Leonardo Spa · MIL:LDO
Leonardo Spa — Investor Day (June 2022)
49 slides from Leonardo Spa's investor day presentation, Jun 15, 2022
Slide 1: Leonardo ESG Investor Day
LEONARDO ESG INVESTOR DAY ESG DRIVING INDUSTRIAL PLAN EXECUTION, GROWTH AND LONG-TERM RETURNS Rome 15 June 2022
Slide 2: Agenda
Agenda INTRODUCTION ▪ Introduction of the agenda and speakers Valeria Ricciotti, Head of Investor Relations and Credit Rating agencies ▪ Strong governance supporting long-term sustainable growth Luciano Carta, Chairman SOUND AND ▪ Sustainability and innovation at the core of the business Ferruccio R
Slide 3: Our ESG vision and journey towards long-term value creation
Alessandro Profumo OUR ESG VISION AND JOURNEY TOWARDS LONG-TERM VALUE CREATION 3 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 4: Deeply committed to ESG
Deeply committed to ESG ESG driving industrial plan execution, growth and long-term returns • We integrate ESG into all aspects of our business, decisions and projects to create long- term value and generate positive impacts for the company and our stakeholders • Sustainability is core to our future
Slide 5: Technological solutions provider with a clear and important purpose
Leonardo is a technological solutions provider with a clear and important purpose We provide essential Security and Protection, security for people and nations.… … Contributing to the world’s progress and safety through our innovative technological solutions 5 © 2022 Leonardo - Società per azioni ES
Slide 6: An industrial and technological leader
An industrial and technological leader With a strong presence in domestic markets and worldwide 2021 REVENUES 2021 BY €14.1bln €14.3bln €35.5bln €1.8bln GEOGRAPHICAL AREA REVENUES NEW ORDERS BACKLOG R&D SPEND 83% 17% Italy OF REVENUES 27% FROM EXPORT, UK outside Italy Domestic 9% US markets Rest of
Slide 7: Important progress towards ESG milestones in 2021
Important progress towards ESG milestones in 2021 ▪ -19% GHG Scope 1 & 2 emissions compared to 2019 Progress on environment ▪ -6% intensity of energy consumption vs 2019 and climate change ▪ -24% intensity of waste produced compared to 2019 ▪ 80% of sourced electricity from renewable sources ▪ 3,753
Slide 8: Clear targets set throughout the value chain
Clear targets set throughout the value chain ENVIRONMENT SOCIAL GOVERNANCE ▪ 10% reduction in consumption of ▪ Hiring at least 40% of under 30 by ▪ Release of Trade Compliance electricity withdrawn from external grid 2022 and 32% of women by 2025 Guidelines including Human Rights by 2025* out of tot
Slide 9: ESG key priorities in executing our Plan for long-term growth
ESG … our key priorities in executing our Plan for the long-term growth Driving execution and value creation SUPPORTING OUR KEY COMMERCIAL AND INDUSTRIAL GOALS ENABLING SUSTAINABLE GROWTH BY TECHNOLOGY AND INNOVATION E S MEETING AND ANTICIPATING CUSTOMER PRIORITIES PARTNERING WITH OUR SUPPLIERS ENHA
Slide 10: Addressing opportunities and industrial goals
Valerio Cioffi ADDRESSING OPPORTUNITIES AND INDUSTRIAL GOALS 10 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 11: Our commercial and industrial future is driven by innovation
Our commercial and industrial future is driven by innovation… … and in turn this critical innovation is driven by sustainability • Our ESG credentials: key enablers to reach over €80bn in new order intake over the next 5 years • Our focus on R&D, innovation and technology support is key for growth •
Slide 12: The commercial context of what we are aiming to achieve
The commercial context of what we are aiming to achieve Positive outlook supported by our commercial model and commitment to ESG and technologies OUR ORDER INTAKE TARGET ▪ Strong positioning in key domestic markets ▪ Competitive position in key strategic countries Commercial strengths Ca. €80 ▪ Inte
Slide 13: Transforming our R&D efforts towards digitalisation
Transforming our R&D efforts towards digitalisation and leading-edge world- class capabilities Innovation enables us to achieve significant results in decarbonization ▪ Deep and wide-ranging digitalisation HPC, Artificial Intelligence ▪ Leading-edge world-class capabilities and technologies ▪ Value
Slide 14: Technology and innovation enabling sustainable growth
Franco Ongaro TECHNOLOGY AND INNOVATION ENABLING SUSTAINABLE GROWTH 14 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 15: Our future is driven by innovation
Our future is driven by innovation … … In turn driven by sustainability, digitalisation and cyber-resilience • Our meaningful technological innovation enables continuous improvements in our decarbonization • …and provides our full value chain with the opportunity and tools to reduce their emissions
Slide 16: Significant progress in meeting our decarbonisation targets
Significant progress in meeting our decarbonisation targets Innovative solutions helping us to make great progress in reducing Scope 1 & 2 emissions CO2 EMISSIONS SCOPE 1 & 2* SF6 replacement Over 100,000 tons of CO2 avoided in 2021 thanks to -19% the partial replacement of SF6 404 423 Energy Self P
Slide 17: We enable our value chain to reduce emissions
We enable our value chain to reduce emissions Leveraging on digital twin and focused research to address scope 3 NEW NEW PROPULSION VIRTUALIZATION MATERIALS SYSTEMS AND SAF ▪ 33,700 training hours delivered in ▪ -20% of CO2 emissions with the use of ▪ Studying electric or hybrid platforms 2021 throu
Slide 18: Leonardo Labs at the core of our R&D efforts
Leonardo Labs at the core of our R&D efforts Our internal capabilities and external collaborations drive long-term R&D of the most innovative technologies LEONARDO LABS 11 Leonardo Labs (in 6 regions in Italy and 1 in the USA) 4 joint external laboratories 200 research fellows by 2023 DAVINCI-1 HPC
Slide 19: Unique assets at the heart of our R&D
Unique assets at the heart of our R&D DAVINCI-1 HPC gives a unique edge in reducing time to market, risks and costs MATERIALS Innovative materials APPLIED QUANTUM DIGITAL TWIN AND TECHNOLOGIES Communications and crypto random number ADVANCED SIMULATION Certification by Simulation UNMANNED ELECTRIFIC
Slide 20: Example of Leonardo Labs in the real-world
Example of Leonardo Labs in the real-world Digital Twin and Advanced Simulation-based AI helping identify safe landing sites in case of emergency landing needs 20 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 21: The UK example: aligning ESG customer priorities with commercial goals
Norman Bone THE UK EXAMPLE: ALIGNING ESG CUSTOMER PRIORITIES WITH OUR COMMERCIAL GOALS 21 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 22: Aligning ESG customer priorities with our commercial goals
Aligning ESG customer priorities with our commercial goals • Sustainability has become a significant part of our customer requirements • ESG criteria are now a cornerstone of the MoD bidding process • Leonardo is positioned as we have strong alignment with our own ESG targets and those of our custom
Slide 23: Sustainability as cornerstone of customers' requirements
How sustainability embeds itself as cornerstone of our customers’ requirements Targeting climate neutrality by 2030 for Scope 1 & 2, and across the value chain by 2050 UK Government is Defence sector Failure to have We are committed to the first country to accounts for c.50% viable plan for Net Net
Slide 24: Our commitment to social values in line with MoD expectations
Our commitment to social values in line with MoD expectations How we invest in our people and supply chain to add social value in the UK SOCIAL VALUE WHAT WE DO AT LEONARDO UK ▪ Supporting 9,700 jobs ▪ Ofsted rated our apprenticeship ▪ Tackling economic inequality indirectly along the supply program
Slide 25: Human capital and skill enhancement supporting our future
Antonio Liotti HUMAN CAPITAL AND SKILL ENHANCEMENT SUPPORTING OUR FUTURE 25 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 26: Human capital and skill enhancement supporting our future
Human capital and skill enhancement supporting our future • People drive our business forward: human capital is at the heart of our business model and our plan for sustainable growth • Upskilling and reskilling for the future are key enablers to reach over €80bn in new order intake over the next 5 y
Slide 27: A top major employer in Italy
A top 5 major employer in Italy … and one of the largest globally in the Aerospace and Defence sector OUR PEOPLE WORLDWIDE IN 2021 WE WANT TO ACHIEVE +8.5% ▪ Hiring at least 40% of under 50,413 30 by 2022 out of total hires WORKFORCE GROWTH vs 2018 ▪ Hiring 32% of women by UK 19% 2025 out of total h
Slide 28: Continuously investing in our people and their development
Continuously investing in our people and their development Focusing on attracting new skills and planning ahead for future needs • Delivered 1.6 million hours of training Upskilling / Reskilling ▪ Managing skills crucial for the • 750+ training course activities using a specific educational system f
Slide 29: Connecting ESG progress and remuneration
Connecting ESG progress and remuneration Confirming alignment between Industrial plan and management performance 10% of short-term variable CEO & General Manager •CEO & General Manager remuneration linked to ESG objectives • 5% →Inclusion of Leonardo in DJSI • 10% →Scope 1 & 2 GHG Emissions** • 5%→A
Slide 30: Transparency and integrity at our core
Andrea Parrella TRANSPARENCY AND INTEGRITY AT OUR CORE 30 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 31: Transparency and integrity at our core
Transparency and integrity at our core • Our business culture is based on responsibility, correctness and integrity • Rules and Company culture translating into daily behaviors strengthen our credibility and performance • Our activities are performed in full compliance with all national and internat
Slide 32: Acting responsibly is at the base of our way to do business
Acting responsibly is at the very base of our way to do business Implementing a robust and ‘fit-for-purpose’ Trade and Business Compliance programme OUR INTERNAL RULES Guidelines and Directive on Trade Compliance + Procedure and Directive on Business Compliance 32 © 2022 Leonardo - Società per azion
Slide 33: Managing and mitigating risk exposure on business compliance
Managing and mitigating our risk exposure from a business compliance side An enhanced level of due diligence on each transaction RISK ASSESSMENT ON COMMERCIAL ACTIVITIES ▪ Country risk and level of corruption 40 red flags ▪ Local law/regulations requirements Gate Risk Not acceptable ▪ Remuneration S
Slide 34: Managing and mitigating risk exposure on export activities
Managing and mitigating our risk exposure on export activities Rigorous evaluation of the risks associated with each transaction including human rights TRADE COMPLIANCE PROGRAM Red flags ▪ Export Controls: Assessing red flags related to any applicable export control laws and regulation concerning HU
Slide 35: Maintaining the highest reputational standard on Compliance and Integrity
Maintaining the highest reputational standard on Compliance and Integrity The importance of continuous training and awareness raising efforts ▪ > 47,000 hours of training on business and trade compliance in 2021 to Training for our around 27,000 participants employees ▪ >20,800 trained on anti-corru
Slide 36: ESG driving our long-term returns
Alessandra Genco ESG DRIVING OUR LONG-TERM RETURNS 36 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 37: ESG driving growth, capital allocation and long-term returns
ESG driving growth, capital allocation and long-term returns • We have adopted the same rigorous approach to measuring both financial and non-financial performance • We are anticipating the trend for an integrated financial and non-financial accounting standard • Full integration between our financi
Slide 38: Measure, Measure, and be Measured
Measure, Measure, and be Measured Sound internal control system supporting reasonable assurance of ESG data New operational procedures have been put in place detailing the main processes of collection, aggregation and transmission of ESG 1. Mapping data to be included in the non financial statement
Slide 39: ESG targets
Full alignment and integration of both our financial strategy and ESG Strong confidence in achieving our targets KEY ESG PRIORITIES MEDIUM-TERM FINANCIAL TARGETS SUPPORTING OUR KEY COMMERCIAL Confirming cumulated > € 80 bn AND INDUSTRIAL GOALS ORDERS Book to bill >1 ENABLING SUSTAINABLE GROWTH BY IN
Slide 40: ESG is crucial in optimal capital allocation
ESG is crucial in optimal capital allocation 50% investment is aligned with SDG goals SDG-ALIGNED OUR MAIN CONTRIBUTION INVESTMENTS TO SDGs Ensuring resilient infrastructures, increasing efficient and digital processes and developing technologies with green impact Improving resources efficiency and
Slide 41: 50% of Leonardo funding sources now are ESG linked
50% of Leonardo funding sources now are “ESG linked" FINANCING SOURCES €6,0bn Two ESG linked financial transactions subscribed in 2021 50% € 2.4 bn ESG linked Revolving Credit ESG linked Facility (RCF) € 600 mln ESG linked Term Loan (to refinance January 2022 debt maturing) 2021 * KPIs selected full
Slide 42: Q&A
Q&A 42 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 43: Appendix
APPENDIX 43 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 44: Materiality analysis
Materiality analysis Internal perspective ▪ 27 Top managers involved External perspective ▪ >1,600 reviewed regulations ▪ >760 mln analysed tweets Stakeholders survey ▪ 160 stakeholders involved ▪ >100 responded from 11 countries 44 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY
Slide 45: Independent, inclusive and skilled Board of Directors
Independent, inclusive and skilled Board of Directors BOARD COMPOSITION BOARD DIVERSITY Skills Strategic planning 100% Geopolitics and governmental and institutional relations 100% Executive and non-executive Experience with innovation and advanced technologies 100% 1 executive Digital IT and cyber
Slide 46: Our main contribution to SDG
Our main contribution to SDG NEW INITIATIVES INCREASING NEW PRODUCTS INCLUDED IN INDUSTRIAL PROCESS EFFICIENCY OUR SDG ALIGNED PORTFOLIO M-346 and M-345 Energy efficiency Our trainers through a greater use of Transition to LED technology for most simulation systems allow a reduction of the industria
Slide 47: Our ESG achievements in 2021
Our ESG achievements in 2021 In 2021, achieved the highest score among Confirmed in the ‘Climate A List 2021’ of the companies in the Aerospace and Defence CDP (formerly the Carbon Disclosure sector for the 3rd consecutive year, included Project), the only company in the A&D sector. for the 12th yea
Slide 48: Safe Harbor Statement
SAFE HARBOR STATEMENT NOTE: Some of the statements included in this document are not historical facts but rather statements of future expectations, also related to future economic and financial performance, to be considered forward-looking statements. These forward-looking statements are based on Co
Slide 49: Contacts
CONTACTS Valeria Ricciotti Head of Investor Relations and Credit Rating Agencies +39 06 32473.697 valeria.ricciotti@leonardo.com Leonardo Investor Relations and Credit Rating Agencies +39 06 32473.512 ir@leonardo.com leonardo.com 49 © 2022 Leonardo - Società per azioni ESG INVESTOR DAY