Leonardo Spa · MIL:LDO
Leonardo Spa — Finmeccanica — H1 2008 Earnings Presentation
38 slides from Leonardo Spa's earnings presentation, Jul 31, 2008
Slide 1: Finmeccanica First Half 2008 Results Presentation
Finmeccanica First Half 2008 Results Presentation Pier Francesco Guarguaglini Chairman and CEO Alessandro Pansa Co-General Manager / CFO London, 31 July 2008
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: Contents
Contents Introduction Pier Francesco Guarguaglini Financial & Business Review Alessandro Pansa Business Strategy Pier Francesco Guarguaglini Appendix 3
Slide 4: Introduction
Pier Francesco Guarguaglini Introduction 4
Slide 5: On course and steaming straight ahead
On course and steaming straight ahead • Finmeccanica has a clear strategy in place since September 2004 with neither U turns nor deviations • Crucial to maintain intact successful and consistent strategy given the long term nature of Aerospace, Defence & Security • Our strategy is delivering results
Slide 6: Proceeding coherently on our strategic path
Proceeding coherently on our strategic path Strengthen Positioning Technologies Acquisitions Processes Internationalisation Investments Innovation Markets Integration and Products Synergies Efficiency Competitiveness Profitability Value Creation 6
Slide 7: 1H 2008 results in line with our strategic commitments
1H 2008 results in line with our strategic commitments Innovation More than 95% of R&D investments devoted to A,D&S (ca. 77% Strategic Pillars) Competitiveness Profitability EBITA Adj margin up from 5.8% in 1H07 to 6.2% in 1H08 Atak helicopter for Turkey €1.1bn; regional SuperJet100 Internationalisa
Slide 8: Financial & Business Review
Alessandro Pansa Financial & Business Review 8
Slide 9: Financial & Industrial Performance on track
Financial & Industrial Performance on track • No material impact of financial market turbulence on industrial activity • Excellent creditworthiness on debt markets confirmed • All economic and financial guidance targets confirmed • No major distractions from DRS acquisition Net impact of high oildem
Slide 10: 1H 2008 Financial Highlights
1H 2008 Financial Highlights 1H 2008 Results vs 1H 2007 • Revenues up 6% to €6,433mln • Ebita Adjusted* up 14% to €400mln • Net profit up 68% to €297mln, including capital gain from STM share sale of €54mln • Net debt up 15% to €2,607mln. FOCF down 10% to negative €1,347mln • Orders up 5% to €6,809m
Slide 11: Helicopters
Helicopters 1H 2008 • Strong order growth driven by both military and civil sector • Profitability mainly driven by increase in volumes for commercial sector (AW139, AW109) Recent Events • 18 AW139 for Qatar, contract value of approx. €260mln (€mln) 1H 08 1H 07 FY07 • Heads of agreement signed with
Slide 12: Defence Electronics
Defence Electronics 1H 2008 • Relevant orders for further tranche of FREMM programme and information technology and Security • Revenues and Ebita Adj.in line with 1H 07, driven by avionics ( EFA and Countermeasures) and IT and Security Recent Events (€mln) 1H 08 1H 07 FY07 • Selex Galileo delivery o
Slide 13: Aeronautics
Aeronautics 1H 2008 • Revenue growth driven by ATR and aerostructures for B787 and A380 • Orders slightly decrease vs 1H 2007 mainly due to high order acquisitions in 1H 07 on ATR and EFA Recent Events (€mln) 1H 08 1H 07 FY 07 • SuperJet 100: agreements signed for 122 a\c so far (of which 48, worth
Slide 14: Space
Space 1H 2008 • Revenues up 20% thanks to service and manufacturing (GMES, Sycral 1B and Cosmo-Sky Med) • Order increase mainly for phase IOV (In Orbit Validation) on Galileo programme and commercial TLC satellites Recent Events (€mln) 1H 08 1H 07 FY 07 • Joint Venture between Telespazio and Italian
Slide 15: Defence Systems
Defence Systems 1H 2008 • Ebita adj increase thanks to a better profitability in Missiles and Underwater • Revenue growth driven by Underwater, Land (VBM and SICCONA) and Naval (€mln) 1H 08 1H 07 FY 07 armaments Revenues 513 497 1,130 EBITA Adj 42 29 125 EBITA Adj 8.2% 5.8% 11.1% Margin Outlook 2008
Slide 16: Civil Activities
Civil Activities 1H 2008 Significant growth of Ebita adj mainly due to recover in Vehicles Transport Good order inflow from Signalling (China, Sweden and Tunisia) and Vehicles Revenue growth due to improvements in all segments (€mln) 1H 08 1H 07 FY 07 Recent Events Revenues 813 725 1,356 Railway sys
Slide 17: Guidance confirmed (excl. DRS Technologies' acquisition)
Guidance confirmed (excl. DRS Technologies’ acquisition) 2008** 2009** Revenues € 14.25 – 14.9bn € 15.1 – 15.9bn EBITA € 1,170 – 1,240mn € 1,300 – 1,420mn Cumulative FOCF* 2008-2010 €1.3–1.5bn; 2008 in line with 2007 Dividend policy: increase together with profits Optimal capital structure: Net debt
Slide 18: Guidance 2010 (excl. DRS Technologies' acquisition)
Guidance 2010 (excl. DRS Technologies’ acquisition) 2007A Stretch 2010 Targets (€M) Ebit Ebit Revenues Ebit margin Revenues Ebit margin Strategic Pillars* 9,112 953 10.5% 11,960 1,280 10.7% Space & Defence Systems 1,983 163 8.2% 2,350 230 9.8% Transport, Energy and Others 2,750 (71) (2.6%) 3,090 140
Slide 19: Business Strategy
Pier Francesco Guarguaglini Business Strategy 19
Slide 20: Meeting our objectives
Meeting our objectives Drive further growth of three Strategic Pillars, both organically and through acquisitions 1 particularly in UK and US Exploit specific companies’ excellences to conclude wider strategic alliances 2 Leverage on companies’ capabilities in civil sectors to capture value in growi
Slide 21: Accomplishing our external growth strategy
Accomplishing our external growth strategy aimed at increasing footprint in key markets, improving skills/capabilities as a solution provider and further strengthening UK and US presence USA: DRS Technologies, defence technology leader providing integrated products, services and support mainly for t
Slide 22: Large Programmes Driving Growth Over Next Five Years (1/2)
Large Programmes Driving Growth Over Next Five Years (1/2) EXPECTED OPPORTUNITIES Helicopters Helicopters VH-71 Presidential helicopter increment 2 Combat Search&Rescue in USA (in 2008) AW101 export CH47+ AW101 in UK AW139 best selling helicopter with > 420 orders Integrated Operational Support for
Slide 23: Large Programmes Driving Growth Over Next Five Years (2/2)
Large Programmes Driving Growth Over Next Five Years (2/2) EXPECTED OPPORTUNITIES Space Space Sicral, Defence & Security, ca. €240mln Commercial segment ca € 300 mln Egnos/Galileo, Infomobility, ca. €260mln Security and Earth Observation for Europe Cosmo, Earth Observation, ca. €290mln and Middle Ea
Slide 24: Exploit niche excellences
Exploit niche excellences Leveraging on Space Alliance to further exploit our competencies and complementary assets in satellite systems and services to significantly strengthen positioning as major European Space player Establishing Italian-French cooperation agreement to create a leading player in
Slide 25: International Strategy in attractive growth markets
International Strategy in attractive growth markets Long term commercial and industrial commitment Partnerships with domestic industries Local investments aimed at exploiting domestic skills based on contribution of our know how and technologies We are expanding our commercial and manufacturing oper
Slide 26: Exploiting opportunities for integrated solutions
Exploiting opportunities for integrated solutions Finmeccanica invests in strategic technologies, anticipating proactively market needs & customer expectations, and enhancing industrial efficiency, with the objective of improving competitive advantage BA609 Tiltrotor Sky-Y UAV Large Systems for Defe
Slide 27: Working successfully to solve residual criticalities
Working successfully to solve residual criticalities First step of restructuring successfully completed and on track to achieve expected targets for: Space Manufacturing and Services (Telespazio), Security and Automation (ElsagDatamat), Military Communications (Selex Comms) Programmes underway: Airc
Slide 28: Growing organically and through acquisitions
2007 was a year of strong achievements for the Group Performance of first six months of 2008 confirm our capability to meet targets set for 2008 Over 2008-2010 we will continue to pursue our strategy based on Growing organically and through acquisitions Leveraging high exposure to large defence prog
Slide 29: Appendix
~\ “7 FINMECCANICA Appendix 29
Slide 30: Recent achievements (Q2) confirming growth opportunities (1/2)
Recent achievements (Q2) confirming growth opportunities (1/2) Helicopters Agreement signed with Boeing for the joint manufacture of new CH-47F Chinook helicopters for the Italian Army (worth €800mln) Heads of agreement signed with Oboronprom Corporation for AW139 Final Assembly In Russia Kaigai Avi
Slide 31: Recent achievements (Q2) confirming growth opportunities (2/2)
Recent achievements (Q2) confirming growth opportunities (2/2) Space New orders for GMES (€12mln) and Koreasat6 (€23mln) signed in 2Q ASI and Telespazio signed a JV for COSMO-SkyMed to promote worldwide selling of images and other value added services based on data collected by the satellite Defence
Slide 32: 1H 2008 Selected Data
1H 2008 Selected Data (Eur mln) 1H 08 1H 07 FY 07 Revenues 6,433 6,079 13,429 EBITA* Adjusted 400 351 1,045 Margin 6.2% 5.8% 7.8% Net income 297 177 521 Excluding capital gain 243 EPS (cents) adj 53 37 110 New orders 6,809 6,478 17,916 Order Backlog 36,245 36,245 39,304 Working Capital 503 531 (693)
Slide 33: Consolidated Profit and Loss Account
CONSOLIDATED PROFIT AND LOSS ACCOUNT CONSOLIDATED PROFIT AND LOSS ACCOUNT €mil. 1H 2008 1H 2007 Change % Revenues 6.433 6.079 6% Costs for purchases and personnel (5.811) (5540) (**) Depreciation and amortisation (205) (204) Other net operating revenues (costs) (17) 16 Adj EBITA (*) 400 351 14% Adj
Slide 34: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET BALANCE SHEET €mil. 1H 2008 1H 2007 Non-current assets 9.705 9.845 Non-current liabilities (2.467) (2.562) 7.238 7.283 Inventories 3.945 3.383 Trade receivables 8.210 7.546 Trade payables (10.559) (10.481) Provisions for short-term risks and charges (480) (545) Other curre
Slide 35: Debt
DEBT Financial Position €mil. 30.06.2008 31.12.2007 Short-term financial payables 1.018 484 Medium/long-term financial payable 1.538 1.556 Cash and cash equivalents (314) (1.607) BANK DEBT AND BONDS 2.242 433 Securities (33) (13) Financial receivables from Group companies (26) (33) Other financial r
Slide 36: Cash Flow
CASH FLOW CASH FLOW €mil. 1H 2008 1H 2007 Cash and cash equivalents at 1 January 1.607 2.003 Gross cash flow from operating activities 635 669 Financial charges paid (40) (66) Income taxes paid (67) (91) Changes in other operating assets and liabilities (183) (208) Funds From Operations (FFO) 345 30
Slide 37: Divisions
DIVISIONS H1 2008 Helicopters Defence Aeronautics Space Defence Energy Transport Other Activities Eliminations Total (€ mil.) Electronics Systems and Corporate Revenues 1.469 1.628 1.062 451 513 512 813 173 (188) 6.433 Adj EBITA (*) 158 98 70 15 42 37 50 (70) 400 Adj EBITA (*) margin 10,8% 6,0% 6,6%
Slide 38: IR Contacts
IR Contacts 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