H1 financial report talks about GM

I know we are about to set a new record on posts per day, but I feel like having to talk about this, as most of the people when reading the financial report seems to only concentrate on the losses of €(201.5) million.

On pages 21-22 on Chapter 16. the report talks about related partner transactions. And it illustrates very well how much money Saab gets or pays to certain third parties for services delivered or obtained from those.

One of this partners is e-AAM who buys services from Saab and also the other way around.

During the period ended 30 June 2011 e-AAM purchased services from the Group for an amount of € 0.5 million and the Group purchased services from e-AAM for an amount of € 0.3 million. At 30 June 2011 the Group had a net receivable of € 0.1 million from e-AAM.

Yes, Saab has earned €100,000 from e-AAM in the first half of 2011, which is quite interesting.

But the most interesting third party is GM.

At Closing, GM converted $ 326 million (about € 228.7 million) of pre-closing receivables on Saab Automobile into redeemable preference shares (RPSs) in Saab Automobile. The voting rights attaching to these RPSs constitute 0.0005% of the total voting rights in Saab Automobile.

During the period ended 30 June 2011 GM companies purchased parts and services from the Group for an amount of € 32.8 million. During this period the Group purchased cars, materials, parts and services from GM companies for an amount of € 104.3 million. As at 30 June 2011 the Group owed a net amount of € 308.4 million to GM companies (including RPSs).

To me it looks like GM is still interested in using the engineering capabilities of Saab, and Saab is also a good client for GM. So it makes no sense for GM to actively hinder Saab’s success.

And what about the 9-4x??

Saab Automobile will pay GM for the 9-4X development costs and fixed assets for a total amount of $ 48.6 million and the complete amount has been paid or accrued as per 30 June 2011 and is included in the amounts above. In addition Saab Automobile will pay GM an agreed price per car produced for the coverage of the costs relating to additional special tooling equipment. For future model year changes Saab Automobile committed itself to pay GM a total amount of $ 9.3 million. As security for costs related to the production of the 9-4X, the Group has deposited $ 10 million in reserved cash.

It would have been nice to know what the agreed price is, but I don’t think we will never know. But whatever price it is, with MY production of maybe 20.000 cars, the MY change will cost $ 465 per car, so I hope they sell at least that much.

And what about the fees for GM technology?

Saab Automobile has committed itself to pay GM $ 17.5 million over a period of several years in exchange for the right to use certain technology in present and future models. At the end of the reporting period $ 7.5 million is recognized as a liability in the balance sheet.

Now we know how much Saab has to pay to GM for using their technology. If Saab manages to sell 450,000 cars till the end of 2015, where we may see a new 9-5 or a new 9-4x, it will pay about $ 39 to GM per sold car only for technology fees. There are many parts in the car that have a lower price tag. 🙁

It is interesting that the report only talks about technology and not about patents, it would be interesting to know the patents agreement between GM and Saab Automobile, or if there is any agreement at all.

BoeBoe
Member
5 years 1 month ago

A few points (sorry)

– Net Loss = 224.2 million (EBIT is not the same as “loss”), this is the “group” loss. The loss of Saab Automobile was 229.5 million
– “net receivable of € 0.1 million from e-AAM” this means that Saab has to receive 100.000 euro from e-AAM. It is just a claim Saab has on e-AAM. Or in other words: an unpaid bill.

saabdog
Member
5 years 1 month ago

I’m curious. From these reports, can someone figure out the total amount of cars Saab would need to sell a year to reach the break even point? Also, I saw mentioned in another post that Jaguar/LandRover were once in the same position that Saab is now in. Is this true? Or is this comparison apples & oranges?

The reason I ask these questions is that I’m losing my ability to see the big picture with so many things going on at once. Thanks.

Simon
Member
5 years 29 days ago

I would say at least more than 50,000.

zippy
Member
5 years 29 days ago

Im gonna guess at least double that amount if not more.

Mailr
Member
5 years 29 days ago
If you use the figures from H1 an Q2 to calculate Q1 results, and assume that the difference in profit is only dependant on cars produced (which is a gross simplification) you get the rsult of about 3 times the sales or production rate of Q1, i.e. far above 100K/year. Which is what I always assumed, Saab realistically can’t turn a profit until the new 9-3 is in production. One positive point in all this is that the added loss for no production versus Q1 production level (assuming 100% lost orders which is not the case btw) is only about… Read more »
Khrisdk
Member
5 years 29 days ago
Excuse me for doing a little speculation in a while:-) For a little facts to start of softly, I am happy to see that a couple of common suspicions have been proved wrong: 1. SWAN has not been trading while insolvent. 2. Off-topic, but still an important issue to some. NDO finished their investigations into management fees and found them reasonable. –The Free Form Speculation Part– If there is a possibility that Saab will come through with the PangDa/Youngman deal, I would expect from the statements made by Pang Da that they expect to sell a large amount of cars… Read more »
BoeBoe
Member
5 years 29 days ago

@Khrisdk: SWAN has a negative equity of 400 million euro!

Or in other words: The debt is MUCH higher that the value of assets.

Balance sheet insolvency
Having negative net assets – in other words, liabilities exceed assets.

And that is the case here!

Trued
Member
5 years 29 days ago

Key for Saab survival is strengthening the relations with GM. So far Saab can not sell anything but GM products. GM has good engines and part bins for Saab. Start there otherwise the uphill walking alone will be to hard.
Please reach out a hand and buy the really good GM parts. I guess Saab IS to small to walk alone.

SAABNUT
Member
5 years 29 days ago

Yes – to maintain the trust and cooperation with GM is essential – if SAAB fails (hate to even write the words) the IP and components needed to keep the company running under new ownership is not readily available. This unless GM approve and support any new constellation willing to take over SAAB.

The information in the financial report H1 2011 verify that SAAB have fulfilled their contract terms with GM regarding the SAAB 9 4X – this is a good indication that SAAB realize their dependency on GM technology and try honour their contracts with GM.

skwdenyer
Member
5 years 29 days ago
Perhaps… but let’s just look at what others are doing. Tesla is launching their Model S soon. Fisker are projecting 100k sales pa by 2015, with an engine deal just signed with BMW for a new 2nd model to be shown in Frankfurt. Although Fisker are currently assembling at Valmet, they are refurbishing the old Saturn plant to use as a US manufacturing base. These are two examples of successful enterprises, following a path which should be easier (read cheaper) for Saab to tread; they already have distribution networks in place, for instance. In fact, it might make a lot… Read more »
mpprh
Member
5 years 29 days ago
I think one of the services GM purchase from Saab may be the GM Nordic parts distribution operation run through Nykoping. To calculate the break even point, you need to isolate fixed and various costs and that is not apparent from the info above. The most important parts of these accounts is in the notes. The company is hopelessly insolvent (def: inability to pay one’s debts as they fall due). The financials are available here : http://media.saab.com/press-releases/2011-08-31/swedish-automobile-nv-reports-semi-annual-results-2011 The accounts are presented on the going concern basis assuming sufficient additional funds will become available to resume trading. Net equity is €-397m… Read more »
Pedro
Member
5 years 29 days ago
Agreed on all counts. GM used to provide structural vs non-structural cost breakdown, and while it wasn’t a pure fixed vs variable cost breakdown it wasn’t totally useless in calculating breakeven points and operating leveraging. One thing to think about is that just to clear existing (on june 30th) debts to suppliers, etc. and to clear the EIB loan (the mother of all Evil for some posters here), you’d need give or take EUR 1 billion. Adding to that what is required to restart production and give the company at least 2 years of a financial buffer so they can… Read more »
Tripod
Member
5 years 29 days ago
Que? One thing to think about is that just to clear existing (on june 30th) debts to suppliers, etc. and to clear the EIB loan (the mother of all Evil for some posters here), you’d need give or take EUR 1 billion. The debts to suppliers are said, by some, to be around 800-900 MSEK; let’s say 1 billion SEK. The EIB loan, what is it, around 2.0-2.5 billion SEK (or what they will draw max; earlier it was said they had used around 217M Euro). Say 4 billion SEK together. 1 Euro is roughly 9.1 SEK. That is, 4,000,000,000/9.1… Read more »
Pedro
Member
5 years 29 days ago
Well, I was just mentioning that to refinance their liabilities (consolidated, so movements within the SWAN groups are eliminated) as a whole they’d need around 1 billion EUR. The consolidated Balance Sheet is on page 12 of the H2 2011 report (it is reported in thousands of EUR). Adding the Long Term Interest-Bearing Debt (almost all of that is/should be EIB) of 341 million EUR, the Short Term Interest-Bearing Borrowings of 44 million EUR, the Trade Payables of 284 million EUR, and Other Payables of 339 million EUR, you get a total of around EUR 1 billion. I didn’t even… Read more »
Pedro
Member
5 years 29 days ago
Just let me add two things: 1. Interestingly, that Other Payables balance of 339 million EUR does not have a note number next to it, i.e., its detail has not been disclosed… In all honesty, I would expect an item representing roughly a third of the Balance Sheet total of a 1 billion EUR to have some form of disclosure; it is a material item. 2. I am fully aware that what I wrote was about replacing essentially all items on the liabilities side that most likely are cash items; but I still keep my opinion that a solution other… Read more »
jgwich
Member
5 years 29 days ago

It is always the same: Opel and Saab have devoleped new technology – on their costs. GM has the patent and is the owner. Saab and Opel have to pay for using it … and has to pay for every single car that will be produced! It is obvious that the profit is always on the GM-site and the costs on the other. The partners have no chance to become real profit center!

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