Leonardo Spa · MIL:LDO
Leonardo Spa — Finmeccanica — Debt Investor Presentation (March 2005)
34 slides from Leonardo Spa's debt investor presentation, Mar 7, 2005
Slide 1: Fixed Income Investors Presentation
Fixed Income Investors Presentation Milan, 7 March 2005
Slide 2: Executive Summary
Executive Summary ¾ Finmeccanica is a leading European A&D group with high technology expertise and synergic activities in the Aerospace, Defence and Security sectors ¾ Finmeccanica plays leading roles in major European programmes and projects in the Aerospace, Defence and Security sectors, contribu
Slide 3: Agenda
Agenda ¾ STRATEGY ON TRACK ¾ RECENT AEROSPACE & DEFENCE TRANSACTIONS ¾ FINANCIAL HIGHLIGHTS ¾ BUSINESS DIVISIONS OVERVIEW ¾ FINANCIALS 2
Slide 4: Group Structure (FY 2003 figures)
Group Structure (FY 2003 figures) Aeronautics Space Alenia Aeronautica Alenia Spazio Aermacchi Telespazio Information Technology Semiconductors 100% ownership 100% ownership Elsag STMicroelectronics Eur 1.3bn in revenues Eur 0.8bn in revenues 15% revenue contribution 9% revenue contribution 100% own
Slide 5: Building a stronger competitive position
Building a stronger competitive position… Yesterday (up to 2001/2002) Today/Tomorrow Industrial diversification Concentration in Exit Non-core Aerospace & Defence Helicopters, Defence Fragmented Electronics, Military trainers, Focus on areas of excellence Aerospace & Defence portfolio Tactical trans
Slide 6: ...by focussing in Aerospace & Defence...
…by focussing in Aerospace & Defence… by 2005 after 2005 Build A&D focussed Group Strengthen leadership in selected businesses Reinforce areas of excellence through Complete transformation from holding internal and external investments to industrially focused group Expand geographical penetration fo
Slide 7: ...and by capitalising on our Strategic Assets
…and by capitalising on our Strategic Assets Platform-based assets, consolidated areas Enabling assets for platforms and of activity Integrated Solutions Platforms Systems • Helicopters • Mission Systems • Aircraft • Sensors • Satellites • Comms • Land Vehicles need to build • Command & Control & In
Slide 8: Mission Objectives
Mission Objectives Strategic Objectives Operational/Financial Objectives ¾ Pursue leadership in selected areas of ¾ Increase profitability and cash flow generation of Aerospace, Defence and Security through both the Finmeccanica Group organic and external growth Focus on economies of scale and con
Slide 9: Shareholder Structure
Shareholder Structure Shareholder Structure Special Powers Held by the Ministry of Economy and Finance ¾ Ministry of Economy and Finance special powers 100% (recently amended): 90% 16% Veto powers over material changes: 80% 39% • Liquidation of the Company 70% 66% 60% • Disposal of Company’s asset
Slide 10: Agenda
Agenda ¾ STRATEGY ON TRACK ¾ RECENT AEROSPACE & DEFENCE TRANSACTIONS ¾ FINANCIAL HIGHLIGHTS ¾ BUSINESS DIVISIONS OVERVIEW ¾ FINANCIALS 9
Slide 11: Major 2004/2005 A&D Transactions
Major 2004/2005 A&D Transactions... …reducing the number of existing JVs and … ¾ Helicopters: outright control of AgustaWestland, a world’s leading helicopter player. Closing signed last 30 November. Additional revenues of at least Eur 1 bn in 05 ¾ Defence Electronics: building leadership in Europea
Slide 12: Helicopters
Helicopters Complete control of AgustaWestland will boost profitability… ¾ Compete more aggressively for international and military programmes (for example recent award of US 101 Presidential contract) ¾ Removing delays in decisional process typical of JVs ¾ Integration effects: Eur 50 mln annualise
Slide 13: Helicopters: AgustaWestland product line
Helicopters Just an example: AgustaWestland product line 2 Ton - 3 Ton A119 Koala A109 Power A109 LUH A109 K2 4 Ton - 6 Ton Lynx & AB139 BA609 AB412 Super Lynx 300 Multiruolo- Cmbt 4 Ton - 6 Ton A129 Apache 9 Ton 10 Ton - NH90 (TTH) NH90 (NFH) 14 Ton - 15 Ton EH101 Family Cormorant Naval Terrestrial
Slide 14: Defence Electronics
Defence Electronics Strategic autonomy and full managerial control over complete range of… ≥ 75% 100% 100% Military Military & & Secure Secure Avionics Avionics JV JV New New AMS AMS (Italy) (Italy) Communications Communications ¾ Land radar and command & control systems ¾ Land & naval communication
Slide 15: Space
Space Space alliance with Alcatel: ready to exploit renewed EU commitment… ¾ Manufacturing (Alcatel Alenia Space, 67% Alcatel / 33% Finmeccanica): European leadership in institutional and world telecom satellite markets Economies of scale and expanded customer base More balanced customer portf
Slide 16: Agenda
Agenda ¾ STRATEGY ON TRACK ¾ RECENT AEROSPACE & DEFENCE TRANSACTIONS ¾ FINANCIAL HIGHLIGHTS ¾ BUSINESS DIVISIONS OVERVIEW ¾ FINANCIALS 15
Slide 17: Financial criteria for A&D acquisitions
Financial criteria for A&D acquisitions ¾ IRR > WACC (7.6%) + Hurdle rate of at least 2% ¾ Cash generative once integration completed ¾ Funding criteria aimed at least at maintaining current credit ratings Instruments: ¾ STM shares: remaining 40 mln STM shares still available to fund A&D investments
Slide 18: Selected Historical Financial Ratios
Selected Historical Financial Ratios EBITDA/Net Interest Expense FFO/Net Debt 45.0x 300% 38.8x 254% 240% 30.0x 180% 17.6x 120% 15.0x 12.3x 69% 5.0x 60% 34% n.m. 0.0x 0% 2000 2001 2002 2003 2000 2001 2002 2003 Net Debt/EBITDA Net Debt as % of Net Capitalisation 2.0x 30.0% 1.7x 24% 1.6x 20.0% 17% 1.2x
Slide 19: Debt Overview
Debt Overview (in EUR million) 30/09/2004 30/06/2004 31/12/2003 30/09/2003 Short-term debt 47 65 86 112 Current portion of medium- to long-term debt 920 64 84 86 Medium- to long-term debt (net of current portion) 1,404 2,268 2,304 1,816 Cash on hand or equivalent (1,399) (1,617) (2,234) (1,022) NET
Slide 20: Debt Refinancing Strategy
Debt Refinancing Strategy ¾ Significant liquidity (Eur m) 1,000 sources: 940 (1) Average Life of Bond Debt: 5.1 years (as at 31-Dec-04) Bank lines uncommitted Conv. Into Eur 1.0 bn 800 Finmec. Shares Bank lines committed Eur 1.2 bn EMTN due 2018 (no financial Exchang. 600 covenants and rating in
Slide 21: Agenda
Agenda ¾ STRATEGY ON TRACK ¾ RECENT AEROSPACE & DEFENCE TRANSACTIONS ¾ FINANCIAL HIGHLIGHTS ¾ BUSINESS DIVISIONS OVERVIEW ¾ FINANCIALS 20
Slide 22: Aeronautics: currently capitalising on previous military investment
Aeronautics: currently capitalising on previous military investment… Significant presence in two largest civil programmes (A380 and 7E7) create strong base to reap benefits of sector recovery from 2006 Eurofighter first tranche: production ramp up, deliveries until 2006 = 50% of backlog. Second tr
Slide 23: Helicopters: export build and customer support
Helicopters: export build and customer support help offset… High margin customer support rising from 25% to 30% revenues in 04. Further increase over next few years NH90 ramping up over next few years (>150 helos in backlog) AB139, selected for DeepWater, first deliveries in 04 ramping up to >30
Slide 24: Space: outlook improving thanks to new boost
Space: outlook improving thanks to new boost … Weak commercial offset by improved m-t prospects for govt funded programmes. Space investment considered strategic by new EU white paper Ramp-up in Cosmo earth monitoring programme (~Eur 500 mln order acquired in December) drives Manufacturing growth
Slide 25: Defence Electronics: volume growth and restructuring
Defence Electronics: volume growth and restructuring… Exciting prospects driven by growing demand for integrated system solutions Significant growth in avionics driven by forthcoming Eurofighter 2nd tranche (contract worth ~ Eur 3 bn including BAE avionics) as well as good export opportunities (Gr
Slide 26: Defence Systems: ramp-up in missile production
Defence Systems: ramp-up in missile production... Significant potential for further improvement in performance thanks to ongoing rationalisation of missile JV Missiles: m-l term increase in profitability supported by programmes (PAAMS/FSAF, Storm Shadow/Scalp EG, Brimstone) moving from development
Slide 27: Non-core: strong commitment to exit Transport and Energy
Non-core: strong commitment to exit Transport and Energy confirmed Transportation Increasing European investment in rail infrastructure (Euro mln) 2003 Positive outcome for spin-off into combined civil engineering activities (Transport, Revenues 1,320 Energy and Fincantieri shipbuilding) only with
Slide 28: Agenda
Agenda ¾ STRATEGY ON TRACK ¾ RECENT AEROSPACE & DEFENCE TRANSACTIONS ¾ FINANCIAL HIGHLIGHTS ¾ BUSINESS DIVISIONS OVERVIEW ¾ FINANCIALS 27
Slide 29: Profit & Loss
Profit & Loss (EUR million) 9M 2004 9M 2003 FY 2003 REVENUES 6,088 5,724 8,279 VALUE OF PRODUCTION 6,388 5,923 8,646 Costs of goods and services (4,057) (3,794) (5,561) VALUE ADDED 2,330 2,129 3,085 Labour cost (1,849) (1,713) (2,340) Other provisions (13) (23) (34) Provisions for risks and charges
Slide 30: Balance Sheet
Balance Sheet (EUR million) 30.09.2004 31.12.2003 30.09.2003 Intangible assets 1,194 1,198 1,222 Tangible assets 1,690 1,692 1,626 Long-term investments 1,420 1,419 1,486 TOTAL NON-CURRENT ASSETS 4,304 4,310 4,333 Inventory (net of progress billings) 7,765 6,720 7,095 Trade receivables 3,070 3,328 3
Slide 31: Divisions: 9M 2004 Results
Divisions 9M 2004 RESULTS (Eur mln) Aeronautics Helicopters Space De fence De fence Transp. Energy I. T Other Elim. TOTAL Electronics Systems Value of production 1.200 867 523 1.408 748 987 515 267 96 (223) 6.388 EBITA 75 75 9 97 42 41 19 9 (60) 307 EBITA Margin (%) 6,3% 8,7% 1,7% 6,9% 5,6% 4,2% 3,7
Slide 32: Divisions: 9M 2003 Results
Divisions 9M 2003 RESULTS (Eur mln) Aeronautics Helicopters Space Defence Defence Transp. Energy I.T Other Elim. TOTA Electronics Systems Value of production 860 937 486 1.246 705 917 590 282 102 (202) 5.92 EBITA 44 88 (37) 70 42 38 25 16 (45) 24 EBITA Margin (%) 4,1% 5,1% 9,4% -7,6% 5,6% 6,0% 4,1%
Slide 33: Divisions: FY 2003 Results
Divisions FY 2003 RESULTS (Eur mln) Aeronautics Helicopters Space Defence Defence Transport Energy, IT, Elim. TOTAL Energy IT Electronics Systems Other Corporate Value of production 1,318 1,297 767 1,858 1,102 1,320 1,276 (292) 8,646 796 401 EBITA 137 137 14 160 88 66 (53) 549 23 24 EBITA margin (%)
Slide 34: 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
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