Leonardo Spa · MIL:LDO
Leonardo Spa — Finmeccanica — FY2013 Earnings Presentation
41 slides from Leonardo Spa's earnings presentation, Mar 20, 2014
Slide 1: FY2013 Results Presentation
FY2013 Results Presentation Alessandro Pansa Chief Executive Officer Gian Piero Cutillo Chief Financial Officer 20 March 2014
Slide 2: Agenda: Introduction, FY2013 Results & 2014 Outlook, Strategic Update, Appendix
INTRODUCTION (Alessandro Pansa - CEO) FY2013 RESULTS & 2014 OUTLOOK (Gian Piero Cutillo - CFO) STRATEGIC UPDATE (Alessandro Pansa - CEO) APPENDIX
Slide 3: 2013 a Year of Transition Making Significant Steps Forward
2013 A YEAR OF TRANSITION MAKING SIGNIFICANT STEPS FORWARD We are doing the right things progressing on corporate priorities: Addressing corporate governance Executing business restructuring Moving forward on business portfolio rationalisation Our A&D business is getting stronger U Upper end d off g
Slide 4: Agenda: Introduction
INTRODUCTION (Alessandro Pansa - CEO) FY2013 RESULTS & 2014 OUTLOOK (Gian Piero Cutillo - CFO) STRATEGIC UPDATE (Alessandro Pansa - CEO) APPENDIX
Slide 5: FY2013 Group Overview
FY2013 GROUP OVERVIEW A&D d liTESTO FINTO delivered d strong t results lt T t Testo AnsaldoBreda results within Transportation remain disappointing Overall the Group achieved: Remarkable order intake of €17.6 bn (+11% YoY) Revenues at €16bn, down 2.9% as expected given cuts in US and EU defence spen
Slide 6: FY2013 Operating Highlights
FY2013 OPERATING HIGHLIGHTS A&D b TESTO FINTO businesses i growing i stronger t helping h l i us tto achieve Thi t G Testo Group guidance id ffor O Orders, d Revenues and EBITA Delivering on promises in challenging and uncertain markets Strong order intake significantly above guidance and book to bi
Slide 7: Strong A&D Performance in FY2013
STRONG A&D PERFORMANCE IN FY2013 STRONG A&D ORDER INTAKE, DRIVING Book to bill >1 A&D REVENUES € Million € Million +14% 15,501 14,668 14,093 13,582 +57% 7,330 4,677 4,438 4,164 Q412 Q413 FY12 FY13 Q412 Q413 FY12 FY13 A&D EBITA & ROS TRANSPORTATION ROS € Million € Million 8.4% 1,075 1,058 2,406 2,230
Slide 8: Helicopters
HELICOPTERS Strong order momentum supports visibility of solid performance TESTO FINTO Q4 ACTUAL FYACTUAL 2013 2012 % h Y %ch. YoY Y 2013 2012 % h Y %ch. YoY Y € Mln Orders 2,141 1,737 +23,3% 4,384 4,013 +9.2% Revenues 1,064 1,267 -16% 4,076 4,243 -3.9% EBITA 151 134 +12.7% 562 473 +18.8% ROS % 14.2
Slide 9: Aeronautics
AERONAUTICS Successful execution of restructuring drives significant profitability improvement TESTO FINTO T t Testo Q4 ACTUAL FY ACTUAL 2013 2012 %ch YoY %ch. 2013 2012 %ch YoY %ch. € Mln Orders 1,943 945 +105.6% 3,980 3,169 +25.6% Revenues 1,169 932 +25.4% 3,343 2,974 +12.4% EBITA 34 30 +13.3% 182
Slide 10: EU Defence Electronics and Security - Selex ES
EU DEFENCE ELECTRONICS AND SECURITY-Selex ES Good order intake in a challenging environment; restructuring ahead of schedule TESTO FINTO T t Testo Q4 ACTUAL FY ACTUAL 2013 2012* %ch YoY %ch. 2013 2012* %ch YoY %ch. € Mln Orders 1,634 1,208 +35.3% 3,457 3,206 +7.8% Revenues 970 1,148 -15.5% 3,214 3,5
Slide 11: US Defence Electronics and Security - DRS
US DEFENCE ELECTRONICS AND SECURITY – DRS Good performance confirms resilience despite pressure on volumes TESTO FINTO T t Testo 4Q ACTUAL FY ACTUAL 2013 2012 %ch YoY %ch. 2013 2012 %ch YoY %ch. $ Mln Orders 639 687 -7% 2,018 2,477 -18.5%% Revenues 619 677 -8.6% 2,240 2,769 -19.1% EBITA 88 114 -22.8
Slide 12: Space and Defence Systems
SPACE Q4 ACTUAL FY ACTUAL 2013 2012 %ch. YoY 2013 2012 %ch. YoY € Mln Orders 517 T +127.8% Testo 227 t 1,002 866 +15.7% Revenues 322 356 -9.6% 1,051 1,053 -0.2% EBITA 40 37 +8.1% 94 84 11.9% ROS % 12.4% 10.4% +2p.p. 8.9% 8.0% +0.9 p.p. Order increase in Q4 due to relevant acquisitions in the field o
Slide 13: Transportation
TRANSPORTATION Good STS performance, while challenges in AnsaldoBreda persist TESTO FINTO Testo ANSALDO STS Q4 ACTUAL FY ACTUAL 2013 2012 %ch. YoY 2013 2012 %ch. YoY € Mln Orders 470 441 6.6% 6 6% 1 484 1,484 1,492 0 6% -0.6% Revenues 390 374 4.3% 1,256 1,248 0.7% EBIT 39.8 39.5 0.8% 118 117 0.9% EB
Slide 14: Below the Line Costs
“BELOW THE LINE” costs R t t i costs Restructuring t off ca €394mln €394 l are mainly i l concentrated t t d iin kkey b businesses i lik like: European Defence Electronics & Security – Selex ES for ca. 194mln (ca. 50% of total restructuring g costs)) US Defence Electronics & Security – DRS for ca. €
Slide 15: Cash Flow
CASH FLOW Underlying cash conversion in A&D is strengthening; old contracts continue to weigh 1,350 ‐530 ‐300 gures do not include Anssaldo Energia a ‐730 2012 1,330 €m ‐710 300 90 320 GROUP Cash flow from Cash out Net investments FOCF FOCF excl off which A&D Operations Restructuring costs AnsaldoBr
Slide 16: Application of IFRS 11
APPLICATION OF IFRS 11 Starting St ti from f 1 January J 2014 th the new International I t ti l accounting ti standards t d d (IFRS 10, 10 11 and d 12) will ill be b effective Finmeccanica’s reporting will be affected mainly by IFRS 11, which no longer allows for the accounting of Joint Ventures und
Slide 17: FY2014 Outlook Assumptions
FY2014 OUTLOOK ASSUMPTIONS ORDERS: Solid order intake intake, confirming A&D book to bill above 1 REVENUES: broadly flat / slightly lower PROFITABILITY: Efficiency gains/restructuring support further improvement in A&D ROS, close to 9% RESTRUCTURING COSTS P&L: substancially lower in 2014 (vs €395m i
Slide 18: FY2014 Group Guidance
FY2014 GROUP GUIDANCE T t Testo TESTO FINTO FY2013A (restated according to IFRS11) FY2014E (according to IFRS11) GROUP A&D GROUP A&D Orders € bn 15.1 13.0 13.0 – 13.5 11.5 – 12.0 Revenues € bn 13.7 11.8 13.0 – 13.5 11.0 – 11.5 EBITA €mln 878 988 930 - 980 970 – 1,030 FOCF €mln (220) 135 (100) - 0 25
Slide 19: Agenda: Strategic Update
INTRODUCTION (Alessandro Pansa - CEO) FY2013 RESULTS & 2014 OUTLOOK (Gian Piero Cutillo - CFO) STRATEGIC UPDATE (Alessandro Pansa - CEO) APPENDIX 19
Slide 20: Adapting to a Changing Environment
ADAPTING TO A CHANGING ENVIRONMENT ENVIRONMENT 3 KEY PRIORITIES The competitive scenario is changing US and EU defense budgets expected to be flat in real terms Corporate Continuous shift of demand to Governance emerging countries High competition and strong price pressures Industrial Increased role
Slide 21: Progress on Our Key Priorities in 2013
PROGRESS ON OUR KEY PRIORITIES IN 2013 TESTO FINTO Testo New Group Organizational and Operating Model Corporate p Tighter control over group businesses: new role of Governance the Corporate Center as “Strategic Controller” IIndustrial d ti l Creating a sustainable long term portfolio Restructuring I
Slide 22: Corporate Governance Roadmap
CORPORATE GOVERNANCE ROADMAP MAR Reinforce the management and coordination of the Corporate over the operating companies, 2013 shortening reporting lines Centralization of the Group’s Internal Audit, including specific audit for monitoring of intermediaries Strengthen Trade and Business Compliance a
Slide 23: New Organizational and Operating Model
NEW ORGANIZATIONAL AND OPERATING MODEL Consistent with the objective to become a Group more concentrated on A&D Focus will be on the competitiveness p of our p products and services through g : Reshaping the role of the center as a “Strategic Controller” Better leveraging of best practices across th
Slide 24: New Organizational and Operating Model
NEW ORGANIZATIONAL AND OPERATING MODEL INCREASING EFFECTIVENESS by introducing formal networks focused on some key areas (i.e. Product Development, Markets, Order Execution, Service) to: better leverage skills, best practices and technologies across the Group go to market in a more coordinated way I
Slide 25: Progress on Our Key Priorities in 2013
PROGRESS ON OUR KEY PRIORITIES IN 2013 TESTO FINTO Testo New Group Organizational and Operating Model Corporate p Tighter control over group businesses: new role of Governance the Corporate Center as “Strategic Controller” IIndustrial d ti l Creating a sustainable long term portfolio Restructuring I
Slide 26: Restructuring Plan Target Exceeded
2 YEAR RESTRUCTURING PLAN TARGET EXCEEDED Savings (€m) FY 13E FY13A P Procurement, t engineering i i and d production d ti overperformed f d SAVINGS New key initiatives efficiency-oriented and focused to deliver +13.7% excellence € Million 540 Helicopters 65 70 Product family/modularity;Customer 475
Slide 27: New Wave of Restructuring Launched in A&D
NEW WAVE OF RESTRUCTURING LAUNCHED IN A&D In order to continue to improve industrial performance and go ahead with restructuring initiatives initiatives, Finmeccanica is launching additional initiatives in A&D Helicopters Headcount rightsizing A Aeronautics ti Centralizing Procurement Cost Reduction
Slide 28: Progress on Our Key Priorities in 2013
PROGRESS ON OUR KEY PRIORITIES IN 2013 TESTO FINTO Testo New Group Organizational and Operating Model Corporate p Tighter control over group businesses: new role of Governance the Corporate Center as “Strategic Controller” IIndustrial d ti l Creating a sustainable long term portfolio Restructuring I
Slide 29: Asset Portfolio Rationalisation
ASSET PORTFOLIO RATIONALISATION Progress and Actions Two important steps achieved in 2013 1. Completion of the disposal of Ansaldo Energia in December 2013 2. Positive actions taken on AnsaldoBreda to minimise economic losses/cash absorption incompatible with Group capital structure Completion of co
Slide 30: Building a Stronger More Sustainable Finmeccanica
BUILDING A STRONGER MORE SUSTAINABLE FINMECCANICA T t Testo We have confidence in our core businesses We are not deterred by specific issues impacting FY13 results We are successfully executing our restructuring We are making good progress on our business portfolio 30
Slide 31: Appendix
INTRODUCTION (Alessandro Pansa - CEO) FY2013 RESULTS & 2014 OUTLOOK (Gian Piero Cutillo - CFO) STRATEGIC UPDATE (Alessandro Pansa - CEO) APPENDIX
Slide 32: Group Performance (1/2)
GROUP PERFORMANCE (1/2) TESTO FINTO A&D Transportation Testo Total continuing operations % % € Mln FY2013 FY2012 FY2013 FY2012 FY2013 FY2012 % Change Change Change Orders 15,501 13,582 14.1% 2,230 2,406 -7.3% 17,571 15,869 10.7% Backlog (**) 34,399 34,219 0.5% 8,527 8,837 -3.5% 42,697 42,930 -4.9% R
Slide 33: Group Performance (2/2)
GROUP PERFORMANCE (2/2) TESTO FINTO Q4 ACTUAL Testo FY ACTUAL € Mln 2013 2012 ** % Change 2013 2012 ** % Change Orders 8,276 5,729 44.5% 17,571 15,869 10.7% Revenues 4,690 4,854 -3.4% 16,033 16,504 -2.9% EBITA 252 300 -16% 949 1,006 -5.7% ROS % 5.3% 6.2% 5.9% 6.1% -0.2p.p. EBIT -247 -1,120 46 -531 n
Slide 34: Cash Out Profile of Below the Line Items
CASH OUT PROFILE OF BELOW THE LINE ITEMS €mln 1.015 549 472 Cash out Cash out Cumulative in FY2013A in FY2014E cash out in FY2015E and beyond 2013 data restated to take into account the impact of IFRS11 accounting principle 34
Slide 35: Development Costs Capitalised as Intangible Assets
DEVELOPMENT COSTS CAPITALISED AS INTANGIBLE ASSETS AT 31 DECEMBER 2013 Self Funded Self Funded Total €mln National Security Other 01 Jan 2013 Opening Balance 922 585 1 507 1.507 Gross R&D capitalised 328 113 441 Depreciation and write offs ‐90 ‐95 ‐185 Disposals 0 ‐134 134 ‐134 134 Other changes 7 ‐
Slide 36: Robust Financial Position
ROBUST FINANCIAL POSITION (as of end of December 2013 pro-forma*) Outstanding debt has an average life of approx.9 years The Group debt structure is solid thanks to: ̶ Long average debt life, aligned with the Group's assets ̶ No maturity before December 2017 Finmeccanica Fi i bonds have no financial
Slide 37: Strong Liquidity Position
STRONG LIQUIDITY POSITION (as of end of December 2013) In order to cope with possible volatilities in financial needs, Finmeccanica can leverage: – 31 D December b cash hbbalance l off €1.5 €1 5 Billi Billion Availability of – Credit lines worth €3.0 Billion (confirmed and unconfirmed), undrawn at 3
Slide 38: Impact of IFRS 11 - FY2013 JV Breakdown
IMPACT OF IFRS 11 - FY2013 JV BREAKDOWN The table below shows how deconsolidation of the JVs will impact the 2013 key reported figures of the Group. Group TESTO FINTO DECONSOLIDATION DUE TO IFRS11 ATR MBDA SPACE NET IMPACT (50%) (25%) (67% Space Services OTHERS 33% Satellite Manuf.) ON THE GROUP (Ae
Slide 39: Asset Portfolio Rationalisation - Sale of Ansaldo Energia
ASSET PORTFOLIO RATIONALISATION – SALE OF ANSALDO ENERGIA T t Testo Closing of the sale of Ansaldo Energia to Fondo Strategico Italiano announced on 23 December 2013. Transaction agreed on 4 October 2013 for a fixed price of €777mln for 100% of the Company and an earn out worth up to €130mln. Transa
Slide 40: Safe Harbor Statement
SAFE HARBOR STATEMENT NOTE TESTO FINTO NOTE: Some of the statements incl included ded in this doc document ment are notTesto Thistorical t facts bbutt rather statements of ffuture expectations, also related to future economic and financial performance, to be considered forward-looking t re statement
Slide 41: Investor Relations & SRI Contacts
Investor Relations & Sustainable Responsible Investors (SRI) Contacts Raffaella Luglini Head of Investor Relations & SRI ir@finmeccanica.com +39 06 32473.066 www.finmeccanica.com/investors raffaella.luglini@finmeccanica.com Valeria Ricciotti Paolo Salomone Financial Communication ESG +39 06 32473.69