Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on FINMECCANICA SPA. We currently have 5 research reports from 2 professional analysts.
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Stable top-line, improving margins, brighter outlook
07 Nov 16
Leonardo released its Q3 results showing a decrease in sales by 13% yoy to €2,621m in Q3, continuing the negative trend initiated at the beginning of the year (-10.7% ytd to €8,034m). At the same time, the EBITDA decreased by 6.7% yoy to €407m in Q3 but increased by 1.6% ytd to €1,193m, leading to an increase in the EBITDA margin from 13% to 14.8% ytd. The decrease in revenues was observed in all four divisions in Q3: Helicopters (-21.9%), Electronics, Defence & Security Systems (-8.5%), Aeronautics (-6.2%) and other activities (-13.4%).
Sealing the progress by becoming Leonardo
17 Mar 16
Results: Finmeccanica released a solid set of results, beating its November guidance on revenues, EBITA and net debt with FOCF coming in at the higher end of guidance. In 2015, Finmeccanica’s order intake amounted to €12.4bn, slightly lower than in 2014. Finmeccanica indicated that the financial thresholds for taking on new orders have been raised to ensure profitability in the future. In addition, the weakness in the Oil & Gas market, which represents 5% of Helicopter revenues, meant a softer order intake for the division. In Aeronautics, the order intake fell significantly as the Italian military postponed some orders. Overall, however, this was offset by improvements in the order intake in Defence Electronics and Security as well as a positive foreign exchange effect. As a result, FNC’s order backlog now stands at €28.8bn and offers more guarantees in terms of future profitability. In terms of revenues, FNC’s revenues amounted to €12.99bn, up 1.8% on 2014, mainly thanks to a more favourable €/$ exchange rate. Looking at the divisions, Helicopter revenues climbed 2.4% to €4.5bn with civil and military contracts compensating for the weakness in Oil & Gas, Selex ES was up 2.2% to €3.65bn mainly due to the stronger sterling, while DRS which benefited from the positive FX move in €/$ saw revenues grow by 15% to €1.6bn, Aeronautics revenues were roughly flat -0.8% at €3.12bn and, finally, Defence systems revenues fell by 7.3% to €459m as revenues from Underwater products fell. Overall, the group posted an EBITDA of €1.87bn, up 18.9% (EBITDA margin, at 14.4%, up 210bp vs FY14) compared with €1.57bn in 2014. Group EBITA grew by 23.3% to €1.2bn (€980m in 2014), resulting in a return on sales of 9.3% up 160bp on the previous year thanks to the efficiency-enhancement and cost reduction actions. With a reduction in below the line items from €383m to €324m (non–recurring items €112m, restructuring €114m and PPA €98m, c.50% of which are not cash), EBIT improved by 48.1% to €884m from €597m in 2014. As a result, the net result came in at €253m, up from €15m in 2014 (including a €50m additional finance charge in 2015 from the buy-back of bonds). Reported net result stood at €527m and included the capital from disposals. Finmeccanica reported a group free operating cash flow of €307m, up from €65m in 2014, as a result the improvement in cash from operations, an increase in dividends from JVs and a greater efficiency in investing. As a result of disposals in 2015 of the Transportation activities, group net debt fell by €684m to €3.28bn from €3.96bn at 31 December 2014. Outlook: The overall 2016 full year guidance is as follows: 2015 2016 Outlook New Orders (€bn) 12.4 12.2 – 12.7 Revenues (€bn) 13.0 12.2 – 12.7 EBITA (€m) 1,208 1,220 – 1,270 FOCF (€m) 307 300 – 400 Group net debt (€bn) 3.3 Lower than 3 Revenues are expected to be flat on an organic basis but decline on a reported basis due to changes in perimeter mainly from the disposal of Fata and the non-core business of DRS as well the deconsolidation of pass-through revenues from the B787 programme. EBITA is expected to continue to benefit from initiatives taken across Selex, DRS, as well as from Defence systems and Aeronautics, especially in the Aerostructures sub-segment. The high profitability in the Helicopter segment is expected to be sustained. The improvement in free operating cash flow should be supported by the improvement in group profitability as well a particular focus on working capital management and a continued efficiency in capex. The target net debt for 2016 stands at €3bn, bringing forward the target for 2017. Change in name to Leonardo: Finmeccanica has decided to change its brand name to Leonardo. Management felt that the company’s new phase in the history of the company is as one single operating company, focused on core Aerospace, Defence and Security, and the results suggests a turn around that warrants a new identity. The choice of Leonardo is obviously linked to Leonardo da Vinci which reflects the company’s Italian roots and fits with the objective of remaining an innovative engineering company in the future.
Industrial plan tracking nicely
09 Nov 15
Finmeccanica’s Q3 results highlighted the clear progress being made in delivery of the industrial plan revealed at the start of 2015. With operating profit improvements clearly coming through and good progress being made in the key areas of restructuring, the group confirmed its confidence for the financial year and revised EBITA expectations up to the top end of previous guidance (€1.13bn), plus an expected €50-60m FX benefit. With the recently announced completion of the transportation disposal to Hitachi, Finmeccanica is now focused on developing as a pure-play aerospace, defence and security group.
Guidance upgrade and disposals finalised
04 Nov 15
New orders reached €7.79bn due to a positive foreign exchange effect and despite a decline in Helicopters and Aeronautics. The order backlog now stands at €28.1bn, equivalent to 2.5 years of production. Revenues reached €9bn, up 4.6% over 9M 14. EBITA stood at €745m, up +45% (€515m 9M 14) meaning FNC achieved a ROS of 8.3% over 9M, a 230bp improvement on the same period in 2014. EBIT increased 84% to €599m (€325m 9M 14) thanks to a significant reduction in below the line items. The net result stood at €150m (-€54m 9M14). Net debt stands at €5.1bn, an improvement of €224m after 9M 14 but up from €3.96bn at year-end 2014 as a result of Finmeccanica's traditional cash flow seasonality which is heavily weighted towards Q4. After 9M, free operating cash flow stood at a negative €935m, i.e. much improved versus 9M 14 with €420m additional cash generated. Finmeccanica maintains its full-year guidance for revenues in the range of €12-12.5bn, net debt to stand at c.3.4bn following the finalisation of the disposal of the transportation business, and in addition management continues to expect FOCF to be positive in a range of €200-300m. The EBITA guidance however has been raised c.€1.13bn with FNC expecting an additional positive impact from FX of €50-60m, meaning that EBITA should stand at €1.18-1.19bn for FY 15.
Good news expected and delivered!
30 Jul 15
New orders amounted to €5.54bn, slightly above expectations. The order backlog now stands at €29.3bn or still c.2.5 years of production for the group. Revenues came in 4.6% above H1 14 at €5.97bn or an increase of €264m, mainly attributable to the appreciation of the US dollar and sterling against the euro. EBITA was a positive €450m, up 45% on H1 14 (€310m). Even excluding the exceptional €100m DRS charge in H1 14, the group made significant improvements through its on-going cost reduction plans. The group's ROS now stands at 7.5%, 210bp higher than last year. The group EBIT came in at €351m, up 93% (€182m in H1 14) as restructuring costs fell as well as non-recurring items. FOCF came in at a negative €743m, a €288m improvement on last year. As expected, the group's net debt came in at €4.8bn due to the group's seasonality. The guidance for 2015 has been confirmed.
The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.
16 Jan 17
We take a look at the rankings of the various countries in Africa that have a significant exposure to mining. We take the Transparency International corruption rankings as our starting point and modify these for exceptional geology and for current UK government travel warnings. Ghana, Botswana and Namibia come out as our top three, with Eritrea, Kenya and Zimbabwe at the bottom of our rankings.
Small Cap Breakfast
17 Jan 17
Global Energy Development (GED.L) — To be renamed Nautilus Marine Services. Schedule 1 from developer and seller of hydrocarbons and related products. Reverse takeover. Raising $10.5m via a convertible. Expected 9 Feb. Eco (Atlantic) Oil & Gas—TSX-V listed oil and gas exploration has announced its intention to float on AIM. Assets in Guyana and Namibia. Proposed £2m-£3m fundraise. Diversified Gas & Oil—According to LSE website first day of trading on AIM now expected for 30 January.
N+1 Singer - St Ives - Downgrade
19 Jan 17
Marketing activation has been impacted by further decline in grocery retail impacting profit by c£5m. Strategic The Company is also taking this opportunity to revise its guidance for Strategic Marketing as its recovery pace is not running at the planned target rate. PBT falls from N1Se £31.9m to £25m. The Company expects dividend to be held based upon lowered guidance and the implied cash flow performance. There do not appear to be any covenant issues. Forecasts and TP under review and downgrade to Hold. We expect the shares to test the 100p level.
N+1 Singer - Northern lights - Shining prospects for 2017
16 Jan 17
As the birthplace of Stephenson, Armstrong and Swan, the North East of England has a proud history of industrial and technological innovation. Despite local economic challenges, the region’s industrial heritage lives on through continuing success in high end engineering and technology. The recent takeovers of private equity backed SMD (subsea robotics) and Nomad Digital (wi-fi on the railways) are testament to this. The North East has also emerged as a leader in genetics and genomics with an enviable life sciences and healthcare infrastructure. Against this backdrop, we expect the region to continue to throw up attractive IPO candidates to build on the six new listings in the past three years. We expect 2017 to be far kinder to the existing portfolio of North East plcs than 2016 (a year to forget) with recent management changes one important theme for the new year. Our top picks are Hargreaves Services, Quantum Pharma and Zytronic (all N+1 Singer Corporate clients) and we are Buyers of Northgate and Grainger.
N+1 Singer - Morning Song 19-01-2017
19 Jan 17
Actual Experience (ACT LN) 2017 – a milestone year for revenue | Bagir Group (BAGR LN) Independent NED appointment to strengthen Board composition | Bioquell (BQE LN) Reassuring pre-close statement | Carador Income Fund (CIFU LN) Q4 dividend increased to 2.75c, 0.5c higher than forecast | FreeAgent (FREE LN) Contract with Royal Bank of Scotland | Halfords Group (HFD LN) Excellent Q3 update, special divi and confidence in FX mitigations | N Brown Group (BWNG LN) Robust peak trading with reversal of drag from older titles | NCC Group (NCC LN) Interims confirm underlying business sound | St Ives (SIV LN) Downgrade | Summit Therapeutics (SUMM LN) Dr David Roblin appointed Chief Operating Officer and R&D President | Wilmington Group (WIL LN) Acquisition – Further scaling of Healthcare