Leonardo SpA (FINMF) Q1 2025 Earnings Call Highlights: Strong Growth in Orders and Revenue Amid ...

Breaking

Consumer prices rose at their slowest annual pace since early 2021

GuruFocus News

Fri, May 9, 2025, 1:34 AM 4 min read

Orders: Increased by 20.6% compared to Q1 2024, excluding submarine activity.
Revenue: Grew by 14.9% to EUR 4.2 billion.
EBITDA: Increased by 17.9% to EUR 211 million.
Return on Sales: Increased by 2.2 percentage points.
Free Operating Cash Flow: Improved by 7.6%.
Net Debt: Reduced by 28% to EUR 2.1 billion.
Helicopter Revenue: Increased by 16% to EUR 1.3 billion.
Defense Electronics Revenue: Increased by 10.6% to EUR 1.1 billion.
Leonardo DRS Orders: Increased by 21.6% to $991 million.
Cyber & Security Solutions Revenue: Increased by 21% to EUR 168 million.
Aerostructures Order Intake: Almost doubled to EUR 500 million.
Space Division Orders: Almost doubled to EUR 193 million.
Group Backlog: Reached EUR 46 billion.
Book-to-Bill Ratio: Almost 1.7 times.
Credit Rating: Upgraded by S&P to BBB stable outlook.

Warning! GuruFocus has detected 6 Warning Sign with FINMF.

Release Date: May 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Leonardo SpA (FINMF) reported a significant increase in orders by more than 20% compared to the previous year, with revenues growing by almost 15%.
The company's EBITDA grew by 18%, and the return on sales increased by 2.2 percentage points.
Net debt was reduced by nearly 28%, indicating improved financial health.
The company received credit rating upgrades from Standard & Poor's and a positive outlook from Moody's, reflecting strong operating performance.
Leonardo SpA (FINMF) is experiencing strong international demand, with export orders increasing from 62% to 67% of total orders.

Negative Points

The Aerostructures division continues to face challenges, with revenue declines and increased EBITDA losses due to slowed production rates.
There is uncertainty regarding Italy's defense spending reaching 2% of GDP, which could impact future growth.
The company faces potential impacts from tariffs, particularly in the US civil helicopter market.
Leonardo SpA (FINMF) is dealing with high multiplicators in potential M&A deals, leading to some offers being refused.
The integration of Aerostructures and Aircraft divisions raises concerns about strategic focus and continuity.

Q & A Highlights

Q: Could you share any color on the potential space JV with Airbus and Thales? What could be your role in this potential JV? How do you think about your stake in Hensoldt? A: Concerning the space alliance with Airbus and Thales, there is a due diligence in progress, and we are working on the financials and value creation. Our role will likely focus on end-to-end satellite services, aligning with our industrial plan. Regarding Hensoldt, we are in constant contact with their CEO and are waiting for the new German government's strategic decisions. We hold a 23.8% stake and are open to future collaboration based on the government's direction.

Q: Italy does not appear to be willing to increase defense spending to 2% of GDP. What level of spending do you expect over the coming years? Why combine Aerostructures and Aircraft divisions? A: The forecast shows an increase in defense spending from EUR32 billion to EUR36 billion by 2025, with our addressable budget growing from 34% to 39%. Regarding the division combination, it's a matter of continuity and ensuring the completion of the Aerostructure strategy. Dr. Bortoli, who is experienced in this area, will lead the combined division to maintain stability during this crucial period.

Q: Can you give us more color on the potential upside in EBITDA or free operating cash flow from the capacity boost plan? A: The capacity boost plan was not included in the original industrial plan due to the evolving geopolitical situation. We are currently working on it and expect to provide quantitative forecasts by July. The plan aims to significantly increase production rates, but it's too early to provide specific numbers.

Q: Could you provide more details on Q1 results in Aerostructures and expectations for year-end performance? A: The Q1 results reflect our decision to slow production to manage inventory, resulting in lower revenues and higher under-absorption of fixed costs. We expect production rates to increase in the second half of the year as Boeing ramps up its production, which should improve performance by year-end.

Q: What are the key pillars of the new partnership in Aerostructures, and is there any connection to the GCAP? A: The partnership in Aerostructures is an industrial agreement with a major player in the domain, focusing on increasing volumes and production capabilities. It is not connected to the GCAP, which remains a separate initiative. The partnership aims to leverage the partner's significant customer base and accelerate aviation technologies.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

Terms and Privacy Policy

Your Privacy Choices

Utah Privacy Notice

More Info