Investor Presentation • Jul 28, 2022
Investor Presentation
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Rome
28 July 2022
• Financial review Alessandra Genco, Chief Financial Officer
Good 1H2022 results, delivering strong performance
* Restatement to include 1H2021 covid costs within EBITA as previously accounted below the line
ESG: DEMONSTRATING DEEP COMMITMENT IN OUR FIRST ESG INVESTOR DAY
POSITIONING FOR TOMORROW'S DEFENCE MARKET
Important progress and goals achieved
In Europe: reinforced positioning in Defence Electronic through the 25.1% stake in Hensoldt
adding Israel as a new domestic market
Increased addressable market and strong fit/diversity of programs
Business strengthening
Technological exploitation
Broader domestic footprint
Exploit EU/international market
Enhancement of market positioning in the tactical operational environment, enabling an integrated approach
RADA products will allow Leonardo to bring innovative integrated solutions to market
Adding Israel, a technology leader and advanced Defence customer, as a new domestic market
Support RADA organic expansion accessing EU / export markets and new programmes
• Key messages Alessandro Profumo, Chief Executive Officer
• Financial review Alessandra Genco, Chief Financial Officer
* Restatement to include 1H2021 covid costs within EBITA as previously accounted below the line
Commercially strong, reflecting continued strength of defence-governmental business
| € mln | ∆ % YoY | |
|---|---|---|
| 1H2021A | 6,682 | |
| HELICOPTERS | 2,183 | 8.7% |
| ELECTRONICS EUROPE | 2,540 | 4.4% |
| LEONARDO DRS | 1,307 | 9.8% |
| AIRCRAFT | 1,490 | 20.6% |
| AEROSTRUCTURES | 158 | 18.8% |
| ELIMINATIONS & OTHER | -368 | |
| 1H2022A* | 7,310 | 9.4% |
* Including ca. € 197 mln of positive forex
Solid performance confirming growth path
| € mln | ∆ % YoY | ||
|---|---|---|---|
| 1H2021A | 6,345 | ||
| HELICOPTERS | 2,110 | 11.6% | Ramp-up mainly in NH90 Qatar and AW169 |
| ELECTRONICS EUROPE | 2,109 | 0.8% | +4.4% like for like** driven by Defence Systems |
| LEONARDO DRS | 1,133 | 2.0% | Softness due to timing of new acquisitions and some shifts in the Supply Chain. Positive FX effect |
| AIRCRAFT | 1,261 | 2.2% | Increase driven by C27-J and logistics EFA |
| AEROSTRUCTURES | 234 | -23.3% | Decrease in line with plan; production increase in 2H2022 based on customer demand |
| ELIMINATIONS & OTHER | -271 | ||
| 1H2022A* | 6,576 | 3.6% |
* Including ca. € 158 mln of positive forex
**Reclassification of the Automation business in "Other activities" starting from January 2022
Improving Profitability
| € mln | RoS | ∆ % YoY | ||
|---|---|---|---|---|
| 1H2021A | 400 | 6.3% | ||
| 1H2021 Restated | 374 | 5.9% | ||
| HELICOPTERS | 151 | 7.2% | 2.0% | Higher volumes with higher pass-through contribution |
| ELECTRONICS EUROPE | 210 | 10.0% | 4.5% | Increase across all business areas, mainly in Defence Systems |
| LEONARDO DRS | 104 | 9.2% | 8.3% | Confirmed margin expansion primarily driven by the transition of development programmes into production |
| AIRCRAFT | 152 | 12.1% | 1.3% | Continued progress on milestone delivery, confirming strong profitability |
| AEROSTRUCTURES | -88 | -37.6% | -7.3% | Low asset utilisation due to low production volumes |
| ATR | -1 | +95.2% | Increase driven by efficiency plan and signing of a customer settlement |
|
| SPACE | 3 | -87.0% | Decrease due to risk provisions on a contract related to Russia, in addition to the unfavorable comparison base (tax benefit accounted in 2021) |
|
| CORPORATE & OTHER | -113 | |||
| 1H2022A* | 418 | 6.4% | +11.8% ** | Including ca. € 11 mln of positive forex **vs 1H2021 restated |
Stronger bottom line thanks to EBITA increase
| FY2021A | FY2022 Guidance(1) |
||
|---|---|---|---|
| New Orders | (€ bn) | 14.3 | ca. 15.0 |
| Revenues | (€ bn) | 14.1 | 14.5-15.0 |
| EBITA | (€ mln) | 1,123 | 1,180-1,220(2) |
| FOCF | (€ mln) | 209 | ca. 500 |
| Group Net Debt | (€ bn) | 3.1 | ca.3.1(3) |
Assuming USD/€ exchange rate at 1.18 and €/GBP exchange rate at 0.90
• Key messages Alessandro Profumo, Chief Executive Officer
• Financial review Alessandra Genco, Chief Financial Officer
• Key messages Alessandro Profumo, Chief Executive Officer
• Financial review Alessandra Genco, Chief Financial Officer
• Growth driven by delivery of programmes in backlog, defence-governmental business and gradual recovery in civil, still affect by the pandemic
• Profitability supported by optimisation of industrial processes and improved competitiveness, despite pass through activities and production mix
(*) Based on the current assessment of the effects deriving from the geopolitical and global health situation on the supply chain and labour market and the global economy and assuming no additional major deterioration
Growing Revenues and Profitability
| 2Q/1H22 Results | ||||
|---|---|---|---|---|
| ELECTRONICS - | EU | |||
| € mln | 2Q 2021 | 2Q 2022 | % Change | |
| Orders | 889 | 1,051 | 18.2% | |
| Revenues | 1,161 | 1,154 | -0.6% | |
| EBITA | 122 | 119 | -2.5% | |
| RoS | 10.5% | 10.3% | -0.2 p.p. | |
| € mln | 1H 2021 | 1H 2022 | % Change | |
| Orders | 2,433 | 2,540 | 4.4% | |
| Revenues | 2,092 | 2,109 | 0.8% | |
| EBITA | 201 | 210 | 4.5% | |
| RoS | 9.6% | 10.0% | +0.4 p.p. | |
| LEONARDO DRS | ||||
| \$ mln(*) | 2Q 2021 | 2Q 2022 | % Change | |
| Orders | 720 | 683 | -5.1% | |
| Revenues | 658 | 627 | -4.7% | |
| EBITA | 58 | 52 | -10.3% | |
| RoS | 8.8% | 8.3% | -0.5 p.p. | |
| \$ mln(*) | 1H 2021 | 1H 2022 | % Change | |
| Orders | 1,435 | 1,430 | -0.3% | |
| Revenues | 1,339 | 1,239 | -7.5% | |
| EBITA | 116 | 114 | -1.7% | |
| RoS | 8.7% | 9.2% | +0.5 p.p. |
* Avg. exchange rate €/\$ @ 1.2057 in 1H2021, Avg. exchange rate €/\$ @ 1.0940 in 1H2022
** Based on the current assessment of the effects deriving from the geopolitical and global health situation on the supply chain and labour market and the global economy and assuming no additional major deterioration
485
10,7%
8,7%
258
9,0%
• Aircraft production increase driven by EFA Kuwait and M-345/M-346; Tempest initial R&D activities expected
* Based on the current assessment of the effects deriving from the geopolitical and global health situation on the supply chain and labour market and the global economy and assuming no additional major deterioration
Gradual recovery
• Aerostructures gradual recovery despite continued softness in target civil market; ATR recovering faster, leveraging 2021 results
| 2Q/1H22 Results | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Aerostructures | ||||||||||||
| € mln | 2Q 2021 | 2Q 2022 | % Change | |||||||||
| Orders | 97 | 64 | (34.0%) | |||||||||
| Revenues | 194 | 111 | (42.8%) | |||||||||
| EBITA | (36) | (42) | (16.7%) | |||||||||
| RoS | (18.6%) | (37.8%) | (19,2 p.p) | |||||||||
| € mln | 1H 2021 | 1H 2022 | % Change | |||||||||
| Orders | 133 | 158 | 18.8% | |||||||||
| Revenues | 305 | 234 | (23.3%) | |||||||||
| EBITA | (82) | (88) | (7.3%) | |||||||||
| RoS | (26.9%) | (37.6%) | (10.7 p.p.) | |||||||||
| ATR | ||||||||||||
| € mln | 2Q 2021 | 2Q 2022 | % Change | |||||||||
| EBITA | (7) | 9 | +228.6% | |||||||||
| € mln | 1H 2021 | 1H 2022 | % Change | |||||||||
| EBITA | (21) | (1) | 95.2% |
* Based on the current assessment of the effects deriving from the geopolitical and global health situation on the supply chain and labour market and the global economy and assuming no additional major deterioration
Recovery of Manufacturing and confirmed solid performance of Satellite services
• Growing volumes driven by increased backlog and profitability improvement expected in Manufacturing due to efficiency actions in place to recover competitiveness on Telecommunication business
* Based on the current assessment of the effects deriving from the geopolitical and global health situation on the supply chain and labour market and the global economy and assuming no additional major deterioration
• Key messages Alessandro Profumo, Chief Executive Officer
• Financial review Alessandra Genco, Chief Financial Officer
Group Performance
| € mln | 2Q 2021 | 2Q 2022 | % Change | 1H2021 | 1H2022 | % Change | |
|---|---|---|---|---|---|---|---|
| New Orders | 3,261 | 3,521 | +7.9% | 6,682 | 7,310 | +9.4% | |
| Backlog | 35,883 | 36,358 | +1.3% | ||||
| Revenues | 3,555 | 3,570 | +0.4% | 6,345 | 6,576 | +3.6% | |
| EBITA | 305 | 286 | -6.2% | 400 | 418 | +4.5% | |
| EBITA Restated* | 290 | 286 | -1.4% | 374 | 418 | +11.8% | |
| RoS | 8.6% | 8.0% | -0.6 p.p. | 6.3% | 6.4% | +0.1 p.p. | |
| RoS Restated* |
8.2% | 8.0% | -0.2 p.p. | 5.9% | 6.4% | +0.5 p.p. | |
| EBIT | 272 | 239 | -12.1% | 347 | 362 | +4.3% | |
| EBIT Margin | 7.7% | 6.7% | -1 p.p. | 5.5% | 5.5% | 0.0 p.p. | |
| Net result before extraordinary transactions |
179 | 193 | +7.8% | 177 | 267 | +50.8% | |
| Net result | 179 | 193 | +7.8% | 177 | 267 | +50.8% | |
| EPS (€ cents) | 0.309 | 0.333 | +7.8% | 0.306 | 0.462 | +50.8% | |
| FOCF | 42 | 118 | +181.0% | -1,380 | -962 | +30.3% | |
| Group Net Debt | 4,613 | 4,793 | +3.9% | ||||
| Headcount | 49,980 | 50.441 | 0.9% |
Free Operating Cash-Flow (FOCF): is the sum of the cash flows generated by (used in) operating activities (which includes interests and income taxes paid) and the cash flows generated by (used in) ordinary investment activity (property, plant and equipment and intangible assets) and dividends received
* Restatement to include covid costs in 2021 as they were accounted below the line in 2021 and on EBITA in 2022
together with cash in-hands ensure a Group's liquidity of approx. € 3.8 bn
| As of today | Before last review | Date of review | |
|---|---|---|---|
| Moody's | Ba1 / Positive Outlook | Ba1 / Stable Outlook | July 2022 |
| S&P | BB+ / Positive Outlook |
BB+ / Stable Outlook |
May 2022 |
| Fitch | BBB- / Stable Outlook |
BBB- / Negative Outlook |
January 2022 |
2Q/1H22 Results
| FY2021A Post IFRS 16 |
FY2021A Post IFRS 16 |
||
|---|---|---|---|
| EBITDA* | € 1,538 mln | Group Net Debt | € 3,122 mln |
| Net Interest | € 138 mln | Leasing (IFRS 16) | - € 568 mln |
| Financial Debt to MBDA |
- € 664 mln |
||
| Group Net Debt for Covenant |
€ 1,890 mln | ||
| EBITDA* | € 1,538 mln | ||
| EBITDA / Net Interest | 11.1 | Group Net Debt / EBITDA |
1.2 |
| THRESHOLD | > 3.25 | THRESHOLD | < 3.75 |
* EBITDA net of depreciation of rights of use
NOTE: Some of the statements included in this document are not historical facts but rather statements of future expectations, also related to future economic and financial performance, to be considered forward-looking statements. These forward-looking statements are based on Company's views and assumptions as of the date of the statements and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Given these uncertainties, you should not rely on forward-looking statements.
The following factors could affect our forward-looking statements: the ability to obtain or the timing of obtaining future government awards; the availability of government funding and customer requirements both domestically and internationally; changes in government or customer priorities due to programme reviews or revisions to strategic objectives (including changes in priorities to respond to terrorist threats or to improve homeland security); difficulties in developing and producing operationally advanced technology systems; the competitive environment; economic business and political conditions domestically and internationally; programme performance and the timing of contract payments; the timing and customer acceptance of product deliveries and launches; our ability to achieve or realise savings for our customers or ourselves through our global cost-cutting programme and other financial management programmes; and the outcome of contingencies (including completion of any acquisitions and divestitures, litigation and environmental remediation efforts).
These are only some of the numerous factors that may affect the forward-looking statements contained in this document.
The Company undertakes no obligation to revise or update forward-looking statements as a result of new information since these statements may no longer be accurate or timely.
29
Valeria Ricciotti
Head of Investor Relations and Credit Rating Agencies
+39 06 32473.697
Leonardo Investor Relations and Credit Rating Agencies
+39 06 32473.512
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