Leonardo: Net Result before extraordinary transactions 120% higher at EUR 200 million
- The acquisition of the EUR 7.95bil contract for the supply of 28 Eurofighter Typhoon to the Kuwaiti Ministry of Defence completed – largest order ever booked by Leonardo – Finmeccanica – brings the backlog at EUR 35bil
- Improvements in main profitability and financial indicators
- EBITDA at EUR 786 million, +7% compared to the first half of 2015, EBITA at EUR 472 million (+5%) and EBIT at EUR 399 million (+14%)
- 2016 full-year guidance confirmed
The Board of Directors of Leonardo-Finmeccanica, convened today under the chairmanship of Gianni De Gennaro, has examined and unanimously approved the Half-Year Financial Report at 30 June 2016.
The first half of 2016 confirmed the success of the efficiency improvement actions that Leonardo-Finmeccanica had taken since the launch of the Industrial Plan, in particular in relation to production and industrial processes in business areas that had showed material criticalities in the past. These actions, together with the effects of streamlining the scope of operation and the product portfolio, entailed a gradual repositioning of the Group, so as to ensure, even in a period of difficulty in some reference markets (including the civil sector of Helicopters impacted by the prolonged crisis in the Oil &Gas), the overachievement of the targets set in the Industrial Plan, particularly in profitability improvement.
In more detail, the first half of the financial year show:
- New Orders: amounted to EUR 12,867 million, 132% higher than the first half of 2015 mainly due to the acquisition of the contract for the supply of 28 Eurofighter Typhoon aircraft signed on 5 April 2016 with the Kuwaiti Ministry of Defence, for an overall value of €bil. 7.95. Therefore, the book-to-bill ratio reached an outstanding 2.4.
- Orders backlog: amounted to EUR 34,996 million (+19% compared to June 2015) and more solid thanks to a rigorous selection of orders that stops the acquisition of structurally loss-making contracts which still slow down the full potential of Group profitability improvement. The backlog ensures about two and a half years of equivalent production.
- Revenues: amounted to EUR 5,413 million, -9.4% compared to the first half of 2015 essentially due to the reduction in Helicopters, affected by some weaknesses in the civil markets caused by the prolonged crisis in the Oil&Gas, and to the change in perimeter namely in DRS and FATA.
- EBITDA: positive EUR 786 million, 6.5% higher than the 738 million of the first half of 2015. Also the EBITDA margin, at 14.5%, increased by 210 bp compared to 12.4% of the first half of 2015.
- EBITA: positive EUR 472 million, improved (+4.9%) compared to the 450 million of the first half of 2015. RoS was at 8.7%, 120 bps higher than in the first half of 2015.
- EBIT: positive EUR 399 million, +13.7% compared to the 351 million of the first half of 2015. Also the EBIT margin, at 7.4%, increased by 150 bp compared to 5.9% of the first half of 2015.
- Net Result before extraordinary transactions: positive EUR 200 million, 120% higher than the EUR 91 million of the first half of 2015.
- Net Result: positive EUR 210 million, including the capital gain from the disposal of FATA, and materially improved (+89%) against the 111 million in 2015, which had benefitted from the results from the Transportation operations sold during the fourth quarter of 2015.
- Group Net Debt: amounted to 4,233 million and improved by 757 million (15%) compared to 4,990 million at 30 June 2015 thanks to a positive cash performance during the last months of 2015 and to the disposals in the Transportation sector, which were completed in November 2015, notwithstanding negative exchange differences. The increase in comparison with 3,278 million at 31 December 2015 was essentially due to the usual cash absorption in the first quarters of the financial year and to the buy-back of treasury shares serving incentive plans.
- Free Operating Cash Flow (FOCF): negative EUR 793 million, slightly worse than the 743 million negative of the first half of 2015. This confirming the usual curve of Group cash absorption in the first quarters of the year.
The 2016 full-year guidance, as improved following the signature of the EFA Kuwait contract, are as follows:
|Actual 2015||Outlook 2016|
|New Orders (€bil)||12,4||ca 20,0|
|Revenues (€bil)||13,0||12,2 – 12,7|
|EBITA (€mil)||1.208||1.220 – 1.270|
|FOCF (€mil)||307||500 - 600|
|Group Net Debt (€bil)||3,3||ca. 2,8|
(*)Exchange rate assumptions: €/USD 1.15; €/GBP 0,75
Based on the results for the six months ended 30 June and on its updated estimates, the Group now expects to deliver EBITA at the top of range stated above, reflecting the continuous improvement in operating performance and the increasing benefits from efficiency improvements. This will be achieved notwithstanding the decline in Revenues, which are now forecast to be at the lower end of the range above, due to lower revenues in Helicopters, affected by the crisis of Oil&Gas and other civil markets, which is lasting longer than expected. In this context of prolonged crisis of some markets, the achievement of our full-year guidance for New Orders will be challenging. Our cash flow guidance is confirmed.
The Group do not expect any significant short-term impact deriving from the so-called “Brexit process”. However, Leonardo-Finmeccanica assets and liabilities denominated in GBP are exposed to translation risk: therefore, the eventual worsening of the GBP versus the Euro currency compared to the outlook assumptions could affect negatively actual results, particularly with respect to Group Net Debt.