Vergiate (MI) 30 January 2018 15:15 Inside Information
- Well positioned for a positive market outlook
- Leveraging one company model with a new commercial strategy
- Leveraging a strong backlog and accelerating orders to deliver revenue growth and improved profitability
- Strict cost control and focused investment on sustainable growth
- Disciplined financial strategy to balance business growth, investments, and cash generation
- A world class business with the right product strategy
- Very clear on what happened in 2017 – no structural issues
- Facing attractive opportunity in improving civil market
- Executing a sustainable plan to return to double digit profitability by 2020
FY 2017 Guidance – confirming the “reset” announced last November
- Revenues, EBITA and FOCF expected towards the lower end of guidance ranges
- Orders expected to be €11.3 – 11.7 bn due to timing of C27J export contract
- Group net debt in line with guidance; c.€2.6 bn including US bond buy-back
FY 2018 – a consolidation year
- Order growth, stable revenues and slightly higher EBITA €1,075 – 1,125 mln
- FOCF of c. €100 mln reflecting the timing of the EFA Kuwait financial profile, other customer advances winding down, Aerostructure performance and higher investment to support sustainable growth.
- Targeting a new phase of sustainable growth, accelerating through to 2022
- 5 years 2018-2022 Order growth CAGR >6% supporting revenue growth CAGR of 5%-6% and a book-to-bill at or above 1x
- 5 years 2018-2022 EBITA CAGR of 8%-10%, with profitability expected to reach double digit by 2020
- Accelerating FOCF from 2020 driven by EFA Kuwait positive contribution, full recovery in Helicopters, growing orders and higher profitability; 2015-2018 Cash Flow Conversion average of 50% will be the base for our plan going forward
- Disciplined financial strategy, continuing to strengthen the balance sheet and target a return to investment grade
- Operating model Optimization ("Leonardo 2.0") through a central organizational structure able to coordinate the businesses action and to share/generate best practices, a stronger identity and a more integrated resources management;
- A more effective commercial strategy and customer approach, through a strong boost to international business development, customer support process, a cross-business customer support and an effective governance of technological innovation;
- Targeted Investments to support growth, focused on key products and technologies and the development of a new commercial network;
- A focus on cost control through a cost transformation program to support competitiveness of our products and reinvestment in growth;
- Product portfolio “Reshaping", including a focus on the allocation of capital to our core businesses, new potential partnerships.
Leonardo Helicopters Division is a world-class business, with a strong product strategy. It has a range of market-leading products that have strong customer appeal, and which are taking share in attractive market segments.
The results obtained in the first nine months of 2017 and the updated estimates for the last quarter suggest that the Group will deliver full year Revenues, EBITA and Free Operating Cash Flow in the lower part of the range of Guidance published in November 2017.
- Revenues € 11.5 – 12.0 bn
- EBITA € 1,050 – 1,100 mln
- FOCF € 500 – 600 mln
The current financial year 2018 is expected to be a consolidation year. Group guidance is summarized as follows:
- Orders € 12.5 – 13.0 bn
- Revenues € 11.5 – 12.0 bn
- EBITA € 1,075 – 1,125 mln
- FOCF c. € 100 mln
- Group Net Debt c. € 2.6 bn
The Plan envisages the achievement of the following targets over the next 5 years:
- 5 years 2018-2022 Order CAGR > 6%, with a book-to-bill equal to or above 1x
- 5 years 2018-2022 Revenue CAGR between 5%-6%, supported by new order intake and a strong order backlog
- Continuous improvement in EBITA, with 5 years 2018-2022 CAGR 8%-10% Return on Sales expected higher than 10% by 2020
- Accelerating FOCF accelerating from 2020 driven by order intake growth and increase in profitability
- Solid and flexible financial structure. We remain committed to a disciplined financial strategy, getting back to an “investment grade” credit rating and continuing to lower our cost of funding, while pursuing a balance between reducing leverage, sustaining investments for growth and adequate returns to shareholders.