The Japan Times - Italian defence firm Leonardo to boost capacity amid geopolitical risks

"We have to ask ourselves how to increase our delivery capacity," Chief Executive Roberto Cingolani told analysts during a conference call laying out the company's new five-year industrial plan.

Cingolani's comments came after European Union countries agreed last week to boost defence spending, vowing to "re-arm Europe" against the perceived threat from Russia and the risk that the United States might not stand by its NATO allies under President Donald Trump.

"We have to protect ourselves more than before, especially if the relationship with our NATO allies changes" and if Washington takes fewer steps "to protect Europe", he said.

Were Italy to boost its military spending by one percentage point from its current 1.52 percent of GDP, Leonardo's revenue would rise by between two billion to three billion euros, he said.

The aerospace and defence group is looking to form "strong alliances" with other players in the sector given the "complex environment", said Cingolani, as Leonardo vies with rivals in the United States and China.

Those alliances will be particularly in the areas of "cybersecurity, space technology and artificial intelligence," he said.

Leonardo's 2025-2029 industrial plan anticipates overall annual revenue growth of seven percent to reach 24 billion euros in 2029, with growth of about nine to 10 percent in its newly created Space division.

It also sees orders rising by 5.8 percent annually to reach 26.2 billion euros ($28.7 billion) in 2029, compared with 20.9 billion euros in 2024, and an anticipated 21 billion euros in 2025.

The company on Tuesday reported a jump in annual net profit and orders, boosted by its joint space venture Telespazio.

Defence budgets in Europe have risen following Russia's 2022 all-out invasion of Ukraine, and are set to increase further as the EU responds to Trump's demands that allies pay more for their security.

Leonardo said its net profit rose 67 percent to 1.16 billion euros in 2024. Revenues rose 16.2 percent to 17.9 billion euros, with growth in nearly every segment.

Its joint space venture Telespazio contributed a capital gain of 366 million euros to its balance sheet.

- Orders up -

Orders last year were 16.8 percent higher than in 2023, helped by its Electronics for Defence and Security (EDS) division, and its helicopters unit.

Since 2023 when he took over the helm of the group, which is 30 percent owned by the Italian state, Cingolani has worked to build alliances with other European defence groups to compete with US and Chinese rivals.

Leonardo and Turkish group Baykar, a drone manufacturer, signed a memorandum of understanding on Thursday for a joint venture to produce drones.

In October, Leonardo and Germany's Rheinmetall signed a joint venture to supply the Italian army with battle tanks and infantry fighting vehicles.

Shares of Leonardo have risen 47 percent in the past month. On Tuesday, they closed up 1.7 percent to 43.75 euros on the Milan stock exchange.

K.Yamaguchi--JT