MILAN (Reuters) – Italian aerospace and defense group Leonardo expects free cash flow to more than double this year compared to 2021, as governments around the world increase military spending in response to the Russian invasion of Ukraine.
“The process of integrating and creating a European defense and increasing defense spending in the EU and neighboring countries could be accelerated, creating opportunities for companies operating in the sector,” the group said. in a press release on 2021 results.
He added that his exposure to operators directly affected by the sanctions against Russia was around 30 million euros ($32.97 million), with an order book with Moscow of around 25 million euros.
Exposure to Ukraine was negligible.
The state-controlled group said it was closely monitoring the geopolitical situation and was aligned with Italian government policies.
Last year, Leonardo announced free cash flow of 209 million euros and a 142% increase in net profit to 587 million euros, beating forecasts for the full year.
Revenue rose 5% to 14.1 billion euros, driven by sales in government and defense businesses, which accounted for 88% of the total.
“We confirm our objective to generate a cumulative cash flow of 3 billion euros over the period 2021-2025, with a significant increase in 2022,” said CEO Alessandro Profumo, adding that the group would revert to paying a dividend on the basis of its 2021 results.
This year, the operating free cash flow should amount to 500 million euros and the turnover should be between 14.5 and 15 billion euros.
All activities have returned to pre-pandemic levels except for the Aerostructures division, which is being restructured, the group said, adding that it saw signs of recovery in civil aeronautics.
Germany, which has long downplayed its military’s role in foreign policy, as well as Denmark and Poland have all said they will increase defense spending with war on their doorstep.
(Reporting by Francesca Landini in Milan; Editing by Keith Weir and Matthew Lewis)
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