A robust performance in military rotorcraft and defence electronics offset problems in aerostructures and weak demand for offshore helicopters to help Leonardo to a 7% increase in first-half revenues to €6 billion ($6.7 billion).
The Italian group has also reported a strong first-half order intake, with orders up 34% compared with the same period last year. Sales successes included its €300 million deal to supply 13 M-345 military trainers to Italy, an AW101 agreement with Poland worth €380 million and a Spanish order for 23 NH90s – Leonardo is a shareholder in the tactical helicopter programme, along with Airbus and GKN.
Acknowledging a “good first half”, chief executive Alessandro Profumo noted that the company had received a “significant number of relatively small orders” – none worth more than €400 million – rather than a handful of major commitments. “Our recent strong intake is evidence of the strength of our products,” he said.
In recent years, Leonardo has rebranded and restructured its once-complex structure into three divisions – helicopters, defence electronics and security, and aeronautics, which includes its aerostructures activities, the former Alenia Aermacchi military trainer business, and its shares in the ATR joint venture and Eurofighter consortium.
Although deliveries of helicopters fell from 77 units in the first half of 2018 to 61 in the same period this year, a much higher proportion of military and government sales pushed revenues up 3.6% to just under €1.9 billion.
Defence electronics and security – which includes its US-based DRS unit – saw orders soar by more than half and revenues by 7.3% to almost €1.9 billion. The DRS business, a Pentagon contractor, is benefiting from a large “soft backlog”, said Profumo, in the 30 July results presentation.
In aeronautics, despite a rise in output, particularly Eurofighter deliveries to Kuwait, “softness” in demand for ATR turboprops – Leonardo builds the airframes for the joint venture – meant revenues were down 2.6 to just under €1.4 billion. However, Profumo says efficiency improvements in the aerostructures business – which also builds fuselage parts for the Boeing 787 and Airbus A220 – are reducing losses there.
“We know what we have to do to fix aerostructures,” says Profumo. “There are no problems that we don’t know how to fix. The house is in order.”
Leonardo expects to announce its first export customer for the M-345 by the end of the year, he adds.
Leonardo’s first-half earnings before interest, tax and amortisation was up 4% to €487 million.