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MILAN (Reuters) – Italy’s Leonardo said on Tuesday his core earnings would improve in 2021 after earnings before interest, taxes, depreciation and amortization (EBITA) fell 25% last year, the COVID-19 pandemic having destroyed its civil aviation sales.
Leonardo, who plans to list a minority stake in his DRS unit this month, said his EBITA is expected to reach between € 1.075 and 1.125 billion ($ 1.28-1.34 billion), from $ 938 million. euros in 2020.
The turnover will amount to 13.8-14.3 billion euros, against 13.4 billion euros last year, thanks to new orders and the delivery of activities on military programs and government, including a 2016 contract with Kuwait for 28 Eurofighters.
The drop in orders from Boeing and Airbus for the Aerostructures division, which produces parts for civil aircraft, and the drop in turboprop contracts by ATR will continue to weigh on the activities this year.
“Our civil activity should still be strongly affected by the effects of the pandemic, with a further contraction of production volumes in Aerostructures and ATR deliveries expected still well below pre-pandemic levels,” Leonardo said.
To meet the challenges, Leonardo said he plans to adopt measures for the early retirement of around 500 employees, adding that he has reduced the valuation of his assets in the division.
The Aerostructures business is expected to absorb 350 to 400 million euros in cash this year, with free operating cash flow improving to 100 million from 40 million euros last year.
Assuming no dividend on the 2020 results, the group sees net debt of 3.2 billion euros at the end of this year.
Leonardo last year wrote off $ 300 million in debt owed to related parties to DRS, which is now preparing for a NYSE listing, the unit said in a filing with the U.S. Securities and Exchange Commission.
(1 USD = 0.8413 euros)
Reporting by Francesca Landini; Edited by Agnieszka Flak and Alexander Smith
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