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Defence group Saab sees years of growth ahead as military tensions rise

By Niklas Pollard

STOCKHOLM (Reuters) - Sweden's Saab, maker of the Gripen fighter, sees years of potential growth ahead in the defence sector as countries re-arm in the face of increased military threats, it said on Friday as it posted a 13.6% rise in quarterly earnings.

Russia's invasion of Ukraine has raised tensions between Moscow and the West to levels unseen since the height of the Cold War, with countries across Europe scrambling to boost defence spending and secure contracts with makers of military equipment.

"Looking at the growth in Europe, my view is that it is a little bit slow in the beginning when it comes to spending," CEO Micael Johansson told a news conference. "But it's a multiple-year growth opportunity that we see in Europe and elsewhere, at least until 2030."

Shares in Saab, up sharply from their level before the Ukraine invasion, rose 1.2% by 0833 GMT.

The company, which focuses on areas such as aeronautics, advanced weaponry and command and control systems, said operating earnings rose to 568 million Swedish crowns ($51.9 million) in the quarter from a year-ago 500 million.

Saab, for whom the Swedish armed forces remain the reference customer, said order intake fell year on year in the quarter, due to two huge orders a year ago, but bookings in the year through September were up 6% to lift its backlog to 112 billion crowns.

Along with other Western countries, Sweden is in the process of boosting defence spending sharply and has applied to join NATO, seen opening up new business opportunities for a company whose stock has gained nearly 70% this year.

Saab, a competitor to the likes of Lockheed Martin, France's Dassault and Britain's BAE Systems, has added a net 500 staff this year and said it was investing in raising capacity and further recruitment.

The company confirmed its full-year outlook for operating income to rise at the upper end of a range between 8% and 12% and for like-for-like sales growth of about 5%.

($1 = 10.9449 Swedish crowns)

(Reporting by Niklas Pollard; Editing by Stine Jacobsen and David Holmes)