Leonardo: 2019 results delivering or exceeding Guidance for the second year in a row

Revenues € 13.8 bn (+12.6% YoY), EBITA € 1.3 bn (+12% YoY)
Net Result € 822 mln (+61% YoY) strong growing
Dividend distribution proposed of € 0.14 per share, in line with 2018
Fully focused on execution of Industrial Plan

12 March 2020 19:19 Inside Information

Results at 31 December 2019.
Below an excerpt. Download here the full version.


Full Year 2019 results show continued successful delivery of plan

  • Delivering or exceeding targets
  • 2018-2019 Cumulated Orders at ca. € 30 billion, above the expectations
  • 2019 New Orders intake at € 14.1 billion, +16.6% excluding NH90 Qatar order in 2018
  • Profitability (RoS) at 9.1%, 10.1% excluding pass-through activities
  • FOCF at € 241, above the Guidance for the second year in a row
  • Group Net Debt at € 2.8 billion, in line with expectations

Despite the challenges in making forecasts in the current situation due to the COVID-19 emergency, Leonardo believes it is appropriate to provide Guidance in a continuity scenario, without including COVID-19 impacts

  • New Orders at ca. € 14 billion
  • Revenues at € 14.0 – 14.5 billion
  • EBITA at € 1,325 – 1,375 million
  • FOCF at € 400 – 450 million
  • Group Net Debt at ca. € 2.8 billion (Including € 0.1 bn higher IFRS 16 effect, Kopter acquisition ca. € 0.2 bn and assuming dividend payment)

Leonardo has clear view of long-term goals and clear strategic path, focused on

  • Strengthen our core
  • Transform to grow
  • Master the new, accelerating innovation

Strong confidence in long-term fundamentals: updating Industrial Plan target over the next 5 years

  • Orders ca. € 80 billion, +10 billion compared to 2018-2022 target (€ 70 bn)
  • Revenues CAGR 4%. 5%-6% growth in 2017-2024 confirmed
  • EBITA CAGR 8%, with growing and steadily double-digit RoS excluding pass-through activities
  • ROIC growing
  • FOCF step up in 2020 onwards
  • Cash Flow Conversion* >60% on avarege over the next 5 years; with the aim of exceeding 70% in 2023-2024

* Cash flow conversion rate = FOCF / EBITA after cash financial charges and cash taxes

Leonardo's Board of Directors, convened today under the Chairmanship of Gianni De Gennaro, examined and unanimously approved the draft of Group consolidated and Leonardo S.p.A. financial statements at 31 December 2019.

Alessandro Profumo, Leonardo CEO commented, “Over the past 2 years we have been delivering or exceeding our promises and we are very well positioned to succeed in the long-term. We have a clear view on our strategic path: strengthening and transforming our business to growth and accelerate the innovation improving business competitiveness in the long-term. We are fully committed to deliver our Plan to create value for all our stakeholders”.

The 2019 year saw the full implementation of the growth project envisaged in the Industrial Plan, with results in line with or above the preset targets.

The significant increase in Revenues in all business sectors, driven by the success achieved in terms of sales, was accompanied by an increase in operating profit capable of also offsetting the lower contribution given by certain strategic joint ventures. The sustainability of this growth over the long term and the creation of value for the Group are guaranteed by the investments made in people, skills and innovative technologies.

The net result for the period, showing a considerable increase compared to the previous year, benefitted from sharp growth in the net result before extraordinary transactions, lower restructuring costs and a reduction in the amortisation and depreciation of assets arising from the Purchase Price Allocation, as well as from the effects arising from the transaction with Hitachi, classified under the result from "Discontinued operations".

In 2019 the Group Net Debt included the effect of the adoption of IFRS 16 on lease agreements for € 451 mln (€ 458 mln as at the date of initially application), the payment of dividends (€ 81 mln), the acquisition of Vitrociset (€ 110 mln, including the acquiree’s net financial position of € 63 mln) and other minor acquisitions. Without these effects, the Group’s Net Debt would have remained substantially unchanged compared to 2018.

2019 results highlights are as follows:

  • New Orders, amounted to EUR 14,105 million. The orders gained in 2018 included the acquisition of the NH90 Qatar order for about € 3 bn in the segment of Helicopters; while excluding this event, the performance improved in all business sectors.
  • Order Backlog, amounted to EUR 36,513 million, ensures a coverage in terms of equivalent production equal to more than 2.5 years
  • Revenues, amounted to EUR 13,784 million, showed a significant increase (12.6%) compared to 2018 (€ 12.2 bn), which was mainly attributable to the Defence Electronics & Security and Aeronautics Divisions.
  • EBITA, amounted to EUR 1,251 million showed significant growth compared to 2018 (€ 1,120 mln), thus confirming a sound profitability (ROS of 9.1%, in line with the previous year) as a result of an improvement recorded in the Defence Electronics & Security, Helicopters and Aeronautics Divisions, which more than offset a decline in the result posted by the GIE-ATR Consortium and in the manufacturing segment in the Space sector. The operating profit also reflected the investments made in strengthening the central units in support of the Group’s path to growth.
  • EBIT, amounted to EUR 1,153 million; showed, compared to 2018 (€ 715 mln), an increase equal to € 438 mln (+61.3%), which was due to an improvement in EBITA, as well as to a reduction in restructuring costs and the completion of a large part of the amortisation of intangible assets recognised upon the acquisition of Leonardo DRS (Purchase Price Allocation).
  • Net Result before extraordinary transactions, amounted to EUR 722 million, mainly benefitted, compared to the previous year, from an improvement in the operating profit, net of related tax charge.
  • Net Result, amounted to EUR 822 million, included the effects of the release of a large part of the provision set aside against the guarantees given upon the sale of the transport business of Ansaldobreda S.p.A. following the subsequent signature of the transaction with Hitachi. The data for 2018 included the effects of the judgment of acquittal towards Ansaldo Energia and another minor transaction, which had led to the recognition of proceeds of € 89 mln among the result from Discontinued Operations.
  • Free Operating Cash Flow (FOCF), posted a positive value of € 241 mln (€ 336 mln in 2018).
  • Group Net Debt amounted to EUR 2,847 million, reflects the positive impact of FOCF performance. However, compared to the value posted at 31 December 2018 (€ 2,351 mln), came to € 2,847 mln, mainly as a result of the recognition of financial liabilities arising from the application of IFRS 16 “Leases” (the effect on the Group Net Debt at 1 January 2019 was equal to € 458 mln), as well as of the impact on the net financial position of the Vitrociset transaction (€ 110 mln, including the acquiree’s net financial position of € 63 mln) and the distribution of dividends (for € 81 mln). The effects of the adoption of the IFRS16 “Leases” on the 2019 financial statements are reported in the Note on the “Effects of the new IFRS16 “Leases” of Report on operations.

Leonardo's Board of Directors has resolved to propose to the Shareholders' Meeting the distribution of a dividend of 0,14 euro, from the profit of the year 2019, gross of any withholding taxes. This dividend would be payable as of June 24, 2020, with ex-dividend date on June 22, 2020 and record date (ie the date of entitlement to the dividend payment) June 23, 2020. The above with reference to each share of common stock that will be outstanding on the ex-dividend date, excluding the own shares held on that date, without prejudice to the regime of those that will be effectively assigned, pursuant to the current incentive plans, during the current year.

Guidance before COVID-19 impact
Before COVID-19 impact, Leonardo currently expects the following in 2020:

  • high level of new orders (circa € 14 bn) thanks to the closing of important domestic and export orders in all business segments, demonstrating the Group's ability to effectively manage its key markets;
  • revenues of € 14 - 14.5 bn, with growth compared to 2019 driven by the contribution of the EFA Kuwait programme, the solid order portfolio and the positioning of the Group's products in the most attractive market segments;
  • increasing profitability, with EBITA of € 1,325 - 1,375 mln, supported firstly by growth in volumes secondly by good levels of industrial profitability that we are seeing despite increasing pass-through activities, thirdly by the progressive improvement of the profitability of specific business areas, and finally through initiatives to improve both efficiency and industrial processes;
  • cash flow generation significantly improved against 2019, with FOCF of € 400 – 450 mln as a result of the financial profile of the EFA Kuwait contract as well as growth in operating income and our constant focus on working capital optimisation.
  • group net debt in the range of ca. € 2.8 bn, and which includes an additional IFRS 16 effect (circa € 0.1 bn), the acquisition of Kopter (approximately € 0.2 bn), and dividend payment.

The estimates for the year 2020 are summarized below.

These estimates do not include the potential impacts of COVID-19(*)

2020 Outlook (**)
Orders (€bn)
ca. 14
Revenues (€bn)
14 – 14.5
EBITA (€m)
1,325 – 1,375
FOCF (€m)
400 – 450
Group Net Debt (€bn)
ca. 2.8 (***)

(*) Within the sections "Leonardo and risk management" and "Significant post balance sheet events", the topic related to COVID-19 is discussed
(**) Assuming a € / USD exchange rate of 1.15 and € / GBP of 0.88.
(***) Includes an additional IFRS 16 effect (approximately €0.1bn), the acquisition of Kopter (approximately €0.2bn) and dividend payment


Significant recent developments
Leonardo's Board of Directors acknowledged that the COVID-19 emergency will likely have an impact on the group’s ordinary course of business. This is despite mitigating actions promptly put in place by the Company and aimed primarily at preserving business and production continuity and fully ensuring the health and safety of employees.
At the current state of knowledge of the spread of the emergency, the main areas likely to be impacted by the Covid-19 emergency are the following:

  • commercial campaigns
  • continuity of supply chain
  • respect of production times / flows
  • respect of timing and acceptance processes of products/activities by customers

In this regard, Leonardo Board of Directors concluded that the current trend of the emergency, now classified by the WHO as a “pandemic”, accompanied by uncertainty related to further developments in terms of impact on public health and, consequently, on industrial, economic and social situation of Italy, does not allow any quantification of the potential effects on 2020 Group’s performance.

Leonardo has made and is making extensive and widespread use of remote working but cannot, at the moment, exclude selective and temporary partial and targeted suspension of operations of certain departments within production sites which by nature do not offer the possibility of remote working.

The company will promptly inform the market once the evolution of the situation allow a quantification of the possible impact, included recovery actions.

The Board of Directors believes that what is happening does not change the Group's solid medium-long term fundamentals.



Group (Euro million)
FY 2018
FY 2019
Chg. %
New Orders
Order Backlog
EBITA (**)
(0.1) p.p.
EBIT (***)
EBIT Margin
2.6 p.p.
Net result before extraordinary transactions
Net result
Group Net Debt
0.3 p.p.
5.0 p.p.
Workforce (no.)

(*) EBITDA this is EBITA before amortisation, depreciation and adjustments impairment (net of those relating to goodwill or classified among “non-recurring costs”).
(**) EBITA is obtained by eliminating from EBIT the following items: any impairment in goodwill; amortisation and impairment, if any, of the portion of the purchase price allocated to intangible assets as part of business combinations, restructuring costs that are a part of defined and significant plans; other exceptional costs or income, i.e. connected to particularly significant events that are not related to the ordinary performance of the business.
(***) EBIT is obtained by adding to earnings before financial income and expense and taxes the Group’s share of profit in the results of its strategic Joint Ventures (GIE-ATR, MBDA, Thales Alenia Space and Telespazio).