Leonardo Spa · MIL:LDO
Leonardo Spa — Finmeccanica — H1 2009 Earnings Presentation
49 slides from Leonardo Spa's earnings presentation, Jul 30, 2009
Slide 1: Finmeccanica First Half 2009 Results Presentation
Finmeccanica First Half 2009 Results Presentation Pier Francesco Guarguaglini Chairman and CEO Alessandro Pansa Co-General Manager / CFO London, 30 July 2009
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 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: Our Strategy
Our Strategy Resilience in domestic markets Strengthen Global Positioning Order visibility Internationalisation Investments Innovation Participating in world's defence Competitiveness growth programmes Profitability Revenue diversification Value Creation On track to achieve guidance and order target
Slide 6: First Six Months 2009 Results Consistent With Our Strategy
First Six Months 2009 Results Consistent With Our Strategy Innovation More than 95% of R&D investments devoted to A,D&S (ca. 78% Strategic Pillars) Competitiveness EBITA Adj margin up from 6.2% in 1H08 to 7.1% in 1H09 Profitability Solid presence in domestic markets (Italy, UK and USA); Internationa
Slide 7: Financial & Business Review
Alessandro Pansa Financial & Business Review 7
Slide 8: Delivering on Our Commitments
Delivering on Our Commitments 1H 2009 results confirm resilience in our domestic and diversified markets, as stated in March and May this year Significant ability to maintain growth, profitability and cash flow despite market turmoil Enhancing and strengthening Group capital structure: on 22 July Fi
Slide 9: 1H 2009 Economic Highlights
1H 2009 Economic Highlights 1H 2009 Results vs 1H 2008 Revenues up 32% to €8.5bn, mainly due to Defence Electronics (+89%), Helicopters (+12%), Aeronautics (+14%) and Energy (+60%). Organic growth: 10% EBITA Adjusted up 51% to €605mln, due to Defence Electronics (+180%) and Energy (105%). Organic gr
Slide 10: 1H 2009 Financial Highlights
1H 2009 Financial Highlights 1H 2009 Results vs 1H 2008 FOCF €(695)mln +48% compared to €(1,347)mln in 1H 2008 Net debt to €4.6bn from €3.4bn at the end of 2008 ROI increases to 16.7% from 15.5% (+1.2 p.p.) despite increasing Net Invested Capital due to DRS acquisition EVA decreases to €(38)mln in 1
Slide 11: 1H 2009 Selected Data
1H 2009 Selected Data (€ mln) 1H 09 1H 08 FY 08 Revenues 8,523 6,433 15,037 EBITA Adjusted 605 400 1,305 EBITA Adj. Margin 7.1% 6.2% 8.7% Net income 242 297 621 Excluding capital gain 242 243 664 EPS (cents) adj* 38 50 139 New orders 8,327 6,809 17,575 Order Backlog 42,980 39,005 42,937 Net Working
Slide 12: Debt Refinancing of Bridge Facility and DRS Bonds Successfully Completed
Debt Refinancing of Bridge Facility and DRS Bonds Successfully Completed Target of ~ 8 year average life achieved Current average cost of debt: ∼ 5,5% Finmeccanica Finmeccanica credit credit profile profile Bridge loan (€mln) MOODY’S MOODY’S A3A3 FITCH FITCH BBB+ BBB+ Bond (€mln) S&P S&P BBB BBB 300
Slide 13: Helicopters
Helicopters 1H 2009 • Order growth mainly driven by military and governmental sector (i.e. Upgrading of 12 Lynx for UK and 16 CH47 for Italy for ca. €900mln) • Revenues up 12% mainly thanks to AW139, AW101, T129Atak and product support • Profitability slightly decreases due to negative sterling effe
Slide 14: Aeronautics
Aeronautics 1H 2009 • Revenue growth driven by military sector (i.e. Eurofighter and Trainers) • Orders decrease vs 1H 2008 mainly due to some weaknesses in civil. Significant military large contracts expected in 2H2009 (i.e. Eurofighter tr. 3 A and M346 in Italy and EAU) Recent Events (€mln) 1H 09
Slide 15: Defence Electronics
Defence Electronics 1H 2009 • Orders and Revenues well above €3bn also due to our US company DRS Technologies • EBITA Adj. increases, also excluding DRS and negative translation effect, driven by good performance for Command & Control Recent Events (€mln) 1H 09 1H 08 FY08 • DRS Technologies awarded
Slide 16: Strong Performance from Our US Company DRS Technologies
Strong Performance from Our US Company DRS Technologies DRS 1H2009 DRS 1H2008 (not included in Group 1H 2008) Revenues €1,466mln Revenues €1,235mln EBITA Adj €176mln EBITA Adj €137mln Orders €2bn Orders €1.3bn Order intake strong, and above plan, guarantees resilience of our US business Backlog at a
Slide 17: Space
Space 1H 2009 • Significant Order increase (+36%) due to both Satellite Services (Contract for Earth observation COSMO-SkyMed data distribution in Middle East and North Africa) and Manufacturing • EBITA impacted by lower volumes and some additional costs in Manufacturing (€mln) 1H 09 1H 08 FY08 Rece
Slide 18: Defence Systems
Defence Systems 1H 2009 • Order increase mainly due to export campaigns for missiles (Marte for EAU and Ground-based VL-MICA export), Naval guns (Greece, Norway, Morocco, Thailand) and Underwater • Profitability in line with expectations (€mln) 1H 09 1H 08 FY08 Revenues 514 513 1,116 EBITA Adj 42 42
Slide 19: Civil Activities
Civil Activities 1H 2009 Good EBITA Adj growth mainly due to higher volumes and profitability in Signalling & Systems Transport Significant order inflow in all segments (+106%), mainly driven by international contracts (Taipei, Turkey, Saudi Arabia, India, USA, Germany and Spain) (€mln) 1H 09 1H 08
Slide 20: Addressing Issues
Addressing Issues Presidential Helicopter All 9 helicopters of Increment 1 delivered to schedule, working closely with supporters to continue programme The Congressional House Of Representatives has allocated further funds to programme: $485mln for FY2010 Negotiations are ongoing to recover all cost
Slide 21: Confirming our Guidance for 2009 and 2010 (DRS Included)
Confirming our Guidance for 2009 and 2010 (DRS Included) 2009E 2010E Revenues €17.1-17.7bn €17.4-18.6bn EBITA €1,550-1,620mln €1,650-1,760mln Assumptions: forex €/US$ 1.43 1.485 • Cumulative FOCF(*) 2008-2010, including DRS, €1.3–1.5bn, of which ca. €400 – 500mln expected in 2009 • Dividend policy:
Slide 22: Business Strategy
Pier Francesco Guarguaglini Business Strategy 22
Slide 23: Maintaining Clear Visibility of Order Book and Pipeline Over the Next 3 Years
Maintaining Clear Visibility of Order Book and Pipeline Over the Next 3 Years Backlog at 30/06/2009 Cumulated Orders 2009 – 2011 €43bn Approx. €65bn 16% 25% 25% 25% 24% 26% 21% 10% 33% 10% 75% 19% 76% 15% Italy Italy UK UK USA Civil USA Rest of Europe Rest of Europe Civil Rest of the world Instituti
Slide 24: Uniquely Positioned to Address Operational Requirements of Coalition Forces
Uniquely Positioned to Address Operational Requirements of Coalition Forces HF Radio Lynx / Wild Cat UK Counter IED UAVs Driver Vision Enforcer Enhancement USA Italy Forza NEC Sustainment Systems Ruggedised Laptop VBM Soldato Futuro HITROLE Sensors 24
Slide 25: Major Italian Contracts Being Signed This Year
Major Italian Contracts Being Signed This Year Contract to supply 16 CH47 helicopters to be operated by the Italian Army signed in May for ca. €900mln Agreement with Italian MoD signed to supply 6 M346, contract expected shortly for ca. €200mln Eurofighter Tr. 3A confirmed, final contract expected s
Slide 26: UK - Building on our Successful Track Record
UK - Building on our Successful Track Record Eurofighter Tr. 3A confirmed for approx. €1.4bn Eurofighter comprehensive support programme under discussion First two Saudi Typhoons delivered AW159 Wildcat (Future Lynx) programme on track Lynx re-engining for Afghanistan deployment ahead of schedule Me
Slide 27: Continuous Need for Army Protection and Logistics
Continuous Need for Army Protection and Logistics Finmeccanica in USA: 2008 revenues over $5.5bn 2009-11 expected orders ~ €12bn Objectives Further build and enhance our Helicopter and Aircraft offering Grow Finmeccanica Group in USA through DRS as channel for electronics supply to DoD and US Agenci
Slide 28: Our Internationalisation Strategy in Mediterranean Area, North Africa and Middle East
Our Internationalisation Strategy in Mediterranean Area, North Africa and Middle East Key highlights ► Financial resources availability ► Growth rate ► Infrastructure modernisation needs ► Security requirements ► Technological and manufacturing opportunities to be exploited through partnerships ► Go
Slide 29: Commercial Opportunities in High Potential Growth Markets - UAE
Commercial Opportunities in High Potential Growth Markets - UAE Country Strategic Highlights Opportunities under Development ► Procurement spending in 2008: €2.6bn ► Financial resources available for new investments NEW BUSINESS IN AD&S (~€2bn over ’09-’14) ► Growth in technology and industrial dive
Slide 30: Commercial Opportunities in High Potential Growth Markets - Saudi
Commercial Opportunities in High Potential Growth Markets - Saudi Country Strategic Highlights Opportunities under Development UP TO ~ €4bn OVER 2009 – 2014 ► Procurement spending in 2008: €7.2bn NEW BUSINESS IN AD&S ► Well established relationships with USA and UK ►Establish a JV with a local playe
Slide 31: Commercial Strategic Approach in Selected Countries: Turkey
Commercial Strategic Approach in Selected Countries: Turkey Country Strategic Highlights ► Procurement spending in 2008: €4.2bn and Opportunities under Development increasing ► Good Gov-Gov relationships UP TO ~ €4bn OVER 2009 – 2014 ► Resources available for military requirements NEW BUSINESS IN AD
Slide 32: Commercial Strategic Approach in Selected Countries: India
Commercial Strategic Approach in Selected Countries: India Opportunities under Development UP TO ~ €5bn OVER 2009 – 2014 Country Strategic Highlights NEW BUSINESS IN AD&S ►Large opportunities in the next few years for AW101 ► Procurement spending in 2008: €11bn (€600mln), AW119 and NH90 (~ €1bn), Se
Slide 33: Milestone Agreement Signed for Strategic Cooperation with Libya
Milestone Agreement Signed for Strategic Cooperation with Libya Finmeccanica, the Libyan Investment Authority (LIA) and Libya Africa Investment Portfolio (LAP) intend to leverage joint capabilities to access key markets by working with local customers and partners For this purpose Finmeccanica signe
Slide 34: Joint Venture Company Marries Finmeccanica's Industrial / Technological Know How to…
Joint Venture Company Marries Finmeccanica’s Industrial / Technological Know How to… A Joint Venture company (JVC), 50% held by each of Finmeccanica and LAP, is to be set up within 12 months JVC will be main vehicle of joint business initiatives and able to invest in specific commercial and industri
Slide 35: Commercial Strategic Approach in Mediterranean/North African Countries: Libya
Commercial Strategic Approach in Mediterranean/North African Countries: Libya Opportunities under Development Country Strategic Highlights UP TO ~ €2bn OVER 2009 – 2014 ► Procurement spending in 2008: NEW BUSINESS IN AD&S €600mln ►ATR42-MPA, C27J, SuperJet 100 ► Gov-Gov agreement for total value of
Slide 36: Strong Business Diversity Reduces Risk of Programme Delays/Cancellations (1/2)
Strong Business Diversity Reduces Risk of Programme Delays/Cancellations (1/2) Top Programmes in Backlog so far Top Programmes in Cumulated Orders ‘09-’11 Helicopters Helicopters NH90 and T129 – Turkey (ca. 35% of total backlog) IOS programmes for UK MoD fleet (ca. £500mln p.y.) IOS programmes for U
Slide 37: Strong Business Diversity Reduces Risk of Programme Delays/Cancellations (2/2)
Strong Business Diversity Reduces Risk of Programme Delays/Cancellations (2/2) Top Programmes in Backlog so far Top Programmes in Cumulated Orders ‘09-’11 Space Space Cosmo, Earth Observation (Services) Galileo FOC Operations Services Sicral, Defence & Security GokTurk and MilsatCom capacity Galileo
Slide 38: Conclusions
Conclusions Our internationalisation strategy for Mediterranean/North African and Middle Eastern countries combined with our capabilities to respond to critical requirements (Defence and Security) and infrastructural needs (Transport and Energy) enable us to be recognised as a reference partner in t
Slide 39: Appendix
, “7 FINMECCANICA Appendix 39
Slide 40: Consolidated Profit and Loss Account
Consolidated Profit and Loss Account CONSOLIDATED PROFIT AND LOSS ACCOUNT €mil. 1H 2009 1H 2008 Change % Revenues 8,523 6,433 32% Costs for purchases and personnel (7,616) (5,811) Depreciation and amortisation (266) (205) Other net operating revenues (costs) (36) (17) EBITA Adj (*) 605 400 51% EBITA
Slide 41: Consolidated Balance Sheet
Consolidated Balance Sheet BALANCE SHEET €mil. 30.06.2009 31.12.2008 Non-current assets 13,628 13,113 Non-current liabilities (2,644) (2,655) 10,984 10,458 Inventories 4,876 4,365 Trade receivables 8,729 8,329 Trade payables (12,239) (12,134) Working capital 1,366 560 Provisions for short-term risks
Slide 42: Debt
Debt FINANCIAL POSITION €mil. 30.06.2009 31.12.2008 Short-term financial payables 1,222 1,144 Medium/long-term financial payable 3,640 3,995 Cash and cash equivalents (718) (2,297) BANK DEBT AND BONDS 4,144 2,842 Securities (1) (1) Financial receivables from Group companies (38) (26) Other financial
Slide 43: Long Term Debt, Credit Lines and Rating
Long Term Debt, Credit Lines and Rating Bond Credit Lines Issuer Notional Issue Date C oupon Matur ity Medium Term Revolving Amount (bps) Size € 1,200 Finm. Finance ² € 501 2003 37,5 08 August 2010 Tenor Committed until 2012 Finm. Finance ³ € 1.000 2008-2009 812,5 03 December 2013 Interest Euribor+
Slide 44: Cash Flow
Cash Flow CASH FLOW €mil. 1H 2009 1H 2008 Cash and cash equivalents at 1 January 2,297 1,607 Gross cash flow from operating activities 1,019 635 Changes in other operating assets and liabilities (241) (290) Funds From Operations (FFO) 778 345 Changes in working capital (1,024) (1,135) Cash flow gene
Slide 45: Divisions
Divisions Defence Defence Other Activities 1H 2009 (EUR million) Helicopters Aeronautics Space Energy Transport Eliminations Total Electronics Systems and Corporate Revenues 1,646 3,075 1,208 435 514 820 895 198 (268) 8,523 EBITA* 162 274 60 13 42 76 55 (77) 605 EBITA* margin (%) 9.8% 8.9% 5.0% 3.0%
Slide 46: Update on Share Buyback Programme
Update on Share Buyback Programme (Approved by Shareholders Meeting on 16 January 2008) • On 16 July 2009 the period of authorisation for the share buyback programme to purchase up to a maximum of 34 million ordinary shares for a period of 18 months from the resolution of the shareholders’ meeting o
Slide 47: International Footprint Underpinning Organic Growth
International Footprint Underpinning Organic Growth Orders 2008A: €17.6bn 2009E: ca. €20.8bn 2010E: ca. €21.9bn 22% 24% 22% 29% 31% 26% 14% 28% 11% 18% 9% 20% 10% 18% 18% Domestic Domestic Markets Markets Italy UK North America Rest of Europe Rest of World 47
Slide 48: Well Balanced Geographically Diversified Revenue Profile
Well Balanced Geographically Diversified Revenue Profile Revenues 2008A: €15bn 2009E: €17.1-17.7bn 2010E: €17.4-18.6bn 25% 20% 24% 29% 20% 24% 23% 12% 11% 20% 13% 25% 12% 21% 20% Domestic Domestic Markets Markets Italy UK North America Rest of Europe Rest of World 48
Slide 49: 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