Leonardo Spa · MIL:LDO
Leonardo Spa — Finmeccanica — FY2012 Earnings Presentation
42 slides from Leonardo Spa's earnings presentation, Apr 24, 2013
Slide 1: FY2012 Results Presentation
FY2012 Results Presentation Alessandro Pansa Chief Executive Officer Gian Piero Cutillo Chief Financial Officer London, 24 April 2013 1
Slide 2: Agenda
AGENDA INTRODUCTION (Alessandro Pansa - CEO) FY2012 RESULTS & 2013 OUTLOOK (Gian Piero Cutillo - CFO) NEAR TERM PRIORITIES (Alessandro Pansa - CEO) APPENDIX 2
Slide 3: Progressing in our path to build a sustainable Finmeccanica
PROGRESSING IN OUR PATH TO BUILD A SUSTAINABLE FINMECCANICA In 2011 we launched a strong Group restructuring plan, reflected in lt ((ca. E FY2011 results 3 2b off exceptional Eur3.2bn ti l charges) h ) Despite operating in a challenging environment weaker market for new orders overhanging potential
Slide 4: Progressing in our path to build a sustainable Finmeccanica
PROGRESSING IN OUR PATH TO BUILD A SUSTAINABLE FINMECCANICA FY2012 results in line with expectations marked the achievement of a further step in the strategic reorganisation of the Group U ifi d E Unified European DE&S (Selex (S l ES) now ffully ll operational ti l Aeronautics “3R plan” showing visi
Slide 5: FY2012 Results
» =/' FINMECCANICA FY2012 RESULTS
Slide 6: FY2012 Results: Delivering on Guidance
FY2012 RESULTS : DELIVERING ON GUIDANCE Revenues at €17,218mln (€16,900-17,300mln expected) EBITA Adj at €1,080mln €1 080mln (ca. (ca €1,100mln €1 100mln expected) FOCF at €89mln (slightly positive expected) Net Financial Debt at €3,373mln €3 373mln (ca (ca. €3,400 €3 400 before disposals) Orders sl
Slide 7: Group Performance
GROUP PERFORMANCE Q4 ACTUAL FY ACTUAL Total Total Organic € Mln Ml 2012 2011 2012 2011 Change Change Change* New Orders 6,052 6,796 -10.9% 16,703 17,434 -4% -2.2% Backlog - - 44,908 46,005 -2% Revenues 5,079 5,066 0.3% 17,218 17,318 -1% 1% Underlying EBITA** 339 313 8.3% 1,080 878 23% 26% Underlying
Slide 8: Helicopters
HELICOPTERS Q4 ACTUAL FY ACTUAL %ch. %ch. 2012 2011 2012 2011 € Mil YoY YoY Orders 1,738 1,956 -11% 4,013 3,963 1% Revenues 1,266 1,160 9% 4,243 3,915 8% EBITA Adj 134 129 3% 473 417 13% EBITA Adj Margin 10.6% 11.1% 11.1% 10.7% Results confirming sustained growth, growth maintaining double digit pro
Slide 9: Aeronautics
AERONAUTICS Q4 ACTUAL FY ACTUAL %ch. %ch. 2012 2011 2012 2011 € Mil YoY YoY Orders 945 761 24% 3,169 2,919 9% Revenues 973 801 21% 2,974 2,670 11% EBITA Underlying 30 -88 n.m. 104 -103 n.m. Ebita Underlying Margin 3.1% -11,0% n.m. 3.5% -3.9% n.m. EBITA Adj 30 -135 n.m. 104 -903 n.m. Orders up 24% in
Slide 10: European Defence Electronics and Security (Pro-forma Selex ES)
EUROPEAN DEFENCE ELECTRONICS AND SECURITY (PRO-FORMA Selex ES) Q4 ACTUA ACTUAL FY ACTUAL ACTUA %ch. %ch. 2012 2011 2012 2011 € Mil YoY YoY Orders 866 879 -1% 3,206 2,780 15% Revenues 1 148 1,148 1 077 1,077 7% 3 590 3,590 3 630 3,630 -1 1% -1,1% EBITA Underlying 59 75 -21% 156 185 -16% Ebita Underly
Slide 11: Defence Electronics and Security – DRS
DEFENCE ELECTRONICS AND SECURITY – DRS Q4 ACTUAL FY ACTUAL %ch. %ch. 2012 2011 2012 2011 $ Mil YoY YoY Orders 687 798 -14% 2,477 2,980 -17% Revenues 677 903 -25% % 2,769 , 3,348 , -17% % EBITA Adj 114 178 -36% 293 399 -27% EBITA Adj Margin 16.8% 19.7% 10.6% 11.9% Order decrease in FY 2012 mainly in
Slide 12: Space and Defence Systems
Q4 ACTUAL FY ACTUAL SPACE 2012 2011 %ch. 2012 2011 %ch. € Mil YoY YoY Orders 227 405 -44% 866 919 -6% Revenues 356 302 18% 1,053 1,001 5% EBITA Underlying 37 41 -10% 84 68 24% Ebita Underlying Margin 10.4% 13.6% 8.0% 6.8% EBITA Adj 37 -9 n.m. 84 18 n.m. Slight decrease in Orders (-6% YoY) mainly rel
Slide 13: Energy and Ansaldo STS
ENERGY Q4 ACTUAL FY ACTUAL* %ch. %ch. 2012 2011 2012 2011 YoY YoY € Mil Orders 322 211 53% 834 1,258 n.m. Revenues 221 261 -15% 715 981 n.m. EBITA Adj 29 37 -22% 65 91 n.m. EBITA Adj Margin 13.1% 14.2% 9.1% 9.3% (* ) Organic FY2011 results would have been: Orders €899mln, Revenues €728mln and EBITA
Slide 14: AnsaldoBreda
ANSALDOBREDA Q4 ACTUAL FY ACTUAL %ch. %ch. 2012 2011 2012 2011 € Mil YoY YoY Orders 599 332 80% 782 671 17% Revenues 1 125 n.m. 456 595 -23% EBITA Underlying y g -99 -79 -25% -160 -155 -3% Ebita Underlying Margin n.m. n.m. -35.1% -26.1% EBITA Adj -99 -126 21% -160 -202 21% Orders up compared to 2011
Slide 15: Robust Financial Position
ROBUST FINANCIAL POSITION No meaningful refinancing needs before end 2017 Strong liquidity position Revolving credit facility and bonds have neither financial covenants nor rating pricing grids Average life >10 10 years Maturing Dec 2013, refinanced through €600mln bond issued Dec 2012 (€mil) 46 3 4
Slide 16: 2013 Outlook Assumptions
2013 OUTLOOK ASSUMPTIONS REVENUES: expected in line with 2012 in all sectors, with the exception of: Lower revenues in Defence Electronics & Security (Selex ES and especially DRS due to US Defence Budget reduction) Revenue recovery in Vehicles mainly “High Speed Italy” and “Main Line” programmes COM
Slide 17: Cash Flow Breakdown FY2012A FY2013E
CASH FLOW BREAKDOWN Negative FY2011 FOCF for ca. 1.370 ‐530 FY2012A €360mln ‐300 €mln ‐230 230 ‐750 FY2012A and FY2013E (key 1.330 300 items): ‐710 90 ‐40 Substantial increase in cash from 320 operations , >90% from A,D&S 40 ‐230 Cash out from restructuring remains CF from Cash out Net Operations Re
Slide 18: 2013 Group Guidance
2013 GROUP GUIDANCE FY2012A FY2013E €mil Orders 16,703 ca. 17,000 Revenues 17 218 17,218 Ca 16,700 Ca. 16 700-17 17,000 000 EBITA Adj 1,080 ca. 1,100 FOCF 89 Ca 100 Ca. Net Financial debt 3,373 Ca. 3,300 before disposals p 18
Slide 19: Near Term Priorities
» =/' FINMECCANICA NEAR TERM PRIORITIES 19
Slide 20: Near Term Priorities
NEAR TERM PRIORITIES Governance: more active coordination and strengthened central control over businesses Business restructuring and operational efficiency agenda Commercial strategy: reviewing priorities for more effective international positioning Portfolio rationalisation programme 20
Slide 21: Group Governance
GROUP GOVERNANCE Centralized/top-down business management and coordination More cohesive Group, less of a “federation” Strengthened control procedures Centralised Internal Audit Set up of a new Risk Management structure External Committee entrusted of proposing procedures and behavior required in or
Slide 22: Building a Successful Track Record in Restructuring
BUILDING A SUCCESSFUL TRACK RECORD IN RESTRUCTURING DRAW CONFIDENCE FROM AERONAUTICS: 3R Plan execution >40% ahead of target in 2012 Procurement: efficiency actions 50% better than expected, both in direct and indirect procurement (materials, tooling and investments) Engineering and industrial proce
Slide 23: Selex ES
S l ES Selex Unified Marketing, Sales, Strategy and Business development to address customer needs Unified Engineering and Production activities by creating and exploiting technology, product and systems’ synergies Airborne and Space Systems Division Land and Naval Systems Division Security and Smar
Slide 24: Restructuring Action Plan – Selex ES
RESTRUCTURING ACTION PLAN – Selex ES Product reduce from 550 to 350 products Rationalisation Number of clusters (group of engineers with homogeneous competences) from 340 to 250 Engineering g g Rationalised organisation COST EFFICIENCY initiatives: lean processes Consolidate production Tot. restruct
Slide 25: Restructuring Action Plan – DRS
RESTRUCTURING ACTION PLAN – DRS Elimination of cost duplication Wave one Site rationalisation efficiencies complete Simplification Headcount down ca.3.400 (from ca 10.800 end 2008 to ca7.400 end 2012) DRS FY2012 profitability maintained at 10.6% on lower volumes External Environment still unstable,
Slide 26: Portfolio Rationalisation Programme
PORTFOLIO RATIONALISATION PROGRAMME Portfolio rationalisation strategy Reconfirmed commitment to to asset disposals Rationalising, focus and maximise value of our business portfolio Support structurally lower debt and strengthen balance sheet, pending recovery in cash flow generation growth, due to
Slide 27: Right Portfolio Plan Focusing on the Right Markets
RIGHT PORTFOLIO PLAN FOCUSING ON THE RIGHT MARKETS Aerospace & Defence Civil International Strategic sectors Partnerships Defence Electronics and Space, Helicopters Aeronautics Energy, Transportation Securityy Defence Systems Group 81% of total orders 19% of total orders Proportion 85% of total reve
Slide 28: Medium Term Model for Finmeccanica
MEDIUM TERM MODEL FOR FINMECCANICA Streamlined and centralised Group Weighted market growth today Increased efficiencies Rationalised business portfolio Mix shift to higher growth segments Expand E d tto new exportt markets k t Solid earnings growth L/T sustainable Finmeccanica Improved sustainable
Slide 29: Conclusions
CONCLUSIONS Strong operational progress despite challenging environment Firm commitment in executing the portfolio rationalization underway Increasing emphasis on centralised group management and governance Clear near-term priorities Optimistic about the medium-term opportunity 29
Slide 30: Appendix
» =/ FINMECCANICA APPENDIX 30
Slide 31: Focusing on the Right Markets
FOCUSING ON THE RIGHT MARKETS MEDIUM TERM MARKET DYNAMICS Market growth over the next 10 years Strategic sectors Steady growth in civil sector military is cyclical – expected decline from 2015 FINMECCANICA KEY GROWTH DRIVERS HELICOPTERS New family of commercial helicopters – AW139, AW169, AW189 Inve
Slide 32: Focusing on the Right Markets
FOCUSING ON THE RIGHT MARKETS MEDIUM TERM MARKET DYNAMICS Civil aircraft segment (commercial and regional) return to pre-crisis levels from 2012 Strategic sectors Military expected to be stable until 2014 than grow on overdue upgrading/renewal FINMECCANICA KEY GROWTH DRIVERS AERONAUTICS Balanced exp
Slide 33: Focusing on the Right Markets
FOCUSING ON THE RIGHT MARKETS MEDIUM TERM MARKET DYNAMICS represent the largest market of interest to the Group despite defence budgets constraints, volumes and trends have remained stable (around €bil. €bil 150 p.y), p y) Strategic sectors homeland security/security systems growing at ca. 5% p.y.;
Slide 34: Focusing on the Right Markets
FOCUSING ON THE RIGHT MARKETS MEDIUM TERM MARKET DYNAMICS International partnerships proven strategic sector at institutional level, less sensitive to the world economic downturn Worldwide market ca. €80bn p.y, of which ca. 25% for satellite services in which hi h th the G Group operates. t IInstitu
Slide 35: Strong Liquidity Position
STRONG LIQUIDITY POSITION In order to cope with possible volatilities in financial needs, Finmeccanica can leverage: – Year end cash balance of €2.14Billion €2 14Billion Availability of – Credit lines worth €3.0 Billion, fully available at December 31th 2012 to finance adequate cash absorptions deri
Slide 36: Cash Out Profile of Exceptional Charges
CASH OUT PROFILE OF EXCEPTIONAL CHARGES €mln 1,209 240 1.747 552 534 88 969 446 264 288 Total exceptionals Cash out Cash out Cumulative accounted for in P&L in FY2012A in FY2013E cash out FY2011A in FY2014E and beyond Cash out of exceptional charges accounted for in FY2011 Cash out of exceptional p
Slide 37: Development Costs Capitalised as Intangible Assets at 31 December 2012
DEVELOPMENT COSTS CAPITALISED AS INTANGIBLE ASSETS AT 31 DECEMBER 2012 Self Funded Self Funded Total € mln National Security Other 1 Jan 2012 Opening balance 716 569 1.285 Gross R&D Capitalised 227 120 347 Depreciation and write offs ff -39 -83 -122 122 Disposals 0 -18 -18 Other Changes 18 -3 15 Net
Slide 38: Recent Events (1/2)
RECENT EVENTS (1/2) 13 F February: b f ll i IIndian following di allegations, ll ti th the BoD B D confirmed fi d operating ti activities ti iti and d ongoing i projects of Finmeccanica to continue as usual by appointing Alessandro Pansa CEO and Admiral Guido Venturoni Vice Chairman - 21 February: T
Slide 39: Recent Events (2/2)
RECENT EVENTS (2/2) -7MMarch:h the th BoD B D took t k additional dditi l measures to t further f th strengthening t th i the th control t l procedures d off Group’s G ’ activities and to reinforcing management and coordination over the operating companies 9Identification of new rules for the compos
Slide 40: Building a Successful Track Record in Restructuring: 2012 Efficiency Targets Exceeded
BUILDING A SUCCESSFUL TRACK RECORD IN RESTRUCTURING: 2012 EFFICIENCY TARGETS EXCEEDED Additional benefits 50 from new initiatives (€M) Benefits from Above target of approx. Eur E 160 initiatives launched in 2011 and achieved in 250mln 2013 440 Benefits from initiatives launched in 280 280 2011 and a
Slide 41: 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, expectations also related to future economic and financial performance, performance to be considered forward forward‐ looking statements. These forward‐
Slide 42: Investor Relations Finmeccanica
TESTO FINTO T t Testo Investor Relations Finmeccanica investor_relations@finmeccanica.com investor relations@finmeccanica com Website: Finmeccanica / Investor Relations Raffaella Luglini Head of Investor Relations +39 06 32473.066 raffaella.luglini@finmeccanica.com 42