Bloomberg Audio Studios, podcasts, radio news. Now, let's turn to earnings this morning the air the defense Swedish arrow and defense company SAB had hit a fresh record this morning a touch off of that after reporting earnings. Joining us now is the CEO Michael Johansen. Michael, thanks for joining us this morning. I do want to get to your earnings,
but I have to start with this it outage. Considering it has to do with cybersecurity software and as a defense company, obviously, this is something you're acutely aware of and keeping track of. I just want to start this. Is it impacting your systems at all? This morning?
We're looking into it, but so far we haven't seen an effect all. But of course we take this seriously and we are continuously monitoring. But I don't have any datas I haven't seen anything that has affected us yet.
How do you think about this moment in terms of the vulnerability of industries? Cybersecurity Networks obviously is a defense company. This is very important to you to build the type of industry that so many countries need. Is does this show some underlying fragility an issue with the supply chain?
Well, of course, I mean and we need to continue to work on this sort of zero trust approach of things, which is more about how you protect your information all the time and how data centric you become, rather than to protect the fourth of information, so to say. And this we discussed during the summit in DC last week
and there are solutions going in that directions. So you have to be to be able to interact at the same times going into a cloud sort of based information set up, you have to work on the serriu trust approach, which I think there are many companies going in that direction, but this is something we take really seriously in working diligently upon. So it's an important area going forward. But without the seru trust approach, I think it will be difficult.
Is there a concentration risk the fact that this is all stemming just from one company, I.
Think so far. I think it's more about the architecture and how the service based approach will look like. To be agnostic, you have to be able to work with several different suppliers, of course, and you have to certify them and they have to prove that they are as certified and reassured as we are on our system. So we haven't selected anyone yet. We're looking into this, so we will see what happens going forward.
Michael, Obviously, if this kind of happened this morning, we would have started by talking about your earnings. Let's go there next, because you did have a very high order book. And I wonder where you see us in the defense spending cycle. Is it a moment that's about to ramp up or are we somewhere near a peak.
I don't think we near a peak at all. I think we're looking at the growth in the next coming ten years. Look at the that the need for the support to Ukraine, but also the replenishment of stock and capabilities in the European countries which are now spending more and more on defense and also increasing capabilities at the same time. So there will be I think lots of growth going forward. And we have just started the last two years just to take these steps, and I'm afraid
we're not doing enough. I think there will be has to be more, has to be done. So this is more like a paradigm shift than anything else.
You know. The Sweden's defense minister only a few months ago said this that this is a challenge that's being felt across Europe right now, and in terms of the lack of defense capability, is that we have a defense industry base shaped for a peace time situation. So what's necessary to change what needs to happen to get things in the right place when there is a heart warrant euroup happening right now?
Well, we as industries are investing a lot as we speak, of course, but these things that's long term commitments over sort of mandate periods for politicians or important to take the really big steps, to really be big, build the new facilities, to invest in automation, to take the big investments.
Were getting there, But I would say that to realize that this is really a paradigm shift rather than incrementally taking small steps, which is difficult for industry to refer to, to relate to when you take big investments decisions is
probably the most important thing. Then of course, if EU, for example, takes a big decision together put lots of money in initiatives like the European Defense Industrial Program that has been discussed, like we did when the pandemic hit us, then of course, if we put a lot of money there, then the collaboration and big programs and alignment or requirements will happen, but these things must be implemented to make sort of taking the big steps, but long term commitments
is important to us from governments while we are taking risks as industry and investing.
I mean, there's certainly more prospects for disruption, and one of them might come from the US, not just European hot wars, but of the growing likelihood of a second term for former President Trump and the language that him and his vice president have been using are certainly more isolationist of not necessarily being willing, for example, to help Ukraine.
If the US does drop out as a supporter of Ukraine and supplying weapons, the supplying defense systems, is Europe ready to pick up the slack?
I would say that your passed to that's the most important thing that your has to realize that they have to take a bigger responsibility going forward to invest more money into this. And I saw the summit last week. I attended it myself to see that so many countries now within the Alliance and now seeing two percents of flaw, and many are going further than that. And the support of Ukraine with a forty billion US dollar support going forward the next year and the coordination from NATO now
supporting Ukraine. I think that's great initiatives. Meanwhile, I mean Europe continue to step up, do it more quickly, and we have to sort of work with that independently of administration in the US and the transatlantic link is really important. But we have to have to be more sovereign as European continent when it comes to the defense in the terrens and resilience.
Okay, Michael, thank you so much for joining us this morning. We appreciate Michael Johansen, SAB Group CEO