Leonardo SpA ((FINMY)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Leonardo SpA’s recent earnings call painted a picture of robust growth and strategic progress, coupled with some challenges. The company showcased impressive growth in orders, revenue, and profitability across several key divisions, including defense electronics and helicopters. Additionally, Leonardo demonstrated a significant reduction in debt and announced strategic partnerships. However, the company acknowledged ongoing challenges in its Aerostructures and ATR segments, with the NH90 settlement posing a potential future cash flow concern.
Strong Order and Revenue Growth
Leonardo reported a remarkable 24.3% increase in new orders year-over-year, reaching over EUR 18 billion. Revenue also saw a substantial rise, growing by 12.4% to EUR 13.4 billion. This growth underscores the company’s successful market strategies and strong demand for its offerings.
Significant EBITDA Improvement
The company’s EBITDA saw a notable improvement, increasing by 22.7% to EUR 945 million, up from EUR 770 million last year. This significant growth in EBITDA highlights Leonardo’s operational efficiency and profitability enhancements.
Reduction in Net Debt
Leonardo achieved a 25.9% reduction in net debt, reflecting a strong financial position and effective debt management strategies. This reduction enhances the company’s financial flexibility and stability.
Record Backlog and Upgraded Credit Rating
Operating with a record backlog of EUR 47 billion, Leonardo also received a credit rating upgrade from Fitch. This positions the company favorably for future growth and investment opportunities.
Helicopter Division Growth
The helicopter division experienced a 13% increase in revenues, reaching EUR 4.1 billion, with an 18% increase in EBITDA. This growth was driven by strong demand in defense and governmental contracts.
Defense Electronics Performance
Leonardo’s defense electronics segment showed robust growth, with revenues up 13% at EUR 3.5 billion. The segment benefited from strong order intake and increased profitability.
Cybersecurity Expansion
The cybersecurity division reported a 20% increase in orders, with revenues up 19% and EBITDA soaring by 86%. This expansion reflects the growing importance of cybersecurity in Leonardo’s portfolio.
Strategic Initiatives and Partnerships
Leonardo announced several strategic collaborations, including partnerships with Airbus and Thales, and initiatives like the Michelangelo Dome. These partnerships aim to enhance the company’s technological capabilities and market reach.
Challenges in Aerostructures
The Aerostructures segment faced challenges, reporting losses in EBITDA with a negative $135 million, excluding ATR. The company is working on ramping up production levels to address these issues.
ATR Losses
ATR’s contribution was negative $34 million due to supply chain constraints. Leonardo is focusing on resolving these constraints to improve performance in this segment.
NH90 Settlement Impact
The NH90 settlement is expected to result in a cash outflow of EUR 125 million, impacting the company’s free cash flow in 2026. This settlement poses a future financial challenge that Leonardo is preparing to manage.
Forward-Looking Guidance
Leonardo’s guidance for the third quarter of 2025 reflects a robust performance with significant year-over-year growth across various financial metrics. The company anticipates continued strong performance across all divisions, with no single product or geographic area disproportionately affecting results. The electronics segment is expected to maintain solid order intake, and revenue growth in the helicopter sector is projected to continue, driven by defense and governmental contracts.
In summary, Leonardo SpA’s earnings call highlighted a period of strong growth and strategic advancements, with impressive increases in orders, revenue, and profitability. While the company faces challenges in certain segments, its overall financial health and strategic initiatives position it well for future success. Investors and stakeholders can remain optimistic about Leonardo’s trajectory, given its solid performance and forward-looking strategies.