Leonardo still keen to list DRS unit as first-quarter core profits jump

MILAN (Reuters) – Italian defence group Leonardo said on Thursday it still plans to list its U.S. unit DRS after reporting a 132% jump in first-quarter core profit.

FILE PHOTO: A logo of defence group Leonardo is pictured on their booth during the European Business Aviation Convention & Exhibition (EBACE) in Geneva, Switzerland, May 22, 2017. REUTERS/Denis Balibouse

The conglomerate said earnings before interest, tax and amortisation (EBITA) came in at 95 million euros ($114.45 million) between January and March.

First-quarter revenue rose 7.7% year-on-year, supported by government and military demand, while civil business was weak because of the protracted negative impact of the pandemic.

In particular, Leonardo’s aerostructures division, which produces parts of aircraft for Boeing and Airbus, recorded a fall in volumes and a decline in results compared to the first quarter of 2020.

In a conference call with analysts, Leonardo CEO Alessandro Profumo said, however, he was less pessimistic on the business compared with some months ago.

On the strategic front, the group said it hoped to improve further its access to the global defence market with the recent acquisition of a 25.1% stake in German military sensor maker Hensoldt.

Profumo added the group was not under pressure on the financial front after spending around 600 million euros for the acquisition.

“Our solid capital structure will be maintained also through disposals and the listing of (the group’s U.S. unit) DRS,” he said.

Leonardo withdrew a planned listing of DRS in March citing adverse market conditions that had prevented an adequate valuation of the unit.

It did not give a new timetable for the listing but said it was “fully committed to the transaction when market conditions are more favourable”.

In March the group said it aimed to raise around $700 million from the sale of a 22% stake in DRS.

Among non-core business that Leonardo aimed to sell, Profumo cited the automation business, which employs around 400 workers in Italy.

The group confirmed its full-year guidance that points to a core profit of between 1.075 billion and 1.125 billion euros and a fall in net debt to 3.2 billion euros.

($1 = 0.8301 euros)

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