Leonardo Spa · MIL:LDO
Leonardo Spa — Finmeccanica — 9M 2011 Earnings Presentation
38 slides from Leonardo Spa's earnings presentation, Nov 15, 2011
Slide 1: Management Priorities and 9 Months 2011 Results
Management Priorities and 9 Months 2011 Results Giuseppe Orsi CEO Alessandro Pansa COO - CFO London, 15 November 2011 1
Slide 2: 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 3: Agenda
AGENDA Management Priorities Giuseppe Orsi, CEO 9M 2011 Results Alessandro Pansa, COO/CFO Outlook Giuseppe Orsi, CEO Q&A 3
Slide 4: Key programmes and products
AW 139 EUROFIGHTER M-346 B787 JV-5 ATC COSMO SKYMED GIMBALS & THERMAL IMAGERS 4
Slide 5: Introduction
INTRODUCTION In July at the H1 results, we withdrew guidance on EBITA based on: an ongoing business review focussed on two main sectors – Aeronautics and Rolling Stock a specific analysis of Defence Electronics and Security Consistent with the commitment we made, we are here today to update you on t
Slide 6: Finmeccanica strengths and shortfalls as confirmed by the business review
CAP. 1 Management Priorities FINMECCANICA STRENGTHS AND SHORTFALLS AS CONFIRMED BY THE BUSINESS REVIEW Strengths Shortfalls and Remedies Major programmes Business portfolio too diversified with: Eurofighter, B787, ATR A number of loss-making activities, to be Cosmo SkyMed and Galileo deconsolidated
Slide 7: Management Priorities
CAP. 1 Management Priorities MANAGEMENT PRIORITIES Strategic consolidation of Group businesses, accelerating focus on Aerospace, Defence Electronics and Security, improving operational performance by: Deconsolidation process and restructuring of Rolling Stock Industrial restructuring of Aeronautics
Slide 8: The New Finmeccanica
CAP. 1 Management Priorities THE NEW FINMECCANICA A focused worldwide leading Aerospace and Defence Group with consolidated presence in high technology with key engineering and manufacturing competencies and state of the art facilities focused on strategic businesses where we can be international le
Slide 9: The New Finmeccanica: Business Areas
CAP. 1 Management Priorities THE NEW FINMECCANICA: 3 BUSINESS AREAS Strategic AERONAUTICS, HELICOPTERS, DEFENCE ELECTRONICS AND SECURITY Sectors Focus on strategic areas to drive Consolidate and expand worldwide sustainable profitable growth leadership leveraging on key products International DEFENC
Slide 10: Loss-making activities remedies: Vehicles (1/2)
CAP. 1 Management Priorities LOSS-MAKING ACTIVITIES REMEDIES: VEHICLES (1/2) Key issues emerged from the business review of Rolling Stock: few economies of scale lack of international structure & footprint to compete on global market non competitive cost structure difficulties in developing new prod
Slide 11: Loss-making activities remedies: Rolling Stock (2/2)
CAP. 1 Management Priorities LOSS-MAKING ACTIVITIES REMEDIES: ROLLING STOCK (2/2) While starting the deconsolidation process, plans for Improving Efficiency and Total Cost of Quality Plan (“EOS” plan) have been launched by the new Management according to the following lines of action: New Management
Slide 12: Underperforming activities remedies: Aeronautics (1/3)
CAP. 1 Management Priorities UNDERPERFORMING ACTIVITIES REMEDIES: AERONAUTICS (1/3) “3R plan” – Restructure, Reorganise… Industrial Staff & Organisation Reduction of fixed costs Venegono related to production Integrated Training Outsourcing of specific Integrated Centers of System Center activities
Slide 13: Underperforming activities remedies: Aeronautics (2/3)
CAP. 1 Management Priorities UNDERPERFORMING ACTIVITIES REMEDIES: AERONAUTICS (2/3) Focus on B787 The complexity of the B787 programme has involved major technological, process and structural challenges which have generated, over the past few years, substantial additional costs These issues are bein
Slide 14: Underperforming activities remedies: Aeronautics (3/3)
CAP. 1 Management Priorities UNDERPERFORMING ACTIVITIES REMEDIES: AERONAUTICS (3/3) … Relaunch Leverage on main ongoing Collaborative Defence Programmes (i.e. EFA, JSF), while MILITARY pursuing new military international initiatives (i.e. European MALE/UCAV) Focus on Proprietary Products (i.e. C27J,
Slide 15: Consolidation of Defence Electronics and Security
CAP. 1 Management Priorities UNDERPERFORMING ACTIVITIES: CONSOLIDATION OF DEFENCE ELECTRONICS AND SECURITY Streamlining from several companies into 4 focused companies completed ICT and Security Further consolidation aiming to develop business to increase market share Avionics and E/O rationalise te
Slide 16: Inadequate cash flow generation: remedies
CAP. 1 Management Priorities INADEQUATE CASH FLOW GENERATION: REMEDIES Monitoring and improvement of contract execution Improve efficiency in Working Capital management, reducing materials’ throughput time and manufacturing cycle time G&A reduction throughout the entire Group, including HQ, by more
Slide 17: Net debt high relative to cash flow generation
CAP. 1 Management Priorities NET DEBT HIGH RELATIVE TO CASH FLOW GENERATION Group net debt increased over the last years due to external acquisitions (partly funded through debt) and lower than expected Cash Flow generation Remedies Improved operating cash flow generation Extraordinary plan for disp
Slide 18: Progress since July 2011
CAP. 1 Management Priorities PROGRESS SINCE JULY 2011 Completed the business review started in May soon after the appointment as CEO Initiated “3R” - Restructure, Reorganize, Re-launch - plan in Aeronautics: negotiations with the Unions finalized Ongoing negotiations aimed at deconsolidating Rolling
Slide 19: 9M 2011 Results
9M 2011 Results Alessandro Pansa, COO - CFO 19
Slide 20: Exceptional items
CAP. 2 9M 2011 RESULTS EXCEPTIONAL ITEMS Exceptional “non-recurring” adjustments of €753mln “above the line” in 9M mainly due to “non-conformities” discovered in some B787 Horizontal Stabilizers already delivered recognition of charges for B787 due to changes in contract and program expectations Exc
Slide 21: Group results: 9M 2011 vs. 9M 2010
CAP. 2 9M 2011 RESULTS GROUP RESULTS: 9M 2011 vs. 9M 2010 Revenues €12.3bn (9M 2010: €12.9bn) Adj. EBITA €-188m (9M 2010: €856m) EBIT €-603m (9M 2010: €768m) Reported Net profit €-324mln (9M 2010: €321m) FOCF €-1.6bn (9M 2010: €-1.3bn) Closing net debt €4.7bn (9M 2010: €4.9bn) Order intake at €10.6b
Slide 22: Cash flow & financial position
CAP. 2 9M 2011 RESULTS CASH FLOW & FINANCIAL POSITION FOCF €-1.6bn in 9M2011 Net debt as at 30/9/11: €4.67bn (30/6/11: €4.19bn); average cost ca. 5.7% Balanced debt maturity profile with average life > 10 years All rating agencies are closely monitoring the financial profile of Finmeccanica. The cur
Slide 23: 9M 2011 sector results
CAP. 2 9M 2011 RESULTS 9M 2011 SECTOR RESULTS 9M2011 Revenue 9M2011 Ebita Adj 9M2011 Order Sector Revenues Change vs. Ebita Adj Change vs. Orders Change vs. Eur mln 9M2010 Eur mln 9M2010 Eur mln 9M2010 Helicopters 2,750 8% 287 14% 2,007 (32%) Defence Electronics and 4,291 (14%) 267 (37%) 3,447 (34%)
Slide 24: Outlook & Summary
Outlook & Summary Giuseppe Orsi, CEO 24
Slide 25: Guidance for full year 2011
CAP. 3 OUTLOOK & SUMMARY GUIDANCE FOR FULL YEAR 2011 Order intake: ca. €18bn* Revenues: between €17 and 17.5bn ** Adjusted EBITA: expected to be negative about €200mln, largely due to the non-recurring adjustments taken “above the line” and included in adjusted EBITA Net profit loss for FY2011 expec
Slide 26: Outlook for 2012 and beyond
CAP. 3 OUTLOOK & SUMMARY OUTLOOK FOR 2012 AND BEYOND Book-to-bill to remain above 1 Adjusted EBITA, before non-recurring costs taken above the line, expected to significantly recover in 2012 and 2013 as benefits of restructuring plans emerge FOCF for 2012 expected to gradually improve over 2011 - de
Slide 27: Key programmes and products
CAP. 3 OUTLOOK & SUMMARY AW 139 EUROFIGHTER M-346 B787 JV-5 ATC COSMO SKYMED GIMBALS & THERMAL IMAGERS 27
Slide 28: Appendix
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Slide 29: Defence investments: MOD plus Ministry of Economic Development
CAP. 4 APPENDIX DEFENCE INVESTMENTS: MOD PLUS MINISTRY OF ECONOMIC DEVELOPMENT 6.000 5,430 5,120 5,040 4,800 4,840 5.000 1.850 1400 3,821 1500 4.000 1.536 1.668 1.300 3.000 MoED MOD 2.000 3.580 3720 3540 3.264 3.172 2.521 1.000 - 2007-2009 2010 2011 2012 2013 2014 avg Source: Budget Law 2012 and Sta
Slide 30: Group results: financial position
CAP. 4 APPENDIX GROUP RESULTS: FINANCIAL POSITION Next L-T debt refinancing due end 2013 Dollar Bond To be reimbursed 370 with cash at hand Sterling Bond Euro Bond EIB 500 To be refinanced 2013 46,3 46,3 462 46,3 (€mln) 46,3 870 370 600 500 500 370 222 36,8 46,3 46,3 46,3 46,3 46,3 46,3 0 2011 2012
Slide 31: 9M 2011 results – profit & loss
CAP. 4 APPENDIX 9M 2011 RESULTS – PROFIT & LOSS CONSOLIDATED PROFIT AND LOSS ACCOUNT Chg. % Chg. % 9M 2011 9M 2010 3Q 2011 3Q 2010 €mil. y/y y/y Revenues 12,252 12,924 (5%) 3,828 4,234 (10%) Costs for purchases and personnel (11,233) (11,586) (3,569) (3,809) Depreciation and amortisation (429) (411)
Slide 32: Balance sheet
CAP. 4 APPENDIX BALANCE SHEET BALANCE SHEET €mil. 30.09.2011 31.12.2010 Non-current assets 13,723 13,641 Non-current liabilities (3,196) (2,583) 10,527 11,058 Inventories 4,647 4,426 Trade receivables 9,667 9,242 Trade payables (12,515) (12,996) Working capital 1,799 672 Provisions for short-term ri
Slide 33: Cash flow
CAP. 4 APPENDIX CASH FLOW CASH FLOW €mil. 9M 2011 9M 2010 Cash and cash equivalents at 1 January 1,854 2,630 Gross cash flow from operating activities 1,091 1,446 Changes in other operating assets and liabilities (869) (849) Funds From Operations (FFO) 222 597 Changes in working capital (1,221) (1,2
Slide 34: Financial position
CAP. 4 APPENDIX FINANCIAL POSITION FINANCIAL POSITION €mil. 30.09.2011 31.12.2010 Short-term financial payables 531 456 Medium/long-term financial payable 4,540 4,437 Cash and cash equivalents (501) (1,854) BANK DEBT AND BONDS 4,570 3,039 Securities (35) (1) Financial receivables from Group companie
Slide 35: Share data
CAP. 4 APPENDIX SHARE DATA SHARE DATA Chg. 9M 2011 9M 2010 y/y % Average number of shares in period (thousands) 577 577 0.1% Net result (not including minority interests) (€mil.) (358) 284 Result of continuing operations (not including minority (358) 284 interests) (€mil.) BASIC EPS (EUR) (0.620) 0.
Slide 36: Divisions – 9M 2011 vs 9M 2010
CAP. 4 APPENDIX DIVISIONS – 9M 2011 VS 9M 2010 Defence Defence Other Activities 9M 2011 (EUR million) Helicopters Electronics Aeronautics Space Energy Transport Eliminations Total Systems and Corporate and Security Revenues 2,750 4,291 1,866 699 811 720 1,372 197 (454) 12,252 EBITA Adj (*) 287 267 (
Slide 37: Divisions – 3Q 2011 vs 3Q 2010
CAP. 4 APPENDIX DIVISIONS – 3Q 2011 VS 3Q 2010 Defence Defence Other Activities 3Q 2011 (EUR million) Helicopters Electronics Aeronautics Space Energy Transport Eliminations Total Systems and Corporate and Security Revenues 922 1,373 569 219 252 158 419 66 (150) 3,828 EBITA Adj (*) 99 88 (809) 17 16
Slide 38: Investor Relations Finmeccanica
Investor Relations Finmeccanica investor_relations@finmeccanica.com Website: http://www.finmeccanica.com/Investor Relations John D. Stewart Raffaella Luglini VP Investor Relations Investor Relations Officer +39 06 32473.290 +39 06 32473.066 john.stewart@finmeccanica.com raffaella.luglini@finmeccanic