Leonardo Spa · MIL:LDO
Leonardo Spa — Morgan Stanley Industrial CEOs Unplugged 2023
34 slides from Leonardo Spa's conference presentation, Sep 6, 2023
Slide 1: Morgan Stanley Industrial CEOs Unplugged 2023 Presentation
Morgan Stanley Industrial CEOs Unplugged 2023 Presentation Rome 6 September 2023
Slide 2: Agenda
Agenda • Key messages Roberto Cingolani, Chief Executive Officer • Financial review Alessandra Genco, Chief Financial Officer • Q&A • Sector results • Appendix 2 © 2022 Leonardo - Società per azioni 2Q/1H23 Results
Slide 3: CEO Introduction
CEO Introduction A great knowledge-based company with strong market position • Leader across Helicopters and Defence Electronics • Key player in international cooperation programmes • Well positioned in key domestic markets • Leading portfolio offering across the businesses • Solid H1 performance; r
Slide 4: A new era of defence
A new era of defence Understanding how to best support our clients in fulfilling their future needs • Changing nature of the conflict as demonstrated by the war in Ukraine • Bytes instead of bullets • Concept of conventional defence evolving into National Security • Leonardo’s technology leadership
Slide 5: Building the Leonardo of the future
Building the Leonardo of the future Evolving product portfolio and positioning to meet geopolitical developments and technological transformation New era of defence and technological transformation Geopolitical and Leaner and stronger Products/technologies strategic positioning organisation for the
Slide 6: Servitization: reinforcing and strengthening the core products
Reinforcing and strengthening the core products More recurrent revenues, higher margins and low capex requirements STRATEGIC PRODUCTS & SERVICES WORKING ON THE FUTURE SIMULATORS FAST ROTORCRAFT NEW ADVANCED NEW GENERATION HELICOPTER Cyber security SERVICES and resilience RUAV embedded for the entire
Slide 7: Making Space and Cyber strategic priorities
Making Space and Cyber strategic priorities SPACE CYBER • Total market value of ~$350bn (~70% • Cumulative market value of ~ €700bn services and Ground equipment) between 2024-28 • Estimated to reach a value of ~ $1tn in • Estimated segment growth of 8% CAGR the next decade 2024-2028 • Operates thro
Slide 8: Key takeaways
Key takeaways 1. Strengthening the core business 2. Making the organisation more efficient 3. Optimising the product portfolio 4. Growing international presence 5. Improving cash generation and profitability through new high-tech service based products 6. More focused R&D to drive our transformation
Slide 9: Agenda
Agenda • Key messages Roberto Cingolani, Chief Executive Officer • Financial review Alessandra Genco, Chief Financial Officer • Q&A • Sector results • Appendix 9 © 2022 Leonardo - Società per azioni 2Q/1H23 Results
Slide 10: 1H 2023 Highlights
1H 2023 Highlights 1H2022A 1H2022 Adj.1 1H2023 % Δ1 ORDERS (€bn) 7.3 7.2 8.7 +21.4% • Strong commercial activity REVENUES • Continued strong demand for our (€bn) 6.6 6.5 6.9 +6.4% products driving top line growth EBITA (€mln) 418 407 430 +5.7% • Solid profitability across all divisions • Stepping up
Slide 11: Order Intake
Order Intake Commercially strong, reflecting continued strength of defence-governmental business € mln ∆ % YoY 1H2022A* 7,161 18 AW169M LUH for Austria; 3 AW159 MLU; AW101 export; 13 MH-139 for the US Air Force; other civil orders HELICOPTERS 2,805 +28.5% Growing across all business areas. ECRS Mk2
Slide 12: Revenues
Revenues Solid performance confirming growth path € mln ∆ % YoY 1H2022A* 6,480 Increase due to dual-use models, CS&T despite expected lower contribution HELICOPTERS 2,160 +2.4% from NH90 Qatar ELECTRONICS EUROPE 2,198 +4.2% Growing volumes in all business areas, mainly in Cyber and Defense Systems L
Slide 13: EBITA and Profitability
EBITA and Profitability Improving Profitability € mln RoS ∆ % YoY 1H2022A* 407 6.3% HELICOPTERS 157 7.3% +4.0% Solid performance driven by top-line growth ELECTRONICS EUROPE 225 10.2% +7.1% Confirming strong profitability in core divisions Lower profitability, as expected, due to business mix. LEONA
Slide 14: From EBITA to Net Result
From EBITA to Net Result Solid bottom line 1H 2022A 1H 2023A +5.7%* +1.7% -22.1% YoY YoY YoY 418 -43 430 -13 -2 -11 362 -47 -31 407* -48 -18 368 -97 267 € mln -74 197 11 208 EBITA Non recurring Restructuring PPA EBIT Net financial Income taxes Net ordinary Discontinued Net Result EBITA Non recurring
Slide 15: 2023 Guidance Confirmed
2023 Guidance Confirmed 2022A 2023E1 ORDERS (€bn) 17.3 ca.17 REVENUES (€bn) 14.7 15-15.6 • Continued solid commercial momentum, with book-to-bill>1x • Successfully navigating inflationary EBITA (€mln) 1,218 1,260-1,310 pressures • Continued improvement in FOCF and focus on deleveraging FOCF (€mln) 5
Slide 16: Agenda
Agenda • Key messages Roberto Cingolani, Chief Executive Officer • Financial review Alessandra Genco, Chief Financial Officer • Q&A • Sector results • Appendix 16 © 2022 Leonardo - Società per azioni 2Q/1H23 Results
Slide 17: Q&A
Q&A 17 © 2022 Leonardo - Società per azioni
Slide 18: Agenda
Agenda • Key messages Roberto Cingolani, Chief Executive Officer • Financial review Alessandra Genco, Chief Financial Officer • Q&A • Sector results • Appendix 18 © 2022 Leonardo - Società per azioni 2Q/1H23 Results
Slide 19: Helicopters
Helicopters Strong order growth 2018-2022 Results 2Q/1H23 Results Orders (€ mln) Revenues (€ mln) EBITA (€ mln) and Profitability 6,208 4,547 6,060 4,025 4,157 3,972 3,810 10.7% 9.1% 9.8% 4,641 9.6% 4,494 4,370 9.4% 2Q 2022 2Q 2023 % Change 415 431 406 € mln 359 383 Orders 1,320 916 -30.6% Revenues
Slide 20: Electronics
Electronics Growing revenues and profitability 2018-2022 Results 2Q/1H23 Results Orders Revenues EBITA and Profitability 5,392 5,628 4,519 4,712 ELECTRONICS - EU 4,289 4,147 4,011 2Q 2022 2Q 2023 % Change 4,409 4,444 4,710 11.7% € mln 10.7% 10.0% 553 Orders 1,051 1.421 +35.2% 2,879 9.8% 8.7% 3,054 3
Slide 21: Aircraft
Aircraft Solid profitability 2Q/1H23 Results 2018-2022 Results Orders (€ mln) Revenues (€ mln) EBITA (€ mln) and Profitability € mln 2Q 2022 2Q 2023 % Change 2,668 2,800 3,268 3,085 Orders 709 766 +8.0% 2,634 13.2% 13.7% 1,904 2,031 2,329 Revenues 690 789 +14.3% 13.8% 13.7% 13.5% 432 1,700 421 1,932
Slide 22: Aerostructures and ATR
Aerostructures and ATR Recovery on track 2018-2022 Results 2Q/1H23 Results Orders (€ mln) Revenues (€ mln) EBITA (€ mln) and Profitability Aerostructures 925 948 1,125 1,020 € mln 2Q 2022 2Q 2023 % Change Aerostructures 819 97 ATR Orders 64 99 +53.1% 53 581 Revenues 111 176 +59.5% 420 -69 -6 EBITA (
Slide 23: Space
Space Solid performance of Satellite services 2018-2022 Results 2Q/1H23 Results EBITA (€m) 58 62 31 2Q 2022 2Q 2023 % Change 39 € mln 23 EBITA -4 1 n.a. 2018 2019 2020 2021 2022 1H 2022 1H 2023 % Change 2023 Outlook(*) € mln EBITA 3 2 -33.3% • Growing volumes driven by solid and increasing backlog *
Slide 24: Agenda
Agenda • Key messages Roberto Cingolani, Chief Executive Officer • Financial review Alessandra Genco, Chief Financial Officer • Q&A • Sector results • Appendix 24 © 2022 Leonardo - Società per azioni 2Q/1H23 Results
Slide 25: 2Q/1H 2023 Group Performance
2Q/1H 2022 Results Group Performance 2Q 2022 2Q 2023 % Change 1H2022 1H2023 % Change FY 2022 € mln New Orders 3,521 3,823 +8.6% 7,310 8,691 +18.9% 17,266 Backlog 36,358 39,119 +7.6% 37,506 Revenues 3,570 3,860 +8.1% 6,576 6,894 +4.8% 14,713 EBITA 286 325 +13.6% 418 430 +2.9% 1,218 RoS 8.0% 8.4% +0.4
Slide 26: Solid Group liquidity ensures adequate financial flexibility
Solid Group liquidity ensures adequate financial flexibility • Available credit lines • ESG Credit Line signed in October 2021 equal to € 2.4bn • Existing unconfirmed credit lines equal to € 1.0bn • Commercial Paper, signed in August 2022, equal to € 1.0bn • New «Sustainability-Linked» EIB loan equa
Slide 27: Balanced debt maturity profile
Balanced debt maturity profile TL DRS RADA Bond Dollar Bond Euro In € mil EIB Term Loan 100 CDP 00 Debt maturity Average life: ≈ 2.8 years 00 500 500 1 10 10 10 10 19 3 50 3 3 3 3 3 44 25 13 2023 2024 2025 202 2027 202 2029 2030 2031 2032 2033 CREDIT RATING As of today Before last review Date of rev
Slide 28: Covenants FY2022
Covenants FY2022 FY2022A FY2022A Post IFRS 16 Post IFRS 16 EBITDA* € 1,671 mln Group Net Debt € 3,016 mln Net Interest € 104 mln Leasing (IFRS 16) - € 570 mln Financial Debt to MBDA - € 713 mln Group Net Debt for Covenant € 1,733 mln EBITDA* € 1,671 mln EBITDA / Net Interest 16.1 Group Net Debt / EB
Slide 29: Remuneration Policy aligned with shareholders interests, business strategy and ESG criteria
Remuneration Policy aligned with shareholders interests, business strategy and ESG criteria CEO REMUNERATION COMPONENTS Fixed Remuneration Short-Term Variable Long-Term Variable Remuneration Remuneration • Convergence of interests between management and shareholders 44% 29% 27% • Aligning the remune
Slide 30: Performance Gate
CEO short term variable remuneration (MBO) Type of objective KPIs Weight Functioning mechanism Target / Guidance Performance Gate 1,260 € mil. – If one or both of the following thresholds are not Group EBITA 30% On / off 1,310 € mil. achieved: Economic and • Group EBITA: 85% of Budget Financials • G
Slide 31: Long Term Incentive Plan (LTIP)
Long Term Incentive Plan (LTIP) KPIs Weight Reference Performance range Payout range financial period (Target / Guidance) 1-4 100% Relative Total Shareholder 2025 5- 6 50% 35% Return ( Delta vs 2023) 7 25% 8-13 0% Target (< 1.6 € bil.) 100% Group Net Debt 25% 2025 Minimum 50% Target (>13%) 100% Retu
Slide 32: Connecting ESG progress and remuneration
Connecting ESG progress and remuneration Confirming alignment between Industrial plan and management performance 10% of short-term variable CEO & General Manager •CEO & General Manager remuneration linked to ESG objectives • 5% →Inclusion of Leonardo in DJSI • 10% →Scope 1 & 2 GHG Emissions** • 5%→A
Slide 33: 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 34: Contacts
CONTACTS Valeria Ricciotti Head of Investor Relations and Credit Rating Agencies +39 06 32473.697 valeria.ricciotti@leonardo.com Leonardo Investor Relations and Credit Rating Agencies +39 06 32473.512 ir@leonardo.com leonardo.com 34 © 2022 Leonardo - Società per azioni
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