Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Now, let's turn to
Speaker 1: earnings this morning the air the defense Swedish arrow and
Speaker 1: defense company SAB had hit a fresh record this morning
Speaker 1: a touch off of that after reporting earnings. Joining us
Speaker 1: now is the CEO Michael Johansen. Michael, thanks for joining
Speaker 1: us this morning. I do want to get to your earnings,
Speaker 1: but I have to start with this it outage. Considering
Speaker 1: it has to do with cybersecurity software and as a
Speaker 1: defense company, obviously, this is something you're acutely aware of
Speaker 1: and keeping track of. I just want to start this.
Speaker 1: Is it impacting your systems at all? This morning?
Speaker 2: We're looking into it, but so far we haven't seen
Speaker 2: an effect all. But of course we take this seriously
Speaker 2: and we are continuously monitoring. But I don't have any
Speaker 2: datas I haven't seen anything that has affected us yet.
Speaker 1: How do you think about this moment in terms of
Speaker 1: the vulnerability of industries? Cybersecurity Networks obviously is a defense company.
Speaker 1: This is very important to you to build the type
Speaker 1: of industry that so many countries need. Is does this
Speaker 1: show some underlying fragility an issue with the supply chain?
Speaker 2: Well, of course, I mean and we need to continue
Speaker 2: to work on this sort of zero trust approach of things,
Speaker 2: which is more about how you protect your information all
Speaker 2: the time and how data centric you become, rather than
Speaker 2: to protect the fourth of information, so to say. And
Speaker 2: this we discussed during the summit in DC last week
Speaker 2: and there are solutions going in that directions. So you
Speaker 2: have to be to be able to interact at the
Speaker 2: same times going into a cloud sort of based information
Speaker 2: set up, you have to work on the serriu trust approach,
Speaker 2: which I think there are many companies going in that direction,
Speaker 2: but this is something we take really seriously in working
Speaker 2: diligently upon. So it's an important area going forward. But
Speaker 2: without the seru trust approach, I think it will be difficult.
Speaker 1: Is there a concentration risk the fact that this is
Speaker 1: all stemming just from one company, I.
Speaker 2: Think so far. I think it's more about the architecture
Speaker 2: and how the service based approach will look like. To
Speaker 2: be agnostic, you have to be able to work with
Speaker 2: several different suppliers, of course, and you have to certify
Speaker 2: them and they have to prove that they are as
Speaker 2: certified and reassured as we are on our system. So
Speaker 2: we haven't selected anyone yet. We're looking into this, so
Speaker 2: we will see what happens going forward.
Speaker 1: Michael, Obviously, if this kind of happened this morning, we
Speaker 1: would have started by talking about your earnings. Let's go
Speaker 1: there next, because you did have a very high order book.
Speaker 1: And I wonder where you see us in the defense
Speaker 1: spending cycle. Is it a moment that's about to ramp
Speaker 1: up or are we somewhere near a peak.
Speaker 2: I don't think we near a peak at all. I
Speaker 2: think we're looking at the growth in the next coming
Speaker 2: ten years. Look at the that the need for the
Speaker 2: support to Ukraine, but also the replenishment of stock and
Speaker 2: capabilities in the European countries which are now spending more
Speaker 2: and more on defense and also increasing capabilities at the
Speaker 2: same time. So there will be I think lots of
Speaker 2: growth going forward. And we have just started the last
Speaker 2: two years just to take these steps, and I'm afraid
Speaker 2: we're not doing enough. I think there will be has
Speaker 2: to be more, has to be done. So this is
Speaker 2: more like a paradigm shift than anything else.
Speaker 1: You know. The Sweden's defense minister only a few months
Speaker 1: ago said this that this is a challenge that's being
Speaker 1: felt across Europe right now, and in terms of the
Speaker 1: lack of defense capability, is that we have a defense
Speaker 1: industry base shaped for a peace time situation. So what's
Speaker 1: necessary to change what needs to happen to get things
Speaker 1: in the right place when there is a heart warrant
Speaker 1: euroup happening right now?
Speaker 2: Well, we as industries are investing a lot as we speak,
Speaker 2: of course, but these things that's long term commitments over
Speaker 2: sort of mandate periods for politicians or important to take
Speaker 2: the really big steps, to really be big, build the
Speaker 2: new facilities, to invest in automation, to take the big investments.
Speaker 2: Were getting there, But I would say that to realize
Speaker 2: that this is really a paradigm shift rather than incrementally
Speaker 2: taking small steps, which is difficult for industry to refer to,
Speaker 2: to relate to when you take big investments decisions is
Speaker 2: probably the most important thing. Then of course, if EU,
Speaker 2: for example, takes a big decision together put lots of
Speaker 2: money in initiatives like the European Defense Industrial Program that
Speaker 2: has been discussed, like we did when the pandemic hit us,
Speaker 2: then of course, if we put a lot of money there,
Speaker 2: then the collaboration and big programs and alignment or requirements
Speaker 2: will happen, but these things must be implemented to make
Speaker 2: sort of taking the big steps, but long term commitments
Speaker 2: is important to us from governments while we are taking
Speaker 2: risks as industry and investing.
Speaker 1: I mean, there's certainly more prospects for disruption, and one
Speaker 1: of them might come from the US, not just European
Speaker 1: hot wars, but of the growing likelihood of a second
Speaker 1: term for former President Trump and the language that him
Speaker 1: and his vice president have been using are certainly more
Speaker 1: isolationist of not necessarily being willing, for example, to help Ukraine.
Speaker 1: If the US does drop out as a supporter of
Speaker 1: Ukraine and supplying weapons, the supplying defense systems, is Europe
Speaker 1: ready to pick up the slack?
Speaker 2: I would say that your passed to that's the most
Speaker 2: important thing that your has to realize that they have
Speaker 2: to take a bigger responsibility going forward to invest more
Speaker 2: money into this. And I saw the summit last week.
Speaker 2: I attended it myself to see that so many countries
Speaker 2: now within the Alliance and now seeing two percents of flaw,
Speaker 2: and many are going further than that. And the support
Speaker 2: of Ukraine with a forty billion US dollar support going
Speaker 2: forward the next year and the coordination from NATO now
Speaker 2: supporting Ukraine. I think that's great initiatives. Meanwhile, I mean
Speaker 2: Europe continue to step up, do it more quickly, and
Speaker 2: we have to sort of work with that independently of
Speaker 2: administration in the US and the transatlantic link is really important.
Speaker 2: But we have to have to be more sovereign as
Speaker 2: European continent when it comes to the defense in the
Speaker 2: terrens and resilience.
Speaker 1: Okay, Michael, thank you so much for joining us this morning.
Speaker 1: We appreciate Michael Johansen, SAB Group CEO