What Leonardo will do according to Leonardo
The highlights of Leonardo's new 2024-2028 industrial plan presented today by CEO Roberto Cingolani
Is Leonardo ready for the challenges of the future?
The answer is yes for the number one of the Italian aerospace and defense giant, Roberto Cingolani (in the photo) who today presented Leonardo's 2028 industrial plan, the first since he has been at the helm of the company since May 2023.
And to be ready, the former Finmeccanica group has mapped out the route five years from now which envisages: strengthening of the core aircraft business, rationalization of the portfolio (at least 20%), increased competitiveness and new alliances ("no one can do it alone ” highlighted Cingolani in the presentation of the plan to analysts).
Among the key points of the plan there is also the updating of the group's core platforms such as the Eurofighter combat aircraft and the acceleration of new programs such as Gcap and Aics.
Furthermore, for the top manager it is essential to catalyze European cooperation, a path already started in the land sector such as the Mbt program with Knds, a Franco-German consortium with which Leonardo has already started a strategic alliance: "at the moment we are in a technical phase. ”
Cingolani also mentioned the importance of collaboration with Fincantieri, starting from the joint venture Orizzonte Sistemi Navali up to the recent memorandum for the underwater domain.
After that, "we have an opportunity to integrate cyber security and space, promoting the space alliance [with the French Thales ed.] and the establishment of a new space division, explained Leonardo's CEO.
All this in the name of the Digital Continuum which "will allow multi-domain technologies to orchestrate military activities in all operational domains."
As regards the main targets of the plan in the next 5 years we find: total orders at 105 billion, revenues at 95 billion, double-digit profitability in 2026 and doubling of the focf to 1.35 billion at the end of the plan compared to 2023.
THE FINANCIAL OBJECTIVES OF LEONARDO'S INDUSTRIAL PLAN
Leonardo's board of directors unanimously approved the 2024-28 industrial plan which estimates collecting 105 billion euros in total orders, with "growth in orders anchored to the portfolio of products and solutions that respond to the evolving needs of customers". According to the company, the market environment is favorable underlying the growth in domestic and export orders. An order book expected to grow from €40 billion to €50 billion at the end of the Plan.
Cumulative revenues of 95 billion are expected, with an average annual increase of 6%. Profitability, in terms of EBITA on revenues, is estimated in double figures at 10% in 2026 and 11.5% in 2028. In particular, revenues at the end of the plan are indicated at 21.3 billion (16.8 billion in 2024) and the EBITDA at 2.5 billion (1.44 billion this year).
CYBER, ONE OF THE PILLARS OF LEONARDO'S NEW INDUSTRIAL PLAN
Moving on to one of the main pillars of the new industrial plan, Cingolani illustrated in a conference with analysts the importance of rationalizing and focusing the existing product portfolio in the cyber sector, transversal to the entire business, leveraging big data and AI.
In this regard, Leonardo's number one stated that the group aims to become a reference for the market as a "security buy design" for products such as radars, helicopters and aircraft.
From this perspective, Leonardo aims to grow in key technologies thanks to M&A operations: "due diligence in progress" anticipated Cingolani.
THE NEW SPACE DIVISION IS LAUNCHED
“Last but not least – explains Cingolani during the conference – the space sector”. For the future "we are already working on the space cloud which could be an asset to provide services to other platforms" said Cingolani, referring to the "Military space cloud architecture" study project assigned to Leonardo by the Teledife contract management of Segredifesa for the development of a military space cloud architecture, first in Europe.
Then, Cingolani recalled that Leonardo is a partner in Avio, the company that creates the Vega launcher, and "this is positive because we contribute to the creation of the launchers but it is not the core business" specifying to journalists that "Leonardo is not interested in entering the market of pitchers."
Precisely to highlight Leonardo's commitment to the space sector, Cingolani underlined that "for the first time we have established a space division and "we will consolidate Telespazio".
Telespazio is one of the two joint ventures of the space alliance, the company is currently 67% owned by Leonardo and 33% by Thales (the other jv is Thales Alenia Space with the French group at 67% and Leonardo at 33%) .
“Leonardo and Thales believe in the space alliance” which has “enormous potential” and will also be able to make “acquisitions”, underlined Cingolani: “This has been agreed with Thales colleagues, we believe in this synergy”. The creation of the Space division and the reorganization of the activities, continued the manager, allows Leonardo to become "a reference at European level because we no longer present ourselves with separate activities" and "gives us the possibility of being independent on all satellite services ”
Finally, Leonardo's CEO claimed that 'private investments will grow in the sector, until now there were more institutional ones but the transition towards greater private commitment as is already happening in the United States is also happening in Europe'.
THE 2024 GUIDANCE
As regards the guidance, "The trend expected in 2024 confirms Leonardo's sustainable growth path accompanied by the increase in profitability and cash generation, in a context characterized by high demand for defense and security" underlines the group indicating the guidance for 2024.
First of all, Leonardo expects a progressive growth in new orders for approximately 19.5 billion euros for 2024, driven above all by the Defense and Security Electronics sector and by the recovery of the Aeronautics sector, confirming the good positioning of the products and solutions of the Group and the ability to effectively control key markets.
Revenues of around 16.8 billion are expected, growing compared to 2023 thanks to the contribution of new orders and the development of activities in the portfolio which has reached the record value of around 40 billion. Profitability is also estimated to increase, with Ebita of 1.4 billion, supported by the growth in volumes and the confirmation of excellent levels of industrial profitability in the main business areas.
RESUMPTION OF THE AEROSTRUCTURES DIVISION
According to the company, the forecast also reflects the progressive recovery of the Aerostructures business (breakeven confirmed in 2025) while discounting the difficulties in the manufacturing segment of commercial telecommunications satellites through the subsidiary Thales Alenia Space, the note indicates.
CASH FLOW SUPPORTED BY THE DEFENSE BUSINESS
The Fofc is estimated at approximately 770 million, with the defense and government business ensuring solid cash generation while cash absorption in Aerostructures continues albeit to a lesser extent than in 2023.
DEBT REDUCTION
The Group's net debt is estimated at 2.0 billion thanks to cash generation and net of the increased disbursement of dividends from Euro 0.14 to Euro 0.28 per share, new leasing contracts, strategic investments and other movements minors.
DOUBLE THE DIVIDEND
Furthermore, Leonardo's board of directors has decided to propose to the shareholders' meeting the distribution of a dividend equal to 0.28 euros based on the profit for the 2023 financial year, to be paid from 26 June 2024. Last year's coupon, valid on the 2022 budget, was equal to 0.14 euros per share.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/piano-industriale-leonardo/ on Tue, 12 Mar 2024 15:11:54 +0000.