Breaking news August 16th at 8pm
S&P Global Ratings affirms Leonardo’s BBB- rating, while upgrading the outlook from stable to positive. The decision is based on the expectation that “operating performance will remain resilient over the next 12-24 months”, with “solid cash flow” to be used to reduce leverage and improve credit indicators.
Resilient performance until 2025
“We believe that Leonardo’s solid results in the first half of 2024, combined with debt reduction prospects and favorable momentum for the defense industry, will support resilient performance through 2025 and should lead to an improvement in credit metrics,” S&P wrote. According to the rating agency, the corporate management of the group led by Roberto Cingolani “has clearly indicated its intention to reduce Leonardo’s debt, thus strengthening credit metrics to levels consistent with a higher rating.”
Debt reduction and higher EBITDA margins
“We expect S&P Global Ratings’ adjusted funds from operations (FFO) to debt to approach 45% in 2024 and potentially exceed this value in 2025”, the agency continues, “mainly driven by debt reduction and supported by a gradual improvement in EBITDA margins above 11% and robust operating free cash flow”. For this reason, S&P revises the outlook on Leonardo from stable to positive and affirms the BBB-/A-3 issuer credit ratings. The BBB- rating on Leonardo’s senior unsecured debt is also affirmed. “The positive outlook”, S&P concludes, “reflects our expectation that Leonardo’s operating performance should remain resilient over the next 12-24 months, with solid cash flow that will be used to reduce debt and improve credit metrics”. (reproduction reserved)