News arriving in Leonardo's organization, the former Finmeccanica. The managing director Alessandro Profumo intends to set up an autonomous central commercial structure, to strengthen the presence in the promotion and sale of the aerospace and defense group's products, according to information collected by Poteri Deboli.
During the management of Mauro Moretti, the former CEO of the Railways who was at the helm of Leonardo-Finmeccanica for three years until 16 May and created the "One company", transforming the main companies into divisions, the commercial function was been incorporated into the skills of Giovanni Soccodato, the director of strategies who also became responsible for "market and business development". Now Profumo, from what transpires from authoritative sources even if there is nothing official, has the intention of separating the commercial from the competences of Soccodato, who nonetheless remains a very listened to executive for his knowledge of the aerospace and defense world.
Aurelio Regina evaluates the managers
For the new position, a number of candidates among the group's internal managers were evaluated, with the help of a headhunting company, Egon Zehnder International. This company's point of reference for relations with the Roman political, institutional and economic "milieu" is Aurelio Regina, partner of Egon Zehnder, a man who is part of Giuliano Amato's network. Entrepreneur, holder of numerous offices, Regina is chairman and shareholder of Manifatture Sigaro Toscano (which has Luca Cordero di Montezemolo as a shareholder), director of the American Studies Center, of which _ since Amato became a judge of the Constitutional Court _ is president Gianni De Gennaro, president of Leonardo, he is also a member of the board of Aspen Institute Italia, vice president of Credit Suisse Italy, director of Cerved Information Solutions, a listed company, president of the Fondazione Musica per Roma. Egon Zhender had already worked a lot with Moretti and, as far as it turns out, not only takes care of the new super commercial director but is also in charge of evaluating executives for other positions in the group.
The choice of Leonardo's new commercial and business development director could be announced shortly, some say in September, when the "hundred days" that Profumo gave himself before making the most important moves will have passed. The new CEO considers this function decisive for the commercial relaunch of the group, which in recent years has lost ground precisely in the acquisition of new orders and has suffered a contraction in revenues. In 2016 consolidated turnover decreased by almost one billion to 12 billion, the same figure is expected in this year's forecasts, confirmed by the board of directors.
Lorenzo Mariani in pole position
Among others, the name of the engineer Lorenzo Mariani, one of the most prominent (and rampant) managers of the group, is the head of one of the seven divisions created by Moretti, the new sales and business development director Electronics division for land and naval defense. Mariani's name had also been hypothesized as a possible ad before Profumo's choice. Then the internal voices indicated him among the candidates for the position of general manager of the group, in competition with the head of the IT security systems division, Andrea Biraghi, engineer, son of team admiral Sergio Biraghi.
But Profumo (who unlike Moretti does not combine this position with that of CEO) has never said that there will be a new general manager. Indeed, as he had explained as soon as he arrived, in confidential talks also in recent days he has pointed out: "I don't want to create structures between myself and the divisions".
It remains to be seen what rank the new commercial director will have, he could have a heavy qualification, which indicates a prominent position, especially if the choice falls on a division head like Mariani. There are also other internal candidates and the official choice has not yet been made. The Board of Directors which approved the accounts for the first half year did not speak of a new organization or new top positions.
Possible changes in divisions
Among the possible moves for the coming months are some changes in the divisions. Filippo Bagnato, the head of the aircraft division (also known as "Alenia Nord") that Moretti had recalled from retirement in 2015 to replace Giuseppe Giordo, is outgoing. The current number two in the division, Stefano Bortoli, could go up.
The helicopter division, led by Daniele Romiti, also remains under observation, but the repeated rumors of a change at the top have not materialized so far. After two years of suffering in helicopters there was an equal recovery in the first half, orders rose by 19,2% to 1.142 million, with a boost especially in the second quarter.
Compared to the organization created by Moretti, Profumo has already abolished the four sectors with their respective heads who were above the divisions, because they created a redundancy and in fact did not have a role, given that the division heads had a direct report to the managing director. It cannot be ruled out that the new organization will also lead to a reduction in divisions. “In perspective, it could happen,” a top manager of Leonardo told Poteri Deboli.
Profumo: “I have no intention of bringing anyone back from the group. We produce too many Ferraris”
Simonetta Iarlori, former Unicredit, has already arrived in Piazza Monte Grappa from Cassa depositi e prestiti, designated as the new personnel manager in place of Domenico Braccialarghe. However, the appointment has not yet been made official. Braccialarghe is still in Leonardo and will continue to be the president of the Ansaldo Foundation of Genoa, moreover, according to rumors, he should have a consultancy.
There is also talk of the possible transfer to another position (in the helicopter division) of the CFO of the group, Gian Piero Cutillo, an unconfirmed rumor. In recent days there have been rumors of the return of some former managers of the group ousted during Moretti's management, but Profumo dryly rules out this possibility. “I have no intention of bringing anyone back,” Profumo said in some confidential talks.
Profumo told analysts in London today that he will present a "new strategic plan" in early 2018, "there will be no upheavals". However, he did send a warning: "we produce too many Ferraris", i.e. very valid products but more expensive than our competitors (he cited the C27J military transport aircraft as an example compared to the Airbus C295), "we need more attention to demand" .
Half-year accounts: revenues and profits fall, weak orders
A quick look at the accounts that Profumo presented to analysts in London today. The half-yearly report approved yesterday by the board chaired by De Gennaro confirms the drop in revenues and orders. Revenues for the first half amounted to 5.326 million, down by 1,6% compared to 5.413 in the first half of 2016. The decline is more pronounced than the 5.973 in the first half of 2015.
Orders acquired in the six months amounted to 5.061 million. In the first half of 2016, the former Finmeccanica had triumphantly announced an order volume of 12.867 million, including the acquisition of the contract to sell 28 Eurofighters to Kuwait, signed by Moretti but the result of work started by his predecessors in 2010 and developed together to the Air Force and the governments that took turns during this period. A year ago Finmeccanica had included in its books the entire value of the Efa-Kuwait order, equal to 7,95 billion euros, but only about 60% is within its competence (therefore a sum equal to 4,77 billion) . The remaining 40% of the contract value, equal to 3,18 billion, is the responsibility of other partners of the Eurofighter consortium.
“Exceptional effect” of the Eurofighter-Kuwait
Now in the half-yearly report the group points out, in our opinion correctly, that "the figure for the first half of 2016 included the exceptional effect of the acquisition of the Efa Kuwait contract for an amount of 7,95 billion, excluding which the amount of orders grew by 2017% in 3”. If, on the other hand, a comparison is made with the bare figures of the first half of 2016, orders in the first half of 2017 decreased by 60,7 percent.
In short, with Profumo's arrival, Moretti's triumphal overtones of a year ago were set aside and it is more realistically acknowledged that the Kuwait event was "exceptional". If the Efa-Kuwait order is excluded from the calculation, the drop in group orders can be better seen: they were 5.539 million in the first half of 2015, then 4.917 million in the first half of 2016, and 5.061 in the first half of 2017. In all these periods, the orders (always excluding Efa-Kuwait) were lower than revenues, this means that the group has used up the order portfolio, which is the work of the future.
The order book wears out
The order backlog at the end of June 2017 amounted to 33.923 million euros (this figure includes 100% of the value of the Efa-Kuwait contract, even if 40%, as mentioned, does not belong to the Leonardo group), i.e. one billion and 73 million less (-3%) compared to 30 June 2016. Leonardo's press release says: "The coverage ensured by the order portfolio is equal to over three years of equivalent production".
A question for Leonardo
On this we have a question to ask Leonardo: since the revenues expected by the group this year are equal to 12 billion, the same amount as in 2016, but with a sharp decrease compared to previous years (for example, in 2015 revenues were equal to 13 billion), if we divide the order backlog of 33,9 billion by 12 billion we get 2,8. That would be to say two years and almost ten months, therefore less than the "over three years of equivalent production" declared by the company. Therefore, for this portfolio to ensure "over three years of production" we would expect a further drop in revenues in the coming years. Otherwise it is not true that there are more than three years of covered work. We therefore ask Leonardo to clarify how he claims that the order book ensures "over three years of production"?
Last figure, in the first half there is a net profit of 194 million, down by 16 million (-7,6%) compared to 210 million in the same period of 2016, which included a capital gain of ten million. On the Stock Exchange, Leonardo shares closed on Friday 28 July with a drop of 2,40% at 15,02 euros. A worse performance than the index which lost 0,92 percent.
Source: WEAK POWERS, blog by Gianni Dragoni
