Leonardo Spa · MIL:LDO
Leonardo Spa — Finmeccanica — H1 2015 Earnings Presentation
37 slides from Leonardo Spa's earnings presentation, Jul 31, 2015
Slide 1: 1H/2Q 2015 Results Presentation
1H/2Q 2015 Results Presentation Mauro Moretti Chief Executive Officer and General Manager Gian Piero Cutillo Chief Financial Officer London, 31 July 2015
Slide 2: Group Overview, Results and Outlook, Strategic Developments
GROUP OVERVIEW (CEO and General Manager) RESULTS AND OUTLOOK (CFO) UPDATE ON STRATEGIC DEVELOPMENTS (CEO and General Manager)
Slide 3: Delivering on promises…
Delivering on promises… Executing 5 year industrial plan launched in January Industrial Plan has STRENGTHENED financial results Significant progress on profitability All key metrics heading in the right direction Share price up 46% over the first sixth months of the year (from €7.73 to €11.28) Indus
Slide 4: …and we have clear priorities for 2015 and onwards
…and we have clear priorities for 2015 and onwards STRENGTHEN Delivery of 2015 guidance Improve operating profitability: >150bp improvement in ROS (FY2016/2014), Reduced P&L volatility and material step-up in net income Positive and growing cash flows Reduce Invested Capital through lower working ca
Slide 5: AW169 EASA certification achieved in July
AW169 EASA certification achieved in July confirms our focus on products innovation to meet customer needs First all new helicopter type in its category in over 30 years set to enter service Marks operational readiness of the whole AW Family of new generation helicopters Outstanding capabilities and
Slide 6: Group Overview, Results and Outlook, Strategic Developments
GROUP OVERVIEW (CEO and General Manager) RESULTS AND OUTLOOK (CFO) UPDATE ON STRATEGIC DEVELOPMENTS (CEO and General Manager)
Slide 7: Key Messages
Key Messages Satisfactory results achieved in 1H2015 New orders and revenues in line with expectations Material step up in EBITA (+45% YoY) with RoS at 7.5% from 5.4%, mainly thanks to Selex and DRS Positive Net Result at €111mln form negative €39mln Positive FOCF in 2Q and improved compared to last
Slide 8: Focus on Group Orders
Focus on Group Orders Commercial Performance in line with strong 1H 2014; Book to Bill remains close to 1 - 15.9% + 21.7% + 29.4% - 31.2% +142.3% - 4.4% % Ch. vs. 1H 2014 € Mln 5,794 189 691 5,539 - 199 898 1,703 2,257 1H2014 1H Helicopters Selex ES DRS Aeronautics Defence Eliminations & 1H2015 1H S
Slide 9: Focus on Group Revenues
Focus on Group Revenues Good performance above expectations + 3.6% +4.2% + 26.7% + 2.5% - 9.1% + 4.6% % Ch. vs. 1H 2014 € Mln 1,414 209 5,973 5,709 - 149 765 1,620 2,114 1H2014 1H Helicopters Selex ES DRS Aeronautics Defence Eliminations & 1H2015 1H Systems Other 2014 2015 DRS consolidating recovery
Slide 10: Focus on Group Profitability
Focus on Group Profitability Material step up in EBITA and ROS - 0.6 p.p. + 1.4 p.p. + 13.4 p.p. + 0.7 p.p. + 3.5 p.p. + 2.1 p.p. ROS Ch. vs. 1H2014 € Mln 31 22 86 (RoS 14.8%) 450 (RoS 6.1%) (RoS 7.5%) 44 - 65 (RoS 5.7%) 72 310 (RoS 4.4%) (RoS 5.4%) 260 (RoS 12.3%) 1H2014 1H Helicopters Selex ES DRS
Slide 11: Focus on Group Net Result before extraordinary transactions
Focus on Group Net Result before extraordinary transactions Meaningful improvement 1H 2014 1H 2015 € Mln € 51 mln “below the line” 450 6 45 - 41% 48 € Mln € 87 mln 351 197 310 28 59 41 63 182 210 91 33 -61 Strong improvement in Net Result before extraordinary transactions driven by Meaningful step u
Slide 12: Focus on Group FOCF
Focus on Group FOCF 1H 2015 and FY expectations COMMENTS ON 1H 2015 2015E € Mln Usual seasonality affecting 1H 2015 ca. 130 ca. 900 Positive FOCF in 2Q YoY improvement in 1H 2015, also excluding the impact of €256mln outflows on Indian Helicopters and extraordinary ca. - 750 200 - 300 dividend from
Slide 13: Bond buy-back and financial position
Recent achievements towards the reduction of Group gross debt and financial charges Bond Buy-back Target achieved with 100% tender redemption rate 450 € mln repurchased across Sterling 2019 and Euro 2021, 2022, 2017 Bonds No refinancing needs before end 2017 Strong liquidity position Bonds have neit
Slide 14: Renegotiated the 5 years Revolving Credit Facility at better conditions
Renegotiated the 5 years Revolving Credit Facility at better conditions Leveraging on strengthened Group industrial fundamentals and favorable market conditions Reduction of size (from €2.2bn to €2bn), confirming the gradual decrease of working capital financing needs significant reduction of margin
Slide 15: FY2015 Assumptions and Guidance
FY2015 Assumptions and Guidance ASSUMPTIONS FY2014A Orders and Revenues: moderate FY2015E* growth, taking into account the changes Reported Pro forma in perimeter Profitability: important step up of 10% New orders € bn 15.6 12.7 12.0 – 12.5 Revenues € bn 14.7 12.8 12.0 – 12.5 Below EBITA: much lower
Slide 16: Delivering on Industrial Plan: Medium Term Objectives
Delivering on Industrial Plan: Medium Term Objectives EBITA +20% and RoS +150b.p. from 2014 to 2016 SG&A reduction > 10% from 2013 to 2015 CAPEX and capitalized R&D rationalization > 20% from 2013 to 2017, rebalancing depreciation/investments ratio, significantly improving self-financing capacity Op
Slide 17: Group Overview, Results and Outlook, Strategic Developments
GROUP OVERVIEW (CEO and General Manager) RESULTS AND OUTLOOK (CFO) UPDATE ON STRATEGIC DEVELOPMENTS (CEO and General Manager)
Slide 18: Executing the pillars of our Industrial Plan
Executing the pillars of our Industrial Plan Quality & Effectiveness Costs Internationalisation & Market FEWER BUSINESSES – FOCUS ON «A,D&S» SELECTED JVS AND «A,D&S» SEGMENTS FEWER PRODUCTS IN CORE «A,D&S» IMPROVE INTERNATIONAL FOOTPRINT / EXTEND REACH NEW GOVERNANCE AND NEW ORGANISATIONAL AND OPERA
Slide 19: New Group Commercial Model
New Group Commercial Model Target Regions in our Global presence Russia USA Canada China Main Target \ Japan Areas South Korea Malaysia India Singapore Indonesia Vietnam Kuwait Qatar UAE Angola Saudi Arabia Egypt Uganda Mexico Oman Tunisia Nigeria Chile Turk
Slide 20: New Group Commercial Approach
New Group Commercial Approach Increasing effectiveness of Global commercial footprint The new commercial approach will be based on ONE VOICE FINMECCANICA: Coherently with the divisionalisation process, Finmeccanica presence in the «target» markets will be unique («one voice») according to clearly de
Slide 21: New Governance and New Group Organisational and Operating Model
New Governance and New Group Organisational and Operating Model One single company The new decentralized structure will provide the following benefits Greater ability to control by the Corporate Center Full accountability of the Divisions, profit centers with end to end responsibility, through decen
Slide 22: New Governance and Group Organisational Model: Shared service centres
New Governance and New Group Organisational and Operating Model Business Support Functions CORPORATE CENTRE Sectors Electronics, Defence & Helicopters Aeronautics Space Security Systems Divisions Shared service centres Helicopters Military aircrafts Airborne & Space Systems Security & Information Ae
Slide 23: Sectors: Finmeccanica presence in homogeneous business portfolios
Sectors: Finmeccanica presence in homogeneous business portfolios Technical Functions Business Support Functions 7 Divisions for the 4 Sectors JV & Others The 4 Sectors are part of the Finmeccanica Corporate Center and coordinate Subsidiary Companies/JV and related Divisions in terms of business, te
Slide 24: Divisions: the pillars of the new Organisational and Operating Model
Divisions: the pillars of the new Organisational and Operating Model According to the new model each Division: DIVISION X Is a “profit center” overseeing one specific reference market with responsibility for the P&L Division Business Support Functions Develops and manages its own business portfolio
Slide 25: Delivering on our promises
Delivering on our promises The execution of industrial strategy is on track on key industrial processes (Engineering, Supply Chain and Manufacturing) We are strengthening our financial structure Delivering continued momentum in our financial performance Increasing effectiveness of our global commerc
Slide 26: Sector Results
SECTOR RESULTS 5a £S >
Slide 27: Helicopters
HELICOPTERS Q2 1H FY % % 2015 2014 2015 2014 2014 € Mln Change Change Orders 909 1,171 (22.4%) 2,257 2,685 (15.9%) 4,556 Revenues 1,190 1,138 4.6% 2,114 2,041 3.6% 4,376 EBITA 148 151 (2.0%) 260 263 (1.1%) 543 ROS % 12.4% 13.3% (0.9) p.p. 12.3% 12.9% (0.6) p.p. 12.4% AW169 achieved EASA certificatio
Slide 28: EU Defence Electronics and Security - Selex ES
EU DEFENCE ELECTRONICS AND SECURITY-Selex ES Q2 1H FY % % 2015 2014 2015 2014 2014 € Mln Change Change Orders 1,255 956 31.3% 1,703 1,399 21.7% 3,612 Revenues 940 928 1.3% 1,620 1,554 4.2% 3,577 EBITA 58 41 41.5% 72 47 53.2% 185 ROS % 6.2% 4.4% 1.8 p.p. 4.4% 3.0% 1.4 p.p. 5.2% Good order intake mome
Slide 29: US Defence Electronics and Security - DRS
US DEFENCE ELECTRONICS AND SECURITY – DRS Q2 1H FY % % 2015 2014 2015 2014 2014 $ Mln Change Change Orders 435 556 (21.8%) 1,002 951 5.4% 1,945 Revenues 453 433 4.6% 854 828 3.1% 1,877 EBITA 31 (77) n.a. 49 (64) n.a. 31 ROS % 6.8% (17.8%) 24.6 p.p. 5.7% (7.7%) 13.4 p.p. 1.7% 1H results exceeded both
Slide 30: Aeronautics
AERONAUTICS Q2 1H FY % % 2015 2014 2015 2014 2014 € Mln Change Change Orders 362 572 (36.7%) 691 1,004 (31.2%) 3,113 Revenues 754 728 3.6% 1,414 1,379 2.5% 3,144 EBITA 52 46 13.0% 86 74 16.2% 237 ROS % 6.9% 6.3% 0.6 p.p. 6.1% 5.4% 0.7 p.p. 7.5% Q2 Orders in line with expectations, lower than 2015 ma
Slide 31: Space and Defence Systems
SPACE Q2 1H FY % % 2015 2014 2015 2014 2014 € Mln Change Change EBITA 21 10 n.a. 22 17 29.4% 52 Revenues expected to grow, mainly thanks to manufacturing and launch operations services Business performance expected to improve, despite a decline in industrial profitability (unfavorable mix and growin
Slide 32: Appendix
APPENDIX
Slide 33: Group Performance
GROUP PERFORMANCE Q2 1H FY % % 2015 2014 (*) 2015 2014 (*) 2014 (*) Change Change € Mln New Orders 2,898 3,102 (6.6%) 5,539 5,794 (4.4%) 12,667 Backlog 29,303 29,328 (0.1%) 29,383 Revenues 3,319 3,161 5.0% 5,973 5,709 4.6% 12,764 EBITA 293 169 73.4% 450 310 45.2% 980 ROS % 8.8% 5.3% 3.5 p.p. 7.5% 5.
Slide 34: A new S/T and L/T Incentive Scheme focused on creating shareholders value
A new S/T and L/T Incentive Scheme focused on creating shareholders value Finmeccanica implemented a brand new Group remuneration policy as a key enabler of the cultural transformation The new Plan is now largely equity based and tightly linked to the medium and long-term objectives set out in the G
Slide 35: A new co-investment Plan
A new co-investment Plan Finmeccanica also introduced a new Co-Investment Plan for the conversion of a portion of the annual bonus (min 25%, max 100%) into ordinary Finmeccanica shares At the end of the three-years vesting period, provided that the performance threshold set in the short- term variab
Slide 36: 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 37: Investor Relations Contacts
Investor Relations & Sustainable Responsible Investors (SRI) Contacts Raffaella Luglini Head of Investor Relations & SRI +39 06 32473.066 raffaella.luglini@finmeccanica.com Valeria Ricciotti Alessio Crosa Paolo Salomone Financial Communication Fixed Income ESG +39 06 32473.697 +39 06 32473.337 +39 0