The merger between Leonardo and Airbus is difficult, but not impossible. On Wednesday Le Monde published an article written by the Italian foreign and defense ministers, Paolo Gentiloni and Roberta Pinotti, in which the two government officials call for closer collaboration in the European security and defense policy, also supporting the reasons for greater industrial integration at the continental level. Words that the market reads with a view to a possible rapprochement between the two defense giants of Italy and France, which could even merge.
“We believe it is a possible scenario, even if relations between Italy and France do not seem so 'warm' at the moment – note the analysts of Banca Akros -. We recall that Airbus was born in the early 14,4s when Germany, France and Spain joined together in a consortium. Italy had stayed out and had decided to strengthen its ties with Great Britain and the United States, but in a post-Brexit scenario the balance of power has changed and it is possible that Italy will seek an agreement with the remaining European partners '. Banca Akros also points out that, from a valuation point of view, Airbus is currently trading at a multiple of 2016 times its expected 10,4 earnings, while Leonardo is only valued at 40 times. The potential upside for Leonardo is therefore a very interesting +XNUMX% approximately”.
As for Leonardo's current situation, the group ranks 11th in the world rankings of the 2015 ranking of aerospace and defense giants, rising two positions compared to the previous year, with a turnover of 14.439 billion dollars. As far as financial performance indicators are concerned, Finmeccanica ranks 15th in the ranking of the top 20 A&Ds for operating profit, rising by one position compared to the previous year. This is what we read in a study by Deloitte dedicated to the aerospace and defense sector.
The same analysis shows that in 2015 the aerospace and defense sector grew by 3,8%, exceeding the growth of world GDP by 2,4 percentage points. A&D revenues increased $24,8 billion to $674,4 billion. However, the volatility of the money markets recorded in 2015 makes it necessary to analyze the data also taking into consideration the fluctuations of the dollar: in this case, the revenues of the sector fall by about two percentage points (1,9%) compared to the same period of the year previous.
Thanks to the growth in spending dedicated to the military sector, the defense segment reports an increase in revenues equal to 1,7% equivalent to approximately 5,8 billion dollars. "After two consecutive years of decline - says Gianluca Di Cicco, Aerospace & Defense Leader for Deloitte in Italy - investments in the defense sector will increase again thanks to the increase in international demand for military products linked to growing tensions in the Middle East, East Europe, Korea, India and China”.
The study highlights that in 2015 the commercial aerospace segment recorded a record for deliveries and backlog orders. In 2015, aircraft deliveries increased by 3,3% while it was the order backlog that recorded an all-time record of 13.467 orders, marking an 87,4% increase over 2010. The backlog, calculated on the prices of price list, amounts to about 2 billion dollars guaranteeing production for the next ten years and marking a clear increase compared to the 2010 figure (7.4 years).
On the other hand, new orders for commercial aircraft recorded a decrease of 39% compared to the figure of the previous year, reaching 1.841 units. In 2015, the commercial aerospace segment grew by 6,3% to total revenues of $325,5 billion. “The current order book suggests a future stability of the industrial sector despite, after 3 positive years, in 2015 there was a drop in orders for commercial aircraft - continues Di Cicco - The growth in transport demand especially in China, India and the Middle East, as well as the need for new generation fuel-efficient aircraft have helped boost demand.”
The Deloitte report estimates that around 34 aircraft will be delivered from 2015 to 2034, for a total value of over $5,47 billion. From a geographic markets point of view, the European Aerospace & Defense sector is eclipsing the US one. Great market competitiveness, the increase in budgets dedicated to defense and the constant increase in the production of commercial aircraft are the factors that have contributed to the growth in European revenues, equal to 8,2% (+9,6% for the commercial sector and +6,9% for the defense sector) while the US one is equal to 1,4%.
