They make billions from the threat of war

Andreas Cervenka

Reporter and economic commentator

This is a commenting text. Analysis and positions are the writer's.

Published 2024-01-10

The war is creeping ever closer to Sweden if the country's leadership is to be believed.

It certainly worries many, but in purely economic terms, the deteriorating security situation has a clear winner: the arms industry.

Swedish Saab's owners, headed by the Wallenberg family, have become SEK 60 billion richer since Russia invaded Ukraine.

This year's edition of Folk och Försvar has at times sounded like a congress for preppers. First, it was Carl-Oskar Bohlin, minister for civil defense who on Sunday stated that "there could be war in Sweden". And when ÖB Micael Bydén took the podium, it was with images from a bombed-out Ukraine and the doom-filled message that it could be our country.

"My ambition is not to worry," Micael Bydén later explained to Aftonbladet, at the same time that Swedes' searches for words such as "canned food", "liquor kitchen" and "crisis box" skyrocketed according to Google.

But you don't need to read the newspaper to understand that we live in troubled times. It is enough to check the stock exchange rates.

Marcus Wallenberg and Michael Johansson.

Marcus Wallenberg and Michael Johansson.

Photo: Henrik Montgomery/TT

On Tuesday, the Swedish defense company Saab, which, among other things, manufactures the Gripen fighter plane and the Carl-Gustaf grenade launcher, rose by 4 percent on the stock market. New all-time high.

On Folk och Försvar, Saab's CEO Micael Johansson was interviewed and testified that the world's weapons factories are running at high pressure.

"Everyone wants much more, much faster and everywhere," he told Dagens Industri.

This is clearly seen in Saab's latest interim report with the heading "Strong momentum in a growing market".

During the first nine months of last year, turnover increased by 26 percent to over 35.5 billion and profit by 94 percent to 2.2 billion. And the orders are pouring in, order intake increased by 39 percent to over 46 billion.

The Swedish defense is being equipped at a rapid pace, according to the government's latest budget, the appropriations for the Armed Forces to buy materiel will increase from SEK 28 billion in 2023 to SEK 48 billion in 2024.But it is not only Sweden that is shopping for weapons, in its report Saab writes that we are in a period with the largest defense investments in 30 years, not least in Europe.

In the days before Russia's attack on Ukraine on February 24, 2022, a Saab share cost SEK 217. Today, the rate is SEK 660. The increase of over 200 percent makes Saab the best share among the Stockholm Stock Exchange's large companies. The market value has risen from just under SEK 30 billion to SEK 90 billion.

Among the winners are the Wallenberg family's various foundations, which via the companies Investor and Wallenberg Investment own 39 percent of the shares in Saab.

The chairman of the board in Saab is Marcus Wallenberg, whose shares in the company have risen in value from SEK 27 to 82 million since the beginning of 2022.

CEO Micael Johansson owns shares worth 34 million, according to the ownership service Holdings.

Many Swedes have also caught on, since the outbreak of war, Saab has had almost twice as many shareholders and now has over 100,000.

To Di, Micael Johansson says that he sees ten years of growth ahead of him. He also makes no secret of the fact that the company benefits from Swedish NATO membership.

According to the Stockholm International Peace Research Institute, the world's total defense spending rose to a new record level of the equivalent of SEK 30,000 billion in 2022. In Central and Western Europe, they are back at the levels that prevailed during the Cold War.

The United States spends the most, spending around SEK 9,000 billion on its defense in 2022.

It is not just Saab that has done well on the stock market, British BAE Systems' stock has more than doubled since the beginning of 2022 and is valued at over SEK 450 billion. French Thales has also risen by 100 percent.

American defense companies such as Lockheed, General Dynamics and Northrop Grumman have climbed the stock market since the war in Ukraine began and are trading near record levels.

If the stock exchange is right, we will have to live with the threat of war for quite some time to come.

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