I have our CEO, Micael Johansson, and our CFO, Christian Luiga. We will first start with a presentation, followed by a Q&A, where you will be able to ask your questions to Micael and Christian, and you'll be able to do that through the teleconference and also through the website on the chat function. We'll come back with more details on the Q&A. With those first remarks, I would like to give the word to you, Micael, to review the first quarter.
Thank you so much, Merton, welcome to this Q1 report. Good morning. Let's start with a quick look at the numbers. I think we're looking at a strong quarter. We grew our order intake compared to the same quarter last year with more than 20%. Still high activity in the marketplace in a combination between Sweden and in the international market. The growth was excellent, 13% compared to the same quarter last year. That is, of course, due to the high activity levels in our large programs. Especially the defense side is pulling this growth, and compensating for still the weak situation on the civilian market. I think we see a stable margin, also due to the, in absolute numbers, that is increasing with 7% compared to last year's first quarter.
I think that also is due to the high activity level in the defense part of the business. Also here, compensating for the decline in the civilian market. I'm really pleased with the operational cash flow, which is a lot better than the first quarter last year. This is due to the good EBITDA, and also customer payments, of course, during the quarter. I think we will see less of a fluctuation now during this year. We are of course, reiterating a positive cash flow for the year. Looking at the market highlights, we still see high demand in the marketplace. Many countries are increasing the defense budgets, and we see a demand in all our areas. We are involved in many tenders and campaigns. Large ones, of course, as you know. Also good traction on our smaller orders and mid-size orders in the marketplace.
The interest for the Surveillance part of the business and the Dynamics part of the business is great. We have a big campaign going, as you know, the Finnish campaign for the acquisition of the fighter aircraft in Finland, we are handing in a best and final offer end of April. I think we have a very attractive offer, a combination of Gripen aircrafts and the GlobalEye aircrafts. We do see still a decline or a less activity or low activity, I would say, in the civilian aviation market, connected to our Aerostructures part of the business, but also related to traffic management and what we do for the airports in terms of optimizing the flows outside the gates. The need for those systems and upgrades are less now due to the lack of traffic at the airports, I would say.
We saw a good order intake, as I said, and a couple of highlights is a reasonably large contract when it comes to the support of the Gripen C/D version to Sweden. We continue to see from the frame contracts that we have order intake coming in when it comes to ground combat, both from the U.S. and in Estonia, as well as orders from Australia. Another important one was the fire control system sights for the Hägglunds CV90 platforms, both for Switzerland and the Netherlands. Great activity in the marketplace. Looking at a few highlights in the different business areas. A high activity level in Aeronautics, driving growth, definitely. We have an intensive phase when it comes to the T-7, the training aircraft that we developed together with Boeing, where we now are approaching the final part of the EMD phase, the industrialization phase.
Just lately, a few days ago, we delivered the first aft aircraft section to Boeing in St. Louis, and the remaining parts will be delivered later this year. As we said, we have an intensive campaign when it comes to Finland, of course. A lot of initiatives are taking place related to that. Dynamics is still seeing a high demand in the marketplace. We have a transition now going from the M3 version of the Carl-Gustaf M4, and many customers which have an install base will go that direction, I think. We see a good sales development and margin improvement in Dynamics due to that. I think they are in a growth phase, so what we have to do is to drive a production ramp-up so we can manage more contracts going forward.
Surveillance has a good project activity. One of the most important milestones during this quarter has been the delivery of the third GlobalEye to UAE. We have a good increase in sales. The margin has been impacted by a few low utilization parts in foreign operations, both in South Africa and Germany. We have a mix of projects. I see the development is going in the right direction also for Surveillance. They have a great order backlog and have good deliveries going forward. On the Saab Kockums side, we have market activities in terms of mega campaigns, as you know, both in Netherlands and Poland. We are seeing a defense bill in Sweden that vouch for more contracts going forward, I would say, now looking at that more in detail. We're doing everything we can now to increase our productivity.
I see that slowly happening quarter by quarter going forward. We're going in the right direction with Saab Kockums. Support and Services is now entering into the support phase for the large platforms, and that is driving sales and also margin, which is good, and continuous contracts on the smaller order side, but very slow in the aviation market. Support and Services are running the business in terms of regional aircraft, where we have low activity when it comes to the support and upgrades of the Saab 340 / Saab 2000 aircraft. Apart from that, the defense side is going really well. We are, of course, now building up the Gripen support in Brazil, connected to Support and Services. Industrial Products and Services are a little bit of both, I would say.
Combitech is showing really good performance, both in terms of growth in single-digit numbers and also in terms of profits. It's going absolutely in the right direction. That is compensating then for the civilian part of IPS, which is still really low activity on, as I said, the Aerostructure side and also on the traffic management side. Those are a few highlights from the business areas. Looking at a couple of things which I'd like to put a little bit more attention to, this time it's ground combat. It's a fantastic development we see within Dynamics on the ground combat side. We've done this for decades now. We have developed something that many customers have acquired over time. We have a very modular design and a fantastic flexibility when it comes to the uniqueness of this portfolio, Carl-Gustaf M4 and NLAW.
We have also supported our customers with a broad variety of ammunition, and it's really easy to use. Here we see a market potential that is growing all the time in correlation with the defense spendings increase. We have an installed base that makes it really positive in terms of now migrating to the new version of Carl-Gustaf M4, because many customers still have the M3. We're doing collaborations with the U.S. company, Raytheon, in developing new guided munition as well, which will also increase the need for ammunition going forward. Looking at this business is actually quite fantastic. We have doubled the sales now in the last five years, and we see good growth going forward as well. We have really a stable profitability above 10%, really supporting the Saab long-term targets.
Here it's all about creating the capacity to deliver more volume. We see that we need to increase the production capacity in Sweden, which we're doing as we speak, but we're also looking at having a couple of sites where we can do more when it comes to the production in this area, which could be abroad, for example. That is the strategy going forward. I just wanted to highlight an area where we're really doing really well now. Another interesting topic is, of course, how we're doing on the training aircraft T-7 that we are developing together with Boeing. As I said now, we are in the end of the so-called EMD phase, the Engineering, Manufacturing, and Development phase.
We are delivering during the remaining part of this year, all the aft fuselage or the aft aircraft sections that is involved in that phase to the U.S., to Boeing in St. Louis to do final assembly of the full aircraft. We are transitioning into new contract phase, which we expect to happen in 2022. We are then now ready. We have, as you see on this slide, even if the picture is a little bit small, we are ready with the factory in West Lafayette, Indiana, which is the most modern factory I think we have today in terms of how digitalized it is and how automated it is. We have people now that we have recruited in the U.S., or as we speak in Sweden, to do training to go back to West Lafayette and start the production.
Why I mention this is because this is going to be long-term for many years, continuous manufacturing capability that we will have in the U.S., and also lead to more Aeronautics initiatives in the U.S. together with partners. It's a very important [part]. We have told the market also that we are going into a new organization, a restructuring of Saab, that will become live July 1st this year. What we do, in essence, is that we go from six business areas to four business areas.
We're merging the parts of IPS and Support and Services into the other business areas. We create an independent position for Combitech, where Combitech will report directly to the CEO office. We are going to put a lot of effort to grow Combitech going forward because they have a really interesting mix of business and competence as I see it in the marketplace, an important part of Saab going forward. We do this because we need to have a clear connection between our business areas and our core areas, and we have a number of internal interfaces that we will be more efficient if we sort of remove them in our business cycle. There will be more clear interface from the customer perspective to our businesses. At the same time, we will establish an operational excellence function on corporate level.
That function will work with the areas of supply chain and sourcing and IT, and also aligning how we do project execution and work with quality management. This is important. We can't do everything the same way in all parts of Saab, of course, because we have a very diverse portfolio, but we can align better, and we can do best practices into a larger extent than we do today. This function is going to drive that, and this is all about creating higher efficiency and improve our gross margins going forward. This will really contribute to Saab's long-term goals going forward. Finally, from my side then, what's happening now? What's our way forward? Well, as you know, the part of our strategy is to become more international in terms of establishing ourselves with more complete operations in a selected few countries.
That is a key initiative that we're working as we speak. We're talking about U.S., of course, U.K., Australia. We're talking about important countries like Germany and Finland. We will have to go that direction, not to the expense of the Swedish market, of course, but to grow the company, this is going to be important, and we need to be an embedded part of other countries' defense capabilities. We have a huge backlog, which gives us lots of possibilities, of course, and it's so important to execute now on our large programs. They are going into a production phase, and we are in the middle of going from development to production, that is going to be key to us. As I spoke about the productivity and efficiency improvements are important.
We need to improve our gross margin, of course, to support our long-term targets when it comes to margins. That implementation of the new organizational structure that we will do now mid-year is really important. Finally, I would like to reiterate our outlook for the year. We are still supporting our view that we will grow in line with our long-term target of 5%, and our EBIT margin will be in line with the adjusted EBIT margin that we saw last year of 7.4%. We will definitely deliver an operational cash flow, and I see that it will be less fluctuating during this year than we've seen before. That was a quick review from my side, and then by that, I would like to hand over to my CFO, Christian Luiga.
Thank you, Micael, and good morning, everyone. To summarize again what Micael said, this is a strong quarter. We continue to have a growth in orders and sales. EBITDA and EBIT is growing. Even though we have a small hit on the margin compared to last year, we increase our earnings, and cash flow will be more positive even this year and be positive for the full year. We have a strong balance sheet. That's the short summary of where we are standing right now. If we look then into the numbers a little bit and start with the order backlog, this is an order backlog that supports the growth that we are giving as an outlook. We have, in this quarter, primarily had large and medium-sized orders. The small orders are down 5%.
Nothing we are worried about, it is a very heavy Swedish ordering intake this quarter. The order backlog today is 70% outside Sweden still, something we'll see will increase even more over time. This year's sales from order backlog is up 11%. We have SEK 25 billion now in Q1 that is sales for this year. With that 11% uplift and a growth in sales of 13%, we have a very solid position and good foundation for 2021. Of course, this gives us stability to our operations, and it gives us comfort on our outlook for the year. The financial summary for the quarter, sorry, I'm not there yet. We have three quarters to go. In this first quarter, we have a 13% sales uplift. That is organic sales of 14%. The only difference in this quarter is currency effects.
There's no M&A effects in this difference. We have a 17% uplift of EBITDA, and EBIT is up 7%. The main driver for this uplift is growth. On top of this, of course, between EBITDA and EBIT, we have a SEK 115 million increase in amortization and depreciation. The main part of that is an amortization on the development cost we have had on GlobalEye. This is something we also told you in Q4. Specifically. The growth in the earnings impact also then drives down to the bottom line, and EPS then continues to grow and is up 18% this quarter. If we look at the sales per business area, four out of six business area grows in this quarter. We have a high project activity and increased deliveries, and that drives the sales growth. In Aeronautics, it's definitely primarily and only related to Gripen E programs.
In the Dynamics, it's very interesting to see, it's not only the ground combat, but also the underwater and training simulation that is growing in this quarter. In Surveillance, it's driven by the airborne early warning, That is also something that helps to support the services growth in this quarter. As Micael said, IPS is heavily impacted by the civil aviation decline, That gives us a 19% decline, even though Combitech is growing with around 6% this quarter. Kockums, we have had an adjustment on the sales, which doesn't impact on the EBIT, but that means that the operational sales is down 4%, which is a more correct, better reflects the change in the quarter, That's important to state.
If we look at the trend a little bit over time, just to remind ourselves of our development, we have been growing sales with around 10%, except for in 2020. As we all know, and we discussed it a lot, we had a heavy impact both from a market point of view, but also from a project revision point of view, from the COVID-19 in 2020. On the EBITDA side over these years, it has also been the same. We have been growing the EBITDA up to 2020, where we had to take a hit. Now in Q1, we are improving the EBITDA again.
Just some simple math from our side, all of us will say that if we stand for our outlook and we have a growth in revenue this year, and we have an EBIT that is flat, and we are increasing our amortization and depreciation, then the EBITDA will grow also in 2021 as a whole. It's been a tough and challenging year in 2020 that put some stress on our numbers. We follow the original plan of improving our operations underlying. If we then go to the EBIT per business area, we can see then that starting with Aeronautics, it is a decline in margin, even though the EBIT in itself is at the same level. The margin decline refers primarily to the adjustment we did in 2020 related to COVID-19 on the projects.
We see that there is a clear potential for a ramp-up of that margin as we are moving from the ramp-up phase for production in Gripen E into full production, but also, as Micael said, when T-7 moves into the next phase of production in the U.S. Dynamics has improved a lot quarter-over-quarter. That is very fun to see. As I said, it's not only ground combat, it's also training and simulation and underwater. Q1 in Dynamics is typically a little bit lower than the full year, and therefore we remember that 2020 was a 12% margin in Dynamics, and we don't have a lower expectation for this year. That is a good starting point for them. In Surveillance, we have a lower margin compared to last year, and it's primarily related to the increased amortization that impacts around 2%.
We also have a mix shift in the programs and the outside Sweden operations where we had some lower utilization that impacts in this quarter. If we just finally comment a little bit on IPS, we see the margin is improving, even though we have a 19% decline in revenue. That tells us that we have worked very hard with cost management, adjusting our cost framework in those areas, but also that Combitech is improving year-on-year. That is a very good and comfortable number. I am very happy to see how we worked very hard to improve and counter the 19% decline. Cash flow for the first quarter improved compared to SEK -1.6 billion in Q1 2020 to close to flat SEK 0.2 billion in this year. The main change is the change in working capital and customer payments.
That's the prime source for the difference between the year. However, we do also have an improved EBITDA and somewhat lower investments, and all money counts, as you know, when we are improving over time. If we look at then the cash flow for the years we've had, we came out into Q4 2020 and said that we now have a positive cash flow, and we will continue to have a positive cash flow, and we still have that view. Q1 is supporting that. The other comment I will reiterate from quarter four is that the cash flow will be more even this year over the quarters than it was last year. We have a very strong balance sheet at this point. We have a net debt to EBITDA, counting on the adjusted numbers of 0.9, a net debt of SEK 4.1 billion.
If we take out the pension fund, the pension liability, sorry, which is SEK 4.8 billion, we would have had a net cash position. The pension liability is covered by a pension fund and more than the SEK 4.8 billion. These are the true numbers, 0.9, and it is a solid position going forward. On top of that, we have credit facilities of SEK 10 billion. We have a strong preparedness if things would change for the company. Finally, we are reiterating our outlook. We have a very comfortable position from quarter one going in then to reiterating a long-term, the 5% growth target, which is in line with our long-term target. An EBIT margin that will be 7.4% for the year is our latest estimate, and an operational cash flow that will be positive.
Thank you for that, and leaving to you, Merton, to take us further.
Thank you very much. Thank you. Now we have the time to open up for a Q&A session here. Before we do that, and before I invite the moderator, some few rules. When you are asking the questions, please keep your questions to one and a follow-up question to that. Then if you have more questions, please get back to the line so everybody gets the chance to ask questions. We have also some questions from our viewers online, and I will try to bring them up during the course as well. With that, I would leave the voice to the moderator.
Thank you. If you do wish to ask a question via the teleconference platform, please press zero and one on your telephone keypad. If you wish to withdraw the question, you may do so by pressing zero and two to cancel. There will be a brief pause while questions are being registered. Our first question comes from the line of Douglas Lindahl from Kepler Cheuvreux. Please go ahead. Your line is open.
Good morning, gentlemen. Congratulations to a strong report. I'll hold myself to one question then. My question is on your full-year margin guidance. You managed to turn around the IPS business here quicker than I'd expected, at least. In this context where IPS is now in positive territory already in Q1, and you continually guide for EBIT margin in line with last year's levels where IPS was loss-making. What are we missing here? What in the group is expected to be more negative this year compared to last year? It looks like your margin guidance is on the conservative side. I, of course, also note that D&A is up year-over-year, but even including this, it looks conservative. You mentioned Surveillance. Is that the main delta on the negative side? Just any comments on what you think about this from a business area standpoint?
Well, I can start. First, when it comes to IPS, you need to see the mix of how well Combitech is performing and still the rather difficult situation on the Aerostructures side primarily, but also the traffic management side. You need to see both aspects of it. I'm really happy with the Combitech performance. As we said, it's really supporting our long-term target now, and it's growing 6%. That sort of supports the improvements in IPS. That to say to start with. Again, the margin is we took a number of provisions last year to be more proactive when it comes to mitigating things happening still during the pandemic. We're not out of that territory yet in terms of working the supply chain and having effects on that.
I feel more comfortable now than I did last year when it comes to the margin development, definitely. We did the right things last year to work with it this year. Still, it's early days, I would say. That's why we reiterate what we said now, supporting the adjusted margin that we saw last year. Now, of course, we see a margin now which is not involving any sort of non-recurring effects now. I feel more comfortable. I will go as far as that. We're still not out of the woods, so to say.
Okay. If I can just follow up on that. On the mix, does that mean that IPS can turn back into negative territory throughout the year if Combitech does not have such a good quarter as it did now in Q1 based on your comment there?
I would say we're doing everything we can to make sure that the part related specifically to Aerostructures is mitigated. Part of that is also now using the resources in integrating Aerostructures in a more beneficial way into Aeronautics, which is part of a organization. Combitech is, of course, hopefully supporting our margin and going in this direction all over the year, so to say. It's a combination of the two. If we are successful with Aerostructures, I hope we can stick to seeing good improvements over the year, and that's the whole purpose of it. Combitech, I don't see any sign or reason why they couldn't stick to where they are today and do a great year. It's the mix of the two.
No reason to expect negative earnings from IPS then throughout the year? Okay.
Thank you, Douglas.
Thank you, Douglas.
Thank you. Our next question comes from the line of Mikael Laséen from Carnegie. Please go ahead, your line is open.
Hi, good morning. A question on Ground Combat. Is it possible to be a bit more specific about the market opportunity that you have there? The addressable market for Carl-Gustaf. How large is the market, and what is your share of the market?
Well, I would go as far as saying that we have important frame contracts in the U.S., in Sweden, and connected to a few other states that gives us room for quick order intake, so to say, which will grow the business, definitely. There are initiatives in the marketplace where we will be part of tendering phases and what you call testing during the year. U.S. is going to run something called Individual Assault Munition program, which is a big program. If we can win that will, of course, be a big thing. I don't want to mention the number, it's SEK 1 billion -plus, at least. There is potential, but I wouldn't frame the whole market saying, The market is supporting growth, We can continue to take market shares, and we have a good position.
The thing is that we need to improve production capacity in Sweden, and I think we have to do that elsewhere as well.
Okay.
Do you want to comment?
Do you have any comment on the penetration? Do you have any qualitative comments made on that?
Sorry, can you say that again?
I mean, how the system is used in your key clients, for example, in the U.S. and in the other countries.
How it's used?
Operates in the system. Yeah, exactly.
Yeah. I don't know exactly how they use it, but we've started with special forces, and now we're getting traction into the full-fledged army, which is driving the market. It's a flexible all-purpose type of ground combat weapon, so that's why they like it so much, that they can use it in a flexible way. It's not a specific anti-tank weapon. You can use it for other threats as well, of course, which makes it really attractive. We can dive into that at the capital market day or something going forward.
Yeah. That's great. Thanks.
Thanks.
Thank you. Our next question comes from the line of Sash Tusa from Agency Partners.
Thank you very much. Good morning. My first question is about your tender for Finland, where unlike any of the other tenders, you are offering an airborne radar system as well as the fighter. I just wondered whether there was any possibility within your current offer for you to end up supplying GlobalEye, even if you were not successful with Gripen, and whether you have talked about tying a GlobalEye offer into any order from the Swedish government as well.
Well, first of all, this acquisition in Finland is based on a capability that they need, and that is the reason why we have combined the GlobalEye with the fighter aircraft. The GlobalEye is a force multiplier and really adds value in how you use your fighter capability in different scenarios. I don't know what would happen if we wouldn't be successful on the fighter side. I assume there would have to be a retake if they still wanted the GlobalEye, there's nothing that we've discussed. We put all efforts in now in this package, which gives them, I think, the capability that they need to fulfill the scenarios that they're working with in their threat environment. It's a very attractive offer. We will have to take the next step if we're not successful on the fighter side. I'm really hopeful that we have a great package.
Sweden has said in their defense bill that they will replace the existing airborne early warning capability, and our defense minister has been clear that they are aligning their view on where Finland is going if Finland selects our offer. I'm positive on the chances of seeing Sweden also going for GlobalEye going forward. There's nothing specific yet on that.
Great. Thank you. If I could just follow up on the previous question, perhaps this is one for the capital markets day. Just to understand the success of the Carl-Gustaf weapon system in particular, it'd be very helpful to understand roughly how many customers you have for the M3 and previous variants of the system, and how many of those have so far converted to the M4?
We have, I think it would be a handful of customers right now that have converted to M4.
14, roughly.
14? That many. Okay, that's good. Last time I looked, but okay, that's even better. 14 customers have converted, and we have roughly 40 customers now on that capability. There is still room for additional orders, definitely. Connected to the installed base, I mean.
Great. Thank you very much.
Thank you.
Thank you.
Thank you. We don't have any further question on the teleconference platform so far.
Okay, great. If you have questions for those on the line, please, you can go back to the line. Meanwhile, I have some questions from our audience online. We have David Barker actually have a question here from Bank of America. David has a question about the cash flow. I think I'll direct that to you. We had a strong cash flow in Q1, free cash flow performance. How much of this reflects underlying free cash flow improvement versus the phasing, and how much can we extrapolate for the rest of 2021? It's a bit more flavor on the cash flow. His follow-up to that is also, when will you be able to give a better sense of the timeline and the pathway to the midterm margin guidance that we have the long-term targets?
Let me start with the cash flow, if that's fine, Micael. What I said was that the quarter one has a impact from customer payments year-on-year. Of course, it's not only this quarter that is different, it could be also quarter one in 2020 that is different. The main impact is from the customer payment, and then we have an increased EBITDA and a slightly lower investment situation. If we will have a more even pattern going forward on our cash flow, the answer is yes. If it will be totally even, the answer is no, because we are still very dependent on larger milestone payments on our major projects. As more we get both Surveillance and Dynamics and others to have a portfolio that gives a running sales and a running flow of cash, it will be better for us.
We also work within our programs to make sure that the milestone payments are more even over time where we can do so. It will be an impact. The only thing we will say, at this point, and I appreciate the question, David, is that it will be more even this year compared to last year, and it will be positive for this year. Maybe we will come back with more details when we have passed a few more quarters this year.
Yeah. Second question.
On the second question, well, we are working hard to cope with the impact we had last year. As I showed you the development on EBITDA, that we had a hit on 2020, and we are recovering from that now in a very solid and good way. We have a phasing, as Micael talked about, moving out from a more development phase into more production phase that will be vital for the step change. Thirdly, we are working then now with our efficiency, both through changing the model, but also the hundreds of activities that are ongoing in the different business units to improve ourselves as we go along. Those are the three elements. It's not going to be a quick change. It will be a moving change slowly over the coming periods.
Thank you. We have another question actually from the audience here. Maybe it's for you, Micael. Matt Johnson from, I think Finland is asking, can you confirm or repeat the Gripen E deliveries that you expect to Sweden and Brazil this year? How does that schedule look like?
We have a schedule that we are committed to for this year. We expect to deliver another four aircraft to Brazil this year, as we've said before, and also a few to Sweden. That's the plan. Nothing has changed.
Thank you. We have one more question here from David Barker, from Bank of America, and his question is about the T-7 trainer. The first delivery, the question is, how big will this program be for Saab in SEK terms? In terms of the margins, are they in line with the rest of Aeronautics?
Definitely, the program supports the margin development. How big the program will be, we've just taken into our books right now the EMD, that phase. What happens in the U.S., as you know, is that you go into low-rate i nitial production phase, and then we go into full rate production phase after that. The frame contract that exists today is in the region of 350 aircrafts, but it could go up to 450. Then again, Boeing's expectations on the market side, both in the U.S. specifically and also internationally, has been in the range of a couple of thousand aircrafts over time. That gives you a feeling for it, but it's not definitive numbers yet.
Yeah.
There will be a few hundreds at least coming in from the U.S. in the next couple of phases.
Great. Hope that answered your question. Let me ask the moderator, do we have any more questions from the telephone line?
Yes. We have a follow-up question coming from the line of Douglas Lindahl from Kepler Cheuvreux. Please go ahead. Your line is open.
Yes. Thanks again for taking my questions. Two, if I may. You mentioned that Dynamics is doing really well. There is some need for additional capacity. Is it possible to put some sort of number on that? Will it be significant, the investment for Dynamics? That's number one. Secondly, Christian, for you as well. On cash flow, I believe you mentioned previously that you were wanting to implement shorter payment periods and more evenly spread out over time with customers in order to counteract volatile cash flow. Has this been accepted by customers? Are your competitors moving in the same direction, would you say? Thanks.
If I start with the last question. I can't answer for the competitors, actually, but I can see what kind of dialogues we are in since I came to Saab. In certain cases, it is predefined what the payment schedules will look like. In several cases, you have an opportunity to discuss that. There's two things that, of course, are important. One is that we cover our costs and have a positive cash flow as much as possible over the project life cycle, then secondly, that it's as even as possible. I know in cases since I came here that we have changed in the negotiation to have more and smaller payments in an offer that has gone out. We can actually change in the dialogue with the customers.
Okay. Interesting.
Again, if I may answer that a bit as well, I think it depends a bit on who we are looking at. The U.S. companies in the international market, if they supply the larger platforms, that's normally under the Foreign Military Sales perspective. We have no real insight into what that really means to the industry when the contract is done between the two governments. I have a feeling that that gives them a better and more stable cash flow situation than when you directly discuss that with your customer. You have things like that, and then it depends whether you're a sole source in a country or not. In the competition, when we are in open competition, it is exactly as Christian described it. Sometimes it's very well defined, and sometimes it's negotiable. It's not a 100% clear picture.
What we're seeing is it's not a generic thing, or generally speaking, now that you get large advanced payments when you look at all contracts. You have to work with milestones and performance milestones. That's obvious.
On the investment in ground combat, it's too early to say anything right now. There are different ways to step into a new production plant by doing just part of the product in that site, and then use two sites for a while, or you go a little bit more full-blown. It depends also on how we will see the order intake, how fast we'll grow, how fast we will do this. There's no clear answer to that today, Douglas.
Okay.
If you extend your capability in Karlskoga, for example, of course, that will be investments in the normal course of operations, I would say. Nothing that will stick out. If you want to establish yourself in another country, that could be an M&A, and then we have that as a target to do if you want to take a shortcut to having a capability in another country. It's difficult to say right now. We will, of course, come back and inform you when we're taking a step like that.
Okay. Thank you, Mikael and Christian.
Thank you.
Thank you. No further questions at the moment.
Okay, perfect. We have some more time to do two more questions, perhaps. We have Sandy Morris from Jefferies in London, who obviously has read the report here, and he's wondering, are the sales still dependent on milestones in Brazil, meaning are the quarters going to be lumpy, or do we have it reached a delivery phase where it's going to be more consistent in Brazil? That's his question.
We are in the early phase of delivery, so I wouldn't say it's completely jumped from milestones to deliveries only yet. As I said, we've delivered five aircraft after this year, so that gives you a feeling for the initial production, but still also dependent on milestones, definitely. We're in the in-between right now.
Okay, great. We have one more question here from a person, Pavel Ivan. He thanks for very positive news today. He reflects on that we mentioned that orders are 70% came from abroad, and obviously we're growing the international business, and we emphasize that a lot. His question is, how does this comply with the Swedish Government's intention to increase the budget until 2025? Don't you expect an increase in orders from the Swedish Government?
Oh, yes, we do. Absolutely. There are many things in the defense bill that support growth also in the Swedish market over this rather long time period. I always say that to really long-term grow the company, we have to grow more internationally than we do in Sweden, but not at the expense of what we do in Sweden. That's the whole thing. I'm just saying that we are still quite dominated by what we do in Sweden. If we want to grow the company substantially, which is the intention, we have to be an embedded part in a few selected countries around the world, and then we need complete operations there. We have selected some markets where we think it's beneficial for us to be. Yeah, it's not the one or the other, definitely not.
I really look forward to more contracts from the Swedish side as well.
Great. Thank you. That's very clear. Do we have any more questions online?
No questions.
Okay, I think the Q&A session is over, and I would like to thank you, Mikael, and thank you, Christian, for this time.
Thank you very much.
Thank you for listening in.
Thank you very much.
Thank you.