The Board of Directors of Leonardo, under the chairmanship of Stefano Pontecorvo, unanimously approved the update of the Industrial Plan for the period 2025-2029.

Leonardo presents today to the financial community the update of the Industrial Plan for 2029, announced in March 2024, including medium-term targets.

The advancement of the Industrial Plan, which aims to develop the next generation of technologies for global security, is based on the massive digitalization and rationalization of products and services, efficiency initiatives, and cost reduction at the Group level – a gross saving of €1.8 billion over the course of the plan, of which €191 million have already been achieved in 2024. The alliances developed with other defense players are seen as a key factor in accelerating the competitiveness and profitability of the group in the current landscape.

Update on the Industrial Plan: Strengthening the Core Business and Paving the Way for Leonardo's Future

Leonardo’s goal of leading the transition towards the development of interoperable multidomain technologies for global security, updating the concept of traditional defense in line with the current technological evolution driven by the rise of digital technologies, will be pursued by further strengthening organic growth, initiated in 2024, and developing all inorganic growth activities, starting with alliances and international projects.

The most significant actions for reinforcing the core business (portfolio rationalization, digitalization, efficiency improvements) include advancing the digitalization process, continuing the efficiency plan, and seeking new strategic partnerships in the aerostructures sector.

Digitalization will impact both internal processes and the development of new products and services to expand Leonardo’s portfolio. Internally, the main focus will be on production, with optimization and efficiency solutions, advanced product lifecycle management, and a shared cloud for planning. The development of the Digital Twin to optimize the entire product lifecycle, utilizing advanced AI systems and simulation, represents the most innovative phase in the manufacturing sector.

Regarding the reinforcement of its solutions, interoperability stands out in the development of systems in the context of GCAP (Global Combat Air Programme) like ISANKE (Integrated Sensing and Non-Kinetic Effects) and ICS (Integrated Communication System), which are the most advanced forms of digital continuity in the aeronautical sector. The AI Dynamic Cross Domain Command and Control encompasses digital capabilities to achieve full multidomain interoperability. Additionally, the development of custom digital services for post-sales support will further enhance the offering.

During the first 12 months, the acceleration of the efficiency plan resulted in savings of €191 million, compared to the €150 million originally forecasted for March 2024. The target remains confirmed at €1.8 billion within the Plan’s time horizon.

Creating a global player in the Aerostructures sector, capable of competing in the new post-COVID competitive landscape, involves seeking a new alliance to support a solid and sustainable long-term business. The ambition is to become a reference partner for OEM (Original Equipment Manufacturer) operators, expanding business into new markets.

The future of Leonardo, focused on creating new interoperable multidomain technologies that form the basis of global security, aims to consolidate and further accelerate both its capabilities and alliances, while developing potential ones. The progress made in the first 12 months is particularly promising.

The most representative initiatives are:

- The New Space Division of Leonardo, which aims to centralize all initiatives within the group and offer E2E (end-to-end) solutions. In a global space market expected to grow by approximately 7% annually until 2030, the Space Division will seize new opportunities created by advanced data analysis systems and emerging military and governmental needs (intelligence). This also marks a new phase within the Space Alliance. The data constellation configuration resulting from this review, along with the development of new data valorization models, will generate an estimated revenue growth of €1.3 billion over the plan period.

- Leonardo Rheinmetall Military Vehicles, the joint venture, established to develop the most advanced and next-generation technologies related to the multi-domain MBT (Main Battle Tanks) derived from the Panther platform and the AICS, Armoured Infantry Combat Systems derived from the Lynx platform. The program is expected to generate an estimated upside of approximately €1 billion over the course of the plan, for the production of 1,050 AICS units and 272 MBT units by 2040, considering only the contract for the Italian army.

- Leonardo-Baykar JV in the UAV (Unmanned Aerial Vehicles) sector, which aims to create a global player in this promising and rapidly growing segment. The partnership will leverage Baykar’s advanced unmanned platforms, which have demonstrated operational effectiveness in international markets, and Leonardo’s expertise in mission systems, payload design, and aviation certification in Europe. Both companies, currently involved in the development and production of UAV systems, electronic systems, payloads, C4I (Command, Control, Communications, Computers, and Intelligence), artificial intelligence, integrated mission systems, and space equipment and services, will ensure interoperability within multidomain ecosystems. The program is expected to generate an estimated upside of €600 million over the plan period.

- GCAP for the development of the next generation of fighters, together with JAIEC and BAE Systems, with the possibility of evaluating the inclusion of new partners to accelerate the development of the program. Leonardo brings its capabilities in electronics and digitalization to the program, particularly in the area of combat systems (EW / Radar multi-mission systems and multi-sensor & multi-spectral data fusion).

- The new Leonardo Hypercomputing Continuum (LHyC) Line of Business, established to develop the full potential of digital technologies, AI, and HPC to improve Leonardo’s entire value chain, from engineering simulation to generative AI predictive systems, to satellite image analysis. The market potential for these solutions spans from AD&S to energy, healthcare, transportation, financial services, and public administrations. The program is expected to generate an estimated upside of cumulative orders equal to €230 million over the plan period.

These initiatives are expected to contribute significantly to Leonardo’s growth, with cumulative orders projected at €5.4 billion and cumulative revenues at €3.1 billion over the plan period.

The revenue growth trajectory, forecast to reach €24 billion by 2029 - including the upside from new initiatives - will be driven by increased capacity in delivering the products and solutions developed by Leonardo. A dedicated program will be launched to reach full potential capacity and improve profitability within the Industrial Plan timeframe. The goal of the Capacity Boost program is to address the so-called “new normal,” characterized by the shift from the concept of Defense to Global Security – requiring Governments to strengthen critical infrastructures using innovative technologies – in a dual-use perspective.

On the human capital front, Leonardo aims to attract talent in the key competencies of the future, such as quantum technologies, Digital Twin, High-Performance Computing, and AI, to master emerging technological trends. Specific recruitment plans will focus on bringing in System and Software Engineers to support the growth of the Space sector, resources with engineering and project management skills to develop the GCAP program, and the digital innovation team will be strengthened with specialists to accelerate the growth of the Cyber sector. Leonardo’s talent development plan includes the launch of flexible training programs - focused on management approaches and soft skills - to address an increasingly complex market environment. In particular, AI-based learning tools and platforms will be introduced to support skill alignment, with the creation of personalized development paths.

Divisions Highlights

The Plan will focus on the capabilities of each business segment. For the Divisions, Leonardo’s goal is to strengthen the core business and pave the way for the broader challenge of global security.

- Electronics: Become a global player in Defense Electronics by increasing competitiveness, investing in technology, streamlining the product portfolio by focusing on core offerings, and leveraging international partnerships. Over the course of the Plan, the Electronics Division expects growth in orders, revenues, and EBITA of 6%, 8.5%, and 13%, respectively.

- Helicopters: Strengthen the position as a global player in the civil sector and become a key player in the military sector by increasing the conversion of orders into revenues and boosting product development to reach a leadership position in tilt-rotor technology, considered the most viable and mature by leading military institutions. Over the course of the Plan, the Helicopters Division expects growth in orders, revenues, and EBITA of 3%, 6%, and 7.4%, respectively.

- Aircraft: Ensure a leading role in major international cooperation programs, sustain high profitability, and increase competitiveness through the update of the product portfolio. Over the course of the Plan, the Aircraft Division expects growth in orders, revenues, and EBITA of 12%, 8%, and 4%, respectively.

- Aerostructures: Overall challenging business context due to prolonged gap between workload and industrial capacity, compounded by high inflationary pressure. Developed and launched new industrial plan including multiple improvement levers such as business diversification, revision of make / buy policy, enhancement of industrial efficiency and supply chain restructuring. Over the course of the Plan, the Aerostructures Division expects growth in orders and revenues of 15% and 16%, respectively, with EBITA breakeven expected by the end of 2028.

- Cyber: Capitalize on the accelerating demand to increase size through both organic and inorganic growth, acquiring distinctive technologies with the aim of becoming a key European player. Over the course of the Plan, the Cyber Division expects growth in orders, revenues, and EBITA of 14%, 15%, and 30%, respectively.

- Space: Consolidate activities in a new Division and leverage existing capabilities to become a European leader in high-value-added segments, following an organic growth path to be integrated with inorganic levers. Over the course of the Plan, the Space Division expects growth in orders, revenues, and EBITA of 9%, 10%, and 13%, respectively.