Slide 1: Finmeccanica Full Year 2010 Results Presentation
Finmeccanica Full Year 2010 Results Presentation Pier Francesco Guarguaglini Chairman and CEO Alessandro Pansa Co General Manager / CFO Co-General London 3 March 2011 1
Slide 2: 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 C
Slide 3: Contents
Contents 2010 Highlights & 2011 Outlook Pier Francesco Guarguaglini Financial & Business Review Alessandro Pansa Business Strategy gy Pier Francesco Guarguaglini Appendix 3
Slide 4: 2010 Highlights & 2011 Outlook
2010 Highlights & 2011 Outlook Pier Francesco Guarguaglini 4
Slide 5: 2010 Highlights: Strong Set of Results In Line or Above our Guidance
2010 Highlights: Strong Set of Results In Line or Above our Guidance • Orders exceeded guidance despite tough pricing competition in growth markets • FOCF guidance exceeded due to efficient working capital and investment management • Revenues and Ebita Adj. at the high end of the guidance • Streamli
Slide 6: 2011 – Looking Ahead: Focusing on Cash Generation and Reducing Debt
2011 – Looking g Ahead • 2011 Guidance – Cash flow* €400–500mln – Revenues €18.3–19bn – Ebita €1,530–1,600mln – Orders 2011E >€20bn, maintaining a book to bill solidly > 1 • Reducing debt through – Ansaldo Energia – Real estate Debt reduction of ca. €600-650mln by end of 2011 Strategic repositioning
Slide 7: Backdrop to Performance in 2011
Backdrop p to Performance in 2011 • Civil unrest in North Africa • Domestic markets resilient but still tough as cuts take hold • Security and border control requirements increasing • Civil Ci il aircraft i ft return t tto growth th • Exploiting our strong footholds in India, Turkey, Russia and Midd
Slide 8: Financial & Business Review
Financial & Business Review Alessandro Pansa 8
Slide 9: Full Year 2010 Results
Full Year 2010 Results (Euro mln) FY 10 FY 09 Change Revenues 18,695 18,176 2.9% Strong performance by three pillars Increase in Helicopter, D&SE and EBITA Adj 1 589 1,589 1 587 1,587 0 1% 0.1% Transportation offset reduction in Aeronautics and Energy EBITA Margin Adj 8.5% 8.7% (0.2) p.p. Reduction
Slide 10: EBITA Bridge
EBITA Bridge g (Euro mln) 2010 2009 EBIT 1,232 1,392 Impairment - - Non recurring rec rring costs (income) 145 92 Amortisation of intangible assets acquired through a business combination 85 80 Restructuring Costs 127 23 EBITA Adjusted 1,589 1,587 Non-recurring costs: Writedowns and provisions for €
Slide 11: Strong Attention to Shareholder Remuneration
Strong g Attention to Shareholder Remuneration EPS* Ordinary DPS in Eurocents in Eurocents • At current prices, proposed DPS of 41 Eurocents implies a dividend yield of 4.5% All dividends relating to FY 2005 / 2007 recalculated to take into account the *EPS after minority interests calculated on ave
Slide 12: Improving Cash-Flow Generation Through Selective Investments and Disciplined WC Management
Improving Cash-Flow Generation Through Selective Investments and Disciplined WC Management g Cumulated Gross Investments Capex p and Capitalised p R&D 2010-2012 2010-2012 Old plan New plan 10% 9% 6% 27% 7% 25% Capitalised R&D R&D €4.3bn €3.6bn* Capitalizzata 41% 24% 25% Capex 34% 59% 33% Helicopters
Slide 13: Sector Results
Sector Results 2010 Revenue 2010 Margin g 2010 Order Sector Revenues Growth Ebita Change vs. Orders Growth Eur bn vs. 2009 Margin 2009 (bps) Eur bn vs. 2009 H li Helicopters t 3 644 3,644 4 7% 4.7% 11 3% 11.3% 70 5 982 5,982 86 6% 86.6% Defence and 7,137 6.2% 10.3% (10) 6,783 (17.4%) Security Electr
Slide 14: Helicopters
Helicopters p Defence vs. Civil FY2010 Revenues ((Euro mln)) FY 10 Change g FY 09 • O Order d intake i t k (+87% YoY) Y Y) mainly i l d driven i b by significant i ifi t increase in Military-Gov orders 51% Revenues 3,644 4.7% 3,480 – 12 AW101 for the Italian MoD 2009 – IMOS contract (AW101Merlin ) a
Slide 15: Helicopters: Large Robust Military Backlog Supports Future Growth
Helicopters: Large Robust Military Backlog Supports Future Growth Market Outlook Key Programmes in 2012 and Beyond • Recovery R off civil i il market k t expected t dbby 2012 • Governmental G t l programmes (Italy (It l and d export) t) • Improvement in world economy led by • Integrated Operational
Slide 16: Defence and Security Electronics
Defence and Security y Electronics Defence vs. Civil FY2010 Revenues • Revenue R growth th mainly i l ddue tto 22% (Euro mln) FY 10 Change FY 09 – Avionics and Electro-optics systems , DRS and value added applications for Security Revenues 7,137 6.2% 6,718 2009 • Key contributors to revenues – E fi
Slide 17: Defence & Security Electronics: Well Placed to Respond to Increasing Worldwide Security Needs
Defence & Security Electronics: Well Placed to Respond p to Increasing g Worldwide Securityy Needs Market Outlook Key Programmes in 2012 and beyond • Th The largest l t market k t for f Finmeccanica Fi i (including (i l di D Defence, f • Large systems (i(i.e. e Saudi Saudi, Iraq Iraq, Italian Forza
Slide 18: Aeronautics
Aeronautics Defence vs. Civil FY2010 Revenues • Key K military ilit orders d (Euro mln) FY 10 Change FY 09 44% – First tranche of JSF Final Assembly and Check Out (FACO), Tot value €414mln 2009 Revenues 2,809 6.4% 2,641 – 12 M346 Singapore (€250mln) , first delivery expected in 2012 56% EBITA Adj 20
Slide 19: Aeronautics
Aeronautics Market Outlook Key Programmes in 2012 and beyond • Ci Civilil aeronautics ti recovery ((mainly i l ffor wide-body id b d • W Worldwide ld id opportunities t iti ffor M346 advanced d d Trainer T i (i.e. (i segment) Italy tranche 2 (9 a/c), UAE (48 a/c), Israel (24 a/c), – Growth opportuni
Slide 20: Space
Space p Defence vs. Civil FY2010 Revenues ((Euro mln)) FY10 Change g FY 09 • O Order d increase i mainly i l ddue tto E Earth th Ob Observation ti and d Iridium NEXT contract (81 satellites ) Revenues 925 1.8% 909 16% • Revenue mainly due to commercial and military comms, 2009 84% earth observation
Slide 21: Defence Systems
Defence Systems y Defence vs. Civil FY2010 Revenues • R Revenue growth th mainly i l ddriven i b by A Armored d vehicles hi l & (E (Euro mln) l ) FY10 Ch Change FY 09 0% Naval guns and Missiles, offsetting slight decrease in Underwater 2009 Revenues 1,210 1.3% 1,195 • Key revenues include Missiles (
Slide 22: Energy
Energy gy Defence vs. Civil FY2010 Revenues • Plants Pl t & components t (P&C) drive d i kkey changes h yoy (Euro (E FY10 Change FY 09 mln) 0% – Orders Up: Key orders include P&C (i.e. Bangladesh, Finland, Middle East and North Africa), new service Revenues 1.413 (14.5%) 1,652 2009 solutions (i.e. L
Slide 23: Transport
Transport p Defence vs. Civil FY2010 Revenues • Orders Od up due d tto Vehicles V hi l and d Si Signalling lli & S Systems t (Euro mln) FY10 Change FY 09 0% – Key orders include Signalling & Systems (Copenhagen Revenues 1,962 8.3% 1,811 driverless metro: Cityringen +O&M, existing lines O&M, 2009 Lib
Slide 24: Guidance for 2011
Guidance for 2011 2011E Revenues € 18.3-19bn EBITA €1 530 1 600mln €1,530-1,600mln FOCF* €400-500mln *Free Operating Cash Flow: Operating Cash after investments, net financial charges and taxes 24
Slide 25: Committed to Achieving the Cost Reductions at Group Level
Committed to Achieving the Cost Reductions at Group p Level • As presented during our latest Investor Day in November 2010, we are carrying out a set of efficiency ffi i measures for f a total t t l amountt off ca. €290mln €290 l off costs t over 2010 2010-2013, 2013 off which hi h ca.€130mln accoun
Slide 26: Defence & Security Electronics Segment Optimisation
Defence & Security Electronics Segment Optimisation p Internal Drivers • Elimination of existing overlaps • Improvement of competitiveness (p (product p portfolio)) and synergies y g (R&D investments) • Definition of a business organisation g closer to the market During 2010 we completed the 1st • E
Slide 27: Update on Restructuring Plans (1/2)
Update p on Restructuring g Plans (1/2) ( ) Aeronautics short/medium term actions include savings for ca. €125mln by 2013 • Full integration of Aeronautics Sector organisational structure and responsibilities completed. • 1° Wave of integrated SAP (Alenia and Aermacchi) system completed. • 2° Wave (
Slide 28: Update on Restructuring Plans (2/2)
Update p on Restructuring g Plans (2/2) ( ) Space: • New Telespazio, reorganisation of Space sector effective as of January 2011 – Restructuring of operations (including portfolio rationalisation), optimised management of satellite capacity, focused Operation Centres, reduction of controllable costs
Slide 29: Business Strategy
Business Strategy Pier Francesco Guarguaglini 29
Slide 30: Our Current Strategic Guidance
Our Current Strategic g Guidance • Market leadership in 3 robust strategic pillars (Helicopters, Aeronautics, Defence & Security El t i ) Electronics) • Resilience and opportunities in domestic markets despite pressure on defence budgets; reinforcing our positioning positioning, mainly in the UK and
Slide 31: Outstanding Order Intake Boosts Visibility of Our Future Performance
Outstanding Order Intake Boosts Visibility of Our Future Performance 2010 Orders 2010 Key Orders Italy 24% Programme Value Sector 40% UK Product support €2.2bn Helicopters €22 453 l €22,453mln AW101 €1.6bn Helicopters 14% US Eurofighter tr. 3A €1.4bn Defence & and customer Security 22% RoW supportt
Slide 32: Solid Backlog Sustained By Strong Commercial Performance
Solid Backlog Sustained By Strong Commercial Performance Major programmes in backlog Programme Sector Eurofighter Aeronautics/Defence & Security Electronics/Defence S t Systems C27J Aeronautics book to book to AW101 Helicopters bill ratio ti bill ratio ti ATR Aeronautics 1.16 1.2 B787 Aeronautics AW
Slide 33: Current Backlog Establishes a Strong Platform for Further Growth
Current Backlog Establishes a Strong Platform for Further Growth Revenues €18.3-19bn ~16% 16% ffrom 2011 Orders ~ 15% from ~ 12% from 2012 Orders 2013 Orders ~ 20% Orders acquired in 2011 ~ 43% Orders ~ 84% from acquired in 2011- Orders 2012 acquired ~ 65% from Orders ~ 45% ffrom acquired Orders acq
Slide 34: Orders and Revenues: Geographical Footprint Enables Us to be Resilient
Orders and Revenues: Geographical Footprint Enables Us to be Resilient 2010 Orders 2011 – 2012 Orders 19% Italy 24% 40% UK Avg p p.y. y 8% €22,453mln 51% >€20bn US 14% RoW 22% 22% 2010 Revenues 2011 – 2012 Revenues 20% 22% 45% 2011E €18 695 l €18,695mln 12% 49% 8% €18.3-19bn 21% 23% Maintaining a Bo
Slide 35: USA: Focus on Resource Optimisation
USA: Focus on Resource Optimisation p Fewer cuts than anticipated, mainly driven by increased efficiencies. Proposed spending is up in our programmes (helos, cargo airplanes, tanker, ships, UAV and cybersecurity). cybersecurity) • Advanced Trainer Replacement programme (TX tender - M346), C27J (9 ad
Slide 36: UK: Focus on Resource Optimisation
UK: Focus on Resource Optimisation p UK Budget remains constrained, however… • Merlin IOS awarded (ca.£570M); AW159 programme on budget and on time (4 completed, 3 flying), SAR-H termination extends life of AW Sea Kings • Typhoon enhancement plan in development, Afghanistan operations receiving £4B
Slide 37: Italy: Focus on Resource Optimisation
Italy: y Focus on Resource Optimisation p Italy: A Solid Platform on which to build • Military programmes (and NATO) relying on multiple funding sources (i.e. Ministry of Industry for Eurofighter, FREMM, VBM, Forza Nec); • Growing C4ISR sector • Growing G i ffunding di opportunities t iti ffor S Sec
Slide 38: Achievements and Opportunities in Target Growth Markets: India
Achievements and Opportunities in Target Growth Markets: India India is a priority market for Finmeccanica Democracy, sustainable economical growth, large industrial base, well-educated people and competitive costs encourage long-term investments Order Intake Key Drivers • 2005-2009 €250mln average/
Slide 39: Achievements and Opportunities in Target Growth Markets: Brazil
Achievements and Opportunities in Target Growth Markets: Brazil Huge Defence & Security and infrastructure Investments Italy and Brazil have a G-to-G agreement in place Italian Parliament ratified the agreement in February 2011 Potential opportunities ca. €11bn • Short-term opportunities ca. €7bn, i
Slide 40: Achievements and Opportunities in Target Growth Markets: Turkey
Achievements and Opportunities in Target Growth Markets: Turkey y Turkey • Partnerships and JVs (i.e. ATAK Programme between AgustaWestland and two important Turkish Aerospace Groups (TAI and Aselsan) for the production of T129 helicopter) • Additional opportunities – Helicopters (AW149 TUHP) – Defe
Slide 41: Achievements and Opportunities in Target Growth Markets: Russia
Achievements and Opportunities in Target Growth Markets: Russia Russia • Partnerships and JVs – AgustaWestland and Russian Helicopters jointly established a new site to produce and assemble the civil version of AW139 – Alenia Aeronautics and Russian Sukhoi have jointly developed Superjet100 through
Slide 42: On-going Efficiency Actions
…On-going g g Efficiency y Actions • Defence and Securityy Electronics segment optimisation process 9 GROUP’S EFFICIENCY 9 • Restructuring of Aeronautics, ACTIONS Rolling Stock and Space segments We are pursuing selected actions to increase our efficiency and effectiveness in line with effectiveness
Slide 43: Defence & Security Electronics Segment Optimisation
Defence & Security Electronics Segment Optimisation p 2010 2011 • “Integrated Systems”: concentration within SELEX SI, of all key y competencies p in large systems, ATMS, CS and Surface g 9 • Establishment of fully integrated “ICT ICT & Security Security” capability through the merger Radar + of Els
Slide 44: Focus Enhancement in Core Segments of US Asset Portfolio (1/2)
Focus Enhancement in Core Segments g of US Asset Portfolio (1/2) ( ) Two years after DRS’ acquisition, we have completed an in depth business assessmentt off all ll the th acquired i d US assets, t mostt off all ll in i terms t off growth th and d profitability prospects • As a result, we now aim to
Slide 45: Focus Enhancement in Core Segments of US Asset Portfolio (2/2)
Focus Enhancement in Core Segments g of US Asset Portfolio (2/2) ( ) • The proceeds accruing from the successful completion of the divestment plan will be partially ti ll used d ffor debt d bt reimbursement i b t and d partially ti ll reinvested i t d tto supportt DRS’ growth th and d repositioning
Slide 46: Summary: Strong Value Proposition for Finmeccanica
Summary Strong g Value Proposition p for Finmeccanica • Continue to streamline and consolidate the Group • Well positioned to exploit fast growing security demand leveraging our market-leading technologies and strong capabilities • Building on established industrial footholds in emerging growth mark
Slide 47: Appendix
X’, “7 FINMECCANICA Appendix 47
Slide 48: FY 2010 Results – Profit & Loss
FY 2010 Results – Profit & Loss CONSOLIDATED PROFIT AND LOSS ACCOUNT €mil. 2010 2009 Change % YoY Revenues 18,695 18,176 2.9% Costs for purchases and personnel (16,381) (16,125) Depreciation and amortisation (578) (575) Other net operating revenues (costs) (147) 111 Adj EBITA (*) 1,589 1,587 0.1% Ad
Slide 49: Balance Sheet
Balance Sheet BALANCE SHEET €mil. 31.12.2010 31.12.2009 Non-current assets 13,641 12,956 Non-current liabilities (2,583) (2,639) 11,058 10,317 Inventories 4,426 4,662 Trade receivables 9,242 8,481 Trade payables (12,996) (12,400) Working capital 672 743 Provisions for short-term risks and charges (7
Slide 50: Cash Flow
Cash Flow CASH FLOW €mil. 2010 2009 Cash and cash equivalents at 1 January 2,630 2,297 Gross cash flow from operating activities 2,361 2,222 Financial charges paid (258) (180) Income taxes paid (335) (392) Changes in other operating assets and liabilities and provisions (355) (134) for risks and cha
Slide 51: Divisions
Divisions Other Defence and 2010 Defence Activities Helicopters Security Aeronautics Space Energy Transport Eliminations Total (€mln) Systems and Electronics Corporate Revenues 3,644 7,137 2,809 925 1,210 1,413 1,962 243 (648) 18,695 Adj EBITA (*) 413 735 205 39 107 145 97 (152) 1,589 Adj EBITA (*)
Slide 52: Exchange Rates Adopted / Employee Obligations / Share Data
Exchange Rates Adopted / Employee Obligations / Share Data Exchange g rates adopted p At 31 December 2010 At 31 December 2009 average exchange rate for the year exact average exchange rate for the year exact US dollar 1.32572 1.3362 1.39478 1.4441 Pound Sterling 0.85784 0.86075 0.89094 0.88810 At 31
Slide 53: Finance Income and Costs
Finance Income and Costs Finance Income and Costs (€mln) At 31 December 2010 At 31 December 2009 Income Costs Net Income Costs Net Capital gain on sale of STM 0 0 0 18 0 18 Dividends 3 0 3 6 0 6 Gains on investments and securities 4 0 4 37 0 37 Discounting of receivables, payables and provisions 5 -
Slide 54: Debt Structure
Debt Structure 9% 31% 20% Dollar Bond 69% Sterling Bond Fixed 71% Euro Bond Floating • Average Debt Life > 10 years • Average cost of debt approximately 5.6% • Currently approx. 70-30% fixed vs. floating interest cost • Rating: Fitch = BBB+ Stable Outlook Moody’s = A3 Stable Outlook S&P = BBB Negati
Slide 55: Long Term Debt Maturity Profile: No short term refinancing
Long g Term Debt Maturity y Profile Dollar Bond 46 Sterling Bond 46 Euro Bond 465 46 1.000 46 EIB 500 600 500 225 374 (€mln) 37 46 46 46 46 46 46 374 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2025 2039 2040 • No refinancing needs until end of 2013 • 12 12-year year amortizing EIB L
Slide 56: Long Term Debt Maturity Profile
Long g Term Debt Maturity y Profile Dollar Bond Sterling Bond 46 46 Euro Bond 465 46 EIB 1.000 46 (€mln) 500 600 500 225 374 37 46 46 46 46 46 46 374 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2025 2039 2040 Bond Available Credit Lines Notional Amount C hC Cash Credit dit Li Lines S
Slide 57: Total R&D Expenditure in 2010
Total R&D Expenditure p in 2010 € mln FY 2010 FY 2009 Value % of Revenues Value % of Revenues R&D Total Expenditure 2,030 11% 1,982 11.0% of which: Customer Funded 1,056 930 Government Funded 292 432 Group Expenditure 682 620 € mln FY 2010 FY 2009 Value % of Revenues Value % of Revenues Group expend
Slide 58: Development Costs Capitalised as Intangible Assets at 31 December 2010
Development Costs Capitalised as Intangible Assets at 31 December 2010 Self Funded Self Funded € mln Total National Security Other 1 Jan 2010 Opening balance 545 624 1,169 G Gross R&D C Capitalised it li d 155 165 320 Depreciation and write offs (34) (121) (155) Other Changes 44 5 49 Net R&D Capital
Slide 59: 2011 Financial Calendar
2011 Financial Calendar Date Event 2 March 2011 2010 Full Year Results Ordinary shareholders’ meeting (first 29 April and 4 May 2011 and second call) Extraordinary shareholders’ meeting 29 April – 3 and 4 May 2011 (first, second and third call) 28 April 2011 First Quarter 2011 Results 27 July 2011 F
Slide 60: IR Contacts
IR Contacts Investor Relations Finmeccanica investor_relations@finmeccanica.com Website: http://www.finmeccanica.com/Investor Relations John D. Stewart S Raffaella Luglini VP Investor Relations Investor Relations Officer +39 06 32473.290 +39 06 32473.066 john.stewart@finmeccanica.com raffaella.lugli