Investor Presentation • Mar 11, 2022
Investor Presentation
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Rome
11 March 2022
| • | Key messages | Alessandro Profumo, Chief Executive Officer |
|---|---|---|
| • | Industrial review | Lucio Valerio Cioffi, General Manager |
| • | Financial review | Alessandra Genco, Chief Financial Officer |
• Q&A
We provide essential Security and Protection, security for people and nations.…
This means preserving peace and stability, safety and democracy, without which social and economic prosperity does not exist …
* Scope I and II CO2 total emissions, market-based
All businesses ahead of 2019 levels, excluding Aerostructures (€ mil)
ROIC 12.4% vs 11.3% in 2020
FOCF materially up, doubling guidance
5 • Proposed(1) dividend reinstatement at € 0.14 per share, reflecting stronger performance and our confidence looking forward
Helicopters and Aircraft
Helicopters
2021 Backlog € 12.4 bn
2018-2021 EBITA*: +4%
2021 Backlog € 8.9 bn
2018-2021 Revenues*: +19%
2018-2021 EBITA*: +18%
2018-2021 Revenues*: +3%
Attractive Customer Support & Training
Aircrafts Leadership position in key European and International cooperation programmes (i.e. EFA, JSF, EuroMale, Tempest)
Electronics
2021 Backlog € 12.0 bn 2018-2021 Revenues*: +4% 2018-2021 EBITA*: +7%
2021 Backlog € 2.2 bn 2018-2021 Revenues*: +7% 2018-2021 EBITA*: +19%
Leading edge in sensors and systems for multidomain applications
Leonardo DRS Strong backlog (funded and unfunded)
Continuing to execute our strategic plan "Be Tomorrow-2030"
Transform to Grow
Master the New
Based on strong fundamentals of our businesses
(*) Based on the current assessment of the effects deriving from the geopolitical and global health situation on the supply chain and the global economy and assuming no additional major deterioration
| • | Key messages | Alessandro Profumo, Chief Executive Officer |
|---|---|---|
| • | Industrial review | Lucio Valerio Cioffi, General Manager |
| • | Financial review | Alessandra Genco, Chief Financial Officer |
2021 the bottom year, gradual improvement from 2022
| ACTION PLAN |
• Furlough scheme agreed with trade unions • Workforce reduction by ca.800 mainly through new pension scheme • Collaboration with Vertical Aerospace on fuselage development for the Vertical's VX4 electric aircraft • Ongoing diversification business i.e. additional working packages |
|
|---|---|---|
| AIRBUS | • A321 further rate installation • A220 new "state of art" assembly line |
AEROSTRUCTURES |
| ATR | • Recovering faster than expected • Deliveries tripled (31 in 2021 vs 10 in 2020) • Clear strategy to strengthen ATR leadership in the regional market, providing sustainable and affordable platforms (i.e. new engine, SAF, etc.) • Portfolio enlargement (i.e. Cargo, STOL) |
BREAKEVEN Confirmed at the end of 2025 |
| B787 | • Resuming B787 deliveries • Breakeven from fuselage delivery n. 1,406 thanks to expected rate profile and pricing per contract |
|
| OTHER PROGRAMMES |
• EuroMALE agreement just signed - significant industrial fallout on Grottaglie and Foggia plants |
|
| DEFENCE | • Eurofighter and JSF production |
10 Leonardo Labs (in 6 regions in Italy and 1 in the USA)
30 research units
4 joint external laboratories
130 research fellows in 2022
7 th in the aerospace sector behind to NASA and JAXA agencies
5 Pflops of computing power
20 PByte of cumulative storage capacity
IMPORTANT YEAR OF DELIVERING ON PROMISES
| € mln | ∆ % YoY | |
|---|---|---|
| FY2020A | 13,754 | |
| HELICOPTERS | 4,370 | -2.8% |
| ELECTRONICS EUROPE | 5,392 | 14.5% |
| LEONARDO DRS | 2,194 | -18.0% |
| AIRCRAFT | 2,668 | 31.4% |
| AEROSTRUCTURES | 365 | -37.2% |
| ELIMINATIONS & OTHER | -682 | |
| FY2021A* | 14,307 | 4.0% |
* Including ca. € 12 mln of negative forex
Growing top line and continued strong programme delivery
| € mln | ∆ % YoY | |
|---|---|---|
| FY2020A | 13,410 | |
| HELICOPTERS | 4,157 | 4.7% |
| ELECTRONICS EUROPE | 4,519 | 9.0% |
| LEONARDO DRS | 2,434 | 0.8% |
| AIRCRAFT | 3,268 | 24.1% |
| AEROSTRUCTURES | 442 | -46.0% |
| ELIMINATIONS & OTHER | -685 | |
| FY2021A* | 14,135 | 5.4% |
* Including ca. € 19 mln of negative forex
Improving Profitability
| € mln | RoS | ∆ % YoY | ||
|---|---|---|---|---|
| FY2020A | 938 | 7.0% | ||
| HELICOPTERS | 406 | 9.8% | 6.0% | |
| ELECTRONICS EUROPE | 485 | 10.7% | 34.7% | |
| LEONARDO DRS | 218 | 9.0% | 23.2% | |
| AIRCRAFT | 432 13.2% 21.7% |
|||
| AEROSTRUCTURES | -203 | -45.9% -136.0% |
||
| ATR | -24 | 65.2% | ||
| SPACE | 62 | 169.6% | ||
| CORPORATE & OTHER | -253 | |||
| FY2021A* | 1,123 | 7.9% | 19.7% |
* Including ca. € 2 mln of positive forex
© 2022 Leonardo - Società per azioni
Stronger bottom line thanks to EBITA increase
cash flow conversion excl Aerostructures at ca. 70% in 2022
Continued cash discipline in core
Slightly lower cash absorption from Aerostructures
(*) Based on the current assessment of the effects deriving from the geopolitical and global health situation on the supply chain and the global economy and assuming no additional
KPI selected in loans fully aligned with Leonardo's ESG strategy and Long Term Incentive Plan
(1) Pro forma for January 2022 bond reimbursement.
(1) Includes Bond, Bei, Term Loan and CDP.
(2) Pro forma for January 2021 bond reimbursement and the EIB financing drawdown.
(3) Pro forma for January 2022 bond reimbursement.
| 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) |
2022 exchange rate assumptions: € / USD = 1.18 and € / GBP = 0.9
(1) Based on the current assessment of the effects deriving from the geopolitical and global health situation on the supply chain and the global economy and assuming no additional major deterioration
(*) Based on the current assessment of the effects deriving from the geopolitical and global health situation on the supply chain and the global economy and assuming no additional major deterioration
36%
37%
Growing Revenues and Profitability
* Avg. exchange rate €/\$ @ 1.1422 in FY2020; Avg. exchange rate €/\$ @ 1.1827 in FY2021
** Based on the current assessment of the effects deriving from the geopolitical and global health situation on the supply chain and the global economy and assuming no additional major deterioration
• 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 the global economy and assuming no additional major deterioration
Gradual recovery
2022 Outlook(**)
• Aerostructures gradual recovery despite continued softness in target civil market; ATR recovering faster, leveraging 2021 results
* Based on the current assessment of the effects deriving from the geopolitical and global health situation on the supply chain 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 the global economy and assuming no additional major deterioration
Steady path of growth, with FOCF doubling the original Guidance
Group Performance
| € mln | 4Q 2020 | 4Q 2021 | % Change | FY 2020 | FY 2021 | % Change |
|---|---|---|---|---|---|---|
| New Orders | 5.244 | 5.039 | -3.9% | 13.754 | 14.307 | 4.0% |
| Backlog | 35.516 | 35.534 | 0.1% | |||
| Revenues | 4.385 | 4,571 | 4.2% | 13.410 | 14.135 | 5.4% |
| EBITA | 441 | 516 | 17% | 938 | 1.123 | 19.7% |
| RoS | 10.1% | 11.3% | 1.2 p.p. | 7.0% | 7.9% | +0.9p.p. |
| EBIT | 122 | 466 | 282.0% | 517 | 911 | 76.2% |
| EBIT Margin | 2.8% | 10.2% | 7.4 p.p. | 3.9% | 6.4% | 2.5 p.p. |
| Net result before extraordinary transactions |
106 | 357 | 236.8% | 241 | 587 | 142.7% |
| Net result | 106 | 357 | 236.8% | 243 | 587 | 143.6% |
| EPS (€ cents) | 0.182 | 0.621 | 241.2% | 0.419 | 1.017 | 141.6% |
| FOCF | 1.257 | 2.805 | 123.2% | 40 | 209 | 422.5% |
| Group Net Debt | 3.318 | 3.122 | -5.9% | |||
| Headcount | 49.882 | 50.413 | 1.1% |
Free Operating Cash-Flow (FOCF): this 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
process efficiency
Energy efficiency Transition to LED technology for most industrial plants
Re-industrialization projects Implementation of automated equipment and digital solutions in order to increase competitiveness and product reliability for both existing and upcoming programs (ATR and EuroMALE)
Production line improvement with machines substitution in order to increase production rate and to reduce waste in the process
Digitalization of manufacturing and engineering processes driven by upgrade applications (such as SAP and Product Life-cycle Management) in order to reduce waste and improve quality
Our trainers through a greater use of simulation systems allow a reduction of the flight-hours resulting in benefits on carbon footprint and emissions
First civil tiltrotor to be certified which will represent and enabler technology for prosperity and progress combining into one aircraft the benefits of helicopter and fixed-wing aircraft
Light Intermediate helicopter with class-leading technology that guarantees the highest performance also representing a solution for a healthier planet along with operating capability in the most challenging conditions
New AESA multifunctional radars suite for naval platforms with state-of-the-art technologies. The new materials and manufacturing process for AESA antennas reduce power consumption and increase sustainable production
together with cash in-hands(1) ensure a Group's liquidity of approx. € 5.4 bn
(1) Pro forma for January 2022 bond reimbursement.
New Debt Instruments
• €600mln ESG linked Term Loan subscribed in December 2021 has a bullet repayment in 2027 Repayment Conditions of
| As of today | Before last review | Date of review | |
|---|---|---|---|
| Moody's | Ba1 / Stable Outlook |
Ba1 / Positive Outlook |
October 2018 |
| S&P | BB+ / Stable Outlook |
BB+ / Positive Outlook |
April 2020 |
| Fitch | BBB- / Stable Outlook |
BBB- / Negative Outlook |
January 2022 |
| € mln | Self Funded National Security |
Self Funded Other |
Total |
|---|---|---|---|
| 01 January 2021 Opening Balance |
1,710 | 713 | 2,423 |
| Gross R&D capitalised |
118 | 160 | 278 |
| Depreciation and write offs |
(75) | (44) | (119) |
| Disposals | - | (2) | (2) |
| Subtotal | 43 | 114 | 157 |
| Other Changes (*) |
7 | 22 | 29 |
| Net R&D capitalised |
50 | 136 | 186 |
| 31 December 2021 |
1,760 | 849 | 2,609 |
| (*) Movements w/o cash and PL effects |
| 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.
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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