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.
20 Feb 17
Hayward Tyler Group* (HAYT): Trading update and financial position (CORP) | Petra Diamonds (PDL): Interim results (BUY) | Gemfields* (GEM): Interim results (CORP) | Premaitha Health* (NIPT): Middle East momentum (CORP) | Sound Energy (SOU): Acquisition update and TE-8 well spud (HOLD) | Proactis* (PHD): Interim trading on track (CORP) | 7digital* (7DIG): Automotive contract win (CORP)
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.
21 Feb 17
Lighthouse Group* (LGT): Middle Britain growth (CORP) | Utilitywise* (UTW): Double-digit sales growth (CORP) | Trakm8* (TRAK): Earnings expectations cut again (CORP) | dotDigital* (DOTC): Myriad growth opportunities (CORP) | Artilium* (ARTA): Five-year Telenet deal secured and prepaid (CORP) | Netcall* (NET): Cloud investment pays off (CORP)
Emerging from the clouds
16 Feb 17
Rolls-Royce’s underlying performance in FY16 was ahead of both its own and market expectations. Media focus on the non-cash £4.4bn headline FX loss is missing what looks to be the basis for optimism. As the civil model starts to move from investment in engines for the A350 and A330neo into the aftermarket delivery phase over the remainder of the decade, we think cash flow is likely to improve, particularly if supported by an eventual recovery in Marine.
N+1 Singer - Small-cap quantitative research - New quality style screen + 11 quality focus stocks
09 Feb 17
We introduce our fourth and final style screen representing “quality”. This screens for stocks with the best combination of high returns on capital/equity, EBIT margins and operating cash-flow conversion rates. These criteria should help us monitor how strong underlying returns translate into share price performance over time and under varying market conditions. The screen selects the “best” 25 stocks from our universe of just over 500 stocks and, as usual, we focus on a shorter list of stocks we cover or otherwise know and believe to be particularly interesting. We provide brief investment summaries on these focus stocks on pages 4 – 9. We will monitor performance and refresh the screen in approximately 3-4 months time.
Taking the bull by the horns
15 Feb 17
Avon Rubber announced this morning that CEO Rob Rennie has left and been replaced with Paul McDonald, formerly managing director of Avon’s Dairy division. This news comes as a surprise and is likely to raise some questions over the CEO and CFO transition, with the CEO only being in post for just over a year. However, the group has appointed an executive already known to many who have followed the business, and as such should be seen as a good appointment with a track record of decisiveness and getting things done.