Eurofighter, what happens to Leonardo in Kuwait
Leonardo's clarifications after the news of the corruption investigation launched by Kuwait as part of the 28 Eurofighter order. The Italian defense group has an industrial stake in the program of 36%.
Difficult session yesterday on the stock exchange for Leonardo due to the Kuwait affair.
The stock has come to lose up to 8% in the first trades on Piazza Affari.
The news of the investigation launched in Kuwait for corruption reported by the Ap . The Kuwait government said on Monday it had referred two senior military officers on allegations of alleged bribery in the purchase of 28 Eurofighter Typhoon fighter jets. The total value of the order is 8.7 billion dollars.
The company headed by Alessandro Profumo has announced that it is not the subject of a judicial investigation in relation to the Eurofighter program with Kuwait which is proceeding in line with expectations. However, the stock was unable to recover by closing Leonardo in sharp decline, on the lows since before Christmas. “The market fears that there may be repercussions on the contract (only two jets have been delivered so far). And while waiting to understand more, he sold ”comments Repubblica .
In December 2021 Leonardo delivered the first two Eurofighter Typhoons to Kuwait. The delivery of the others will follow as foreseen in the plan, underlines the press release from the former Finmeccanica group.
In the meantime, today Leonardo's shares have regained their 3.44% stake to 6.44 euros. Analysts remain cautious. As MF reports, “Intesa Sanpaolo does not rule out that potential further negative voices on the program may contribute to keeping the stock under pressure in the short-medium term”. "In the event that Leonardo were involved in the investigation there would, in any case, be a reputational damage", warned Equita, "recalling that in India, where the group had undergone an investigation for corruption relating to an order for 12 helicopters of the value of 560 million dating back to 2012, he returned to having stable relationships only in 2021 ".
THE JUDICIAL INVESTIGATION IN KUWAIT
As Defense News reports, the Kuwait Anti-Corruption Authority has stated that a prominent Kuwaiti army general and colonel will face prosecutors for their alleged misuse of public funds in connection with 28 Eurofighter contract worth 8 , 7 billion dollars signed in 2016.
“This is not the first corruption scandal that has rocked Kuwait. Two years ago, for having used the 800 million dollar military aid fund "improperly", the Prime Minister and Minister of Defense ended up in prison "reports Repubblica . "Now the stock market operators are waiting to understand if what has been circulated in the last few hours contains elements of substantial novelty", remarks Il Sole 24 Ore.
“Now history repeats itself, but the Leonardo group is involved in it”, underlines Repubblica .
THE HIGH COST OF JETS IN THE SIGHT
According to AP, the high cost of the deal has created some perplexities, especially when compared with similar purchases of fighter jets across the Middle East. Qatar, for example, paid about $ 6.9 billion for just 24 of the same jets with shipments starting next year while Saudi Arabia spent $ 6 billion on 72 Typhoons, albeit of earlier generation aircraft sections. .
LEONARDO'S PRECISATION
"As a result of some rumors, Leonardo intends to specify that the Eurofighter program with Kuwait is proceeding in line with expectations and with success in terms of deliveries, contractual milestones and collections", the Piazza Monte Grappa company announced yesterday. .
"It is clarified that Leonardo is not the subject of a judicial investigation in relation to the Kuwait program," he added.
THE EUROFIGHTER PROGRAM WITH KUWAIT
The 8 billion euro contract for the supply of 28 fighter jets to Kuwait, signed in 2016, is the most important ever signed by Leonardo as prime contractor.
“Our contractual relationship with Kuwait – whose relationship is governed by a contract signed as part of a broader relationship between the institutions and the aeronautics of the two countries – has always been based on the principles of maximum transparency as well as full fairness. Leonardo does not have any evidence of criticality and every single transaction is punctually subject to procedures and adequacy checks ”, says Leonardo.
THE COMMENT OF THE ANALYSTS
Leonardo's share is equal to 60% of the value of the order ” MF recalls. According to Intesa Sanpaolo, “it should contribute significantly to the group's accounts in 2022 and in the coming years. Bestinver Securities has estimated that the effective weight of the program on the group's backlog starting from the first nine months of 2021 is over 15-18% and represents about 12-15% of the estimated revenues for 2021 (14.1 billion euros according to the Bloomberg consensus), considering the scheduled flow of payments ".
"Regardless of the evolution, Equita Sim believes that the order cannot be canceled or modified significantly, also because after the long development phase, the first 2 aircraft were delivered last December and the rest are scheduled. by 2024-2025. Banca Akros is also convinced that the contractual framework with the client is solid and does not envisage major risks such as contractual or criminal changes: “in our opinion, the program is too important and at an advanced stage and has broad political support. Therefore, we do not expect the news to have a significant impact today ”reports MF .
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/eurofighter-cosa-succede-a-leonardo-in-kuwait/ on Wed, 26 Jan 2022 14:55:04 +0000.