Leonardo closes the first nine months of 2024 with all the main indicators growing. Confirms the guidance 2024 which would have been revised upwards if – as the CEO indicated Roberto Cingolani to financial analysts – had there not been the impact of external factors “such as the Boeing situation and the business of telecommunications for Thales Alenia Space which are not very positive.”
Leonardo, the numbers: 9-month profit rises to 364 million (+25,5%)
“Promising numbers”, Cingolani underlines about the results. And Piazza Affari recognizes it with a clear acceleration in the performance of the stock which then closes the day of Thursday 7 October with trading in strong growth (+4,28 percent). In the nine months the ordinary net income, without considering the extraordinary benefit of the capital gain of 366 million linked to the consolidation of Telespazio, rises to 364 million, +25,5%. Revenues and orders grow: the first at 12,076 billion, +17,6%, with a positive contribution from "almost all business sectors", in particular fromdefense and security electronics and helicopters“. The growth in orders, +11,7% to 14,753 billion, with a portfolio of 43,618 billion, is linked to “a particularly positive performance” for defense and security electronics, both in Europe and in the American Drs, but also for helicopters, cybersecurity and aerostructures. EBITA marks +18% to 766 million euros. TheGroup net debt: -18,2% to 3,1 billion.
It is a trend that "is confirming the validity of the path undertaken in pursuing the objectives indicated in the industrial plan", comments Cingolani who took stock 18 months after his arrival as CEO and reiterated the milestones achieved, prospects and objectives. "The consolidation of the core defense business is proceeding in line with the objectives we have set ourselves thanks to the acceleration of the digitalization process and the rationalization of the portfolio", he says.
Leonardo, Cingolani: here are the programs
In the foreground are major programs, such as the Gcap, the project of Italy, the United Kingdom and Japan for the next generation fighter which will see "the formal signing of an industrial agreement by the end of the year". And "the path of international alliances" which in mid-October saw the Birth of the joint venture with Rheinmetall in tanks.
We look at the role it could have Iveco Defence Vehicle: “All possibilities are open”, from a contribution from Iveco as a subcontractor to the hypothesis – still to be evaluated, also with the German partner – of an acquisition. But for an acquisition “at the moment we do not see the need”, clarifies Cingolani.
Leonardo: 14 SMEs targeted for M&A in cyber, drones and space
For the small acquisitions in its sights, Leonardo "is carrying forward 14 due diligence, in seven cases in an advanced way" especially in the cyber sectors, but also space and drones. In this regard, there are precisely 14 small and medium-sized enterprises in the sector cyber, space and drones that Leonardo has in its sights for potential acquisition operations, three of these are Italian. This is what we read in a slide presented by Cingolani to analysts. The most advanced dossier is that of a Danish company, with 9 million in revenue, active in cybersecurity with which an agreement could be finalized. As regards the Italian dossiers, two are in the cyber field (one with revenues of 20 million and the other of 2 million) and third in drones (5 million in revenues). In this last case, due diligence has been completed and Leonardo is waiting for feedback from the counterparty.
Leonardo and Aerostructures: possible spin-offs and alliances
Leonardo wants to change the pace of the activities of aerostructures given that the situation of Boeing and the prospects of civil aviation do not allow us to remain still: for this reason – said the CEO – the group is evaluating with its advisors a new scenario for these activities that goes towards a possible “spin-off (carve-out) and the creation of alliances”. The new scenario will be presented, said Cingolani, on the occasion of the update of the industrial plan in March.
“We are aware of Boeing’s great willingness to find an agreement, our teams have worked together trying to find the solution and I think we both did our best, but unfortunately this is not enough for us to keep the division profitable,” the manager began, speaking about supplies to the American aircraft manufacturer. “We have decided to develop an industrial transformation that includes a repositioning of the cost structure, a reconfiguration of the platforms, a restructuring of the supply chain and a reanalysis of business opportunities: all this could be implemented with financial and/or industrial partners.” It is necessary to “think differently and prepare alliances that can make the division attractive at an international level,” he added. “The quality of our manufacturing production is exceptional, but the situation requires an evolution towards a carve out and the creation of an alliance. We are working on this.”
With a conservative approach to the situation of the Aerostructures – explained Cingolani – the break even of these activities will come “in 2028 or 2029“, instead it is necessary to find “solutions with other partners” because an 'inertial' attitude would fail anyway. The way, he added, could involve a spin-off of the activities “protecting the workforce as much as possible” and the search for “a strong partner”: “the partnership is very important”, he continued, adding however that in civil aviation it is not easy to find an ally because “the margins are low, the competition is really difficult especially in countries with low labor costs, the contracts are long-term and inflexible”.
Leonardo and the sale of the former Wass to Fincantieri
The closing of the Sale of Uas to Fincantieri will take place in the first quarter of 2025 and, since orders are exceeding expectations, the valuation should be "at the expected maximum of 415 million", Cingolani added regarding the Sale of former Wass submarine defense assets to Fincantieri.
Cingolani on Trump: “Consistent with European Defense Space”
“If the pressure of Donald Trump will make increase defense budgets companies in the sector will benefit from this positive situation”: the newly elected president of the United States “he clearly said that he wants a more active Europe in participating in spending for NATO and investments in Defense. This is consistent with what I have always said: it is reasonable for Europe to come together and create synergies to create a European Defense space,” Cingolani notes. Two of Trump’s proposals, “increasing spending to 2%” and “stopping all conflicts” as an effect on Defense companies, “could be balanced.” As for the Italian government, there is the possibility of “good relations” with the new American administration and this is a circumstance that “can facilitate dialogue and future positive opportunities.”
