Leonardo Spa · MIL:LDO
Leonardo Spa — Finmeccanica — H1 2014 Earnings Presentation
30 slides from Leonardo Spa's earnings presentation, Aug 1, 2014
Slide 1: 1H 2014 Results Presentation
1H 2014 Results Presentation Mauro Moretti Chief Executive Officer and General Manager Gian Piero Cutillo Chief Financial Officer 1 August 2014
Slide 2: Agenda
GROUP OVERVIEW (CEO and General Manager) SECTOR RESULTS AND OUTLOOK (CFO) CONCLUSIONS (CEO and General Manager) APPENDIX
Slide 3: 1H2014 Highlights
1H2014 HIGHLIGHTS Strong order intake Revenues in line with expectations Book to bill consistently >1 since 2013 Specific profitability issue in A&D (DRS) to be recovered at Group level by yearend Below the line items under control Positive cash flow generation in 2Q despite cash-out for Indian heli
Slide 4: 80 Days in the Job
80 DAYS IN THE JOB… …. since appointed CEO and General Manager, with full operational powers for unified management of the Company and of the Group IDENTIFIED STRENGHTS some very good businesses with strong capabilities selected high quality products and valuable technologies Using a positive mix of
Slide 5: Resilient Commercial Performance
RESILIENT COMMERCIAL PERFORMANCE … €b 25 22.453 ORDERS 20 17.434 17.571 16.703 15.059 15 13.000 13.500 10 5 0 2010 2011 2012 2013 2013 restated Guidance FY2014 €b 25 REVENUES 20 18.695 17.318 17.218 16.033 15 13.690 13.000 13.500 10 5 0 2010 2011 2012 2013 2013 restated Guidance FY2014 Book to Bill
Slide 6: More Can Be Done on Operating Profitability
… MORE CAN BE DONE ON OPERATING PROFITABILITY … €m 2,000 (8.5%) EBITA (ROS) 1,589 1,500 (6.3%) 1,080 (5.9%) (6.4%) 949 878 1,000 930 980 500 (-1.2%) 0 -216 -500 2010 2011 2012 2013 2013 restated Guidance FY2014 €m 2,500 SG&A (% OF REVENUES) (9.2%) (9.9%) 2,000 1,709 (9.3%) 1,721 (9.2%) 1,603 (9.3%)
Slide 7: On Improving Quality of Net Result
… ON IMPROVING QUALITY OF NET RESULT … €m 1,000 557 NET RESULT BEFORE EXTRAORDINARY TRANSACTIONS * 500 Reduce 0 volatility of -649 net results -500 -943 from operations -1,000 -1,500 -2,000 -2,728 -2,500 -3,000 2010 2011 2012 2013 2014E No. 80,000 75,197 HEADCOUNT 70,474 70,000 67,408 63,835 60,000
Slide 8: And on Increasing Cash Generation
… AND ON INCREASING CASH GENERATION €m 500 443 FOCF 400 300 200 89 100 Pre-India 0 -100 -100 0 -220 -200 -358 -307 -300 -350 -250 -400 -500 -600 -700 2010 2011 2012 2013 2013 restated Guidance FY2014 €m 5,000 GROUP NET DEBT 4,500 ~ 4,300 Pre-India 3,902 4,000 3,443 ~ 4,000 3,373 3,316 3,500 3,133 3,
Slide 9: Revitalise and Reposition Finmeccanica
REVITALISE AND REPOSITION FINMECCANICA AREAS TO ADDRESS IDENTIFIED PRIORITIES Too diversified product portfolio Optimise product portfolio and consequently Still a number of underperforming select investments based on return assets Accelerate on cost savings A number of 'one-off' issues Increase ind
Slide 10: Going 'Faster and Further' on Group Governance
GOING 'FASTER AND FURTHER' ON GROUP GOVERNANCE JVs & Finmeccanica Proxy & Other OpCo’s A Divisions D B C Interna- Techni- tional Defense Business Process cal Helicop- Aero- Defense Group Electro- Support expected to Structu- ters nautics Systems Strong- nics Functions be completed res holds by end 2
Slide 11: Positive Discontinuity: Relentless Optimisation of the Cost Base
POSITIVE DISCONTINUITY: RELENTLESS OPTIMISATION OF THE COST BASE Reducing aggressively Overheads/staff costs Operating costs ICT will be managed through a single systems for all divisionalised companies, thus Reducing costs Strengthening control over processes/businesses Increasing efficiencies As p
Slide 12: Agenda
GROUP OVERVIEW (CEO and General Manager) SECTOR RESULTS AND OUTLOOK (CFO) CONCLUSIONS (CEO and General Manager) APPENDIX
Slide 13: Group Performance (1/2)
GROUP PERFORMANCE (1/2) Q2 1H FY 2013 % 2013 % 2013 2014 2014 Restated Change Restated Change Restated € Mln New Orders 4,288 2,427 76.7% 7,184 5,040 42.5% 15,059 Backlog 37,653 34,805 8.2% 36,831 Revenues 3,611 3,531 2.3% 6,557 6,630 (1.1%) 13,690 EBITA 198 265 (25.3%) 351 426 (17.6%) 878 ROS % 5.5
Slide 14: Group Performance (2/2)
GROUP PERFORMANCE (2/2) TESTO FINTO A&D Transportation Total continuing operations 1H 2013 % 1H 2013 % 1H 2013 % 1H 2014 1H 2014 1H 2014 € Mln Restated Change Restated Change Restated Change Orders 5,755 4,580 25.7% 1,447 467 n.m. 7,184 5,040 42.5% Backlog 28,927 28,565* 1.3% 8,925 8,494* 5.1% 37,65
Slide 15: Helicopters
HELICOPTERS Q2 1H FY 2013 % 2013 % 2013 2014 2014 € Mln Restated Change Restated Change Restated Orders 1,171 530 n.m. 2,685 1,436 87.0% 4,386 Revenues 1,138 1,093 4.1% 2,041 2,041 0.0% 4,049 EBITA 151 170 (11.2%) 263 282 (6.7%) 547 ROS % 13.3% 15.6% (2.3 p.p.) 12.9% 13.8% (0.9 p.p.) 13.5% Orders de
Slide 16: Aeronautics
AERONAUTICS Q2 Testo 1H FY 2013 % 2013 % 2013 2014 2014 € Mln Restated Change Restated Change Restated Orders 572 504 13.5% 1,004 1,272 (21.1%) 3,422 Revenues 728 691 5.4% 1,379 1,256 9.8% 2,816 EBITA 46 44 4.5% 74 69 7.2% 199 ROS % 6.3% 6.4% (0.1 p.p.) 5.4% 5.5% (0.1 p.p.) 7.1% Orders up in Q2 driv
Slide 17: EU Defence Electronics and Security - Selex ES
EU DEFENCE ELECTRONICS AND SECURITY-Selex ES TESTO FINTO Q2 Testo 1H FY 2013 % 2013 % 2013 2014 2014 € Mln Restated Change Restated Change Restated Orders 956 704 35.8% 1,399 1,180 18.6% 3,457 Revenues 928 826 12.3% 1,554 1,546 0.5% 3,214 EBITA 41 20 n.m. 47 26 80.8% 71 ROS % 4.4% 2.4% 2 p.p. 3.0% 1
Slide 18: US Defence Electronics and Security – DRS
US DEFENCE ELECTRONICS AND SECURITY – DRS TESTO FINTO Q2 Testo 1H FY 2013 2013 2013 2014 % Change 2014 % Change $ Mln Restated Restated Restated Orders 556 487 14.0% 951 851 11.8% 1,991 Revenues 432 527 (18.2%) 827 1,051 (21.3%) 2,213 EBITA (77) 33 n.m. (64) 60 n.m. 194 ROS % (17.8%) 6.3% (24.1 p.p.
Slide 19: Space and Defence Systems
SPACE Q2 1H FY 2013 % 2013 % 2013 2014 2014 € Mln Restated Change Restated Change Restated EBITA 10 20 (50%) 17 24 (29.2%) 55 EBITA affected by restructuring costs related to a redundancy plan launched early 2014 DEFENCE SYSTEMS Q2 1H FY 2013 % 2013 % 2013 2014 2014 € Mln Restated Change Restated Ch
Slide 20: Transportation
TRANSPORTATION Q2 1H FY ANSALDO STS 2013 % 2013 % 2013 2014 2014 € Mln Restated Change Restated Change Restated Orders 743 270 n.m. 890 390 n.m. 1,484 Revenues 318 324 (1.9%) 581 572 1.6% 1,230 EBIT 30 32 (3.8%) 52 52 0.0% 117 ROS 9.6% 9.8% (0.2 p.p.) 8.9% 9.1% (0.2 p.p.) 9.5% (EBIT/Revenues) % Q2 1
Slide 21: Ongoing Cost Savings Plan in A&D 2014-2015
ONGOING COST SAVINGS PLAN IN A&D 2014-2015 In order to continue to improve industrial performance and go ahead with restructuring initiatives, Finmeccanica has launched additional initiatives in A&D Helicopters Headcount rightsizing Aeronautics Centralizing Procurement Cost Reduction European Defenc
Slide 22: FOCF and Liquidity Updates
FOCF AND LIQUIDITY UPDATES Testo TESTO Half year FINTO FOCF improved compared to last year, despite the Indian payment Good dividends inflow from JVs and operating cash flow Avio proceeds helped to reduce Group net debt Revolving Credit Facility renewed No refinancing needs before end 2017 22
Slide 23: 2014 Guidance
2014 GUIDANCE FY2013A Testo FY2014E TESTO FINTO (restated according to IFRS11) (according to IFRS11) GROUP A&D GROUP A&D Orders € bn 15.1 13.0 13.0 – 13.5 11.5 – 12.0 Revenues € bn 13.7 11.8 13.0 – 13.5 11.0 – 11.5 EBITA €mln 878 988 930 - 980 970 – 1,030 FOCF €mln (220) 135 (350) - (250) 0 – 50 Net
Slide 24: Agenda
GROUP OVERVIEW (CEO and General Manager) SECTOR RESULTS AND OUTLOOK (CFO) CONCLUSIONS (CEO and General Manager) APPENDIX
Slide 25: Roadmap - Conclusions
ROADMAP- CONCLUSIONS Finmeccanica has some good businesses and strong capabilities that we can leverage on Clear challenges have to be addressed using a positive mix of continuity and discontinuity engineering a deep cultural change driven by values of essentiality and simplicity adopting a relentle
Slide 26: Agenda
GROUP OVERVIEW (CEO and General Manager) SECTOR RESULTS AND OUTLOOK (CFO) CONCLUSIONS (CEO and General Manager) APPENDIX
Slide 27: Financial Position (as of end of June 2014)
FINANCIAL POSITION (as of end of June 2014) No refinancing needs before end 2017 Strong liquidity position Bonds have neither financial covenants nor rating pricing grids Average life ≈ 8.3 years 46 46 (€mil) 46 46 46 499 950* 600 500 600 500 318** 366 Dollar Bond 220 46 46 46 46 Sterling Bond 2014
Slide 28: Liquidity Position (as of end of June 2014)
LIQUIDITY POSITION (as of end of June 2014) In order to cope with possible volatilities in financial needs, Finmeccanica can leverage: – 30 June cash balance of €0.65 Billion Availability of – Credit lines worth €3.0 Billion (confirmed and unconfirmed), utilized for €69mil at 30 June adequate 2014 c
Slide 29: Safe Harbor Statement
SAFE HARBOR STATEMENT TESTO FINTO NOTE: Some of the statements included in this document are notTesto 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 statement
Slide 30: Investor Relations Contacts
Investor Relations & Sustainable Responsible Investors (SRI) Contacts Raffaella Luglini Head of Investor Relations & SRI +39 06 32473.066 raffaella.luglini@finmeccanica.com Valeria Ricciotti Paolo Salomone Financial Communication ESG +39 06 32473.697 +39 06 32473.829 valeria.ricciotti@finmeccanica.c