Slide 1: 1H 2018 Results Presentation
1H 2018 Results Presentation Alessandro Profumo Chief Executive Officer Alessandra Genco Chief Financial Officer Rome, 30 July 2018
Slide 2: Executing the Industrial Plan
Executing the Industrial Plan Chief Executive Officer 1H 2018 Results & Outlook Chief Financial Officer
Slide 3: Key messages
Key messages Solid 1H 2018 performance Good progress in key areas Helicopters DRS FY 2018 Orders and FOCF Guidance revised upwards Fully focused on executing industrial plan 3 © Leonardo - Società per azioni
Slide 4: Steps forward in the execution of the Industrial Plan
Steps forward in the execution of the Industrial Plan Doing the right things for the long-term 2018 Sharper commercial focus Leonardo 2.0 Enhanced Business Solid backlog Approach Transformation Portfolio Reshaping Value and Creation Strengthening Making progress on NH90 Qatar contract Helicopters re
Slide 5: Sharper commercial focus
Sharper commercial focus To be closer to customer needs More export Product Focus on key strategic campaigns LEADERSHIP to win with our Customer Support, Service & Training customers 5 © Leonardo - Società per azioni
Slide 6: Strong backlog supporting revenue growth
Strong backlog supporting revenue growth ORDER BACKLOG as at 30 June 2018 = ca. € 33 bn HELICOPTERS ELECTRONICS, DEFENCE AERONAUTICS AND SECURITY SYSTEMS ORDER BACKLOG € 9.3 bn ORDER BACKLOG € 11.8 bn ORDER BACKLOG € 12.2 bn 28% of total 35% of total 37% of total TOP LINE GROWTH DRIVEN BY Current Ba
Slide 7: Progress on Helicopters
Progress on Helicopters JULY 2018 DELIVERIES OVERTAKING JULY 2017 n°of delivered units Positive market feedback 149 On track to improve profitability 99 85 ~90 81 77 FY2018 expected deliveries materially higher than FY2017 29 12 End of End of 1Q17A 1Q18A 1H17A 1H18A 9M17A FY17A July17 July18 7 © Leo
Slide 8: DRS top-line growth outpacing strong US market
DRS top-line growth outpacing strong US market 2Q 1H 2017 % 2017 % FY2017 2018 2018 Restated Change Restated Change Restated $ mln Orders 826 529 56.1% 1,250 930 34.4% 2,016 Revenues 504 401 25.7% 959 796 20.5% 1,947 EBITA 25 26 -3.8% 46 51 -9.8% 146 RoS 5.0% 6.5% -1.5 p.p. 4.8% 6.4% -1.6 p.p. 7.5%
Slide 9: Delivering results on cost control initiatives
Delivering results on cost control initiatives 40% of annualised savings identified delivered in the 1H (ca. € 80 mln) Potential upside driven by further actions being implemented € mln Key Initiatives: ~ 200 200 Efficiency increase in Manufacturing and Engineering 100 Off-load optimisation Pr
Slide 10: Strict cost control to support future growth: recent achievements
Strict cost control to support future growth: recent achievements Early retirement plan signed with Italian Unions Up to 1,100 employees and Supporting competence mix change 65 managers involved to meet evolving requirements of the Ca. € 170 mln one-off market provision taken in 1H 2018 Positi
Slide 11: Prime contractor business supporting long term visibility and growth
Prime contractor business supporting long term visibility and growth Lower margin pass-through but without capital invested Large prime contractor business wins supporting long term visibility and better positioning in reference markets Higher margin activities under our responsibility Lower mar
Slide 12: Executing the Industrial Plan
Executing the Industrial Plan Chief Executive Officer 1H 2018 Results & Outlook Chief Financial Officer 12 © Leonardo - Società per azioni
Slide 13: 1H 2018 Highlights
1H 2018 Highlights Solid 1H 2018 performance driven by Helicopters & DRS top line growth Orders at € 4.6 bn Revenues at € 5.6 bn EBITA at € 470 mln, RoS at 8.4% FOCF at € (809) mln Net Debt at € 3.5 bn FY 2018 Orders and FOCF Guidance revised upwards IFRS15 impact affecting quarterly resul
Slide 14: Order intake
Order intake Good performance mainly driven by Helicopters & DRS ORDER BACKLOG NEW ORDERS +16.4% -0.2% -36.6% € mln As at 30 June 2018 -6.1% ca. € 33 bn YoY 5,061 1,129 209 ca. 4,755 ca. € 150 mln of negative forex 37% 4,604 35% 2,355 -9.0% 28% YoY 1,329 Helicopters Aeronautics Electronics, Defence
Slide 15: Revenues
Revenues Positive momentum in Helicopters & DRS +4.3% +1.9% -1.4% € mln +4.1% YoY 1,426 188 5,496 ca. 5,720 ca. € 130 mln of negative forex 2,521 5,589 +1.7% YoY 1,830 1H 2017* Helicopters Electronics, Aeronautics Eliminations & 1H 2018 Defence and Other Security Systems *1H 2017 IFRS15 restated 15
Slide 16: EBITA and Profitability
EBITA and Profitability Steady recovery in Helicopters -18.2% -0.5% -3.9% € mln 505 -5.0% 123 YoY (RoS 9.2%) 21 34 (RoS 8.6%) ca. 480 ca. € 10 mln of negative forex 207 470 (RoS 8.2%) (RoS 8.4%) -6.9% YoY 153 (RoS 8.4%) 1H 2017* Helicopters Electronics, Aeronautics Space Corporate & 1H 2018 Defence
Slide 17: Net Result affected by €170mln one-off early retirement costs
Net Result affected by € 170mln one-off early retirement costs To improve competence mix 1H2017* 1H2018 -6.9% -43.3% € mln € mln ONE-OFF 505 32 50 470 182 +11% 423 155 YoY 170 Excluding ONE-OFF 48 55 236 213 240 118 -50.2% 16 YoY 106 EBITA Restructuring PPA EBIT Net financial Income Net EBITA Restru
Slide 18: Working Capital under control while supporting FOCF
Working Capital under control while supporting FOCF Actions to improve Working Capital Performance identified, launched and monitored through KPIs First half progress in line with expectations, delivering ~50% of 2018 targets FY targets confirmed Program Management FY TARGET / % ACHIEVED TO DATE & P
Slide 19: 2018 Guidance revised upwards for Orders and FOCF
2018 Guidance revised upwards for Orders and FOCF FY2017A FY2018E FY2018E Restated at January ‘18 at July ‘18 New orders € bn 11.6 12.5 – 13.0 14.0 – 14.5 Revenues € bn 11.7 11.5 – 12.0 11.5 – 12.0 EBITA € bn 1.08 1.075 – 1.125 1.075 – 1.125 FOCF € mln 537 ca.100 300 – 350 Group Net Debt € bn 2.6 ca
Slide 20: Q&A
Q&A THANK YOU FOR YOUR ATTENTION
Slide 21: Sector Results
SECTOR RESULTS THANK YOU FOR YOUR ATTENTION
Slide 22: Helicopters
Helicopters Well positioned to capture growth opportunities DELIVERIES BY 2Q 1H PROGRAMME 2017 % 2017 % FY2017 2018 2018 Restated Change Restated Change Restated € mln 1H2017 = 81 new units Orders 718 683 5.1% 1,329 1,142 16.4% 3,153 7 33 15 Revenues 1,080 1,167 -7.5% 1,830 1,754 4.3% 3,438 21 2 1 A
Slide 23: Electronics, Defence & Security Systems
Electronics, Defence & Security Systems Remains strong 2Q 1H 2018 OUTLOOK 2017 % 2017 % FY2017 2018 2018 € mln Restated Change Restated Change Restated Revenues and Orders 1,390 1,321 5.2% 2,355 2,360 -0.2% 6,146 profitability almost flat Revenues 1,372 1,318 4.1% 2,521 2,474 1.9% 5,550 YoY EBITA 13
Slide 24: Aeronautics
Aeronautics Aircrafts positive outlook offsetting lower ATR and Aerostructures 2Q 1H 2017 % 2017 % FY2017 2018 2018 Restated Change Restated Change Restated € mln Orders 406 543 -25.2% 1,129 1,780 -36.6% 2,615 Revenues 787 788 -0.1% 1,426 1,444 -1.2% 3,093 EBITA 76 82 -7.3% 123 128 -3.9% 311 RoS 9.7
Slide 25: Space
Space Stable outlook 2Q 1H 2017 % 2017 2017 % 2017 FY2017 2018 2018 Restated Change Reported Restated Change Reported Restated € mln EBITA 14 16 -12.5% 19 21 28 -25.0% 27 72 2018 OUTLOOK Revenues and profitability expected almost in line with 2017 25 © Leonardo - Società per azioni
Slide 26: Appendix
APPENDIX THANK YOU FOR YOUR ATTENTION
Slide 27: 1H 2018 Results
1H 2018 Results Group Performance 2Q 1H 2017 2017 FY2017 2018 % Change 2018 % Change Restated Restated Restated € mln New Orders 2,440 2,414 1.1% 4,604 5,061 -9.0% 11,595 Backlog 32,611 33,918 -3.9% 33,507 Revenues 3,138 3,135 0.1% 5,589 5,496 1.7% 11,734 EBITA 317 350 -9.4% 470 505 -6.9% 1,077 RoS
Slide 28: No material impact from IFRS15
No material impact from IFRS15 Leonardo applies retrospectively IFRS15 in 2018 FY2017 and 2017 quarters fully restated in accordance with IFRS15 when presenting the 2018 corresponding quarterly accounts Not material preliminary impacts on FY2017 KPI’s (higher revenues by ca. 2% and higher EBITA by c
Slide 29: Solid Financial Position as end of June 2018
Solid Financial Position as end of June 2018 € mln Dollar Bond Sterling Bond Euro Bond EIB DEBT MATURITY Average life: ≈ 5 years REVOLVING RCF renegotiated lowering margin (from 100 bps to 75 bps) and CREDIT FACILITY Lower margin amount (from € 2.0 bn to € 1.8 bn). The facility will expire in 2023 L
Slide 30: Availability of adequate committed liquidity lines as end of June 2018
Availability of adequate committed liquidity lines as end of June 2018 In order to cope with possible swings in € mln Undrawn at 30 June 2018 As of 30 June 2018 financing needs, Leonardo can leverage: 30 June cash balance of € 976 mln Credit lines worth € 2.5 bn (confirmed and unconfirmed) Rev
Slide 31: Balanced Remuneration Policy
Balanced Remuneration Policy Aligned with stakeholders interests Clear link between pay and degree of CEO REMUNERATION achievement of targets Aligning the remuneration package with international market best practices Reducing risk-oriented behaviour Attracting / retaining resources regarded by the C
Slide 32: CEO performance: Management by Objectives
CEO performance: Management by Objectives TARGETS GROUP EBITA GROUP FOCF SUSTAINABILITY INDUSTRIAL PLAN OBJECTIVES 30% of REM. 30% of REM. 10% of REM. - ON/OFF 30% of REM. Target linked to the Structured into 3 specific inclusion of KPIs Leonardo in Dow 1. 2018 business performance Jones Sustainabil
Slide 33: Remuneration scheme: Methodology
Remuneration scheme: Methodology CLAW-BACK CLAUSE Provided for all the variable incentives assigned starting from 2014 Leonardo is entitled to request repayment of the variable remuneration paid in the event of incorrect or misstated data SEVERANCE If CEO appointment is: • revoked • terminated
Slide 34: Long Term Incentive Plan (LTIP)
Long Term Incentive Plan (LTIP) BENEFICIARIES LOCK UP Chief Executive Officer 1 year Executive directors, employees and/or associates with a decisive impact on the VESTING PERIOD achievement of business results (210 3 year people) FREQUENCY PAYOUT 3 year cycles assigned yearly on a Share
Slide 35: LTIP Performance conditions
LTIP Performance conditions TSR Relative RETURN ON SALES OF THE GROUP 50% 25% Award max 100% of bonus Return on Sales measured as average of the ≥ TSR of final values of each year during the vesting company at the period of the Plan Top 4 position 25% TOTAL 50% BONUS 25% Award target NET FINANCIAL P
Slide 36: 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 37: Contacts
External Relations, Communication, Italian Institutional Affairs, Investor Relations and Sustainability Contacts Raffaella Luglini EVP External Relations, Communication, Italian Institutional Affairs, Investor Relations and Sustainability +39 06 32473.066 raffaella.luglini@leonardocompany.com Valeri