Italy’s Leonardo says well-placed for surge in military spending

ROME (Reuters) -Italian aerospace and defence group Leonardo confirmed its 2022 forecast on Thursday, saying it was well-positioned for increased military spending, after reporting a first-quarter rise in orders and core profit.

Leonardo Chief Executive Alessandro Profumo said in April that a potential increase in spending after Russia’s invasion of Ukraine could add to growth estimates.

Orders from January to March were up 10.8% year-on-year to 3.8 billion euros ($4 billion) and earnings before interest, tax and amortisation (EBITA) were up 39% to 132 million euros.

The volume of new orders has continued to increase significantly, as well as revenues and EBITA in all its main business areas, Leonardo said in a statement.

Revenues were driven by a strong performance of the state-controlled group’s helicopter business and by higher production volumes at its aircraft unit, it added.

“The first quarter of 2022 showed a good start to the year and results coherent with Leonardo’s growth path, which had already restarted in the previous financial year,” Profumo said.

He added that the group was “well-positioned” in both the European defence co-operation programmes and in the markets which have committed large increases in military budgets.

The conflict in Ukraine, which Russia calls a “special military operation”, has forced a rapid rethink in Europe over defence strategies and led a string of countries to promise large increases in military budgets.

Leonardo is forecasting 15 billion euros in new orders and an EBITA of 1.18-1.22 billion euros at the end of this year. It is expecting free cash flow to be about 500 million euros at end-2022.

($1 = 0.9518 euros)

(Reporting by Giulia Segreti; Editing by Francesca Landini and Alexander Smith)