Leonardo banks on space, cybersecurity, AI for double-digit growth – Defense News

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ROME — Italy’s Leonardo has promised double-digit order and revenue growth by 2028 with a new five-year plan emphasizing investments in space, cybersecurity and artificial intelligence, as well as corporate streamlining.

The state-controlled defense giant predicted that by 2028 its new annual order tally will rise by 16.5% to €22.6 billion ($24.7 billion) from this year’s expected €19.4 billion, while revenue will soar 27% to reach €21.3 billion.

In a presentation to analysts and reporters in Rome, the firm predicted its defense-related cybersecurity work would rise fourfold in the period, while its space revenue would increase from €800 million last year to €1.4 billion by 2028.

CEO Roberto Cingolani said a new space division was being set up and due diligence was being carried out for a dozen potential small acquisitions in the space, cyber and unmanned fields.

“The world geopolitical scenario calls for a new global security paradigm, where we aim to play a proactive role in the evolution of the European defense sector,” Cingolani said in a statement.

The CEO promised a greater use of AI, high-powered computing and digitalization across the firm’s divisions, sparking communication between managers “that have never talked to each other.”

Meanwhile, the firm will make €1.8 billion in savings over the five-year period by tightening up on supplier payments, slimming down its corporate HQ and reducing the 100-120 million euro annual travel budget of staff.

A review of Leonardo’s electronics products to identify non-performing items could lead to the scrapping of 20% of them, Cingolani said.

The CEO said the firm was ending its five-year involvement in Skydweller, a U.S.-Spanish program to develop a the world’s first fully solar powered unmanned aircraft.

“It’s a €25 million program that can be easily replaced by a €100,000 aerostat balloon,” he said.

Shares in Leonardo rose on March 12 after the plan was announced, continuing an upward trend reflecting the boom in defense stocks following Russia’s invasion of Ukraine.

“There are still margins for growth, the company’s market capitalization is still low,” Cingolani said.

He restressed his belief that Leonardo must play a role in the greater integration of Europe’s defense industry through alliances and joint ventures to promote the launch of fewer new products – saving funds and avoiding overlaps.

The perennial drive to create better cross-border tie-ups in Europe has taken on new urgency as the bloc faces a growing threat from Russia.

“The good thing is people are ready to talk about it, although due to fear,” Cingolani said.

“I don’t know if this will be enough for Europeans to understand that at least in defense they need to get together. The point is that every country in Europe has its own aircraft, its own tank, its own torpedo, and when you want to achieve a joint European defense you have to give up something,” he said.

Cingolani warned that the EU’s anti-trust rules risked hindering mergers that would beef up Europe’s defense capability.

“There are areas where rules for the free market apply in peacetime but in a war economy, free market and anti-trust rules can be an obstacle to global security,” he said.

“Companies can be proactive and we have a model that works well in Europe – MBDA – a triple joint venture. Maybe we should consider triple joint ventures,” he added, referring to the missile company’s distributed ownership across Airbus, BAE Systems and Leonardo, with subsidiaries in France, Italy, Germany, Spain and the U.K.

In December, Leonardo signed to create a “strategic alliance” with KNDS – the consortium of Germany’s Krauss-Maffei Wegmann and France’s Nexter – to work on the European MGCS next-generation tank program, as well on the Leopard tanks Italy is purchasing.

When asked if Leonardo would take a stake in KNDS, Cingolani said, “In nature and life nothing is impossible,” but he cautioned that the matter was “very complex,” adding: “Let’s see the technology first, then let’s see if there are synergies and compatibilities in the market, if it’s convenient and cost effective, and then see if there is an agreement.”

He added, “There are technical discussions,” but said no talks had taken place at the governmental level.

Tom Kington is the Italy correspondent for Defense News.

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