LDO Leonardo SpA

By Ed Frankl

Leonardo SpA shares rose Friday after it guided for a higher cash flow than expected as governments eye higher defense spending, and posted revenue and earnings that rose on year.

Shares at 0922 GMT were up 10% at EUR9.01.

The Italian defense company guided for 2022 revenue of 14.5 billion to 15 billion euros ($15.93 billion-$16.48 billion) and free cash flow that would more than double to around EUR500 million on higher orders via its defense and governmental businesses.

It also posted full-year results for 2021 with a net profit of EUR587 million compared with EUR243 million the year prior, on revenue that rose 5.4% to EUR14.14 billion.

Free cash flow was EUR209 million, while earnings before interest, taxes, and amortization was EUR1.12 billion.

The Rome-based company had previously expected 2021 revenue toward the top end of its guided range of EUR13.8 billion-EUR14.3 billion, and Ebita of EUR1.08 billion-EUR1.13 billion.

While the results were generally in line with expectations, shares should be driven by new guidance that surprised on free cash flow and beat views by more than EUR150 million, analysts at Deutsche Bank said.

The cash-flow guidance gives more credibility to Leonardo's long-term cash generation potential, as does its confirmation of the cash generation of around EUR3 billion to 2025, Citi analysts said.

Leonardo also pointed to opportunities in the sector on the possible acceleration of European defense spending in light of Russia's invasion of Ukraine.

However, it said "Ukraine and Russia currently represent high-risk counterparts" due to logistical and economic sanctions imposed by the European Union and other international bodies.

Write to Ed Frankl at edward.frankl@dowjones.com

(END) Dow Jones Newswires

March 11, 2022 04:40 ET (09:40 GMT)

Copyright (c) 2022 Dow Jones & Company, Inc.