Leonardo SpA
(OTCPK:FINMY)
$
33.66
+0.060 (+0.18%)
Market Cap: 38.84 Bil
Enterprise Value: 44.30 Bil
PE Ratio: 28.96
PB Ratio: 3.47
GF Score: 80/100 
Half Year 2026 Leonardo SpA Earnings Call Transcript
Jul 31, 2026 / 12:00PM GMT
Release Date Price:
$31.58
(+0.61%)
Key Points
Positve
- Orders surged 40% year-over-year in H1 2026, driven by strong demand across all divisions, including major contracts like the UK NMH helicopter order and M346 jets for Austria and Italy.
- Profitability improved significantly, with return on sales up 110 basis points to 7.6% and adjusted net income rising 74%, leading to an upgraded EBITDA guidance of €2.21 billion, achieving double-digit ROS a year ahead of plan.
- Free operating cash flow improved 45% year-over-year despite one-off cash outflows for NH90 litigation and higher taxes, reflecting better working capital management and operational efficiency.
- The acquisition of IVECO Defense Vehicles is performing well, contributing €6 billion to backlog and €0.4 billion in revenues in Q2, with integration on track and a strong order pipeline for the year.
- Strategic initiatives are advancing, including the GCAP program with Canada joining as an observer, the Michelangelo air defense project with a demo planned by year-end, and the finalization of the Leonardo Bikar JV for land systems.
- Aerostructures is showing significant improvement, with revenues up 44% and losses reduced by €50 million, driven by higher production rates on the B7A7 program, moving closer to breakeven.
- The company raised its full-year guidance for orders to €28.2 billion and free operating cash flow to €1.37 billion, reflecting strong commercial momentum and confidence in execution.
- Cyber and Space divisions are growing strongly, with cyber revenues up 17% and space up 6%, benefiting from positive program mix and operational efficiency.
- The balance sheet remains solid, with net debt of €3.2 billion (excluding JV cash) fully compatible with leverage targets, and the DRS acquisition is within the planned capital allocation.
- The CEO expressed optimism about the structural long-term defense spending trend, positioning Leonardo to benefit from its diversified portfolio across platforms, electronics, and new domains like cyber and space.
Negative
- Aerostructures remains a loss-making business, with an additional €20 million loss expected in H2 2026, and breakeven is not expected before 2028, despite progress on production rates.
- The order intake in H2 2026 is expected to slow significantly compared to H1, as the first half benefited from several jumbo orders, and the guidance implies a more moderate pace ahead.
- The Gulf region's geopolitical situation has led to lower activities in the aeronautics division, reducing Q2 revenues, though the impact is described as not material for the full year.
- The potential divestment of IVECO's truck business to Rheinmetall remains uncertain, with only a 'gentleman's agreement' and no binding commitment, leaving strategic options open.
- The Bromo space JV faces antitrust complexities, with the filing process expected to be lengthy and potentially delayed by external factors, despite efforts to accelerate it.
- The GCAP program faces pressure to bring forward the entry into service date, which could be challenging and may require modulating requirements, with the window for adding new partners closing.
- The company is incurring higher taxes as it has fully utilized past tax losses, leading to a €100 million increase in tax payments in H1 2026, which could pressure future cash flows.
- Non-recurring costs in H1 2026 include M&A-related expenses and non-cash write-offs, with full-year costs expected around €100 million, potentially impacting profitability.
- The helicopter division's growth is moderating to 4% in 2026 after strong growth in prior years, and profitability improvements are expected to be gradual, not immediate.
- The US market for the M346 trainer jet remains highly competitive, with only one other competitor, but the outcome is uncertain and the path to securing orders is still challenging.
Claudia Introvigne
Leonardo SpA - Director - Investor Relations & Market Analysis
Welcome everybody and thank you for joining us in our presentation of Leonardo's first half results.
My name is Claudia Entrovina and I'm the Investor Relations Director here in Leonardo. I'm really pleased to have here with me today Lorenzo Mariani, our CEO and General Manager and Giuseppe Auriglio, our CFO.
They will do a presentation of our strategy results and guidance. Then we will have a Q&A session. So let's start. I will hand over to Lorenzo.
Lorenzo Mariani
Leonardo SpA - Chief Executive Officer & General Manager
Thanks, Claudia, and thanks, everybody.
It's my first presentation of results as the CEO. Of Leonardo and of course, I'm happy and proud to be here today with you, with all of you.
Spent nearly all of my professional life in Leonardo Group, former Filmeccanica.
And I must say that today we are in a completely different and better group, not only if we compare it to what it was 20 or 25 years ago, but
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