Leonardo 1H 2025 presentation slides: Double-digit growth and upgraded guidance

Introduction & Market Context

Leonardo (BIT:LDO), the Italian aerospace and defense giant, presented its first half 2025 results on July 30, 2025, showcasing strong financial performance and strategic positioning in an evolving defense ecosystem. The company is capitalizing on increased NATO and European defense spending, with particular focus on expanding its capabilities across air, land, maritime, and cyber domains.

The presentation, delivered by CEO Roberto Cingolani and CFO Alessandra Genco, highlighted Leonardo’s progress in executing its industrial plan while adapting to emerging market opportunities driven by geopolitical tensions and technological advancements.

Financial Performance Highlights

Leonardo reported impressive financial results for the first half of 2025, with double-digit growth across key metrics. Revenue increased by 12.9% to €8.9 billion compared to the same period last year, while EBITA grew by 15.0% to €581 million.

As shown in the following chart of Leonardo’s 1H 2025 results, new orders rose by 9.7% to €11.2 billion, and the company significantly improved its financial position by reducing net debt by 27.6% to €2.2 billion:

The company’s efficiency plan is progressing well, targeting approximately €1.8 billion in savings from 2024 to 2028. In the first half of 2025, Leonardo achieved €142 million in savings, representing about 65% of the total expected for the year. Procurement remains the key driver, accounting for 76% of the savings, followed by business disposal (14%) and corporate & travel expenses (10%).

The following chart illustrates the breakdown of efficiency savings and progress against targets:

Strategic Initiatives

Leonardo is pursuing several strategic initiatives to strengthen its market position and drive future growth. The company has established key joint ventures in strategic areas:

1. LBA Systems: A joint venture with Turkish defense company Baykar, focusing on drone manufacturing with multiple sites across Italy. The JV agreement was signed in June 2025, with operations expected to begin in the second half of the year.

The Italian footprint of LBA Systems is illustrated in the following map:

2. LRMV (Light Reconnaissance and Medium Vehicles): Leonardo provided an update on the delivery schedule for the Italian Ministry of Defense, with plans to deliver 5 AICS units and 2 MBT units by the end of 2025, ahead of the expected deadline.

The detailed delivery schedule through 2040 is shown below:

3. GCAP (Global Combat Air Programme): Leonardo announced the launch of Edgewing Systems, a joint venture with BAE Systems and Japan Aircraft Industrial Enhancement Co. Ltd. The JV will lead the design and development of next-generation combat aircraft expected to enter service in 2035.

Key milestones for the Edgewing Systems joint venture are outlined below:

Capacity Boost Program

A significant focus of Leonardo’s presentation was the Capacity Boost program, designed to address increased demand across three divisions that represent approximately 70% of the company’s revenue: Aircraft, Helicopters, and Defence Electronics.

The program aims to enable growth from €17.8 billion in 2024 to a projected €24 billion by 2029, with the highest growth rate expected in the Aircraft division (9.7% CAGR from 2024-2029).

The following chart shows the revenue breakdown by division and projected growth rates:

Leonardo is implementing a comprehensive approach to mitigate the impact of superior growth, focusing on five key intervention areas: commercial focus & product portfolio rationalization, efficiency boost, capacity growth, people attraction & development, and an effective and reliable supply base.

The company has identified 177 specific projects across these areas, as illustrated in the following chart:

M&A Activities and Inorganic Growth

Leonardo has been actively pursuing M&A opportunities, addressing 24 targets in the last 15 months with a focus on cyber & AI, space domains, and capacity boost. The company has signed three acquisitions, including strategic investments in cyber security companies SSH (24.55% stake for €20 million) and Axiomatics (100% acquisition valued at €33 million) to strengthen its "zero trust" security proposition.

A significant recent acquisition is Iveco Defence, which strengthens Leonardo’s position in the land domain. The land defense market is expected to exceed €100 billion by 2030 and represent approximately 40% of total EU defense investments.

The strategic rationale for expanding in the land domain is outlined below:

Iveco Defence brings substantial scale to Leonardo’s land capabilities, with FY2024 revenue of €1.133 billion and adjusted EBITDA of €129 million (11.4% margin). The company has a diverse geographic footprint with 47% of revenue from Europe (excluding Italy), 25% from Italy, and 12% from North America.

Key financial and operational data for Iveco Defence is summarized below:

Forward Guidance

Based on the strong performance in the first half of 2025, Leonardo has upgraded its full-year guidance for new orders, free operating cash flow, and net debt. The company now expects new orders to reach €22.25-22.75 billion, up from the previous guidance of €21 billion, representing a 7.1% increase.

Free operating cash flow guidance has been raised to €920-980 million, up 9.2% from the previous €870 million target. Revenue and EBITA guidance remain unchanged at €18.6 billion and €1.66 billion, respectively.

The updated guidance and growth trajectory are illustrated in the following chart:

Leonardo also addressed potential risks related to tariffs, noting that defense and governmental sales are exempt. The company estimates a maximum impact of $10-20 million in 2025 and 2026 from tariffs on US civil helicopter operations, before considering mitigation actions. However, a recent EU-US agreement announced on July 27 appears to exclude civil aerospace from tariffs, though final terms are yet to be confirmed.

Conclusion

Leonardo’s first half 2025 results demonstrate strong momentum across its business, with double-digit growth in revenue and EBITA. The company is successfully executing its industrial plan while positioning itself for future growth through strategic joint ventures, capacity optimization, and targeted acquisitions.

The focus on efficiency and operational excellence before scaling up capacity reflects a disciplined approach to growth, as emphasized by CEO Roberto Cingolani’s statement that the company aims to be "clean, lean, agile." With upgraded guidance and a clear strategic direction, Leonardo appears well-positioned to capitalize on increasing defense spending across NATO and European markets.

Full presentation:

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