Leonardo Spa · MIL:LDO
Leonardo Spa — Finmeccanica — Shareholder Meeting (May 2015)
46 slides from Leonardo Spa's shareholder meeting presentation, May 11, 2015
Slide 1: Shareholders' Meeting
Shareholders’ Meeting Mauro Moretti CEO and General Manager 11 May 2015
Slide 2: The new Finmeccanica objectives
The new Finmeccanica objectives 2014 Results of the Group and of Finmeccanica SpA Sector results and outlook Guidance 2015 and medium term outlook The new Industrial Plan The new Management Incentive Plan Shareholding and share performance Sustainability Report 2014
Slide 3: The new Finmeccanica objectives
The new Finmeccanica objectives 1. Improve Profitability: ROS around 2 digits by end 2016, no P&L volatility and material net income increase 2. Increase Cash flow conversion rate at adequate levels 3. Reduce Operating Net Invested Capital, lowering working capital and investments 4. Reduce Gross an
Slide 4: The new Finmeccanica objectives
The new Finmeccanica objectives Industrial strategy Improve the key industrial processes (Engineering, Supply Chain, Manufacturing) of our operating business, to reach an adequate level of efficiency and effectiveness Re-design the group commercial foot print domestically and internationally Improve
Slide 5: Agenda: 2014 Results of the Group
The new Finmeccanica objectives 2014 Results of the Group and of Finmeccanica SpA Sector results and outlook Guidance 2015 and medium term outlook The new Industrial Plan The new Management Incentive Plan Shareholding and share performance Sustainability Report 2014
Slide 6: 2014 Group performance
2014 Group performance FY 2013 2014 % Change Restated € Mln New Orders 15,619 15,059 3.7% Backlog 38,234 36,831 3.8% Revenues 14,663 13,690 7.1% EBITA 1,080 878 23. 0% ROS % 7.4% 6.4% 1.0 p.p. EBIT 692 (14) n.a. Net result before extraordinary 70 (649) n.a. transactions Net result after minorities (
Slide 7: FY2014 Results ahead of expectations
FY2014 Results ahead of expectations Robust commercial performance: orders at >€15bn (+4% YoY), book to bill >1 Good A,D&S order acquisition driven by Helicopters (+4%YoY), thanks to UK MoD orders (AW101 and Apache Customer Support) DRS stable after some years of declines due to US sequestration, Se
Slide 8: FY2014 Results ahead of expectations
FY2014 Results ahead of expectations Strong profitability improvement: EBITA at €1,08 bn (+23% YoY), RoS at 7.4% Strong underlying improvement in Helicopters, excluding one-off benefit of US Presidential Helicopter in 2013 Step change in Corporate costs (>€25 mln of savings) and efficiencies more th
Slide 9: "Back in the black"
Net Result before extraordinary transactions ahead of expectations “Back in the black” 2013 2014 € 388 mln € Mln 1,080 92 212 “below the line” more 84 € Mln € 892 mln than halved 692 443 878 423 386 179 70 83 -14 495 140 -649 Positive Net Result before extraordinary transactions (€70mln), for the fi
Slide 10: Results of Finmeccanica SpA
Results of Finmeccanica SpA FY € Mln 2014 2013 % Change Revenues 64 67 -4,5% Purchase and personnel expense -127 -153 - Other net operating income/(expenses) -1 79 - Amortisation, depreciation and impairment -11 -16 - losses EBITA -75 -23 n.s. Restructuring costs -26 - - EBIT -101 -23 n.s. Net finan
Slide 11: Agenda: Sector results and outlook
The new Finmeccanica objectives 2014 Results of the Group and of Finmeccanica SpA Sector results and outlook Guidance 2015 and medium term outlook The new Industrial Plan The new Management Incentive Plan Shareholding and share performance Sustainability Report 2014
Slide 12: Helicopters
Helicopters FY 2013 2014 % Change € Mln Restated Orders 4,556 4,386 3.9% Revenues 4,376 4,049 8.1% EBITA 543 547 (0.7%) ROS % 12.4% 13.5% (1.1) p.p. Strong performance in 2014 Activities on new products progressing well: AW189 AESA certification in Q1 and 10 units delivered in 2014, underpinning YoY
Slide 13: EU Defence Electronics and Security - Selex ES
EU Defence Electronics and Security - Selex ES FY 2013 2014 % Change € Mln Restated Orders 3,612 3,457 4.5% Revenues 3,577 3,214 11.3% EBITA 185 71 n.a. ROS % 5.2% 2.2% 3.0 p.p. 2014 recorded a significant step up in results strong improvement in EBITA driven by higher volumes, recovery in profitabi
Slide 14: US Defence Electronics and Security – DRS
US Defence Electronics and Security – DRS FY 2013 2014 % Change $ Mln Restated Orders 1,945 1,991 (2.3%) Revenues 1,877 2,213 (15.2%) EBITA 31 194 (84.0%) ROS % 1.7% 8.8% (7.1) p.p. Order intake in line with last year, for the first time after some years of decreasing trend Air Cargo contract issue
Slide 15: Aeronautics
Aeronautics FY 2013 2014 % Change Restated € Mln Orders 3,113 3,422 (9.0%) Revenues 3,144 2,816 11.6% EBITA 237 199 19.1% ROS % 7.5% 7.1% 0.4 p.p. Good production performance, mainly B787, ATR as well as M346 and EFA M346: 8 a/c delivered to Israel B787 rise in production rates (113 fuselage and 82
Slide 16: Space and Defence Systems
Space FY 2013 2014 % Change € Mln Restated EBITA 52 55 (5.5%) Revenues expected to grow, mainly thanks to manufacturing and launch operations services Business performance expected to improve, despite a decline in industrial profitability (unfavorable mix and growing pressure on prices) Defence Syst
Slide 17: Transportation
Transportation Ansaldo STS FY 2013 2014 % Change € Mln Restated Orders 1,825 1,484 23.0% Revenues 1,304 1,230 6.0% EBIT 125 117 6.8% ROS (EBIT/Revenues) % 9.6% 9.5% 0.1 p.p. AnsaldoBreda FY 2013 2014 % Change € Mln Restated Orders 1,186 384 n.a. Revenues 728 521 39.7% EBITA (42) (227) 81.5% ROS % (5
Slide 18: Agenda: Guidance 2015 and medium term outlook
The new Finmeccanica objectives 2014 Results of the Group and of Finmeccanica SpA Sector results and outlook Guidance 2015 and medium term outlook The new Industrial Plan The new Management Incentive Plan Shareholding and share performance Sustainability Report 2014
Slide 19: FY2015 Guidance Key Assumptions
FY2015 Guidance Key Assumptions The forecasts for the next financial years no longer include operations in the Transportation sector. This follows the agreement reached at the end of February, which provides for the sale to the Hitachi group of the Finmeccanica’s businesses in the sector (excluding
Slide 20: FY2015 Guidance Key Assumptions
FY2015 Guidance Key Assumptions Orders and Revenues: moderate growth, taking into account the changes in perimeter (B787 pass- through and DRS) Profitability: meaningful step up of 10% Below EBITA line: much lower volatility, with material improvement in the bottom line Restructuring costs: further
Slide 21: FY2015 Guidance
FY2015 Guidance FY2015E FY2014A Old Guidance FY2015E New Guidance GROUP Reported Pro forma A&D (incl. Transport.) New orders € bn 15.6 12.6 14.0 – 14.5 12.0 – 12.5 12.0 – 12.5 Revenues € bn 14.7 12.7 14.0 – 14.5 12.0 – 12.5 12.0 – 12.5 EBITA €mln 1,080 980 1,150 – 1,200 1,080 – 1,130 1,080 – 1,130 F
Slide 22: Delivering on Industrial Plan Medium Term Objectives
Delivering on Industrial Plan Medium Term Objectives EBITA +20% and RoS +150b.p. from 2014 to 2016 SG&A reduction > 10% from 2013 to 2015 CAPEX and capitalized R&D rationalization > 20% from 2013 to 2017, rebalancing depreciation /investments ratio, significantly improving self-financing capacity Op
Slide 23: Agenda: The new Industrial Plan
The new Finmeccanica objectives 2014 Results of the Group and of Finmeccanica SpA Sector results and outlook Guidance 2015 and medium term outlook The new Industrial Plan The new Management Incentive Plan Shareholding and share performance Sustainability Report 2014
Slide 24: Aerospace, Defence and Security Market
Aerospace, Defence and Security Market Expected to grow in the long term WORLDWIDE MARKET: EVOLUTION BY MACRO-BUSINESS SECTOR (2014-2023) - € BLN CAGR % 2014-2023 € 630 8 € 550 8 Civil helicopters 2.1 8 104 € 445 10 Military helicopters -6.3 6 91 15 187 Space 3.9 74 150 Security 6.3 108 137 2.
Slide 25: Aerospace, Defence and Security Market
Aerospace, Defence and Security Market Major spenders not expected to change dramatically… 2014 PROCUREMENT AND RDT&E* – TOP SPENDER EVOLUTION (% OF GLOBAL BUDGET) Defence 42% Procurement + RD&TE* € 290 Bln 24% 10% 5% 4% 4% 3% 3% 2% 2% 1% USA China Russia India France UK Japan Saudi Arabia Germany A
Slide 26: Aerospace, Defence and Security Market
Aerospace, Defence and Security Market Different dynamics in our major markets ITALIAN MOD AND MOED BUDGET - € BLN UK DEFENCE BUDGET - € BLN US DEFENCE BUDGET - € BLN CAGR 12 150 -3.9% 4.7 132 20% 11 4.5 10 33% 121 4.0 17% 35% 20% 44% 39% 49% 52% 80% 80% 83% 67% 65% 66% 61% 61% 48% 2011 2014 2017 20
Slide 27: Group Competitive positioning
Group Competitive positioning Improving the international footprint NATIONAL VS INTERNATIONAL 2013 REVENUES 14% Companies with a strong positioning in the 22% 20% 18% 27% civil segment have historically an higher 40% international footprint 72%* 74%** 59% 57% Sector 65% 71% average 78% Following the
Slide 28: Group Competitive positioning
Group Competitive positioning Leveraging on dual use to develop our business model KEY COMPETITORS: MILITARY VS CIVIL 2013 REVENUES Finmeccanica still needs to do more to rebalance its portfolio mix towards civil, leveraging on dual use applications Sector Average Military: 56% 28 Source: FNM estima
Slide 29: Group Competitive positioning
Group Competitive positioning Our business portfolio is too diversified Presence MBDA A,D&S KEY PLAYERS Military Helicopters Civil Military Aeronautics Civil Defence Defence Electronics and Security Security Missiles Defence Torpedos Systems Ammunitions Space Transportation 29
Slide 30: A diversified portfolio is not an advantage
Group Competitive positioning A diversified portfolio is not an advantage FNM Sectors Main Lines of Business FNM Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Civil Helicopters L L Helicopters Military Helicopters KP L F TP regional aircraft L L Aeronautics Military aircraft
Slide 31: Restructuring and development Key objectives
Restructuring and development Key objectives Increase the efficiency through the cost reduction in: Staff No waste Engineering New Organisational and Operating Model Cut inefficient operating cost Supply chain Eliminate unprofitable capex Focus of R&D on core activities, Improve the effectiven
Slide 32: Restructuring and development Five key pillars
Restructuring and development Five key pillars Quality & Effectiveness Costs Internationalisation & Market Disposals Rolling Stock FEWER BUSINESSES – 1 Bus business FOCUS ON «A,D&S» Industrial plants Other minor activities Reduction of products number 2 FEWER PRODUCTS IN CORE «A,D&S» LoB
Slide 33: New Group Organisational and Operating Model
Focus on the New Group Organisational and Operating Model One single company The new structure will provide the following benefits: Shorter and simpler chain of command with quicker decision making, higher flexibility and operational responsiveness Clearer accountabilities on business results Effici
Slide 34: Agenda: The new Management Incentive Plan
The new Finmeccanica objectives 2014 Results of the Group and of Finmeccanica SpA Sector results and outlook Guidance 2015 and medium term outlook The new Industrial Plan The new Management Incentive Plan Shareholding and share performance Sustainability Report 2014
Slide 35: The New Short and Medium-Long Term Incentive Plan
The New Short and Medium-Long Term Incentive Plan One of the key enablers of Finmeccanica transformation is the new Incentive Plan, that includes a Long-Term Incentive Plan and a Co-investment Plan of the annual bonus earned The new incentive Plan aims at ensuring the achievement of the medium and l
Slide 36: The Co-investment Plan
The Co-investment Plan The new Co-Investment Plan for the conversion of the annual bonus into shares consists in voluntarily deferring the payment of a portion of the annual bonus earned from a minimum of 25% up to a maximum percentage of 100%. The deferred portion of bonus is converted into ordinar
Slide 37: Agenda: Shareholding and share performance
The new Finmeccanica objectives 2014 Results of the Group and of Finmeccanica SpA Sector results and outlook Guidance 2015 and medium term outlook The new Industrial Plan The new Management Incentive Plan Shareholding and share performance Sustainability Report 2014
Slide 38: Shareholding evolution
Shareholding evolution Growth of institutional investors Over the last 10 years, the shareholder base of Finmeccanica went from being mainly domestic to being mainly international, pursuant to the internationalisation strategy followed by the Company. Since 2002 institutional shareholders have more
Slide 39: Shareholder distribution in Q1 2015
Shareholder distribution in Q1 2015 50% of the total share capital is held by institutional investors 49.8% Institutional Investors 30.2% Ministry of Economy and Finance 20% Retail Investors (domestic) GEOGRAPHIC DISTRIBUTION OF THE FREE FLOAT 34% North America 22% UK/Ireland France 18% 10% Rest of
Slide 40: Finmeccanica share performance May 2014 – May 2015
Finmeccanica share performance May 2014 – May 2015 Finmeccanica +98% FTSE MIB +14% S&P600 +18% €3,3 bn €6,5 bn (May 2014) (May 2015) Market capitalization almost doubled 40
Slide 41: Agenda: Sustainability Report 2014
The new Finmeccanica objectives 2014 Results of the Group and of Finmeccanica SpA Sector results and outlook Guidance 2015 and medium term outlook The new Industrial Plan The new Management Incentive Plan Shareholding and share performance Sustainability Report 2014
Slide 42: Sustainability in Finmeccanica
Sustainability in Finmeccanica Finmeccanica has been engaged on the reporting of the extra-financial Group performance, mainly through: The delivery of a certified Sustainability Report since 2011 The annual participation to the Dow Jones Sustainability Indices (DJSI) World and Europe, where has bee
Slide 43: Engagement with responsible stakeholders
Engagement with responsible stakeholders The information on sustainability performance is the main tool of engagement with a wide variety of stakeholders which analyze and assess the Group on the basis of Environmental, Social and Governance (ESG) criteria. Among them: Sustainable and responsible in
Slide 44: Sustainability Report 2014 (1/2)
Sustainability Report 2014 (1/2) Main changes on the process Reporting activity centralized Structured materiality analysis to identify the most significant issues for the Group and its stakeholders The new materiality matrix, reported in the chapter “Sustainability at Finmeccanica”, is based on: 1.
Slide 45: Sustainability Report 2014 (2/2)
Sustainability Report 2014 (2/2) Main changes on the content New chapters: “The New Strategy” and “Business conduct” New topics: Materiality Anti-corruption prevention “Wisemen Committee” and whistleblowing Security Management Risk Management Tax Strategy Conflict Minerals More inclusive description
Slide 46: 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