Leonardo S p A : Results at 31 March 2021 (Comunicato stampa)

Results at 31 March 2021

Leonardo: revenues at € 2,790 million (+7.7% YoY), EBITA at € 95 million (+132% YoY). FOCF € -1,422 million improved for € 173 million YoY. Group Net Debt at € 4,640 million (+5.6%). These in summary are 1Q 2021 key performance indicators.

FY2021 Guidance confirmed. Continued confidence in medium-long term core business fundamentals.

Results in line with our plan

• Continued strength of military/governmental
• Strong backlog of € 36.4 billion
• Order intake of € 3.4 billion, less relying on large scale orders
• Book to bill at 1.2x
• EBITA of € 95 million, up 132%, with robust and higher profitability across the Group, besides aerostructures
• Cash flow, negative for € 1.4 billion, improving in line with plan and reflecting usual seasonality

Leonardo and HENSOLDT

• Strong industrial and strategic rationale
• Closer co-operation and complementary strengths
• Value creation through enhanced market access and key platform exposure
• Maintaining a solid capital structure also through disposals and DRS listing

FY 2021 Guidance confirmed

Confidence in medium/long term outlook

• Solid military/governmental
• Planned recovery actions in the civil side of the business
• Solid backlog and order intake
• Leveraging existing assets, technologies and transversal capabilities to catch new opportunities

Rome, 6 May 2021- Leonardo's Board of Directors, convened today under the Chairmanship of Luciano Carta, examined and unanimously approved results of the first quarter 2021.

The results for the first quarter of 2021 were in line with the expectation of a recovery in growth and an increase in profitability reported in the Integrated Report at 31 December 2020, showing a marked improvement in the Group's industrial performance; in the first quarter of 2020 this indicator was in fact particularly affected by the outbreak of the COVID-19 pandemic, which then gradually stabilised over the following months, also as a result of the measures put in place in order to ensure that the business could continue in full operation.

This trend shows the resilience of the military/governmental business, in a scenario that is still affected by the pandemic. Otherwise, the critical issues that have been reported in the civil aviation sector in recent months have been confirmed, in particular, Aerostructures experienced the

Leonardo, a global high-technology company, is among the top ten world players in Aerospace, Defence and Security and Italy's main industrial company. Organized into five business divisions, Leonardo has a significant industrial presence in Italy, the United Kingdom, Poland and the USA, where it also operates through subsidiaries that include Leonardo DRS (defense electronics), and joint ventures and partnerships: ATR, MBDA, Telespazio, Thales Alenia Space and Avio. Leonardo competes in the most important international markets by leveraging its areas of technological and product leadership (Helicopters, Aircraft, Aerostructures, Electronics, Cyber Security and Space). Listed on the Milan Stock Exchange (LDO), in 2019 Leonardo recorded consolidated revenues of €13.8 billion and invested €1.5 billion in Research and Development. The company has been part of the Dow Jones Sustainability Index (DJSI) since 2010 and has been named as sustainability global leader in the Aerospace & Defence sector for the second year in a row of DJSI in 2020.

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challenges associated with a fall in volumes and the consequent failure to absorb fixed costs, which led to a decline in results compared to the first quarter of 2020.

Alessandro Profumo, Leonardo CEO, stated "First quarter 2021 results are in line with our expectations when we recently set out our guidance for the full year. We have continued to achieve good order intake and our strong backlog has supported growing revenues. Our profitability has remained robust and our cash flow is improving, in line with plan. Our solid military and governmental business offset the impact of the Covid pandemic on the civil side. The acquisition of the 25.1% stake in HENSOLDT represents a long-term operation strengthening our portfolio in the strategic defence electronics business in sensor solutions. The investment and partnership is very exciting, giving us the opportunity for value creation through enhanced global market access, and increasing our competitiveness on key platforms. Our solid capital structure will be maintained also through disposals and DRS listing. We remain fully focused to create value sustainably for all our stakeholders".

Key Performance Indicators

	Group			1Q 2020		1Q 2021			Chg.		Chg. %				FY 2020
	(Euro million)
	New orders	3,421	3,421		-		n.a.	13,754
	Order backlog	37,000	36,414		(586)	(1.6%)		35,516
	Revenues	2,591	2,790		199	7.7%		13,410
	EBITDA(*)	159	202		43	27.0%		1,458
	EBITA (**)	41	95		54	131.7%		938
	ROS	1.6%	3.4%			1.8 p.p.				7.0%
	EBIT (***)	30	75		45	150.0%		517
	EBIT Margin	1.2%	2.7%			1.5 p.p.				3.9%
	Net result before	(59)	(2)		57	96.6%		241
	extraordinary transactions
	Net result	(59)	(2)		57	96.6%		243
	Group Net Debt	4,396	4,640		244	5.6%		3,318
	FOCF	(1,595)	(1,422)		173	10.8%		40
	ROI	1.8%	4.1%			2.3 p.p.				11.3%
	Worforce	49,180	49,780		600	1.2%		49,882

1. EBITDA this is EBITA before amortisation, depreciation (net of those relating to goodwill or classified among "non-recurring costs") and adjustments impairment.

1. EBITA is obtained by eliminating from EBIT the following items: any impairment in goodwill; amortisation and impairment, if any, of the portion of the purchase price allocated to intangible assets as part of business combinations, restructuring costs that are a part of defined and significant plans; other exceptional costs or income, i.e. connected to particularly significant events that are not related to the ordinary performance of the business.

1. EBIT is obtained by adding to earnings before financial income and expense and taxes and taxes the Group's share of profit in the results of its strategic Joint Ventures (GIE-ATR, MBDA, Thales Alenia Space and Telespazio).

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Commercial Performance

• New Orders, amounted to EUR 3,421 million in line with the first three months of 2020. The Defence Electronics and Security sector recorded an excellent performance in terms of sales both in the European and the US components. The Helicopters business segment showed a downturn, which was affected by a major order that had been gained during the period under comparison, while in the Aeronautics sector the expected fall in new orders for the civil aviation segment was almost entirely offset by the performance recorded in the Aircraft Division
• Backlog, amounted to EUR 36,414 million, ensures a coverage in terms of equivalent production equal to more than 2.5 years

Business Performance

• Revenues, amounted to EUR 2,790 million, showed, during the first quarter of 2021, a significant increase in all business sectors, which was only partially offset by the expected reduction in volumes in the Aerostructures segment, which continued to be adversely affected by a decline in production rates on the B787 and ATR programmes
• EBITA, amounted to EUR 95 million, (with a ROS of 3.4%) recorded a significant total growth rate (132%), with a considerable increase in all business segments, except for Aerostructures, which was due to higher volumes of revenues and the improvement in profitability and which was also contributed to by a higher share provided by all the strategic Joint Ventures
• EBIT, amounted to EUR 75 million, showed a substantial increase (150%) compared to the first quarter of 2020 (€ 30 mln), despite the impact of the costs that the Group is still sustaining in order to comply with the Government's instructions in the matter of COVID-19, including to protect the health of its workers.
• Net Result before extraordinary transactions, which posted a loss of EUR 2 million, equal to Net Result, benefitted from the EBIT performance, as well as from lower financial costs, net of any related tax effect

Financial performance

• Free Operating Cash Flow (FOCF), negative for EUR 1,422 million showed a significant improvement (€173 mln), despite the continuation of the COVID-19 pandemic emergency. This result, although confirming the usual interim trend that is characterised by significant cash absorptions in the first part of the year, reflects the expected positive trend towards improvement
• Group Net Debt, of EUR 4,640 million, showed an increase compared to 31 December 2020 (€
  3,318 mln) mainly as a result of the negative FOCF performance, reflecting the usual seasonality

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2021 Guidance

In consideration of the results achieved in the first quarter of 2021 and of the expectations for the quarters to follow, we confirm 2021 Guidance disclosed in March 2021. The estimates for the year 2021 together with 2020 actual results are summarized below

			FY2020A		FY2021
				Guidance
New Orders	(€ bn)	13.8		ca. 14
Revenues	(€ bn)	13.4		13.8-14.3
EBITA	(€ mln)
938		1,075-1,125
FOCF	(€ mln)	40		ca. 100
Group Net Debt	(€ bn)		3.3		ca. 3.2*

Assuming forex exchange rate €/USD at 1.18 and €/GBP at 0.90 * Assuming no dividend payable in respect of 2020 results

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SECTOR PERFORMANCE

1Q 2020	New			Order
		Backlog at			Revenues			EBITA			ROS
(Euro million)	Orders
		31.12.2020
Helicopters	1,486		12,377		704		18		2.6%
Defence Electronics & Security	1,473		13,449		1,358		80		5.9%
Aeronautics	644		10,696		644		(17)		(2.6%)
Space	-		-		-		(2)			n.a.
Other activities	36		87		86		(38)		(44.2%)
Eliminations	(218)		(1,093)		(201)		-			n.a.
Total	3,421		35,516		2,591		41		1.6%
1Q 2021	New			Order			Revenues			EBITA			ROS
(Euro million)	Orders			Backlog
Helicopters	855		12,401		792		31		3.9%
Defence Electronics & Security	2,133		14,357		1,494		127		8.5%
Aeronautics	621		10,760		611		(13)		(2.1%)
Space	-		-		-		3			n.a.
Other activities	56		107		97		(53)		(54.6%)
Eliminations	(244)		(1,211)		(204)		-			n.a.
Total	3,421		36,414		2,790		95		3.4%
												.
Change %	New			Order			Revenues			EBITA			ROS
Orders			Backlog
Helicopters	(42.5%)		0.2%		12.5%		72.2%			1.3 p.p.
Defence Electronics & Security	44.8%		6.8%		10.0%		58.8%			2.6 p.p.
Aeronautics	(3.6%)		0.6%		(5.1%)		23.5%			0.5 p.p.
Space	n.a.		n.a.		n.a.	250.0%			n.a.
Other activities	55.6%		23.0%		12.8%		(39.5%)			(10.4) p.p.
Eliminations	n.a.		n.a.		n.a.		n.a.		n.a.
Total	n.a.	2.5%		7.7%		131.7%			1.8 p.p.

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