Leonardo to focus on digitalisation, AI, and security in next five years

Leonardo’s focus on technology: Italy's defence group Leonardo has announced its ambitious five-year plan, prioritising investments in digitalisation, artificial intelligence, and interconnected platforms to boost security operations. CEO Roberto Cingolani underlined the need to adapt to a shifting global security landscape, intending for Leonardo to proactively shape the European defence sector's evolution.

Outlined in its 2024-2028 industrial plan, Leonardo aims to reinforce its core businesses in helicopters, electronics, and aircraft, while expanding into cybersecurity and space sectors, identified as crucial for future defence strategies. The market responded positively, with Leonardo's shares surging by 6.8 per cent in morning trading, reflecting analysts' approval of the profit and cash flow forecasts.

The state-controlled conglomerate projects a strong growth trajectory, forecasting orders totalling 105 billion euros by the end of 2028, with a compound annual growth rate of 4 per cent. Revenues are expected to climb by an average of 6 per cent annually during the period, reaching 95 billion euros, while core profits are anticipated to soar to 2.5 billion euros, nearly doubling from the current year's projections.

Moreover, Leonardo anticipates a substantial increase in free operating cash flow (FOCF), set to nearly double from 0.7 billion euros in 2024 to 1.35 billion euros by the end of the plan. CEO Cingolani underscored the strategic imperatives of the plan, underlining a focus on unlocking Leonardo's growth potential, achieving double-digit profitability by 2026, and doubling FOCF by the plan's conclusion.

Cingolani, a former government minister appointed CEO in May, has been driving efforts to foster alliances with other European defence entities, capitalising on the region's expanding military budgets in a more collaborative and streamlined manner. He outlined plans for substantial digitalisation and product/service rationalisation across the group, with expected gross savings of 1.8 billion euros over the plan's duration.

(With Reuters inputs)