Slide 1: Finmeccanica First Half 2011 Results Presentation
Finmeccanica First Half 2011 Results Presentation Giuseppe Orsi CEO Alessandro Pansa COO - CFO London, 28 July 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
Slide 3: Contents
Contents • The current Climate: Strategic Directions and Priorities (G. Orsi) • 1H2011 Highlights and Sector Review (A. Pansa) Giuseppe Orsi, Chief Executive Officer • Commercial Outlook and Opportunities (G. Orsi) • Conclusions (G. Orsi) Alessandro Pansa, • Appendix Chief Operating Officer & Chief
Slide 4: Strategic Direction and Priorities
Strategic Direction and Priorities Strategic focus on our three pillars of Aeronautics, Helicopters and Defence Electronics & S Security it remains i unchanged h d Key priorities for immediate execution: • Acceleration of change programmes underway in Aeronautics, Defence Electronics and Security an
Slide 5: The current Climate
\\, “7 FINMECCANICA The current Climate
Slide 6: Current Climate / External factors
Current Climate / External factors External te a factors acto s • Growing pressure on Defence domestic markets (US, Italy, UK) • Civil Ci il unrestt iin N North th Af Africa, i iin particular ti l persisting i ti tturmoilil iin Lib Libya • Economic and financial weakness of some European countries •
Slide 7: Current Climate / Internal structural issues
Current Climate / Internal structural issues • Structural issues in Aeronautics and Rolling Stock • Impact needs to be quantified and actions implemented in order to address issues over coming months • Evaluations and actions will be accelerated Aeronautics - Ebita decreases YoY due to lower industr
Slide 8: Focus Areas of Action
Focus Areas of Action Work to identify and quantify impact of structural and contractual issues is key focus for Management together with continuing focus on the three strategic pillars of Aeronautics Management, Aeronautics, Helicopters and Defence Electronics & Security Actions – taken over coming
Slide 9: Investing in key selected Programmes: Aerospace and Defence
Investing in key selected Programmes to ensure positive Returns: Aerospace p p and Defence Helicopters Aeronautics Space Defence Electronics and Systems E-Scan Radar Tilt rotor UAV Advanced Training SDR Earth Observation Light Twin MAESA DIRCM Connectivity Guided Weapon Heavy Torpedo Tactical Transp
Slide 10: Investing in key selected Programmes: Security, Transport, Energy
Investing in key selected Programmes to ensure positive Returns: Security, p y, Transport, p , Energy gy Security and Automation Transport Energy TRAMWAVE Plate Reader and PMR / Public Safety Urban Transport Surveillance Cyber Security Green Efficiency and Automation Services High Speed Flexibilty 1
Slide 11: 1H2011 Highlights and Sector Review
1H2011 Highlights and Sector Review 11
Slide 12: 1Half 2011 Performance
1Half 2011 Performance 1H11/1H10 (E (Euro mln) l ) FY 10 1H11 1H10 Change Lower volumes in Defence Electronics and Revenues 18,695 8,432 8,654 (3%) Energy Defence D f El t i slowdown Electronics l d iin USA and d EBITA Adj 1,589 440 586 (25%) Italy EBITA Margin 8.5% 5.2% 6.8% -1.6 p.p. Net Income 55
Slide 13: Solid financial structure safeguards from volatility on debt markets
Solid financial structure safeguards from volatility on debt markets Dollar Bond Sterling Bond 46,3 Euro Bond 46,3 EIB 46,3 46,3 46,3 453 1.000 500 500 600 500 (€mln) 46,3 46,3 46,3 46,3 346 46,3 346 36,8 208 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2025 2039 2040 • Next long term
Slide 14: 1Half 2011 Sector Results
1Half 2011 Sector Results 1H2011 Revenue 1H2011 Margin 2011 Order Revenues Change Ebita Change Orders Change Defence vs. Civil Sector Eur bn vs. Margin vs. Eur bn vs. Revenues 1H2010 1H2010 1H2010 ((bps) p ) 43% Helicopters 1,831 5% 10.3% (10) 1,247 (50%) Defence and Security 1H 2,923 (10%) 6.2% (27
Slide 15: Helicopters
Helicopters p 1H2011 Change ((Euro mln)) 1H11 1H10 H1 11/ FY 10 • Revenues R and d EBITA increase i d due tto h helicopters li t (i (i.e. H1 10 AW139, AW109LUH) and customer support (+14.6% YoY) Revenues 1,831 1,743 5% 3,644 • Lower order intake due to some g gov order postponement EBITA Adj 188 181
Slide 16: Defence Electronics and Security
Defence Electronics and Security 1H2011 Change ((Euro mln)) 1H11 1H10 H1 11 FY10 • Decrease in Revenues partially expected expected, mainly due to completion of some US programmes; posponements /H1 10 and lack of expected orders in Libya Revenues 2,923 3,255 (10%) 7,137 EBITA Adj 181 289 (37%) 735 •
Slide 17: Aeronautics
Aeronautics Change 1H2011 ((Euro mln)) 1H11 1H10 H1 11 FY10 /H1 10 • Slight increase in Revenues mainly due to M346 Revenues 1,297 1,262 3% 2,809 and JSF, offsetting Eurofighter production slowdown EBITA Adj 41 54 (24%) 205 Margin 3.2% 4.3% (1.1p.p.) 7.3% • Profitability impacted by above mentioned
Slide 18: Space and Defence Systems
Space Defence Systems (Euro mln) 1H2011 1H2010 Change FY10 (Euro mln) 1H2011 1H2010 Change FY10 Revenues 480 412 17% 925 Revenues 558 537 4% 1,210 , EBITA Adj 10 5 n.a. 39 EBITA Adj 49 37 32% 107 Margin 2.1% 1.2% 0.9 p.p. 4.2% Margin 8.8% 6.9% 1.9p.p. 8.8% Orders 371 497 (25%) 1,912 Orders 318 414 (
Slide 19: Energy and Transport
Energy gy Transport (Euro mln) 1H2011 1H2010 Change FY 10 (Euro mln) 1H2011 1H2010 Change FY 10 Revenues 562 677 ((17%)) 1,413 , Revenues 953 926 3% 1,962 , EBITA Adj 42 67 (37%) 145 EBITA Adj 9 35 (74%) 97 Margin 7,5% 9.9% (2,4 p.p.) 10,3% Margin 0.9% 3.8% (2.8 p.p.) 4.9% Orders 798 374 113% 1,403
Slide 20: Current restructuring plan progress report (1/2)
Current restructuring g plan progress g report (1/2) ( ) • Wide range of initiatives aimed at improving efficiency launched last year against backdrop of increased competitiveness and softer spending in home markets • Worldwide headcount reductions increased from ca. 3,000 cumulated over 2010-2013 t
Slide 21: Current restructuring plan progress report (2/2)
Current restructuring g plan progress g report (2/2) ( ) • Aeronautics – headcount reduction of 600 alreadyy agreed g – closure of 2 sites – integration of Engineering activities – 1st wave of integrated SAP (Alenia /Aermacchi) system completed – 2nd wave (business controlling model) to be completed
Slide 22: 2011 Guidance
2011 Guidance • We will update our EBITA guidance for FY2011 in Q4 • We expect Revenues in the range of Eur17.5 Eur17 5-18bn 18bn (net of ca. ca Eur400mln of deconsolidated revenues from Ansaldo Energia) • Free Operating Cash Flow will be positive in FY2011 • Order intake for the year will be at ca.
Slide 23: Commercial Outlook and Opportunities
Commercial Outlook and Opportunities 23
Slide 24: USA: Focus on Resource Optimisation
USA: Focus on Resource Optimisation DoD focused Resource Optimisation. p National security ypprogrammes, g , cyber-war, y , training g and simulation, helicopters, UAV and missile defence theatre programmes confirmed • Main platform programmes confirmed for Aeronautics (C27J and F35-JSF) • New initi
Slide 25: Italy: Focus on Resource Optimisation
Italy: Focus on Resource Optimisation Italian defence budget coming under pressure, but main programmes remain robust • Well established European and NATO military programmes (and NATO) • Opportunities pp for C4ISR sector ((Defence Information Infrastructure p programme g to p provide integrated g n
Slide 26: UK: Challenges and Opportunities
UK: Challenges and Opportunities UK Budget remains constrained, however… • Recent settlement adds funds to medium term plan (+£3B) and cuts operating costs to fund equipment • AW159 programme on budget and on time (4 completed, 3 flying); Training and Support under negotiation • Typhoon radar develo
Slide 27: Increasing internationalisation
Increasing internationalisation Because our strategy relies on recognised technological endowment and continuous innovation of product portfolio it allows us to respond to growing pressure on domestic markets by: 9 Increasing our independence from domestic launch customers 9 i.e. Superjet 100 civil
Slide 28: High-potential Markets - Overview
High-potential High potential Markets - Overview Russia Turkey Brazil China Latin America India In 2011 – 2015 we expect p Middle East an increase in orders coming from all these countries of approx. 20% In 2011 we expect ca.€10Bn orders coming from non domestic countries 28
Slide 29: High-potential Markets – Key Opportunities
High-potential High potential Markets – Key Opportunities • Naval Systems • Border Control (Sisfron Programme and Amazona Azul) • Security for Big Events (Olympic Games and Football World Cup) • Oil & Gas Brazil •Transport Signalling&Solutions • Civil helicopter market (AW-Russian UIC Oboronprom JV
Slide 30: High-potential Markets – Key Opportunities
High-potential g p Markets – Key y Opportunities pp • Long Range Air Defence programme • Coastal C t lB Border d S Surveillance ill S System t &B Battlefield ttl fi ld Digitisation Di iti ti ffor A Army • Eurofighter for Turkish Air Force Turkey •Metro ((i.e. Istanbul and Ankara)) • Helicopters for
Slide 31: Conclusions
«\, “7 FINMECCANICA Conclusions 31
Slide 32: Concluding remarks (1/2)
Concluding remarks (1/2) We are a world p player y in the A&D markets. • Challenges we face are profound and dynamic • Two clear areas of focus: 1. Urgent restructuring – Aeronautics and Rolling Stock where radical actions are underway – We will report the impact of these changes in Q4 2. Driving gr
Slide 33: Concluding remarks (2/2)
Concluding g remarks (2/2) ( ) Driving greater efficiency and performance throughout the Group in businesses that are on track or below expectations focusing on accountability of CEOs • Select and consolidate products, technologies and market portfolios where appropriate • Identify and further prior
Slide 34: Appendix
«\, “7 FINMECCANICA Appendix
Slide 35: Partnership Agreement for the sale of 45% of Ansaldo Energia
Partnership Agreement for the sale of 45% of Ansaldo Energia 35
Slide 36: Partnership Agreement for the sale of 45% of Ansaldo Energia
Partnership Agreement for the sale of 45% of Ansaldo Energia g On 13th June 2011 Finmeccanica finalised the agreement with First Reserve Corporation (FRC), an American investment firm specializing in the energy sector, for the sale of a 45% stake in Ansaldo Energia (AEN) Total value of the transacti
Slide 37: Debt Structure
Debt Structure 9% 18% % 34% Dollar Bond 66% Sterling Bond Fixed 73% Euro Bond Floating • Average Debt Life > 10 years • Average cost of debt approximately 5.6% • Currently approx. 66-34% fixed vs. floating interest cost • Rating: Fitch = BBB+ Stable Outlook Moody’s = A3 Stable Outlook(1) S&P = BBB N
Slide 38: Long Term Debt Maturity Profile
Long g Term Debt Maturity y Profile Dollar Bond 46,3 Sterling Bond 46 3 46,3 Euro Bond 453 46,3 1.000 46,3 46,3 EIB (€mln) 500 500 600 500 346 346 208 36 8 36,8 46 3 46,3 46 3 46,3 46 3 46,3 46 3 46,3 46 3 46,3 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2025 2039 2040 Bond Available
Slide 39: 1H2011 Results – Profit & Loss
1H2011 Results – Profit & Loss CONSOLIDATED PROFIT AND LOSS ACCOUNT 1H 2011 1H 2010 Change % €mil. Revenues 8,432 8,654 -3% Costs for purchases and personnel (7,671) (7,744) Depreciation and amortisation (294) (275) Other net operating revenues (costs) ((27)) ((49)) EBITA Adj (*) 440 586 -25% EBITA
Slide 40: Balance Sheet
Balance Sheet BALANCE SHEET €mil. 30.06.2011 31.12.2010 Non-current assets 13,141 13,641 Non-current liabilities (2,459) (2,583) 10,682 11,058 Inventories 4,465 4,426 Trade receivables 9,304 9,242 Trade payables (12,078) (12,996) Working capital 1,691 672 Provisions for short-term risks and charges
Slide 41: Cash Flow
Cash Flow CASH FLOW 1H 2011 1H 2010 €mil. Cash and cash equivalents at 1 January 1,854 2,630 Gross cash flow from operating activities 802 1,008 Changes in other operating assets and liabilities(*) (619) (493) Funds From Operations (FFO) 183 515 Changes in working capital (996) (1,059) Cash flow gen
Slide 42: Divisions
Divisions Other 1H 2011 Defence Defence Activities Helicopters p Aeronautics Space p Energy gy Transport p Eliminations Total (E (Euro million) illi ) Electronics Systems and Corporate Revenues 1,831 2,923 1,297 480 558 562 953 131 (303) 8,432 EBITA Adj (*) 188 181 41 10 49 42 9 (80) 440 EBITA Adj (
Slide 43: 2011 Financial Calendar
2011 Financial Calendar Date Event 2 March 2011 2010 Full Year Results Ordinary shareholders’ meeting (first 29 April and 4 May 2011 and second call) Extraordinary shareholders’ meeting 29 April – 3 and 4 May 2011 (first, second and third call) 28 April 2011 First Quarter 2011 Results 27 July 2011 F
Slide 44: IR Contacts
IR Contacts Investor Relations Finmeccanica investor_relations@finmeccanica.com Website: http://www.finmeccanica.com/Investor Relations John D. Stewart S Raffaella Luglini VP Investor Relations Investor Relations Officer +39 06 32473.290 +39 06 32473.066 john.stewart@finmeccanica.com raffaella.lugli