Saab says 1Q profit fell 38 percent

STOCKHOLM, Sweden --Aerospace and defense company Saab AB reported a 38 percent drop in first-quarter earnings Tuesday from a year ago, when the result was flattered by a 170 million kronor (euro18.5 million, US$25.1 million) capital gain from its sale of a unit.

Saab posted a net profit of 261 million kronor (euro28.4 million; US$38.5 million), slipping from 423 million kronor in the same quarter last year.

But sales in the three-month period ended March 31 rose 14 percent to 4.92 billion kronor (euro535 million; US$727 million), boosted mainly by the company's acquisition of Saab Microwave Systems, a joint venture they took control of from Sweden's LM Ericsson, as well as good performance in its defense and security unit.

Chief Executive Ake Svensson said the year began "solidly." Order bookings were higher than in the same three months in 2006, he said.

For 2007, the Stockholm-based company said it expects its growth to be in line with 2006 and that its operating margin, including structural costs, will be slightly better.

Saab shares fell 0.5 percent to 186.5 kronor (euro20.30, US$27.50) in Stockholm trading.

Mats Liss, an analyst at Swedbank in Stockholm, said that although the results overall had been slightly overestimated, the "order inflow keeps looking good."

He added that the company's full year outlook reiteration was good.

Saab, which has been subject to scrutiny amid bribery allegations surrounding a deal to lease 14 Swedish fighter jets to the Czech Republic, said it is convinced that only legal methods are used in the company. "Bribes have never been allowed at Saab. Our rules in this respect are clear," it said in the report.

The company said it is fully cooperating with the Swedish prosecutor who launched an investigation into the matter in February, and that it therefore could not comment further on the allegations.

Saab sold its automobile division to General Motors Corp. in 2000.