Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on FINMECCANICA SPA. We currently have 6 research reports from 2 professional analysts.
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More focused and more efficient
17 Mar 17
Leonardo released satisfactory results in 2016 including the distribution of a dividend of €0.14 for the first time since 2011 thanks to much higher FCF. The results show a mixed performance between the activities at the top-line, but the bottom-line benefited from the decrease in extraordinary items and in investments. The group’s estimates for the future are flat on the revenue side but the trend of an improvement in margins should continue as in 2016.
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.
N+1 Singer - T. Clarke - Strong conclusion to FY16, record order book
28 Mar 17
After significant upgrades at the time of the full year update (PBT forecast +43% FY16; +14% FY17), today’s results are c.4% ahead of our expectations at the PBT level and show strong growth on the prior year (PBT +48%). All regions achieved positive growth in revenue. The outlook statement refers to a still growing order book (£350m at the end of February vs. £330m at the year end) and the strength of recent trading, with London & the South East and Scotland said to be particularly positive. The Group has reiterated its ambitions to improve margins, but we have not incorporated this into our forecasts at this stage. We have nudged up our FY’17 forecasts (PBT +5%) and introduced FY’18 forecasts that imply 2% PBT growth. Despite the well justified bounce in the share price, the shares still trade at a significant discount to the peer group (7.6x FY17 PE, 4% yield).
Panmure Morning Note 29-03-2017
29 Mar 17
We are cutting our recommendation to HOLD as we see little upside from current levels given the lack of positive surprises in today’s trading update. Multiples of 4.4x 2017 sales and 17x 2017 EBITDA imply an expectation of at least slightly exceeding expectations. We had assumed that acquisitions will provide the momentum until organic investments deliver. However, acquisitions are proving elusive and excess cash is diluting returns. Moreover, our forecast relies on at least one order in vehicle simulator market, which has yet to be announced. The management has shown that it can use the financial markets to raise equity but it now needs to show that it can deploy excess equity productively.
N+1 Singer - Severfield - Strong H2 drives upgrades; CEO temporarily steps down due to ill health
28 Mar 17
Severfield’s trading update highlights that trading during H2 was strong and the Group now expects results to be ahead of expectations. Cash flow performance has been similarly strong with net funds at the year end also expected to be ahead of expectations. The strong performance was driven by both a better than expected revenue performance and better than expected growth in the operating margin. We expect to increase our FY16 PBT forecasts by c.9% to around £19.5m. In addition, we are disappointed to see that Ian Lawson (CEO) has taken a temporary leave of absence due to physical ill health. John Dodds (non-executive Chairman) will step up to Executive Chairman on an interim basis and Alan Dunsmore (FD) has agreed to assume the role of CEO on a similar basis. This should ensure the continuity of the business whilst Ian is recovering. The outlook for Sevefield remains positive and the Group has reiterated its medium term target to double PBT from £13.2m in FY16 by FY20. We remain positive on Severfield (one of our best ideas for 2017) and continue to see clear potential for it to outperform its medium term targets.
28 Mar 17
ClearStar* (CLSU): Building a background for growth (CORP) | Sound Energy (SOU): TE-8 results (HOLD) | LiDCO* (LID): 2017 should be a transformative year (CORP) | Proteome Sciences* (PRM): FY 2016 in line. Moving towards breakeven (CORP) | Fulcrum (FCRM): Significant market potential, rising margins and a strong balance sheet (BUY) | Mortgage Advice Bureau (MAB1): Strong and growing intellectual property (BUY) | 7digital* (7DIG): Open offer result (CORP)