Release Date: February 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Leonardo SpA (FINMF, Financial) reported a significant increase in new orders, reaching EUR20.9 billion, a 12.2% increase from the previous year.
- The company achieved a substantial revenue growth of 11%, increasing from EUR16 billion to EUR17.8 billion.
- EBITA increased by 12.9% to EUR1.52 billion, indicating improved operational efficiency.
- Free operating cash flow rose by 26.7% to EUR826 million, surpassing the guidance of EUR770 million.
- Net debt was reduced by approximately 22.7%, from EUR2.3 billion to EUR1.8 billion, demonstrating strong financial management.
Negative Points
- The Aerostructures division continues to face challenges due to the Boeing crisis, impacting profitability.
- The SatCom business, connected to the space alliance with Thales, also experienced difficulties, affecting overall performance.
- Despite improvements, the delivery rate for the B787 fuselage remains lower than expected, affecting the Aerostructures division.
- The Space division's performance was impacted by challenges in the telco satellite segment, leading to lower EBITA.
- The company faces ongoing external challenges in the B787 program and the Space telco segment, which could affect future performance.
Q & A Highlights
Q: Can you provide more details on the ongoing negotiations regarding Aerostructures? Are you considering multiple partners to diversify from the 787 program?
A: Roberto Cingolani, CEO: We have identified a potential co-investor involved in aerospace and defense, and negotiations are ongoing. I cannot disclose more details at this moment, but we are committed to finding a solution soon. Regarding the 787, we have received a new delivery schedule from Boeing, but the delivery rate is currently lower than expected.
Q: How is the geopolitical situation in Europe affecting Leonardo's order intake, and what is the outlook for defense spending?
A: Roberto Cingolani, CEO: The geopolitical situation has highlighted the need for increased defense spending in Europe, potentially exceeding 2% of GDP. This could lead to significant investments in defense, benefiting Leonardo as a major operator in the sector. However, the timeline for order intake to translate into revenues depends on the type of procurement.
Q: Have you seen an acceleration in orders from EU countries due to increased defense spending plans?
A: Roberto Cingolani, CEO: We have not yet seen an acceleration in orders from the EU, as countries are still strategizing to address the geopolitical scenario. However, we expect demand to grow soon, especially from countries near Russia's border.
Q: Can you update us on the progress of potential acquisitions and whether you are considering larger acquisitions?
A: Roberto Cingolani, CEO: We have been working on several due diligences, primarily in cybersecurity and space. While we initially focused on smaller acquisitions, our financial capability has grown, allowing us to consider larger opportunities. We are currently pursuing five non-binding offers.
Q: Will the updated industrial plan on March 11 include assumptions of Europe spending above 2% of GDP on defense?
A: Roberto Cingolani, CEO: The updated plan will be based on existing conditions without assuming increased defense spending. It will reflect our current order book, efficiencies, and joint ventures. Any increase in defense investment would be additional to our presented data.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
