Leonardo's Board of Directors, which met today under the chairmanship of Gianni De Gennaro, approved the 2018-2022 Business Plan focused on initiatives for the growth of the Group. At the same meeting, the Board of Directors examined the most recent estimates relating to the 2017 financial year (the final results of which will be examined for the approval of the draft financial statements on 14 March next), as well as approved the Guidance relating to the 2018 financial year. prospects in Leonardo's reference markets are generally positive, in particular as regards exports to international markets, allowing Leonardo to look with confidence at the opportunities that exist for its core businesses.
In recent years, many achievements have been made towards building an operational and effective "One Company" model. But an acceleration is needed to ensure the sustainability of the business in the medium to long term, making the most of the "One Company", strengthening the company structure and improving the commercial approach.
The 2018-2022 Business Plan is therefore based on a transformation path that will be articulated and implemented on the following areas:
- Optimization of the operating model ("Leonardo 2.0") through a central organizational structure able to effectively support the action of the businesses and to share / generate best practices, a stronger identity and a more integrated management of resources;
- A more effective approach to the client, through a strong push towards international commercial development, a process of customer support and the management of structured and cross-business customers and an effective governance of technological innovation;
- Investments aimed at supporting growth, focused on key products and technologies and on the development of the commercial network;
- A greater focus on costs through a pervasive and transversal cost transformation program for the whole Group, with the aim of improving the competitiveness of products and investing in growth;
- Rationalization of the product portfolio ("Portfolio Reshaping") with a focus on the allocation of resources on the core businesses, also through partnerships.
Address, with specific targeted actions, the temporary difficulties in the Helicopters sector, confirming the trust in the strengths that distinguish it.
Helicopters are a business of excellence at an international level, with a solid product strategy. The Division has a range of leading products in the reference sectors, highly appreciated by customers, with increasing shares in the most attractive market segments.
The difficulties affecting 2017 performance were clearly understood and actions were taken in terms of changing the organization, processes and people. There are positive signs in the markets and a clear plan has been implemented to restore double-digit profitability in 2020.
Confirm the 2017 Guidance
The results obtained in the first nine months of the 2017 and the updated estimates for the last quarter suggest that the Group will close the 2017 financial year with Revenues, EBITA and Free Operating Cash Flow in the lower part of the Guidance range, as revised in November 2017 . As far as Orders are concerned, they are between € 11,3 and 11,7 billion due to the timing related to the finalization of a C27J export contract, an event already known; debt is expected to approx. € 2,6 billion, including the effect of the buy-back of dollar bonds.
- Revenues € 11,5 - 12,0 mld
- EBITA € 1.050 - 1.100 mil
- FOCF € 500 - 600 mil
Guidance for the 2018 exercise - set the stage for growth
The 2018 is configured as a year of consolidation. The estimates for the 2018 exercise are summarized below
- Orders € 12,5 - 13,0 mld
- Revenues € 11,5 - 12,0 mld
- EBITA € 1.075 - 1.125 mil
- FOCF approx. € 100 mil
- Group Net Debt approx. € 2,6 mld
Medium-term guidance: 2018-2022 sustainable growth plan
The new Leonardo Industrial Plan foresees the achievement of the following objectives during the next 5 years:
- Average annual Order Growth (CAGR) 2018-2022 higher than 6%, with a book-to-bill greater than or equal to 1;
- Average annual revenue growth (CAGR) 2018-2022 between 5% and 6%, supported by the solid order backlog and the acquisition of new orders;
- Average annual growth of EBITA (CAGR) 2018-2022 between 8% -10% and expected profitability higher than 10% in 2020;
- Cash generation rising from 2020, thanks to the acquisition of new orders and improved profitability;
- Maintenance of a solid and flexible financial structure. Unchanged commitment to a disciplined financial strategy with the aim of returning to an investment grade credit rating and pursuing the right balance between the reduction of debt and financial charges, the necessary investment support and an adequate remuneration of shareholders.
Leonardo is renegotiating a new revolving credit line with a pool of domestic and international banks
The Revolving Credit facility will provide for the payment of a margin of 75 basis points above the Euribor, down from the 100 basis points of the previous 2015 July transaction.
Moreover, the size will be reduced to 1,8 billions of euros, from the 2 billion of the previous operation and the deadline will be extended to February 2023, a year currently free from repayment commitments on the capital market.
The favorable market conditions have led Leonardo to renegotiate this credit line in order to reduce financial charges, confirming the progressive easing of the working capital loan needs, while also maintaining a source of bank liquidity in line with the expectations of the financial market. , including credit rating agencies.
The new RCF will be underwritten by 26 banks, resulting in an oversubscribment for 3,6 billion.