Rome, 30 July 2024 16:41
- Backlog at record level > € 43 billion with a book to bill at 1,3x
- Growth reflects strong delivery of backlog
- EBITA improvement driven by growing Electronics and Helicopters and acceleration of efficiency plan
- Continuous improvement of FOCF, reducing cash absorption
- Group Net Debt at € 3 billion (-18,3%1)
- Preliminary agreements signed to strengthen international alliances and consolidating the core business
* vs 1H23 pro-forma
Leonardo's Board of Directors, convened today under the Chairmanship of Stefano Pontecorvo, examined and unanimously approved 2024 first half results.
“The first half results show double-digit growth across all KPIs. In recent months we have also achieved significant goals in strengthening international alliances by taking an active role in promoting European Defense. The agreement with Rheinmetall represents a unique opportunity for the development of the new generation of land defence systems. – Roberto Cingolani, Leonardo CEO and GM, stated.
“The consolidation of the core defense business continues thanks to the acceleration of the digitalisation process and the rationalization of the portfolio with the sale of Underwater Armaments & Systems which gives further impetus to the collaboration between Leonardo and Fincantieri, and the exit from non-core businesses such as IIA and Skydweller. The creation of the new Space Division positions Leonardo in rapidly growing market segments, while targeted acquisitions will strengthen the Cybersecurity business. The efficiency plan is fully operational, with results exceeding expectations. All this confirms our clear direction of travel in line with the objectives of the Industrial Plan”.
1H 2024 financial results
The strong performance recorded by the Group in 2023 continued in the first six months of 2024, with a significant step up in volumes and a solid profitability in all the business segments, showing a further significant increase compared to the prior period. In order to make the Group's operating performance more comparable, the indicators for the comparative period are also provided in this Report on a pro-forma basis, including the contribution of the Telespazio group, consolidated on a line-by-line basis starting from 1 January 2024.
New Orders and Revenues sharply increased by 18.8% (+15.6% compared to the pro-forma figure of June 2023) and by 15.8% (+10.9% compared to the pro-forma figure) respectively, driven in particular by the Defence Electronics & Security and Helicopters businesses. The growth in Revenues was accompanied by an increase in EBITA of 17.0% (+13.3% compared to the pro-forma figure), bringing the ROS for the period to 6.3% (6.2% at 30 June 2023).
Free Operating Cash Flow for the period also improved by 2.9% (8.4% compared to the pro-forma figure), demonstrating the Group’s ability to keep on the path to strengthen cash generation it has embarked on, though being affected by the usual interim trend that is characterised by cash absorptions in the first part of the year. The FOCF performance and the sale of the minority stake in Leonardo DRS, which occurred in the last quarter of 2023, resulted in a consequent positive impact on the Group's net debt, which decreased by about 17.5% compared to the comparative period (18.3% compared to the pro-forma figure).
Key Performance Indicators
The KPIs for the period and the main changes in the Group's performance are shown below. Please refer to section “Non-GAAP performance indicators” for definitions.
The Key Performance Indicators for the comparative period are provided also on a pro-forma basis, including the effects of the line-by-line consolidation of Telespazio:
*’EBITA is obtained by eliminating from EBIT the following items: any impairment in goodwill; amortisation and impairment, if any, of the portion of the purchase price allocated to intangible assets as part of business combinations; restructuring costs that are a part of defined and significant plans; other exceptional costs or income, i.e. connected to particularly significant events that are not related to the ordinary performance of the business.
**EBIT is obtained by adding to Income before tax and financial expenses (the Group’s share of profit in the results of its strategic investments (ATR, MBDA, Thales Alenia Space and Hensoldt), reported in the “share of profits (losses) of equity-accounted investees”
2024 Guidance
In view of the results achieved in the first half of 2024 and the expectations for the coming periods, we confirm the guidance for the entire year as drawn up when preparing the annual financial statements as at 31 December 2023.
Exchange rate assumptions: € / USD = 1.15 and € / GBP = 0.89
1) The values shown for the year 2023 enhance the full consolidation of Telespazio, effective from 2024
2) Based on the current assessment of the effects deriving from the geopolitical situation on the supply chain and the global economy and assuming no additional major deterioration.
3) Assuming the increased dividend payment from € 0.14 to € 0.28 per share, new leasing contracts, strategic investments, and other minor transactions.
Commercial Performance
- New Orders, amounted to EUR 10,324 million significantly increasing (+18.8%, +15.6% on the pro-forma figure) compared to the first six months of 2023, thanks in particular to the excellent performance of the Defence Electronics and Security sector, in all the main business areas of the European DES component and in that of the subsidiary DRS, as well as of Helicopters in the government and commercial fields. We also note a considerable increase in the contribution given by Cyber & Security Solutions and Aerostructures. The level of Orders for the half-year 2024 is equal to a book to bill (the ratio of New orders to Revenues for the period) of about 1.3
- Backlog, amounted to EUR 43,346 million ensures a coverage in terms of production higher than 2.5 years
Economic Performance
- Revenues, amounted to EUR 7,985 million, increased compared to the first six months of 2023 (+15.8%, +10.9% on the pro-forma figures) in almost all business sectors. The contribution of the Defence Electronics and Security and Helicopters sectors was particularly important
- EBITA, amounted to EUR 503 million, reflects the solid performance of the Group’s businesses, showing an increase compared to the first six months of 2023 (+17.0%, +13.3% on the pro-forma figure) in almost all sectors. The period was particularly affected by the performance of the Defence Electronics and Security, while the Space sector was affected by the expected difficulties in the manufacturing segment
- EBIT, amounted to EUR 390 million, reported a growth (+6.0%, +3.7% on the pro-forma figure) despite affected by an increase in non-recurring one-off charges, mainly due to the effects deriving from positive termination and settlement of contracts entered into in previous years, also affected by the amortisation of the Purchase Price Allocation connected with the first-time consolidation of the Telespazio group starting from 1 January 2024
- Net Result before extraordinary transactions, amounted to EUR 189 million, (€mil. 197 in the comparative period, €mil. 202 on the pro-forma figure), was affected by the higher tax burden for the period mainly due to the higher taxation of foreign components
- Net Result, equal to EUR 555 million (€mil. 208 in the comparative period, €mil. 213 on the pro-forma figure) included, in addition to the Net Result before extraordinary transactions, the capital gain (€mil. 366) recognised after the fair value measurement of the investment previously held in the Telespazio group, carried out for the purposes of its line-by-line consolidation
Financial performance
- Free Operating Cash Flow (FOCF), negative for EUR 502 million, improving compared to the performance at 30 June 2023 (negative for €mil. 517, negative for €mil. 548 in the pro-forma figure), confirmed the positive results reached thanks to initiatives to strengthen operational performance and the collection cycle, a careful investment policy in a period of business growth, an efficient financial strategy and to the actions to rationalize and make more efficient working capital. The figure however highlighted the usual interim trend that is characterised by significant cash absorptions during the first part of the year
- Group Net Debt, of EUR 3,000 million, reduced (about €bil. 0.6) against June 2023 thanks to the strengthening of the Group's cash generation and to the sale of the minority stake in Leonardo DRS occurred in the last quarter of 2023. Compared to 31 December 2023 (€mil. 2,323) the figure increased mainly as a result of the abovementioned FOCF performance, in addition to the payment of dividends for an amount equal to €mil. 175 (of which €mil. 159 relating to Leonardo S.p.a.).
SECTOR PERFORMANCE
The Key Performance Indicators of the business Sectors are reported below while pointing out that – starting from 1 January 2024 - the contribution from the line-by-line basis consolidation of the Telespazio group is included in the Space sector. Furthermore, with the purpose of providing a representation mode increasingly in line with the Group’s corporate strategies and the underlying business trends, the Defence Electronics & Security and Cyber & Security Solutions sectors, which were aggregated in the 2023 Financial Statements within the Defence Electronics & Security only, are now recognised separately in this Report. The Sectors’ performance will be therefore represented and commented on with reference to the following operating sectors: Helicopters, Defence Electronics & Security, Cyber & Security Solutions, Aircraft, Aerostructures and Space (Helicopters, Defence Electronics & Security, Aircraft, Aerostructures and Space in the 2023 financial statements).
In order to make operating performance comparable, the indicators for the comparative period have been restated in this Section for ease of comparison. With reference to the Space sector, the comparative period is presented on a pro-forma basis, including the contribution of the Telespazio group.
Leonardo continued the path to growth in all sectors of its core business. The trend of new orders, revenues and EBITA by sector was as follows:
