme in a positive or negative way? Thank you.
Well, on the guidance for 2022, we will come back to that, of course. What is important to note 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. I feel confident in that. That's really important to say. When it comes to the adjustment 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 made has made it possible to stabilize the project in a much better way, to be proactive in the mitigation actions, to make sure that we continue to deliver the margin then on a slightly lower level after the adjustment going forward. It is a stable situation now after what we did in Q3 last year, and it was a proactive and good decision to take that measure. Do you want to elaborate some more on the 2022, or?
No, just remind us. We have said that scale-up in certain areas, T-7 we talked about, Gripen and others, will be a driver for profitability. Operational efficiency, of course, something we will stubbornly continue to work with, which gives effects now and will slowly give more and more effect. Then we have the portfolio and certain areas like the civil aviation and others that we need to handle separately, which also is issues to our income statement that will have to be worked on over time. Those are three 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 Hoyle from Flight International, and Craig wonders about the potential GlobalEye 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 GlobalEyes they are interested in.
Well, I think it's very positive, of course, to see that Sweden has now asked the Swedish government to acquire the GlobalEye. Since we have a finalized product that is in production, a contract could be quite expeditious when it comes to establish that contract. It depends on the customer, of course, when they want and can contract us. 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.
For Sweden to go that way, and I don't know the numbers really, but looking at Sweden and Finland, I guess it will be similar. We have offered two GlobalEyes in the finished package, together with the 64 Gripens, which is a reasonable number to cover that airspace and that land domain. I don't know. We have to come back with it, but it's a very positive development, of course.
That's good. Perfect. We have another question from one of our analysts in London, Sash Tusa from Agency Partners, and Sash wonders about the further capability 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 our sales rate. Is it being fed in at present, or how does that activity impact the financials of Kockums?
First of all, the contract is really important. In terms of finalizing the requirements on the capability for those submarines, I can't dwell too much on those capabilities because it's sensitive. The contract as such will come into play immediately in how we look upon the scope of the contract and the profitability of the contract. That is driving the improvement in Saab Kockums' profitability. Definitely. It was really important from that perspective. 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 Laséen. 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-over-year now in Q3. You also mentioned that Kockums is well invested. In total, how should we think about the CapEx?
Well, we have an investment level that has gone down primarily based on the capitalized development cost. I have to say that over time, a company like Saab will have to invest both in new production facilities and in new technology and R&D. This will not be a sliding path downwards to something very low in the end, because then we probably will not be a strong company in 5-10 years.
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 modern plant, both in Kockums but also in T-7 in West Lafayette. 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. 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 very good clarity there. In total, could it be stable from these levels and you can capitalize the scale on this as percent of sales?
I think you can always capital-
more look at the-
No, you will be able to capitalize on sales. It will still go up as revenue goes up and we get more. Our multi-domestic strategy also involves that we have more R&D locally, both funded by customer, but also funded by ourselves. That means there will be some limitation to scale in that sense. Scale will give effect, yes, over time.
Thank you, Mikael.
Thank you. There are no further questions.
Okay, thank you. I think we can conclude the Q&A and this presentation. Any final remarks from you, Micael?
Thank you for joining. I think I just want to reiterate that we're going absolutely in the right direction. We are an attractive supplier of equipment in the marketplace, which is extremely exciting. We have a few months ahead of us that are really exciting when it comes to the big campaigns also. Looking forward to see you after the fourth quarter this year.
Thank you. Thank you, Kristoffer.
Thank you.