Defence manufacturer Saab to boost capacity as profit climbs

The Swedish Saab JAS 39 Gripen fighter jet performs during the Dubai Air Show in Dubai, United Arab Emirates, November 12, 2017. REUTERS/Satish Kumar Purchase Licensing Rights
STOCKHOLM, April 22 (Reuters) - Swedish defence products company Saab (SAABb.ST) will boost capacity to meet rising demand, it said on Friday after posting an increase in first-quarter profit and strong order intake.
Shares in Saab have soared 65% this year as a growing number of countries announce increased defence budgets as a result of intensifying geopolitical tensions and the conflict in Ukraine.
Saab, maker of the Gripen fighter jet and a range of military and civilian hardware, said it expects further supply chain challenges across the industry and would work to mitigate shortages and ensure delivery of components.
Shares in the company, which competes with U.S. defence giant Lockheed Martin (LMT.N) as well as Boeing (BA.N), France's Dassault and Britain's BAE Systems (BAES.L), were up 3.5% at 0847 GMT.
Russia's invasion of Ukraine, which Moscow calls a "special military operation", has prompted many countries, including Saab's home market Sweden, to boost defence budgets.
Sweden and its closest military ally, Finland, are also considering whether to join NATO after decades of military neutrality.
Saab CEO Micael Johansson said that potential NATO membership for Sweden is a political question, but for the company he finds it "hard to see something negative" were Sweden to join.
"The market for our portfolio, I would say, generally grows in the NATO countries, giving more opportunities," he told Reuters, adding that competition would probably increase, too.
Saab posted first-quarter operating profit of 654 million Swedish crowns ($68.8 million), up from 597 million a year earlier. Order intake grew 38% to 8.1 billion crowns.
Investment bank Citi said it expects increases in defence budgets to take some time to feed through to orders and sales, adding that Saab is "well positioned to benefit" with its relatively high exposure to missiles and surveillance.
Saab suffered a setback in December when Finland agreed a $9.4 billion deal for 64 of Lockheed's F-35 fighters ahead of the Swedish company's Gripen. Canada, meanwhile, has also chosen the U.S. company as preferred bidder for new fighter aircraft. read more
Saab maintained its full-year forecast of 5% organic sales growth and operating profit growth between 8% and 12%.
($1 = 9.5029 Swedish crowns)
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Reporting by Helena Soderpalm Editing by David Goodman
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