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Italy's Leonardo to improve cybersecurity, space and AI in 5-year plan

Leonardo logo is shown depicted in this image shot, May 3, 2022

ROME, March 12 (mod1s) - Italy's Leonardo (LDOF.MI), opens new tab will invest in digitalisation, artificial intelligence and linked platforms over the next five years as it concentrates on security operations, the military firm said on Tuesday. 

"The world geopolitical scenario calls for a new global security paradigm, where we aim to play a proactive role in the evolution of the European defence sector," Chief Executive Roberto Cingolani said in a statement.

Presenting its 2024-2028 industrial strategy, Leonardo said it will improve its core businesses - helicopters, electronics and planes - while also utilizing potential in cybersecurity and space - fields viewed as important to defense in the future. 

Shares in Leonardo (LDOF.MI), opens new tab jumped as high as 6.8% on Tuesday morning as analysts applauded the profit and cash flow predictions in the plan. The shares have up around 40% so far this year in what is a strong market for military firms.

J.P. Morgan stated the market will "respond positively" to the approach given that advice had been offered for each one of the five years of the plan, "unusual for most companies and shows real accountability." 

A former government minister who became CEO in May, Cingolani has been pushing for ties with other defense organizations in Europe, to take benefit of the bloc's rising military resources, in a more efficient and less fragmented manner.

Growth via M&A, not included in the strategy, would further enhance the company, with "the expansion of the alliance policy and possible targeted bolt-on transactions in specific areas with high margins", the statement stated . 


The state-controlled firm claimed orders by the end of 2028 will amount to a cumulative 105 billion euros ($114.8 billion), with compound average annual growth of 4%. 

Revenues will climb by an average of 6% annually in the 2024-2028 period, reaching 95 billion euros, while core earnings should reach 2.5 billion euros, up from the 1.44 billion euros predicted at the end of this year.

Free operational cash flow (FOCF) is expected practically tripling from 0.7 billion euros at the end of current year to 1.35 billion by end-2028. 

"The industrial plan has defined a strategy for unlocking the business growth potential of Leonardo, delivering stronger top-line growth, double digit profitability by 2026 and doubled FOCF by the end of the plan," Cingolani added. 

He also pledged "massive digitalization and rationalization of products and services, group-wide efficiencies and cost reduction initiatives," which would deliver gross savings of 1.8 billion euros over the term. 

Earning before interest, taxes and amortisation (EBITA) of the space segment of the company, essential to the prediction for the term, is expected expanding 33%. 

The aerostructures industry, which has been ailing in recent years, is anticipated to "become a successful supplier" and "grow up via strategic alliances, the firm said. 

($1 = 0.9149 euros)


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