Leonardo Aktie

Welcome, everybody. My name is Claudia Introvigne. I'm responsible for Investor Relations and Market Analysis here in Leonardo. Today, we are here to present our first quarter results for 2026. And I'm really pleased to have here with me our CEO, Roberto Cingolani; and our CFO, Giuseppe Aurilio.

So now we can begin, and I will hand over to Roberto. Thank you.

Thank you, Claudia. Hello, everybody. This is our last meeting and will be the last day of my mandate. So I will leave Leonardo tomorrow. So at that occasion, which we will present the Q1 data, I would like to take a few minutes of your time to wrap up the last 3 years in view of the change of [indiscernible] management and to say goodbye to all of you. Let's start with Q1 and the numbers that you have seen already there on the table.

In the first 3 months of 2026, a few months after having launched the Michelangelo Dome in October 2025 and the updated plan, we've got very good and encouraging results. The order backlog has been rising to EUR 57 billion, plus 23% versus 2025. The book-to-bill ratio is 2 and the new orders amount to EUR 9 billion, so plus 31% year-over-year. Revenues increased to EUR 4.5 billion, plus 6.9% year-over-year. EBITDA growing by 32%, up to EUR 281 million. The adjusted net result is EUR 184 million, plus 60% year-over-year. Free operating cash flow has been improved by 29%. It is still in the negative ground. It's minus EUR 411 million.

The workforce [ concomitantly ] has been increased by 5,600 units, and we have reached now more than 65,000 people in Leonardo global. This data do not include the upside given by the acquisition of [ Iveco Defense ], which has been, however, estimated as remarkable. Giuseppe will tell you more later. I mean, frankly, guys, the numbers are very good and the upside of IDV is very promising. So we could have even proposed an upgrading in guidance. But because tomorrow, we will have the new CEO, I think for fairness, we'll leave this choice to the next top management. But as you see, the numbers are very promising, and I'm sure they will do a fantastic job.

Anyway, Q1 2026 confirms that the plan is solid, credible and feasible. This is in line with the expected further growth, which is foreseen by the new plan. I remind you, by the year 2030, the challenge is EUR 32 billion [ order ], EUR 30 billion revenues, EUR 3.6 billion EBITDA, 12% return of sales, more than EUR 2 billion free operating cash flow. This is in 2030. So this follows the already positive 3 years trend that we registered during the mandate.

I just want to remind you that in the last 3 years, we grew up by almost 20,000 people, reaching the 60,000 units. Importantly, 1/4 were women, 64% of the new people own a technical background and more than 1/2 were below 30 years old. The productivity per capita has been increasing. I mean, the pre-COVID to post-COVID comparison, those are data at the end of '25. We're increasing from EUR 290 kilo per headcount pre-COVID to EUR 320 kilo per headcount last year. The share value was growing from [ 10 to 64 ] maximum about 1 month ago, market cap from [ 4.6 billion to 34 billion ]. That was under control. The free operating cash flow exceeded [ 1 billion ] for the first time in 2025. It was a psychological target almost, but very meaningful. And the margins are moving towards double digit throughout the company, which was our main commitment since the very beginning, which were the guidelines of our operations over the mandate.

The first one was what we define [ bullets and bites ]. So this intriguing and unexpected merge of hardware and software, digital technologies and defense platforms that we have learned abruptly after the Russian invasion of Ukraine. The second guideline was no one can make on its own so the need of alliances, especially at the European level to fight the to contrast the fragmentation of the European defense space, and also merger acquisition in big collaborations among industries.

The third guideline was moving quickly from conventional defense to global security. Not only military defference, but also cybersecurity, space security, so space observation, infrastructure security, energy security is something that we have to work on in the future, and even food security one day, which were the enabling factors that brought us to get good results over the 3 years.

First, cleaning the portfolio and withdrawing noncore business activities that were heavy [indiscernible] in the balance sheet. Launching a saving plan a very strategic and systematic saving plan, transversal to all the company, a strong effort in digitalization. Today, we have 1 terabyte per headcount memory and 0.5 teraflop computational power per headcount. Those numbers are world-class. That means AI-driven products and processes, improved manufacturing, digital services towards [ servitization ], of course, use of digital twin in all our hardware platforms, new services.

Then the efficiency plan because the demand of defense was growing because of the tremendous geopolitical situation, more than 60 conflicts in the [ planet ]. So we are working actively. We have been working actively in improving efficiency in production. And then most important, that focuses on specific technological priorities, increasing digital capability, as I mentioned before, digital twin, AI, cloud, data analytics, high-performance computing. Develop hybrid warfare technologies, develop interoperability in the multi-domain, develop unmanaged system in all domains. Today, all our platforms, land, sea, air, have an unmanned counterpart of any managed platform.

Last but not least, we've been working on building a brand and a digital identity of the company, which was perceived like an old paper-based company. I think this transformation helped a lot in having more confidence in our approach. The tool for all this was the industrial plan, an innovative rolling industrial plan, which started in '23, primarily with a disciplined capital allocation, dividends, debt, clear R&D strategy, organic and inorganic growth. The completion of the product portfolio covering all domains, both through investments in new products. Just to remind you, satellite constellation, high-performance computing, cybersecurity, or through M&A, land vehicles, drones, some new part of cybersecurity, et cetera.

The international alliances and merger acquisition market the difference with the past. Land defense are the new impulse through the collaboration with the joint venture with Rheinmetall, collaboration with [ KNDS ], [ Iveco ] Defense acquisition, the recent one. [indiscernible] and the drone technology. By the way, I'm happy to tell you that in a few weeks, we will launch our first drones in [indiscernible], the new models. So this will be -- after a few months, the joint venture started will be an interesting inauguration. Even IVD, Iveco Defense opens up some interesting perspective towards land drones. Again, in the multi-domain concept where you have manned and unmanned systems that are interoperable, interconnected.

The new aeronautic division, which is now doing very well with the new orders on the fighters, GCAP and the Eurofighter, the 346 and the Eurofighter. Also has incorporated the [ Aerostructure ], and we've been working a lot to create an international JV on Aerostructures, which is finally a titch. And finally, the cyber acceleration to enhance our AI capability and the new high-performance computing line of business that were created in 2025.

In less than 3 years, all of this has generated the Michelangelo Dome project. A blend of electronic sensors and command and control at the center of the multi-domain together with AI and cybersecurity, satellite constellations for earth observation and early warning, manned and unmanned air, land and sea platforms in the digital continuum of the combat cloud. We became the only industrial company in the world that has all the hardware platforms and the AI digital capabilities to create the first [ OpenShield ] architecture for air defense that can accommodate any asset compatible with NATO and our defense doctors.

At the same time, the diversification and orchestration of hardware and software technologies makes us increasingly flexible, accelerating Leonardo's transformation from a defense company to a global security company. After 3 years, will leave a free, clean and safe highway that must be traveled with great conviction regardless of who is called to lead the transformation. And I'm sure that my successor and the new top management will move in the continuity because they participated in most of this work done so far.

All of this has been possible, thanks to the work of Leonardo employees. Everyone from the first to the last in each of the 126 countries where we operate actively with [indiscernible]. The strategy is built, capitalized and contracted. The plan is communicated. The job now is execution, not strategy anymore. Deviation from the plan could be detrimental for the company. About [ 1 billion ] year self-funded R&D in addition to the customer-funded [ 2 billion ] per year R&D is key to keep the pace of growth and to make Leonardo a world-class player. This is a good capital allocation story, applied to a novel technology story, this is called bullet and bite vision, both very timely in the current geopolitical scenario. Any short-term margin optimization through R&D cut would cause failure.

The engineering capability in conjunction with the unique integration of software and digital technologies together with hardware platforms and the consequent enhanced [indiscernible] will increase margins, EBITDA, free operating cash flow and the overall competitiveness of Leonardo. I'm proud of the work done so far, and I'm sure there will be continuity by the next management. The last 3 years were fantastic. I believe there is plenty of room for further growth, and the acceleration ramp of the Q1 2026 is very encouraging. I want to thank all of you, dear investors and analysts, for your support, your constructive attitude and for sharing the dream of a world-class Leonardo.

Now it's my time to go, but maybe we will meet again. Thank you, [indiscernible] for your support. Bye-bye.

Thank you, Roberto. And I know that today, I can talk for everyone in Leonardo in thanking you for your outstanding leadership and for the contribution to the group over the last years. So thank you, Roberto.

So back to Q1. It was a very strong start of the year, as Roberto said. So outstanding performance in all of our KPIs, plus 30% -- around plus 30% in EBITA, free operating cash flow and order intake. Revenues up by 10% net of the exchange difference and improved profitability up to 6.3% from 5.1% in Q1 2025. So again, a strong start of the year.

In the quarter, we completed also the acquisition of [ Iveco ] Defense with for a total consideration of [ EUR 1.6 billion ] is not in the numbers we were discussing earlier. It was consolidated for the balance sheet and for the backlog. But for all the other flows, so income statement and cash flow, it will be consolidated starting April 1, 2026.

Third point, very important, progress in the credit ratings. We have improved our rating with Moody's from [ Ba3 to Ba2 ], maintaining also a positive outlook. So good prospects for the future. At the same time, Standard & Poor's confirmed the current rating, but improving the outlook to positive from stable. So this is a very important acknowledgment of the progress we have made from the financial standpoint.

So Q1 results, Roberto has gone through them. Just a couple of points. Again, orders were up to [ EUR 9 billion ] in Q1 2026, so plus -- more than 30% plus than last year. Revenues were up by 7%. Again, it's 10%, excluding the negative impact of the translation, mainly of the U.S. dollars and the DRS components. EBITA has increased by more than 30% compared to Q1 2025. And free operating cash flow is negative as it is usual in our business, and it is expected, but much less compared to the past. So plus 30%. It is an important result of our effort to make the trend much more linear over the year, also negative in the first quarter.

So let's focus now on orders. As I said, very important result, strong commercial momentum. Orders were up by 31% compared to Q1 2025 with a total backlog at [ EUR 57 billion ]. So it's more or less 2.5 years of production, including also the backlog coming from IDO, which is something close to [ EUR 6 billion ]. If we look at each sector, you see that the progress is spread over all the business. So we can say we are very much on track for getting our full year guidance. We see a very good commercial momentum in all the divisions. Of course, the value -- the total value of EUR 9 billion is only driven -- is also driven by a couple of big orders.

I want to remind the NMH order in helicopters for AW149 for the U.K. Armed Forces, which was a very important order for us. It was an important milestone, so very important to get it already in the first quarter. And in the aeronautics, where you see a big peak compared to Q1 2025, we have to remind the big order from the Austrian Air Force for M346. So a couple of big orders driving up to [ EUR 9 billion ], but all the sectors improving.

Defense Electronics has improved significantly compared to last year, 20% if we look at Electronics Europe. Whereas Leonardo DRS was negative compared to Q1 2025, but because of a couple of effects. The first one is, as I said, the negative exchange difference. And the second is the fact that in Q1 2025, DRS recognized a very important order on bus activities. So the trend of DRS is very positive. We will see when commenting revenues and EBITDA again.

Helicopters, as said, the performance is outstanding, of course, driven by the order for [indiscernible]. But also Q1 2025 had benefited from some important orders from governments, mainly the AW249 from the Italian MOD. So it partially offset the increase relating to the recognition of the NMH order. Aeronautics, as said, we have the Austrian order for M346, but we have also a number of very good success. We have [ IFA ] order from Germany and Italy and also [ C27J ] contract for logistics support for the Italian Air Force. So very good results and very good results also from Aerostructure, we will see better when talking about revenues and EBITDA, but we see an increase of workloads, which is the key metrics for this division.

[ Cyber & Space ], smaller division, but again, like last year, growth rate, very important, plus 30% for cyber, 18% for space. This has led us to a book-to-bill, which is at 2x. So very important at a total backlog of [ EUR 57 billion ].

Revenues. So let's talk about the execution of this contract, up by 10%, excluding the negative translation of dollars, with improvements across all the business and all the divisions. So very solid performance, again, very well on track versus our full year guidance. Let's focus on the different sectors, starting from Defense Electronics.

We see Electronics Europe's -- Europe growing by 15% compared to last year. So very good improvement, additional scale. Leonardo DRS, you see a red number, but just because of the negative exchange difference. Otherwise, it will be a growth of 6%. So performing very well. Driven by [indiscernible] and Colombia Marine Plus programs.

Helicopters. Helicopters, we are growing at a lower rate compared to the overall growth rate of the group, so around 3.8%. But you may remember that this growth is in line with our full year estimate where we estimated a growth of 3.5% for helicopters also due to the fact that over the last 2 years, we have been growing by more than 10% in each year. So very good performance. Very solid performance in aeronautics based on our core programs, so GCAP, EFA, M346 and C-27J.

Aerostructure, I said, we see a big increase. Of course, this is mainly due to the increased rate of production on B787. You may remember that in Q1 2025, the rate of production was at around 4 deliveries per month. We started the year 2026 with 7. Now we are at 8. So the increasing rate of production is driving additional revenues and improving the results of Aerostructure. So Cybersecurity and space, again, as we have seen for orders, very -- they are growing a lot, cyber by around 20%, space by 14% on a mix of programs. Space is benefiting from the service components, so [indiscernible] business and satellite systems and operations mainly. So very good performance in terms of revenues, well on track to deliver our full year guidance.

And now let's focus on EBITA, where we see an outstanding results, up 33% compared to Q1 2025. And as you can see, of course, this is partially due to the volume effect. So more revenues, of course, more EBITA, but a big increase is due to the improvement in profitability margins. So with the return on sales going up from 5.1% to 6.3%. And again, very important for me, it is an improvement which is spread across all the divisions. So it's a general improvement compared to last year.

Let's look now at the breakdown by segment of EBITA. So starting from Defense Electronics, which was the biggest contributor to this increase. Plus 20% on a year-on-year basis compared to Q1 2025. If we look at the different components, you know that inside the EBITA of Electronics Defense, we have 4 building blocks. We have Electronics Europe, we have Leonardo DRS, and we have the contribution from MBDA and salt only at EBITDA level. So if we look at this breakdown, you can see that Electronics Europe has grown up by 25%. So outstanding results. [ ROS ] already in double digit starting Q1. That's a result that usually we get later in the year. This year in 2026, we are already double digit in Electronics Europe in Q1. So very important.

DRS has improved by 15% despite it was affected by around [ EUR 10 million ] of negative exchange differences. So otherwise, the improvement would have been much higher. And again, they are running at around 10% return on sales. So they are closing the year at 9.8% with a big improvement compared to last year where they closed the quarter at 8.2%.

Aircraft. Aircraft, again, very solid performance driven by the programs I was remembering earlier. So plus 12% in terms of EBITA compared to Q1 2025. Return on sales close to double digit already in Q1. So very good quarter also for aircraft. Aerostructure, as you can see, is negative, of course, minus 45%, but we see a partial recovery compared to last year, where we closed the quarter minus 56%. So it's plus 20%. And of course, this is mainly driven by the increase of rate of production on B787. I was mentioning earlier. So very important, this increase. It gives us much more workloads and so it reduces the losses during the year.

Cyber, plus 36%. So again, this is an impact mainly of the additional scale of increasing scale of cyber because we are increasing revenues, but we are increasing cost -- fixed cost mainly and cost below the line much less compared to the increase of revenues. So plus 36%. Again, like last year, you may remember, we got an excellent result also on that.

Space, plus 100%. Here, we have a strong performance of the service component, like in line with last year. Also the payload robotics business is performing very well, getting some important orders also on some [indiscernible] activities. But of course, there is also a big difference deriving from the partial recovery of the loss of [indiscernible]. So it is still negative as expected, but it has reduced the loss compared to Q1 2025. And this, of course, has led to an improvement of 100% compared to last year.

So key message, ROS is improving across all the business. We are already double digit in electronics, close to double digit in Aeronautics. Overall, very good results, very strong results. And in line with our targets. We have been able to improve our free operating cash flow, which was -- it is a key target for us. It is a key target also to make the negative trend over the first 9 months much more linear over the year. So free operating cash flow in general was up 30%, thanks to the -- our operating performance, of course, but also to the actions we are doing on the working capital and on the effort that we are making to make this trend more linear. So both in terms of revenues, EBITDA and also free operating cash flow.

So it is a strong increase. And if we look at cash flow used in operating activities, you can better appreciate the improvement because we have [ EUR 0.2 billion ] in 2026 compared to [ EUR 0.4 billion ], but this EUR 0.2 billion includes also the settlement of the [indiscernible] litigation for which we had a cash out of EUR 100 million in the first quarter. So otherwise, it would have been at around EUR 0.1 billion negative. So a good improvement compared to Q1 2025. And again, this is something we see across all the division. And back for a second to Aerostructure. We have seen the results in EBITA, which was in line with our estimates. Also the cash drag from Aerostructure was in line with our expectation. So overall, again, a very strong results also in terms of free operating cash flow.

Free operating cash flow that contributes to the increase of our net debt, which is increasing up to EUR 3 billion as expected, so perfectly in line with our expectation. Starting from [ ]1, of course, we had EUR 0.4 billion of free operating -- negative free operating cash flow plus EUR 1.6 billion related to the closing of the acquisition of Iveco. So EUR 3 billion group net debt, excluding the lease liabilities and the loans from joint venture, our net debt is around [ EUR 0.7 billion ]. So very strong balance sheet in our view, very disciplined approach to our capital allocation. We continue to see the progress, and we continue to see the results.

And these results have been well accepted also by our credit ratings. As said, Moody's has improved our rating to [ Ba2 ] with a positive outlook, and we have also a positive outlook from Standard & Poor's. So we will see in the future our possible potential additional improvements.

And therefore, if we look now for a second at the full year where -- what we see for the full year. We can confirm our guidance. I mean the Q1 gives us strong confidence in confirming our guidance for the full year, with new orders at EUR 25 billion, revenues at EUR 21 billion, EBITA at EUR 2.03 billion with a free operating cash flow of EUR 1.1 billion despite the settlement of the [indiscernible] litigation I was mentioning earlier. So we confirm our guidance. As I said, we completed the acquisition of [ Iveco ] Defense vehicle in the second half of March. So we are now also in a position to communicate preliminary add-ons to group results coming from the consolidation of Iveco Defense. We will consolidate, as I said, profit and loss order and free operating cash flow starting from April 1, 2026. And you can see what we expect from [ IDV ] for these 9 months. So new orders at around EUR 1.2 billion, revenue EUR 1.1 billion, EBITA at EUR 0.12 billion and free operating cash flow at EUR 0.22 billion.

So to conclude, very strong results, very good start of the year, very well on track to deliver our full year guidance and achieve our group results.

Thank you, Roberto and Giuseppe. Let's open the Q&A session. So the first question is coming from Sam Beres from Goldman Sachs.

Firstly, Roberto, I know I'll speak for many when I say, I think you've done an excellent job at Leonardo, and I'm sure many will be sad to see you move on, but wishing you all the very best for whatever is next.

With that said, my first question is that the Italian government has said Gulf countries have made urgent requests for air defense and anti-drone systems. Can you just help us understand if Leonardo and MBDA are seeing this translating into orders at this stage? And what might the prioritization there look like relative to other customers?

And secondly, I just want to look at -- talk about BMD Plus. Should we think about this as the sort of first major funded step in the broader Italian missile defense architecture? And in terms of the margin, as this comes through, should we expect it to be broadly in line with the electronics margin even in the early phases of delivery?

Okay. In order to give you a rather quantitative answer, I think we should wait and see what happens in the next, say, weeks or just a few months. On one hand, with respect to what Europe is doing and what is the relationship between the 3.1% versus 3% deficit ratio that apparently the country as far as we know, the 3% threshold has been missed by just a few decimal points. So it's unclear what happens there.

Now to be very correct towards Leonardo, we should never forget that we export 80% of our products, okay? So in principle, we could say we are a world company, and therefore, most of the market comes from export. And we could certainly say that we are most independent of the domestic fluctuation. However, as you know, it's very important when you sell defense platforms abroad that you show that your defense system has tested them already in-house. So it's a sort of credit card that you get when you sell your products. So this could be the only interplay that I see in case there will be a small reduction of investment in defense by the government.

Having said this, I just would like to point out one thing. Our capital allocation has been done in a very safe and controlled way. For instance, for the Michelangelo Dome and what we call the air defense [ Shield ], most of the R&D is already included in our in our capital allocation. There's not so much new to develop. But electronics command and control, and this is part of the organic growth of the company, thanks to our safe allocation. I'm still very positive towards the success of this initiative.

I mean, of course, time matters a lot. As you've seen after we announced [indiscernible], for instance, many other countries -- many other companies announced the kind of rebranding their existing products, or moving on the external market. Our Michelangelo design team that goes around in different countries to customize the specific architecture to be developed is supposed to be very busy. So I think we should not -- they should not miss not one day starting from tomorrow because here, we are in a rush actually. And the geopolitical situation imposes a pace a rhythm that is not the usual one. But I'm very optimistic. I would be very optimistic.

Okay. The second question is coming from Alessandro Pozzi from Mediobanca.

I will go one by one, if it's okay with you. First one for Roberto. In your opening remarks, you mentioned continuity with the [indiscernible] management. And I guess you had the handover. And I was wondering if you can share what advice you've given to the next management, if any? And what do you think are the key challenges for Leonardo in its next phase of transformation?

I mean, we are in a rather fortunate situation that the new President has been 3 years member of the Board. So he participated very actively to the entire decision process. He knows step by step, how do we came to this point. And that makes a big difference compared to a President that is [indiscernible] from the outside into the company. And I'm sure this helps a lot in terms of continuity and knowledge of the structure.

The CEO, as you know, was in the company for many, many years. We were working together for almost 2 years. So he knows very well people and structure. So I believe continuity should not be a problem. The problem eventually is the competition abroad and the time to market. I mean, the usual, the daily challenges that Leonardo has to face in such a complex geopolitical situation.

Having said this, of course, there will be some rearrangement. At the moment, the team is moving, the team that was working. And therefore, they have to recreate the team very soon to not lose 1 day of operational capability. Fortunately, there are very relatively young people that were operating with us in these 3 years, ready to jump and to work on all the different programs. So I believe there is no really big problem.

One thing that, maybe, should be addressed, this is something I discussed with my colleagues. As you know, because of my background, I was operating like the kind of a Chief Technology Officer, not only as CEO because of my background. So if a profile like mine goes out, maybe they have to reinforce the technology -- the Chief Technology Officer position that the moment is back end because I was playing that role basically so far. But I think this is -- okay, this is solvable. We have to go in the market and see either internally or externally, whether there are good candidates that can kind of coordinate the multi-mission idea underlying the industrial plan. But it's something -- I mean, in the end of the day, it's a good difficulty finding good people shouldn't be a problem.

My second question is on the guidance. I believe you mentioned that you can even raise guidance at this point given the progress you've made. I was wondering, is there any KPI in particular or things are going way better compared to the initial expectations across order intake, EBITDA and free cash flow? And whether maybe there is any areas of particular strength, I guess, Defense Electronics may be one of them?

I'll leave the answer, of course, to Giuseppe because it will continue, and this will be his responsibility. But let me say one thing with the zero responsibility that I have because I'm leaving.

Last time, we were discussing whether we have to be prudent or we have to be, kind of, challenging. And we decided not to increase the guidance when the improvement of the KPI is below some few percent. I would say this time it's really very good in almost all KPIs. So with the braveness that I can have because I'm leaving, I would have increased conversely the guidance. But of course, we need to be more -- they need to be more prudent.

First of all, this is a responsibility that the new CEO has to share and he has to agree on that and he has to make his analysis. And then, of course, we will -- I think they will discuss this with the CFO, and they will make their choices. But the numbers are all quite above the expectations. So in the end of the day, I think we could be optimistic. And I stop saying anything.

No, no. The numbers are very, very good. Of course, it was a strong quarter. Of course, we need to factor a couple of things.

The first one is that first quarter is the weakest contributor to the full year. So although it is very good, most of the activity has to be done over the last 3 quarters. So it's a good -- very good start, but it's a minor part of our path towards the full year guidance.

We have also a number of plus and minus we need to access mainly due to the geopolitical context. So of course, for a prudent view also in the light of the exchange Roberto was mentioning, I think overall, starting from where we are now, it is still a balanced situation versus the guidance. Of course, if you look at the orders, we are already at EUR 9 billion. So it is a particularly good performance. But again, keep in mind that orders are not linear.

So we knew that first quarter would have been the best quarter maybe at the beginning of the year, but we have to do lots of things to get the guidance. So we are optimistic. We look at the guidance in an optimistic way that will be a task for the new Board of Directors, but keeping in mind all this.

Just a follow-up on this. I've seen the margin effect is fairly large, about [ EUR 59 million ], much larger than the volume effect. Can you say perhaps what is the main driver of that? And that's the last one.

Yes. I think -- and you see it very well when you look at the split by sector, I think increasing scale without increasing fixed cost is helping us a lot. So we're improving marginality because we're increasing the scale. But also, of course, we are continuing on our saving plan. And of course, we are not increasing fixed cost in a way which is comparable to the increase of revenue.

So increasing from scales, benefiting from the saving plan we set a couple of years ago and global contribution overall is improving everywhere. So very solid program performance, which is at the end, the main driver. I think we are performing very well on programs. And so this is a clear outcome of the actions we have been doing over the last years.

Okay. And the next question comes from Ross Law from Morgan Stanley.

I'll start by reiterating [ Simon's ] earlier thoughts, wishing you all the very best for the future, Roberto.

The first question is on Iveco, and thanks for the 2026 contribution guidance. I know you don't want to give new group medium-term guidance, but maybe you can provide a bit more color on what you think Iveco could contribute medium term? Should we use Iveco's 2024 CMD outlook as a guide? Or is it better given developments since 2024?

And then secondly, just on order intake, specifically with the [ Turkey Typhoon ] contract, it doesn't look like this was included in Q1. Some of your peers have recorded it. So can I just get an update on when you expect to record this?

Okay. On [indiscernible], you see the contribution for 2026. We are still working on the entire plan. And of course, it will be, again, a task to be done together with the new Board of Directors to understand how to implement the entire plan of Iveco Defense vehicles and above all, fully leverage on the synergies we can produce putting together Leonardo and [indiscernible]. So it is something we will update during the year based on the progress of this analysis.

But you can see already that we expect a good profitability overall 11% return on sales on the 9 months 2026, and this is something we expect also over the plan. So we think the acquisition of [ IDB ] will be accretive stand-alone, but also including the synergies we can generate over the plan. So we will update on the entire plan, but we see a very positive situation.

Regarding Turkey, it is not on Q1 orders, of course. You know that there is a time to flow down the orders from the prime to the [indiscernible] So we are working on that, but it is -- I confirm it is not on Q1 orders.

So the next one is coming from Sash Tusa of Agency Partners.

I've just got two questions. One, can you confirm that the IDV backlog has gone into Defense Electronics and Security? And if that's the case, is that where you expect IDV to remain? Or will you eventually report it as a stand-alone business? Because clearly, it's broadly similar size to 2 of your smaller divisions?

And then the second question on your broader ambitions in air defense and particularly Michelangelo Dome. What are the terms under which you can get access to the [indiscernible] missile system and in particular, the effectors given that, that is a joint venture comprised of [ MBDA ] and your rival Thales in the [indiscernible]. Can you get access to [indiscernible] on the same conditions that Thales does? Or do they have a structural advantage because of the [indiscernible] [ teaming ]?

Okay. On IDV, yes, I confirm it is inside the backlog of Electronic Defense. For the future, I mean, I think that will be one of the items to be analyzed by the new Board of Directors. Of course, it has to do with the organizational issues. And so analysis. It's an analysis that, of course, we will do. But at the moment, it is included in the electronic defense. And clearly, the portion, which is -- which has more synergy with IDV is inside -- is currently inside Electronic defense.

Can I -- I mean even though it would not be my business, but you have to consider historically that [indiscernible], so the remaining part of land defense developed by Leonardo is inside the Electronic division. Now we might argue for the future, that was something we were discussing, by the way. We might argue that Iveco Defense plus [indiscernible] is getting so big that possibly in itself could be a sort of land division. But we have to see the industrial synergy. They have to see a number of industrial parameters. It has to be convenient eventually to carve out from the division creating a new division.

But clearly, the critical mass of land defense now is much bigger than 1 year ago where the -- where [indiscernible] only could not be enough for a division. It was just a sort of line of business. Though this will not be my business, but I believe it's important to show that how much bigger it became the entire land defense landscape in Leonardo.

About the [indiscernible] and the effectors, let me tell you something. I mean, obviously, we expect to have some preferential access to [indiscernible] because we participate into the MBDA and so on and so forth. However, the important point is that Michelangelo is effector agnostic. So as been conceived not to be specifically dedicated to one effector. Of course, we like to have sort of homemade effectors, or at least participated effectors. But we have already started discussions with other producers outside Europe, or not only in Europe to see whether other [indiscernible] can be used in their defense field. This is because [indiscernible] is the only effector-agnostic system that you can think of.

Next question is coming from [indiscernible] from Bank of America.

I think you made some comments on the Aerostructures discussions. Could you just give us a bit more color where are you on that? Is there any time line or probability that you can give around that deal coming to fruition?

Then secondly, could you give us an update on where we are in the joint venture with Rheinmetall on the land side? And when can we see orders on that? And then finally, just an update on the Global Combat program. There were some articles about the U.K. struggling in the short term with some funding. I was just wondering if has that impacted the development time line at all, if there's any update there.

Okay. I'll start telling you something. Giuseppe, you go.

Aerostructure, I mean, as we said in March that there is an important outstanding issue with a potential partner that you may remember, we cannot name. It was related to the funding of the local activities, which need to be done to implement -- to fully implement the business plan and the JV. I think they are still working internally on that. They are discussing between an essential part of this plan is the funding agreement and the funding they need to get from their country.

So it's a work they are done from their side. We are not part of this discussion. As we said, we set a window -- a summer window to have a go, no-go decision. So they are saying that their analysis will be consistent with the summer deadline, but we will see when they have the results of this analysis. Of course, we can imagine also that it may be somehow affected by the situation in some of the countries of the world.

Which was the next one? GCAP? About GCAP, yes, we heard about -- we read on the news actually about the momentary difficulty in the U.K. for funding the program. But I believe this is a 10 years program. So it will be -- we should not make, I would say, fast decision based on a momentary difficulty. All the partners are working. And last but not least, this is the only one sixth-generation fighter program left in the world. So I think it will be a big mistake to abandon because one of the partners has a momentary difficulty. This can happen to any partner any time. But I believe that the rationale for continuing insisting, trying harder on the GCAP is by far more important than the momentary difficulty. There was...

Yes, very important to add that we got the first order [ Edgewing ], the first international contract at the end of March. So it's GBP 0.8 billion, so coming from the international portion. So funded by all the 3 countries. So it was a very important milestone to progress on the activities which are being made by [ Edgewing ].

Yes. In the end of the day, it's more likely to have a slight delay in the program rather than a stop also because stopping would be a big mistake in that all the others have already stopped. So I think we should make an effort. There was a third question or?

Yes, on the Leonardo Rheinmetall venture.

Yes.

The agenda of Leonardo Rheinmetall?

Joint venture.

Yes, yes. Well, I mean, this is operating -- so far, it's operating on time. The infantry vehicles have been delivered on time. There is a second lot coming. And the -- most of the work done on the big tanks is still dealing with the integration. Basically, integration means the payload produced by Leonardo for the [indiscernible] should be integrated in the chassis of the tanker and the teams are working. They are still working on the integration. So right now, we don't see specific issues. But of course, we are monitoring continuously.

The next question comes from Martino De Ambroggi from Equita.

First of all, it was a pleasure to work with you, Roberto, and all the best. Number one on IDV. Because the free cash flow that you are providing for the 9 months is quite sizable compared to the size of the company. So I just wonder if it's something exceptional this year or there is -- it is a business probably not recurring? Because I knew this business inside [indiscernible] was not clear, obviously, the stand-alone free cash flow, but seems quite important. And still on IDV, could you quantify what is the portion of the business that you are proposing in figures today, which is part of the potential acquisition of from Rheinmetall?

Yes. Relating to the first question, of course, when we say that cash flow is seasonal in defense, it's true for everyone. So of course, excluding the first quarter from the numbers leads you to a very good 9 months results. But just because you are excluding the first quarter, which was heavily negative in Iveco, like in every company in aerospace and defense. So this is not fully an indicator of the full year free operating cash flow of IDV because that will be also affected by the negative results in the first month. So you see only the more positive part of the year, of course.

Okay. Could I ask you what would be the pro forma full year?

Let's say that we don't give guidance on each component of the free operating cash flow, but the first quarter was heavily negative. So if you look at the 2025 results under Iveco control, so it was not our responsibility. It was in the range of [ EUR 160 million to EUR 150 million ].

Okay. And the portion of the business?

The portion of the business in the 9 months on revenues, we see that the balance between trucks and armored and multi-roll vehicles is not stable because, of course, the reversal of backlog in trucks is much faster than in armored vehicles. So if we look at those 9 months, the ratio is around 600 -- of course, if you look at the margins, we get back probably to the split we gave in the past of 70%, 30%.

Okay. And last on the Aerostructure. What is the cash burn embedded in your full year guidance very roughly compared to the [ EUR 200 million ] absorbed last year?

Well, we assume that it will be negative again. The EBIT was around minus EUR 80 million in the year, plus some investments. So it's more than EUR 100 million of cash drag in the year.

Okay. Very last on the GCAP that you commented before. Maybe new entry is a possible way to go ahead quicker?

From an industry perspective, new countries could open new markets in the future. Of course, it is more a political discussion rather than a discussion between...

Governmental decision. I mean from our side, since the very beginning, we were open to any expansion of the consortium as long as there was a clear technical contribution, not only financial, but this is ultimately a political decision. We expressed more than one occasion, but we would agree in widening the team, but it's just a technical position

The next question comes from Sebastian Growe from BNP Paribas.

It's only one really that's remaining around the [ DES ] segment. Apparently the segment started the year much stronger than expected, especially from a margin perspective. I was just wondering what drove really this material margin improvement, both in the European business that was up about 100 bps and then also DRS at almost up 200 basis points.

So the two questions related to this are simply, can you provide any color around how we should think about the mix component in the quarter? And how would you assess on the quality in the order book and how it might differ from what we have seen in the first quarter?

Yes. I think it's a mix of positive items. I said that the first one is the program performance that it was very good. So this is the main driver, together, of course, with the increasing of scales because as I said, we are increasing revenues, but not increasing the fixed cost and the cost below the margin in a way which is comparable to the increase of revenue. So we are benefiting from the additional scale we are able to get. And from this point of view, the commercial momentum is key because we see that there are prospects, there are opportunities, and it is a good -- very good sign for the future development of electronic defense.

In the comparison, you may also remember when looking at DRS that last year, it was somehow affected by some issues relating to some specific programs and some cost impact on rare materials. So in the difference, you see also the impact of that. But overall, DRS as well is performing very well. You may have seen that they are slightly revising their guidance for the full year, very small number. We are talking about between $5 million and $10 million of additional EBITDA. So very small improvement. But of course, this is a clear sign of how positive they see the rest of the year.

Next question is coming from [ David Perry ] from JPMorgan.

Roberto, I don't want to embarrass you further, but congrats on a good job. You're the ninth Leonardo CEO in the time I've covered the stock, you were definitely the best. So I've got two questions.

Giuseppe, I'm sorry, you may have answered this. I couldn't follow all of an earlier answer. Have you said or given a rough guide on which part of [indiscernible] you are going to sell? Because we're adding some numbers to this year, but are we going to take a chunk of that back out next year. So I just wanted some clarity on that.

And then, Roberto, if I can ask you an unfair question. What -- as you leave, what do you think is the biggest opportunity for Leonardo to improve its performance? Because you've made a lot of progress, but I still think the company is some way behind some of its peers in some of its financial metrics. So curious what advice you might have for your successor?

Yes. So relating to [indiscernible] consolidation, the numbers you have seen we presented for the full year include also the track portion, which is the one which may be potentially under discussion for a future disposal, but it's just one of the options. So I will say that we will sell. I would say that it is one of the option. Of course, you know that there was a discussion -- there is a discussion with Rheinmetall in place. But the outcome, we will see -- we will evaluate the best option and we will see at the end of this process.

So for the time being, we are consolidating 100% of the IDV perimeter, including the truck business, and we will see the outcome of this discussion and potential negotiation also together with the assessment of synergies that Roberto was saying. So of course, we will do the best thing from a value perspective, and we will decide.

David, thank you. Yes, first of all, for your words and the second for the question. I believe that, number one, Leonardo must learn to believe in itself. It's a problem mindset. For that, you -- to change the culture of the company, of course, we need a bit of time, a bit more time. But at the moment, we do have one of the most complete portfolios in the world and for sure, the most complete in terms of nature, services, digital softwares, hardwares and platforms. Now if we understand that this is a plus, and it is a competitive gap compared to the others, we have to make our best effort to take advantage of this unique capability. So changing the mindset, believing in ourselves.

Second, Leonardo should start behaving like a truly multinational company, not a domestic company. This is also a change of mindset, but I believe we should have the courage to say, okay, we produce the best product. We invest in R&D and we risk -- this is the company risk. We invest in R&D. We don't stop making innovation. If the products are better than the others, we prevail in the market.

I would have a third longer-term vision. I mean we are getting a lesson whenever there is a war, whenever there's a conflict, whenever there's a problem, we end up on energy. I mean this is crazy. Look at the almost Gulf -- the almost shrinkage crisis, price of gas and price of petrol goes up. Look at Ukraine, gas price was up and then electricity is up. So the national security of the entire world is at risk.

So if we -- if [indiscernible] will be a real global security company, I think should have the duty to develop advanced technology for modular nuclear reactors for generators -- for generation. You might say, but this is too long. This is a lot of investment. Yes, you are right, but somebody has to do it. Otherwise, we will never be really independent. And I think it's crazy. It's a suicide policy, the one that as you see, after a conflict, we go back and say, okay, from where do we buy gas, from where do we buy petrol. I mean I believe this is going to be the biggest threat to the global security, especially in the Western countries. So I believe Leonardo would have all the capability, all the technology, the industrial capability to launch maybe a new co participated by Leonardo with other investors to do something serious in the field.

It's very difficult. If this were easy, somebody else would have done it already. But I believe many companies in the gravity field of defense are thinking in this direction. So mindset, R&D, taking advantage of the unique software, hardware capability and [ servitization ] of the products. And then for the mid- to long term, maybe energy security becoming the most important energy platform for the future. That's all.

We have a last question from Afonso Osorio from Barclays.

I just wanted to reiterate what all my peers have said, wishing you all the best for what comes next into your career. I have a few questions, if I can, last ones.

The first one is very quick on the cash payment for the [ NH90 ] settlement. I see this is included in the cash flow this quarter. Just wanted to confirm if that's the full payment or if there's more to come later on this year? And then the second question on Aerostructures. Again, I appreciate you just mentioned that the summer deadline is broadly unchanged here, but just wondering if you can comment on the size of this new venture. I believe you have said before that this would be a much bigger and larger venture. So it would be interesting for me to know the size of the new partnership you're forming here.

On [indiscernible], it was not a full payment, but most of the outcome of the litigation has been paid. So I think we missed something like EUR 10 million or EUR 15 million still to pay in Q2, but most of it was paid in Q1.

You want me to answer about the -- okay. The latest information we have, as we mentioned before, our partners is now negotiating internally ministerial incentives for the creation of the new international joint venture, okay? So we don't touch the ball there. We are looking forward what will happen. However, we were told that the window of the law for the ministerial incentives will be closed end of June, beginning of July. So inherently, they have to make a decision giving us a response because otherwise, they will shut the door -- shut the window and there will be no more incentive law in that country.

With this in mind, it's very important to know that the stand-alone plan of Leonardo has been done, approved by the parties, and it's very good, very convenient. We, in turn, approved their stand-alone part of the plan. So industrially, everything has been agreed. Even financially, everything has been agreed. So we could start tomorrow. The point is that the counterpart said we need to have an incentive from the minister because otherwise, there will be no ministerial presence in their team, let's say. So I believe this is more sort of internal political organization. And the deadline that they confirmed a few days ago still stands at the end of June, beginning of July. We know that the situation in the Gulf is difficult, but I don't think it's going to change the deadline of their incentive law. So we look forward to seeing what happens, but this is the situation at the moment.

And if I can quickly follow up on -- we were talking about time lines for the deal with Rheinmetall with the effect of defense. Is there a new message you want to send across by June still? Or can that slip into the second half?

Well, I mean, we stay on the deadline, and I believe we are focused on the end of this first semester. We didn't get any counter signal about that. So we have no reason to expect a shift. I mean that will be really negative also for us. Now give us 1 week to fix the change of top management, but I'm sure that our people will fly again there and press the institution to see what happens. This has been done until a few weeks ago. So we are really riding the horse at the moment. I don't think anybody wants to delay.

Sorry, sorry, because -- maybe I didn't get -- the question was on Rheinmetall. So I gave you an answer about -- the question was on... we lost the line?

Yes, we lost the line. So thank you all. We are now closing our Q&A session. Thank you to Roberto, and thank you to Giuseppe. And the IR team is anyway open to any follow-up. Thank you. Have a nice evening. Bye.

Welcome, everybody. Welcome to Bob here in presence in Rome and to all of you joining us by webcast. First of all, let me introduce myself. My name is Claudia Introvigne. I'm the Investor Relations and Market Analysis Director here in Leonardo. And it is also very special to welcome you here in our new hub. This is Leonardo's latest milestone, a brand new strategic hub that will support over time, Leonardo's mission of innovation and excellence.

Today, here at date 28, we will present our new industrial plan, which will be presented shortly by our CEO and General Manager, Barton. Roberto Cingolani, but before the beginning, I'd like to give you some information about the day. After the overview of the plan, we will welcome the questions from you, the financial community, with our CEO and our CFO, Giuseppe Aurilio. After that, we will have a light lunch. And finally, here today, we as there are the managing directors of the division. They are present, but the most importantly, they are viable to meet with the financial community, and we are really delighted to have them with us today.

So let's begin. Thank you all. I hope you will enjoy the day. Thank you.

First of all, thank you for coming. It's not a very nice day, unusual in Rome. So twice, thank you. I know the traffic is terrific today. I will spend about 45 minutes to tell you what is the vision of Leonardo for the next 5 years with specific emphasis and the capital allocation for the next 3 years.

First of all, I'd like to summarize quickly what we have been doing in the early so the first mandate of myself and the team. And then I would like to point out how we will take advantage of the impressive growth of our portfolio, both in terms of platforms, so hardware CapEx and in terms of digital capabilities, how we can take advantage of this very competitive portfolio at global level for our organic growth.

And on top, I will tell you another couple of drivers for our future industrial plan. One will be the capability to integrate all our technologies in the digital continuum as well as in the physical space for their defense. This is the so-called Michelangelo Dome air defense system. And the second one will be the possibility to use all our technologies for what we expect to be the new frontier, which is the global security and particularly hybrid wars, catastrophe recoveries and so on and so forth.

So let's see what happened in the last 3 years. In terms of human resources in terms of people, I think the important thing is that we grew up from about 50,000 people to 63,000 people with the geographical fingerprint that was increasing by 30%, 100 sites or so in the world today is the 130. What is remarkable is that you can analyze our domestic market, Italy, U.K., U.S., Poland and the rest of the world.

The domestic market grew up approximately 18%, 19%. But the geographical fingerprint, were up 28% at global level. So we grew up more abroad than in Italy, to be clear. And this means that our promise will be more international, is being achieved in these years.

Now let's see the product portfolio. When we started -- so we with the company in '23, there were a few relevant issues. Business were rather managed at. There were a few unresolved performance issues. The product portfolio was fragmented. There was a very limited digital capability and a rather slow pace of innovation.

The portfolio at that time was basically on platforms such as helicopters and fixed-wing systems. There was a lot of electronics that was spread -- the different domains, a little digitalization, primarily dealing with some cybersecurity activity.

That was the photography of Leonardo at the very beginning of our action. Well, definitely, the investor confident was not very good. Market cap was rather small for the size of the business. And the cash conversion was around 54%, if I remember correctly.

I do have some numbers there, but yes, I go by memory. Now 3 years later, the picture is different because we focused a lot on a number of specific actions that we shared with you, of course. This was all shared with you since the very beginning.

So first of all, new products and increasing servitization. So better margins, first of all, but also changing a little bit the nature of the portfolio, creating strategic partnership or joint ventures and/or selective merger and acquisition to complete the portfolio. This was a very careful maker by analysis. Sometimes, it's easier to buy than to develop in-house. It depends, of course, on what you want to do, but the aim was to complete the portfolio to be as much as possible competitive with a complete portfolio, both software and hardware, let's say.

There was a cost optimization and portfolio rationalization. I'm sure you remember, we closed a lot of activities, things that were rather marginal or not really fitting with the target of the company. We accelerated digitalization to an extent that was never like this in the past. So we built up a high-performance computing capability.

Today, we have more than 2,000 engines that operate in AI-driven environment, more than 100 developers of codes, and of course, this was enabling us in terms of efficiency, increasing services into the different platforms. And of course, it was the main enabler for any multi-domain approach that we were actually targeting in the previous plan.

We launched the capacity boost program. Well, this was kind of mandatory because in the meanwhile, as you know, there were wars in the planet and the demand of defense system was increasing, and we have to accelerate our capability. This is ongoing actually. But actually, it works. I mean we do see the results.

And finally, we committed ourselves towards a very disciplined product capital allocation. Of course, the aim is to guarantee high return of the invested capital, but also a serious approach to how we manage our resources.

Now after 3 years, I would say the portfolio is, as you see, is maybe the most complete you find in the -- among the peers, I think this is a competitive advantage that we have now. We are in all platforms, all I mean, for maritime, we don't build the ships, but we are concentrated with the builder in the country in Italy. But of course, we have now completed the portfolio in that we can make both manned and unmanned system in any domain, manned and unmanned.

This was through independent development in-house or through merger and acquisition or through joint venture, as I said before. Electronics is the real glue of the company because we are sharing a payload weapons command and control basically the soul of all our platform as a common origin, which is the electronics that grew up quite a lot, as you've seen by the numbers. We launched the new space domain that was very fragmented at the beginning.

Now we have a division. We are entering into strong international alliances. We are building our constellation. And so that was really a boost. And finally, cybersecurity had a strong growth because of very selective choice of products. And of course, digitalization became transversal through AI, data, high-performance computing and so on and so forth.

Well, the numbers somehow show that this was a good approach. I think today, the cash conversion is 69.5%, around 70%. I see my CFO here, this is now being fortunately. And people grew up, as I said before, and we're very happy to say this year for the first time, we broke the barrier of EUR 1 billion in free operating cash flow that was a kind of a psychological barrier we wanted to go through as soon as possible.

Now this is what we found at the beginning. This is today, I don't want to waste your time in describing this slide. Just to show you the Galaxy of Leonardo right now is the most complete portfolio in terms of digital and hardware, digital and hardware, yes. Existing areas were improved sometimes. In gray, there are important updates that we had to make, for instance, cybersecurity, mission critical communication, all the satellite services and space platforms it was a strong upgrade.

And in blue, it's all the new, what we didn't have. Today, this is our footprint. And I believe what we have to remind, this is really a unique situation in which we can control from the platform to the system, to the system of system, we can offer solutions that are completely software, completely hardware. I would love because I come from hardware science, okay, hardware technology. I would love to be a software man, little effort, a big return.

But today, software people need hardware, and we do both. And I think this is our strength for the future. It's very important. So what's the future? Today is defense. We completed the portfolio. As I said, we did a big effort. I mean, of course, it's an ongoing process. I'm talking about 3 years only, but it's very solid approach now. We have new digital capabilities. We have all the platforms, manned and unmanned, which is very important.

And this made us credible when we start talking about the multi-domain solutions, multi-domain technologies because we really can do multi-domain products and solutions. However, only by this, we can take a big advantage. We can grow by this. You will see -- I will show this in the next part of the presentation, and you will see how simply the complete portfolio and the dominance of both the digital and hardware capability, let us be -- allows us to be very competitive.

But this opens new perspective, more ambition. Number one, you've seen what happened since October when we presented Miguel Angelo, several of you were at the presentation since October. That was the most timely idea to be presented in that part of the year because 3 months later, we have now 6 new complex in the Gulf, in Iran, and Lebanon, everywhere. And they're all dealing with air defense, air supremes. It's impressive.

So everybody would like to have an air dome, but what about the platforms? Do we buy all the same platform from the same provider, from the same country? That obviously would be possible economically for any country, which is not named U.S. or China because of the size of the economical power.

So we introduced our idea, which is the open architecture that makes it possible different platform from different builders to cooperate, to be orchestrated into a very effective defense system. This is what we are doing. And I will show you where we are going, and I will show you what kind of upside very conservative, to be honest, what kind of upside we can get out of this vision.

And then there is a third driver, this is the third driver of our future, what we call the new normal. Now imagine as we all hope that the world will finish all of a sudden, well, there will be any way a huge need of fighting counteracting against hybrid wars and not only those. There are also other very impressive economical impact that are coming from disaster recovery, climatology issues and so on. And those need basically the same technologies that we are developing for the Michelangelo Dome, and they're based on the same system that we developed here.

So this is the jam from defense, bare defense to global security. This will be the pathway of the plan. Now I will discuss with you that will be a bit boring. We go platform by platform, I will be quick. We'll see what is the upside that we expect from the new portfolio, which is a competitive point of Leonardo. Then we will go to the second driver, which is the Michelangelo Dome, the open architecture that makes us very attractive to everybody, not having the possibility to create all the platform in-house. So this is interesting for maybe 150 countries in the world potentially.

And then we will go to the new normal, the cyber -- the hybrid war, everything which will happen beyond a standard conflict. So these are the 3 drivers, and I'm going to present to you, and I will give you the upside for the 3 of them. Of course, the more we go towards the future, the more the forecast is tentative and rather conservative. But of course, we will update you quarter by quarter because this is rapidly evolving.

So let's see what is the portfolio benefit. Let's dismantle this structure, defragment the portfolio. Those are all our platforms now. Those are all our, let's say, software and services, and this is the network that let us work together. Now with some patience, I will be quick, I will not to be boring. Let's see -- let's go through all these thumbnails.

So this is a fixed wind. Well, I mean this is a very interesting transformation since 3 years because we do have all the platforms here, GCAP, sixth generation fighter, the long-living Eurofighter platform, which is now extended. There is a lot of offer. There is a lot of update ongoing. The trainers and the light attack aircraft, the 346, which is doing very well in terms of business. The new drone solutions that thanks to the agreement with by Baykar. Now we are ready to offer drones from very small payload to very big payload a couple of tons, including among jet fighter, which are fundamental for the for the loyal wingman or in general for the adjunct drones for the sixth generation fighters. Then we have the traditional air lifters and multimission platforms. And the class of services, simulation, training capabilities, electronic warfare, platform protection solutions, all the swarm intelligence that will govern the relationship between the mother aircraft or the father aircraft and the drones.

But things are all together. This is all in our portfolio. This we are actively working to that. Helicopters. Well, helicopters is also now is also a very complete portfolio. It's dual. We cover entirely the civil part, and we are very competitive in the military part, I'm going to point out the 249, which I believe beginning of 2017, will be certificated on the market. Jean-Pierre I'm watching you because the date is 27 anything, right, okay?

And then there are all the unmanned rotorcraft. This is the hero and the focus, which are being tested. All the multifunction systems. So also in this case, it's a complete portfolio, manner and unmanned plus all the services, worldwide customer support, training network. There is a lot of mission system integrated sensor suites, electronic equipment things that developed for the new machines.

So you see, I tend to emphasize that we do hardware and software, I mean, namely because the services are increasing the profitability, obviously, but also because demonstrate the flexibility of the capability Leonardo to offer products that are very competitive. And in most cases, it's cyber secured by design.

Land. That was the entry, but particularly exciting. So let me be very clear. I heard about criticism about the land systems. So do we need land systems? Okay, we have to be very clear. Technologically speaking, in a continent like Europe, having 180,000 kilometers of borders, you will always need land defense. It's not like a big island in the middle of 2 oceans, surrounded by 2 countries like Canada and Mexico.

That's a different story. In our case, we have bordered 27 countries in Europe, another, I don't know, 20 or so in the Eastern part. So we need the land defense. On top of that, there is something that I will drill down later, but it's very important.

Now air defense, it is not only big missiles coming from 1,000 kilometers. It's also massive attack or swarmed drones, massive attack short-range missiles. And in that case, you cannot use counter measures that cost 2 millions to destroy around that cost EUR 20,000. In that case, you need artillery.

Land artillery very fast, very precise connected to short-range radars, connected to a very advanced command and control system, but this is, again, land defense. So what we're going to do now because now we have all the portfolio. The agreement with, we have an agreement with we have acquired Ivehiclesco Defense. So Iveco Defence is not included in most of our numbers today, but we are going to close the merger in March this month. So it's a -- we are a target.

So what we do, we are developing end-to-end solutions, platform sensors, ammunitions, we can do everything. It's very important also that we are now, I think, among the very few, if not the only one that can provide all platforms on wheels and on trucks. And this is very different for different markets with all kinds of weaponization, with all kind of missions. main battle tanks and infantry vehicles, conventional and get ammunitions, our under 155 ammunition guided are supposed to be the best in the world at the moment. All the electronic countermeasures and force protection because of critically, there is war electronic warfare and also drones that are attacking those land machines. New integrated command and control solutions. These are, again, swarm intelligence type of approach.

Those machines will be surrounded by those machines unmanned. So the concept of GCAP, with flying GCAP or helicopters with the drone rotorcraft or land system is exactly the same. And you need, again, swarm intelligence to operate all together. And then, of course, another bunch of technologies for counter drone solutions, different platforms and so on and so. I mean, this is clearly the same approach we have on the helicopters on the aircraft is for this specific domain land.

Now let's go to Naval. As I said, we don't build ships. This is a totally different job. But our electronics essentially and our cybersecurity divisions control all the intelligent partnerships, combat management systems, surveillance, multimission radars, multispectral sensors, Naval, the 76 millimeters the volcano, I think, is best-in-class. Conventional and guided munitions, naval communications, counter U.S. solutions. And these things make the the ship more or less intelligent.

And this is all proprietary of Leonardo. Finally, space. We're still in the hardware part primarily. You remember, our plan was to reinforce end-to-end capability in satellite services. We are not proprietary of our head observation constellation. This was launched last year. It's under construction. You will see later in the road map. We're going to launch in '27 beginning of '28. The Guardian constellation is called.

Then we have all the technologies for exploration and all the technology for the ground segment. I mean this is a very complete portfolio, which is fundamental for both dual-use civil application, observation, but also for Michelangelo Dome multi-domain applications and so on and so forth. Now let's see the horizontal part.

Well, here, it's just brute force computation of power, data handling and people that are able to make algorithms for AI. We have reinforced substantially, we have doubled actually the capability in the last year will be actually inaugurated the new center, the data tower in general will be inagurated in April.

Cybersecurity. Cybersecurity, that's something very clear. I think you remember when I -- when we presented the first plan, the target was to increase substantially the defense packages and proprietary products. At the beginning when we started, Cyber was kind of a system integrator. So integrating softer than by others.

We changed completely the landscape, hired many people, technical people. So now first of all, we are able to be -- we are the first offering Zero Trust in technology made in Europe, which is NATO standard, by the way. So very necessary to interact.

We have 2 important platforms. One is for defense operation. And the other one is for trusted security services and crisis management. Those are products, the platforms for cyber that are very transversal. We are developing sovereign solutions for secure hybrid cloud data platform and global monitoring, and we are developing mission critical communications. Those are the 4 things on which cybersecurity is focusing now, did a very good job, double the -- more than double the volume of business. And of course, based on that, there are other products and other platform to grow.

You see here, I mean, this is, I think, self-explanatory. Orders generated by proprietary products in basically in 2 years, triplicated. So this is not integrating a job done by others. This is proprietary. And this is the military part, in 2 years plus 45% of military demand for cyber products, okay?

I don't spend time on electronics because as I have seen electronics is everywhere. So electronic is in itself a very powerful division. By the way, you will have today, I think, for the first time, the opportunity after the presentation to go, right, me all the in first 3 years, making a very cost competitive portfolio with other expectation of 134 million in 5 years.

This is approximately 16 more desperation, the last plan, the one that we updated of 2024. So we'd be happy -- it's the strategy. But of course, the challenge is would be a long lasting wave, but we have to build the future on top. So the aim is that after this will be 5 years from now, Leonardo to give possibly a world-class company capable to use all in defense or in cybersecurity. And this is the all potential demands on potential markets.

So let's see what we see the upside that could bring. So let's go this you have seen most of you, but I think it's very important to go through the analysis of the threat because we have to see what is the need. Then is the following: can we attack. Today, this is ballistic or hypersonic from 5%, 6% so they can open the mouth and at a given height that can deliver the bombs and the bombs are guided.

So very difficult to intercept. So there is a plethora of those technologies. The point is you have to see them as soon as possible because they like 3, 4 minutes. And that point will be very fast in making threat analysis and weapon assignment. That's all. This is nothing you can do with a conventional kill chain that we use today.

The second approach, the second trend, is a massive threat involving different type of platforms, swarm of drones, small drones, they cost 20,000, 30,000 each that are attacking and saturating the defense or a swarm of missiles or even aircraft that are attacking in big numbers. Now clearly, and this -- I hope this is clear, you can use missiles that cost maybe 1 million each to destroy a drone that cost EUR 50,000, but that's not very cost effective. And in the end, it's going to be a big problem if you have a number of sequential attacks.

So those are the threats. What do we do with Michelangelo. Level 1 is to fight with the massive attack of low-cost drones. They're not very high, they operate, let's say, hundreds of thousands of meters. They come all together. You have seen this in these days from Tehran. You've seen in the complete Lebanon and you've seen everywhere in Ukraine.

First thing you have to create the so-called dead zone. The dead zone is a volume of space. Typically, we're talking about 10, 15 kilometers, length could be 25 kilometers or even more if you want to protect the border, in which nothing should go through. The height can be 10 kilometers. So not so much to do with important missiles, just drones or other cheaper system.

The way of choice to neutralize the threat is primarily artillery, in which we have very advanced products, 30 millimeters, 40 millimeters, 76 millimeters with very high precision in front of my electronic BOSS Marco, the 30 millimeters, I remember more than 20, 50 bullet per minute, 98% precision. Is that right?

Okay. So that means that you have -- if you have a battery of those, of course, interconnected to radars and eventually 2 satellites, they can see this swarm coming, they take the position and they shoot, primarily -- I mean, in almost all the shoots, you have 1 shoot, 1 drone destroyed. You can have 40-millimeter machines that bigger, you can have 76, it depends on how much space you have and how much resources you have.

But this is the so-called dead zone. And you see clearly there is an integration satellite radars and artillery. And of course, you can have helicopters, you can have counter-drone systems. This can be expanded as much as you want as long as you own the platforms and you own the software and the electronics and the control of those machines.

Let's go to the second threat, the one that comes from very high. Here you need really a complete portfolio. You need satellite, our Guardian constellation. Now we -- you understand why we were pushing so much to our constellation. This is normally monitoring the infrared spot because typically those big missiles, they have an inference signature. When they are launched, there is a specific flash that is typical of the missile. So you know when and where the missile has been launched.

This information is passed through to a different menu of radars. It depends on the distance. Leonardo has an outstanding portfolio of radars for 30 kilometers range up to 1,000 kilometers more, and we're now funding the development of longer-range machines. Those can be mounted -- can be installed in ships or on ground. That's the fantastic things of controlling all the platforms. You do -- you put these things where you need them. It could be on ground, it could be on the -- on a ship. You can have small radars in a big network and a big one in a very specific location.

You can really do whatever you want. And the space you have to monitor is monitored according to the fact that you can combine all those technologies that are available. Well, of course, you need to have the data about the threats. You have to identify the threats and then you have to assign which is the best system to best effector to destroy the incoming threat. Okay. Those are the 2 extreme low height and the high called. Now the point is, we have minutes. So this is the kind of the human-driven. It must be AI-driven. So you need to collect all data and you understand how much -- how many data here are circulating in this combat field in this combat space. It could be 1,000 kilometers this one, very big, of course. Not necessarily more space.

So we should be ready to manage hundreds and hundreds of terabytes of data per second, order them, sort out order, analyze with fast algorithm. You need supercomputing capability, maybe in combination with edge computing because some of the preliminary data can be processed by edge computing, which is another source of new technology we are developing.

And then in a matter of 1 or 2 minutes, you have to decide which weapon is assigned to destroy the threat. Now is this compatible in real life within the doctrine for instance? At the moment, you have to consider this. We act with 1 sense of 1 shooter. I have one radar, I see the threat, and I shoot it. And this is what I have. Imagine that this is true for each domain.

So land, you have your radar, your GaN, whatever your tank in air, you have your aircraft, your satellite, whatever. But now imagine that all your domain have capability to find the threat to fix it, to track, to target to shoot and then to assess whether the system is destroyed. This is not a doc NATO doctrine, okay. Now imagine that you already have a country in which all domain already have this capability, and those are very few countries.

So this is country #1. And this is called the kill chain in which basically you get a dome that is protecting a single country. Now you have a country #2, and there's other dome protected in this country, and this is another country which is protecting itself by then. But you understand, this is not a complete approach. This is not safe approach, because every country will be individually pursuing the kill chain approach, which is not effective.

And remember, each country has different effectors, different sensors different equipment, different plants. So the Michelangelo radio Michelangelo is let's transform the key chain into a web chain. In order to make a web chain, you need all the platforms of all the countries to be interactive. So how can we make the different platforms built by different manufacturer, talk to each other. And once they talk to each other, you take the data, you struck the data, you process the data and then AI will make the decision. The decision stands in. Country #1 finds the threat. It's more convenient than country #2 because it's in a better position. Fixed. And then country #3, we did some platform we'll track. And then maybe, again, country #1 will be engaged because it has the highest possibility probability to hit the threat.

So these things it's like operating in parallel. It's an orchestration. You have 2 possibility for that. One is that all countries buy the same platforms. So it must exist one country that sell platforms to everybody. It's impossible, to be very clear. The other country is the open architecture that we have proposed with Michelangelo, which is technically simple at the implementation level is not that simple, but technically simple.

The idea is that you create an upper level communication amongst all the platforms of the different countries, no matter regardless of the builder, okay? It's Leonardo. It's -- I don't want to make up the names, but any country. So what is this? This is a module that we call Michelangelo 5 for some reasons, that interconnects all domains, including legacy assets of ours, but not only ours, -- it's a communication last. We do not enter into the electronics of the specific machine. No one will give you the secrets of the machine. It's just a top communication layer. And the data will be connected. So this sure multi-domain interoperability, interchangeability, interconnection. It must be agnostic platform sensor and effector agnostic.

So it can be applied to any machine existing machine. It is secured by sign, made for expandable network, of course, and it enables the open architecture because you can integrate any defense system into the network. So I know your question is a nice picture, where do you make the money? Okay. The picture is nice. Believe me, this is very new. No one thought this. And I think now we have 20 countries that are in contact with us to see how we can make this.

The money is very simple. You don't make the money on the hardware, you make the money on the service. You have to -- basically, you're selling a telephone, but the hub has to be paid. So you have a contract for service, cybersecurity for continuous update. You know the threats are evolving on a monthly basis. Well, we are going to evolve on a monthly basis too. And so this is actually the concept of the open architecture versus the rigid concept of a hardware architecture in which you buy my equipment, you put it there, and then you belong to the country that sold it to you.

This is the only way to make a European defense space in air, by the way, if you want to very realistic. We'll not be maybe the best, but for sure, will be more functional than many individual air domes in different countries. While Leonardo, well, obviously, because this goes back to what I told you before, we do all platforms, we do all command and control and communication systems and protocols and services.

We do all sensors, all weapons, all effectors. So we are ready. We will do this anyway. Just for your information. I can't say more. But the first component of the Michelangelo Dome, which is this one is now under construction for our friends in Ukraine. First test will be there in a real environment.

Delivery is supposed to be before the end of the year. Don't ask me more. You understand this impossible. But this is kind of prove that it's a very effective approach. Let's make it work. Now, of course, I mean I'm not oversimplifying. So what is the road map of Michelangelo?

In terms of milestones and deliverables, this is a very committing program for us. We didn't make it public, but at the end of '25, we demonstrated intercept and destruction of -- in one of those simulations done with the Army that were military forces intercepts and neutralization of a ballistic missile at 76 kilometers from the target. Mid-'26, we're going to demonstrate the first case swarm. Case swarm means that we'll make it fly in mother aircraft, which will be our M346 light attack fighter, governing 2 amended fighters. The fighters are jointly produced with our colleagues in Baykar and will be operated directly by the mother aircraft. Incidentally, you understand that this is not a sixth generation fighter. This is a standard fighter. So the concept is while we wait for the sixth generation fighter, which is, by the way, the frontier in the next decade, you can already provide to customers that don't have the opportunity to buy very big systems kind of a junk that can be operated in conjunction with existing aircraft.

We will have the dead zone trial. This is coincident with the Ukraine program that I told you by the -- by November, hopefully, '26. And then we will start NATO exercise NATO trials in 2027. In the meantime, we are developing all the command and control, the MC5, so our electronic teams and the cybersecurity teams are working full time on this development.

We are at the end of '27, beginning '28, where we have the first window launch window for the Guardian space constellation. Second window will be end of '28 beginning of '29 and then we will start opening to the other countries. So actually, besides a very urgent program with Ukraine, we plan from the end of this year to start having transfer of that technology or the Michelangelo in companion countries. And of course, adaptation of the M5C module technology to different systems.

Okay. I hope you understand how committing this road map, and this is an upside that comes not only a financial, this is a technology challenge, which is monster. But of course, the future goes through this kind of approach. We could kind of sum in a war zone with a strong portfolio we have now. But I don't think this is the target of Leonardo. We really have to develop something which is breakthrough.

So the upside of Leonardo of the Michelangelo very conservative, and you understand we do our best to be predictive, but this is not easy. We estimate approximately EUR 21 billion in the next decade and we prudentially estimate EUR 6 billion in the plan '26-2030 and the second -- in the continuation to 31, 35, EUR 15 billion. The promise is that we will be very clear in telling you how things are developing, but we believe this is very reasonable. Importantly, this is a truly transversal one company solution. You see all our skills are here, everything electronics, cyber, ammunition system, fighters, combat helicopter, artillery, new land defense system, platform integration of any kind, HPCAI, digital platform, newspace system.

Now you understand that if you miss one of those, just one, you don't make anything. That's why we need the most complete portfolio on the market. And I believe we should be proud of this because that was not at the right moment.

Okay. So the upside is EUR 6 billion, 134 here, and we are approximately 140 yes, 0.5%. And then we see the last domain. Let's go and see here, this is a bit more visionary for obvious reasons. The global security means that we have to protect agriculture, emergency services, energy, transportation, financial services, health care, water, nuclear sources, government facilities, military basis, critical manufacturing, chemical, maybe there is more. But I think this is enough.

Now security risk is no longer isolated, but they are interconnected. And clearly, this will appear when you see the numbers. Now there are very interesting statistics. Those are the loss for cyber crime, which stay for a while on cyber crime, the source is here, okay? In 2020, the estimated damage at global level caused by cyber crime was in the range of EUR 1 trillion per year. In 2030, the forecast is EUR 1 trillion per month. We are midway at the moment. Just for your information, you can work cost EUR 0.15 trillion per year. And you've heard recently this early days of the Iran conflict costed to United States some EUR 1 billion per day. So it's going to be EUR 0.36 trillion, EUR 0.4 trillion per year. We're in that range.

So starting surprisingly, those numbers are much more impressive. The global security spending, which is our countermeasure, it was EUR 0.4 trillion at global level in 2020 and it's supposed to rise to EUR 1 trillion in 2030. So you see there is a strong imbalance. The damage is going to be 12x bigger than the investment. So there's a huge market there. What is the business model here? Cyber crime was just an example. There are many others. I could show you risk connected to climatology, risks connected to energy and security.

I mean you've seen -- once again, I'm sure you remember when I presented the first plan, I told you, the first consequence of the Ukraine innovation was energy and security. You remember this. Many of you were already there. Okay. Now the first consequence of the Iran attack was would energy and security, the oil is $100 or so $90. So clearly, all those things are connected. So what is the, let's say, the business model, the strategy here?

First of all, we have to protect. It means continuous protection means persistent monitoring. You have to watch things, the more you watch, the more you observe, the more you are predictive. Then you have to detect the problem. It's written here, predictive analytics and identification of threats. By the way, it's like for me size, threat analysis and weapon assignment.

Here is threat analysis and solution assignment. This is primarily based on predictive analytics, AI, high-performance computing, big data analytics and so on and so forth. Then you have to respond. Respond means real-time decisions, support and rapid response. What does it mean? If it is a cyber crime, it is cybersecurity. If it is a earthquake, it's going to be drones, helicopter, land systems, so you have to be ready at any level in any domain, domains are no longer physical domain, multi-domain is no longer the physical multi-domain space airline, it's also digital multi-domain.

And there, you have to be ready as much as in the real -- in the physical domains. And finally, recover, ensuring operational continuity and resource optimization. So this is what a security competition guarantee. But do you realize that the same -- you need the same ingredients that you need for the are dominance and you need the same ingredient that you need for standard defense.

It's amazing. We are doing the building blocks of any kind or war, physical, cyber war, even more hybrid war, whatever. That's why we're pointing towards for the future to this market. It will be a progression, obviously. It's not going to be done in 1 year. Two examples already in progress in the company.

The first one, we launched a program that is about EUR 170 million, not so small. Crop monitoring and field health assessment to support the location of European funding, even without the European funding, it's good to have a crop monitoring and health assessment. The global market in agriculture is supposed to be EUR 40 billion in 2030 and the European market is 13%. That's easily aggressive, not only. So what is the concept here? You see here, satellites. Now -- well, I say Guardian, it is not yet in orbit, but we are using other constellations at the moment. Aerial imaging capabilities is our controlled company that makes image analysis at resolution. There is a smart agriculture country room where we do see by drones with the 10 centimeter solution, a single crop, if there is a disease how much chemicals they need. And this avoids, for instance, spreading big amounts of chemicals on the crop field because you can go with precision agriculture crop by crop without any extra pollution, without noise

Of course, this needs a lot of AI and computational capability. You need -- in some cases, you need a lot of cyber security for that. This is already operating, okay? It's an ongoing program. On the same footing, catastrophic event. If you see the United Nation reports, you see there's a trillion damage on a 10-year scale for catastrophic event that could have been predicted. You've seen in recently, there was a strong fall in this city in. I think it was 500 meters of rocks went down, bringing along houses, roads, cars, people. This simply because on this geological , it was a very strange it's a kind of hill, but with a very abrupt cut, underneath there was a river.

Everybody knew it, but they did consider that after a massive rain for about 3 weeks, the area has fallen and then it was basically breaking the ground and everything fell down. I mean hundreds of people lost their houses. Those things can be seen by the satellites or even with drones in real time, but nobody cares. There are many other examples.

This is something we can really do. The market is EUR 250 billion, the global market in Europe is EUR 55 billion is supposed to be. Europe is safer from the climatology point of view compared to other countries. And here, again, the look is the same. We have a program for that that has been launched. There is a global monetary control room. There is a number of actors.

Here, again, we need drones, we need satellites. We need cyber helicopters for the recovery because those things are entering in different moments of the loop when you have to recover or when you have to monitor or when you have to predict. So that's another source of funds for our, let's say, new approach, global security.

Okay. prudentially very conservative. We expect this to bring in in the next 5 years, let's say, EUR 1.5 billion. So we will inform you almost day by day. This could grow also, but I think at the moment, we have to be very realistic. So overall, 134 million plus 6, plus 1.5. It means that the group targets are clearly those. This is our expectation for orders.

Well, the numbers are good. The CAGR is growing 6%. It's better than in the previous plan. I have to find a position because this is so big that I need to run here and there. So EUR 142 billion order, cumulative order expectation. Just to let you know, this is approximately EUR 24 billion more than the forecast we had last year in the updated plan.

25 29. So it's considerable the improvement that we expect. The high order intake, of course, is based on a portfolio, which is absolutely symmetric. We don't have spikes or weak areas. It's rather solid. There is no concentrated exposure in any single country or single customer. And I think they are a unique supplier that can offer comprehensive defense and security solutions specific strategic partnership that you know very well with our -- in our JVs primarily.

Concerning revenues, strong revenue growth. We should be a EUR 30 billion company by 2030. CAGR is 9%. It's really interesting. Now of course, there is an improvement because we have improved growth in deliveries, and we have improved services. But of course, also the business units are growing very well, very harmonic. EUR 126 billion it's plus EUR 20 billion compared to the plan of last year, '25, '29. That was the last update that you were looking at 1 year ago or so, 1.5 years.

All right. This is the EBITDA. I mean I just want to stress that we are very committed in making efficiency and profitability higher. That was the mantra we have in the 3 years. The rush to go from the present double digits, let's say, to 12%. You see here EUR 14 billion, the EBITDA cumulative over the new plan, basically doubled from '25 to 2030. That's the commitment. Delta is EUR 3 billion more than the last plan, '25, '29. Actually, doubling the profitability in these 5 years, this means that margins are growing at faster pace than revenues.

And of course, we are very focused on the program management, efficiency across all divisions and increased service volumes. That's the commitment we have. Free operating cash flow doubled between '25 and 2030, very high growth. This is a strong commitment. So we doubled cash generation. This is driven by the higher profitability. We have to ensure continuity in the investment and in the new technologies that we're developing, capacity of expansion and innovation capability. That's very important.

The upside will come from the innovation capability on top of the organic growth given by the defense market. So let's have an overview '22 when we started, 25 today, let's say, yesterday, 2030, we want to go with the new plan. Let me tell you something I'm sure you remember the things I'm going to say you know.

Orders are supposed to grow by 85%. Revenues by 100% or so. EBITDA, almost EUR 194 million and for ROCE growing 3.7 points. cash -- free operating cash flow plus 28%. You remember when I told you, when I came here, I think it was the first time we met, I was online. I told you orders are growing. Revenue is not so much, EBITDA is constant, free operating cash flow, sometimes it's even negative.

So something was not good. Today, we have this situation, which is, I think, more appreciable. And in principle, FOC and EBITDA are growing much super linearly compared to the other 2. So I like this arthrosis, in my hand. This is what we have to show in the next few years to show that we have recovered a very healthy management and a very healthy company in terms of profitability and in terms of financial results.

I know that this cannot be done in 3 years, maybe in 6. For sure, the company is fully committed. And I believe that already the numbers here show that there was some important impact of our actions. But now I think the best should come -- so we are really committed in ensuring that we become very profitable and very advanced in terms of portfolio offer a board level. At this occasion, I will tell you a bit about the shareholder return dividend.

This year, the net income grew up by 21%. This is told by my CFO, and I was watch him. So we decided to increase the dividend by the same amount proportionally. So we will go to -- from EUR 300 million to 364 million this year, which brings us in the payout ratio range of 35% between 30% and 40%.

So as a guideline, you could think that if things will go well, all we should be at least able to offer a payout ratio to maintain to keep a payout ratio in the range of 30% to 40%. So you have a guideline, okay. hopefully better, but at least you have a guideline. You remember last time I told you we want to stay at least at the average of the big companies in Europe because at the beginning when we came -- when we started, we were really at the bottom.

So interestingly, the CAGR of our dividend is 46%. And from '22 to '26, we increased the dividend by 355%. I I told you this at the very beginning, I insist day, I think if the investors are not happy, if the market is not happy means that we are not doing well. So we are really committed to continue to do our best. The paid dividend per share is now -- will be 0.63 from now on. And let's see, hopefully, next year, even better, but that's what we can say today.

Okay. Capital allocation. We are confident because the operating cash flow before M&A contribution is EUR 7.5 billion. So the numbers are very healthy, good. We think to we would like to reserve or to book 5.5% of the cumulative revenues, which means the EUR 3.7 billion for organic growth. This means CapEx, research and development, basically, what we are doing, the organic things.

The good news is that other than Iveco, which is considered this stake the previous capital allocation because of the good number, we can allocate ex-resources for inorganic growth, approximately EUR 1.8 billion. This money will be spent always keeping in mind 2 roles, better to buy or better to make.

And this we decide depending on the in-house capability and, of course, time schedule and obviously, keeping the disciplined approach that we don't buy things that are more than the cost more 15% to 20% of the turnover of the division that's going to make them M&A. In general, this disciplined approach has been working very well so far.

The total shareholder return will cost EUR 1.3 billion. So as I said before, between 30% and 40% of the adjusted net income. By the way, this should be for the group, about EUR 1.5 billion, including our friends in DRS, our participation in, we have some participation in other companies.

So for Leonardo only, it's EUR 1.3 billion. So this gives 6.8%. Part of the remaining will be used for other actions, standard and for reducing the debt. By the way, the debt at the moment, we're going to close the Iveco deal, I think it's before the end of the month, if I may correct 18?

18 in March. So we're going to touch for a while, 1.1 EBITDA. So anyway, very much under control. And in 2 years, we go down to 0.8% of the EBITDA, definitely under control. I mean this is something fundamental because we don't want to have high debt. There is no point and yes, okay.

So those are the numbers you've seen already, but I just want to make sure that the picture is clear. Before concluding, I know it's long, I'm sorry. Before concluding, I want to tell you just 3, 4 things. So first of all, we launched a plan -- a program, we believe in Leonardo. The good news is that 11,000 of our employees invested their savings in Leonardo share.

I think this is the first time it's unique in Leonardo. We have 11,000 people in our team, in our community that purchase the used savings to buy shares. And the share at that time, we're at 45. Today, I think it's much more. It's a very good indication. The company starts to be self proud, and I think it's a very good point. I don't think it was like this in the past.

Second, human resources, okay, I should kill my human source people because this is very complicated. No, but these are all good news, okay? So I would make a sense. First of all, the workforce is going to rise. We're going to reach 75,000 people to be more precise. In the first mandate, the last 3 years, I think we hired some 23,000 people. I don't remember exactly, but several thousands were retiring. So the net amount of new fresh brains was 17,000 or so. Anyway, I should find Antonio. Antonio, tell me the numbers. We're right?

[indiscernible]

Okay, 63,000 were the fresh brains because some several thousand retired, okay? Those were fresh brains that are actually 50% below 30, 25% women and 74% STEM, so Science, Technology, Engineering, Mathematics, I think.

Now this means that our cluster of engineers, more than 15,000 engineers reduce the age, average age from 54 to 46, and we are progressively making the company younger. Not that the old people are useless, but we need more young people.

In the second step, the plan is to have 28,000 people new, but of course, there is a turnover on top. So the net will be a bit less. But anyway, with a target of more than 1/2 under 30%, 30% women and 70% STEM. What is interesting, it is because of the change of the portfolio and the challenge with, we're going to go from domain-specific platforms across a land, marine, cyber, this was the last plan towards fully integrated digital platform, multi-domain architectures and in the next plan, fully interconnected multi-domain ecosystems, cooperative management managed platforms, open industrial ecosystem. So what kind of profile do we need?

Five years ago, electronics mechanical engineers, avionics platforms, especially software developers, test engineers. Recently, system engineers, integration architects, ethical and malware data sciences cloud architects, digital twin architects, and now AI, human AI orchestrators, cyber and digital trust, quantum engineers, edge computing, space, satellite, communication and electronics.

So we have to be fast in introducing new competencies, does not mean reducing the others because those are essential for the bottom line, the 134 billion, obviously, but these are necessary to increase our capability in the new challenges. Now the question I see -- I saw one of my colleagues doing, where do we find them? I'm sure you were saying that, yes, that's a big problem. There is a shortage of STEM, which is impressive. For this reason, we cannot fix the problem all of the ones, but for this reason, I think I should tell you that our Leonardo laboratories program was very successful. We hired people from many countries with a brand-new methodology, not simply employee of the company, kind of more like scientists, let's say, more programmable contracts, primarily in quantum technologies and managed services, advanced power energy management, materials, optronics.

And those activities in addition to the R&D activities done by the divisions, cost approximately EUR 3 billion per year. About EUR 2 billion of those are funded by customers, primarily in the divisions that are making the real R&D, the one that goes into the products in short term, so high KRL. And then we are boosting the low TRL with our capital

allocation. These people let's say, about 12 go, they don't pass the selection after being 3 years with us or 4 years and the others, they go directly into the divisions. And they immediately nurture the innovation. For instance, quantum sensors or new software, stuff like that, AI is immediately transferred to the division. This just started with the first batch of and people but will be strongly increased over the next few years.

Without innovation, Leonardo goes back where it was before. That has to be very clear. Last but not least, you have seen this already, but I have to -- I have to knowledge that an outstanding job was done in sustainability. We didn't forget that we have to be sustainable even the defense has to be sustainable. So these are the main -- the most important organizations that are making the rankings in different ESG-related KPIs. This is Leonardo the moment. It's always among the top 3, 4 very often at the top always rated very high. This is, I think, Raffaella, this is the average of the peers, right, the average sector. So we are outperforming the sector in a definite way. I'm happy. I'm glad to say that the company is doing its best -- it's best to be clean and sustainable.

Maybe in some of these areas, we could be even a threat for other companies in other domains that are intrinsically cleaner. That will be funny. Will be fine, would change the metrics. Anyway, those are the international rankings. So I think we did our job and for the integrated balance sheet, it's important to show that we have also this capability.

Okay. So at this point, I promise it. I just want to show you 1 thing. You got all the numbers in terms of orders, revenues and -- sorry, EBITDA for all the divisions, including all the divisions are here. And you have the opportunity after we -- after the question and answer, to talk to the division leaders directly and ask your questions. Just for transparency, all our numbers are given the division by division. You find all the information. And I think this is an effort from our side to show you that there is nothing to hide. We're doing our best to be clear and transparent. Yes. That's all. Thank you very much for your attention.

Thank you, Roberto. You can, I think, come -- thank you come back. And I call also on the stage Giuseppe Aurilio, our Chief Financial Officer. Thank you, Giuseppe. We are now open to take your questions. Please take into consideration that we have now 45 minutes for questions, and please ask maximum a couple of questions each. For those in presence, please raise your hand and tell us your name and your company name. For those on the line, we will try to connect you or I will read your questions to Roberto and Giuseppe. So let's begin with the first questions from the audience. Thank you.

Two questions. The first one on Michelangelo. You didn't mention the R&D costs, the CapEx needed to finalize the development and I clearly understand it's too early, but what is the profitability once it is fully exploited sorry, and the second question is on the potential upside because the business plan doesn't include any contribution for Iveco, which is finalized soon. I suppose, small mid-single-digit EPS depending on the perimeter.

It doesn't include the synergies for space alliance enlargement. And also the other structure. I don't know if you are willing to discuss any additional clue on when and in which kind -- sorry, I forgot Martino De Ambroggi from Equita.

So I'll give you a short synthetic answer. And then of course, I can ask both Giuseppe and Marco to add information. So primarily now on the Michelangelo, most of the effort is in the module, okay, in the MC5. Can I say order make there is some some budget for development, which has been already included in the plan of the Electronic division. This does not need extra -- at the moment, does not need extra allocation from a general capital allocation. It's a part of or specific allocation. It's a part of the R&D plan and development of the division.

It's not nice to give numbers in this case, but we're talking to a global effort for the module in the range of EUR 50 billion to EUR 100 billion for the entire development. So we're not talking of disruptive amount of money. Of course, this is true because you're in Leonardo, where most of the -- I mean, all the tools are there. You just go to shelf and take the knowledge and the capability. If you have to do from scratch, missing some of the platforms or some the technology, I simply tell you cannot do it unless we invest billions, which we invested already in the past. I mean, for instance, the contribution of cybersecurity to the model. Imagine 20 platforms being interconnected by the module, the data in the battlefield, they have to be totally protected. And this -- we have the capability in-house. We don't have to buy it outside zero trust, they all these things. So the combination of this mix is very affordable. Yet not for free, but affordable within the organic investment in our internal development. Concerning Iveco, I confirm nothing is within -- no numbers related to Iveco primarily because we're going to conclude in a few days, we're going to sign the deal.

There is a very advanced due diligence in progress at the moment. So we have the numbers, and we will update you very likely already the quarter. I mean we know where to go. Don't forget that we are waiting to finalize also eventually, we still have to make a decision whether we release or not the -- we sell or not truck part. So this also changed a little bit. So those things are under analysis at the moment. Concerning aerostructure, I confirm that the business plan and industrial discussion with our partners is concluded. So we found all the level agent which is necessary. Our partner is now waiting for a sort of a political response primarily dealing with the possibility of incentives on the government to close the deal. We were told we have given actually -- we have the agreement to the exclusivity of June 30. And then it has to be yes or no. By the way, I should say. We still hope to make this operation because it's a very, very convenient for both Leonardo and the partner. But on top of that, because of the improvement of the situation in Boeing, aerostructure is actually recovering a delivery rate, which is very interesting. So we will do the new joint venture. But in any case, the numbers are improving. restructure so that we could even say that by '28, we go after breakeven point. But as you know, for me, it's no longer an issue of breaking point or not breaking point.

It's a technology and industrial policy issue. We see beyond the simple fact that we might lose EUR 100 million or not per year. We have to fix this in a very definitive way, okay? So I think I can confirm at any level that what we told you already at the reclosing is still there. We are working. Actually, the ball is not in our field to be clear.

Yes. Regarding Iveco contribution, Martino, we can add that this year, we will consolidate assuming that the deal is closed in March, will consolidate 9 months, only 9 months starting since April. So the contribution will be relatively small in terms of revenue, 1 year of revenue, Iveco is around EUR 1.3 billion, marginality is around lower than 10% in terms of EBITDA. So contribution relatively small for the year. Space Alliance, as you said, is included into the numbers. So there is no assumption at the moment in the plan to have the alliance instead of Space alliance. So the plan includes our structure, sales as it is now and not including Iveco vehicle. Roberto, liability?

No, Really, I mean, I can say numbers, but to be honest, if you give us -- let's see, at least it's not -- after the first trials, maybe even the 1 year campaign, we can have some ideas at the moment is a bit difficult. I mean, Marco, you're going to talk to them later as electronics. You can give an insight. So far, I think we have estimated something which is typical of the profitability of the Electronic division, okay? So on average, it makes sense because most of the stuff comes from there. But to be more precise, we have to go into the real situation also real architecture.

Alessandro Pozzi, Mediobanca. First question on the 2030 target EUR 32 billion, it's a big improvement compared to last year, much higher than our numbers as well. If I look at the CAGR, it's 6% versus 2025 in terms of order intake. But if we need to go from 2% spending on defense to 3%, let's say, by 2030, the procurement growth in defense is going to be probably much higher. So I was wondering what are your assumptions underlying the 2030 target also in light of the fact that you are becoming a global security company. So probably there's going to be an element of as well on top of that. .

Second question is, as you pointed out, over the last 3 years, you made a significant improvement in terms of portfolio. What is the key priority of Leonardo for the next 3 years? And last question, if I may, 2026 guidance, any moving parts on cash flow and cash conversion.

Okay. So concerning the expectation of the global market target, I think we should not look at the domestic market, whether this will be 2% or 3%. At the end of the day, Leonardo exports 80% of its products. So we have to be at the global market. That's why I told you at the beginning, we need to feel more international. We should not consider ourselves a domestic -- an Italian company. It doesn't make any sense.

If I stay on that fraction, 80 to 20 roughly, export versus import, I think we should simply watch what happens in the world. I don't want to sound like cynical, but if we continue with this trend in terms of words, clearly, the business is going to grow at the pace of those gigantic numbers. If all of a sudden, the words go down there is a comparable market, a very big market, which is the one I mentioned afterwards because everybody after the worse is willing to have a air shield for sure. This is prevention.

And of course, hybrid war will grow. As soon as the physical comfort will diminish, the hybrid war will increase because resources will be moved towards cyber attacks, infrastructure attacks and so on and so forth. So the important point for Leonardo is to be at the very core of the security.

Today, you cannot say simply, I am a defense company. It lasts as long as it lasts of war. That's a very shortsighted view. I think we should be really ahead. And therefore, this goes to -- drives me to your second question, what is the priority. The priority stands in the fact that we have to offer state-of-the-art platforms. We are there in most cases, okay, both manned and unmanned, but the real strength we have is that we have the capability to put all these things in the same orchestra, which means electronics, sensors, command and control at large, whatever it means, weapons cybersecurity, artificial intelligence.

Now if you only do those things, you have another name. I don't want to say which one, but you have another name. And you make software. And then you need to find people giving you the platform in a proprietary way so that you can play us after there. It's a weak position. If you only make hardware you struggle as it was in the past because when you only make big equipment in the best case, you have margins that are not comparable to software in the best case. Therefore, you have to do both.

So the priority is to be able to grow in an harmonic way from both point of view, we have to be strong in both I mean, to be honest, I think that to me, to analog, we should not be that we're champing 100 meters or in wait lift or whatever. We have to be like in Decathlon being among the top 3, 5 in any sector. In that case, for global security, you are definitely in a leading position. It takes time. It takes a lot of training. It takes a lot of investment in discipline that maybe we don't like, but we have to do the effort.

Yes. On the third point guidance, 2026, just one second back to the orders to the plus 5% orders because if we look at the split by division, I think it's interesting to see the evolution. We are above or close to double-digit growth in 2026 in all the divisions, except for aeronautics. And please remember that in 2025, we booked a jump order on. So when you read the data and the plus 5%, you should keep in mind the contribution from on 2025 on aircraft.

On free operating cash flow, I think we are planning to increase free operating cash flow by around 10% from above EUR 1 billion, which was a very successful year in 2025 to EUR 1.11 billion. It's a plus 10% increase with a number of items that we are offsetting to increase because as you may remember, we discussed, I think, in November about the outcome of the NHI anti litigation with Norway. So we booked in 2025, a provision of EUR 130 million, which is going to be almost entirely paid in 2026.

So the free operating cash flow includes more than EUR 100 million of cash outflow for the closure of the litigation with NH90. We are offsetting an increase in CapEx because as we see in the capital allocation table, we are planning an increase of our -- a peak of our CapEx in the next 2 years. Historically, we are at around 5% CapEx over to revenues. We saw in the cap allocation table that we are planning to get at 5.5%.

So the peak is more on 2026 and 2027. Finally, we are offsetting also the fact that we are getting taxpayer in Italy. As you know, in Leonardo, we used to have a significant amount of tax losses. Now given the very good results that we are doing, we will be a taxpayer since 2026. So 1 year in advance compared to the previous plan, we have an increase of pay tax. All that is factored into the provision of free operating cash flow. Despite this, we are increasing by 10%.

We are also factoring some -- as we said for the year-end, we are factoring the fact that we are being successful on the export market. This is going to create a recurring amount of advanced payment and so some benefits to the working capital. It's a event. The more we are successful, as Roberto was saying, on the international markets, the more we get cash advances, and that's going to finance our free operating cash flow. So cash conversion rate is going to increase above 70% despite all the things that we have been discussed in '26.

Ross Law from Morgan Stanley. The first one just on your guidance. Last year, you highlighted several sort of upside initiatives you called them, like the Baykar and the Rheinmetall JVs. Can you just confirm that that's now in your base case that you presented this morning? Secondly, on some comments made by your defense minister this week, Crosetto. He said that companies need to ramp up faster. Is he asking you to ramp up ahead of your current plan? Or is that now the base case? And if so, is Italy providing you better visibility to support that growth?

And maybe if I can just add 1 more -- you've said a lot about software, but obviously, software companies have come under a lot of pressure from the risk of AI. How do you protect yourself?

Yes. On the UAV, of course, that's in the plan. It's -- you see that mainly in the aircraft division but also electronics because we do provide from electronics, the platform. So the plan is including now the UAV business.

Okay. Okay. About the comment of our Ministry of Defense. Just last Saturday, we had a meeting with more than 100 operators in defense, which he was calling and asking all of them to accelerate because there is a peak of demand. You imagine from where. I mean, the Gulf area is under attack. So we're trying to drain all resources we have means platforms, radars, weapons. And in that respect, he was pushing a lot on 2 concepts. One was the try to get together to collaborate. But as you imagine, Leonardo is so big that most of the attention was on us. And the other one was give -- offer solutions that can be sent next week. So I have here, spent all the week and with the team finding those platforms, I mean, radars, missile stations and stuff like that, big stuff, okay, that you have to transport with special aircraft to send there.

And all this is under extreme urgency. So I believe the message was there is extreme urgency because Europe is trying to support the Gulf countries. By the way, even for us, it is not very easy because we don't have guns or big radars on shelf. But of course, we are moving a little bit our -- the available components.

In general, our production capability, capacity capability has been increased substantially, especially for this -- these products, such as the 76 millimeters GaN or some of the radars there's a big effort ongoing. To be honest, the number of words, the war is growing even faster than our capacity boost program, but yes, hopefully, it will not be like this forever. Considering the common software and hardware, you were asking me, where do I position Leonardo between hardware and the software, right? That was the question. Okay. Let's say, we maybe we're in the middle for sure because there is a big advantage in having your own platforms and adapting your, say, software to your own platform. In the meantime, you have to consider that the app is distributed on different technologies.

So you kind of focus only on one or on the other. So the complication stands in the fact that you have to sustain a multiple effort. Like in the deck at, you make many disciplines, but you are the same asset, but and in time, you're happy because this is all yours, and you know how to manage which is a big simplification in the end of the day, if you're going to offer a good product at the right price because if you own the components, of course, the final price can be competitive compared to those who have to do the software and adapt to another hardware that is not conceived for that specific coding.

So I think -- it's anyway a very competitive word. So you feel the pressure anyway. But I prefer to be in this situation than having only 1 of the 2 capabilities and then depending on somebody else to offer a complete product.

Christophe Menard from Deutsche Bank. Two questions. First one on Michelangelo. Why to pick your brain a little bit on the competition, how your clients are reacting to your proposal versus, I don't know, Thales proposed the Sky Defender. There is the European Sky initiative, and they are also the South Koreans on the market at the moment. So how is it -- how -- what is the market acceptance, so to say, of Michelangelo among your clients? And the kind of a touch question to this is, how many do you need to sell to attain your EUR 6 billion order intake target? Is it a few of them? Is it a number of them is just to gauge penetration. .

And the second question is on order intake. You said it's -- I mean if I take away Michelangelo and the new opportunities in hybrid, I think, EUR 16 billion or EUR 17 billion extra order intake versus the last plan. Where is it coming from? Because it's -- you updated us last year, so EUR 16 billion or EUR 17 billion is a big number in the year. So where is it coming from? Which division, which activities on the legacy business?

Yes. Okay. Concerning what the others are proposed, including Thales, we don't know anything because -- there's no specs nothing. So unless they're doing exactly what we're posing. I don't see how they can -- others can make on which platforms are they using, making an open architecture. That could be -- if there is another open architecture, it will be fantastic to collaborate, especially with Thales, we have special in together, we are working on Bromothat will be fantastic. At the moment, we don't have information.

In general, I think that everybody wants to make sky dome, but I think we went a little bit beyond this. So we -- the fact that we offer an open architecture means that this could be compatible with existing loans for nonexisting loans, so spare components. We are absolutely flexible. I will see what is the offer. I know that other countries are discussing how to implement a protection system. So we're totally open. The advantage of our architecture, as I said before, is so open that it can be compatible with any other system.

Concerning how many you have to sell to make the. Okay. First of all, the 2 components, dead zone, so let's say, land short range and long range can have independent life. Of course, the dream is that 1 day you have a total dome that covers entire Europe, et cetera, et cetera. But I think there is a widespread of opportunities. For instance, we're now thinking how to realize this program that I mentioned before. And it matters a lot whether you have to protect 25 kilometers square or whether you have to protect the Rome, which is much bigger or you want to protect the entire Italy.

So number one. And then number two, is this that zone or air defense. And then what is the business model? We -- of course, we have scenarios for that. The business model could be only services or you have to buy some platforms together with the Michelangelo dome and they, let's say, long-term contracts, 10 years, 20 years. So this depends on how we will negotiate. The advantage is that the architecture is open and it's so flexible that we can basically offer from the are, let's say, software contract plus the module up to the entire package, including the platforms because we can offer any kind of platform. By the way, some in collaboration with the French for instance, you can think to MBDA, for instance, where we collaborate on the missile. So it's really manageable as an approach. So answering you, how do you calculate the deli, -- it depends very much on the assumption done. Maybe 10 dead zones, 5 dorms some extension with or without platforms.

The original question is how do you make the plus EUR 60 billion on the, let's say, on the conventional part, let me say so on the part. Well, you have to consider that the new is -- we are entering into the production of the drones. We expect important things there. The first one will be delivered in April, and we are now starting with the plants in different countries, in the different areas of Italy. We have the land system that is growing because the delivery of the particularly of the inventory vehicle is supposed to have a rise from 27, 28, 29. The satellite part with the constellation and the services is supposed to grow because this is -- this was a negligible before now. There will be a boost.

Yes, I think in terms of platforms, there's a lot. The demand of electronics and of cybersecurity is impressive. The GCAP, anyway, if we managed to develop a giant fighter, that could be another market. So I believe that the perspective are quite reasonable. Of course, I don't say we're in a comfort zone. I hope it's clear. Don't confuse me out not to be misunderstood. We're not in the comfort zone we are pushing like hell. That's to be clear. People are under stress. We make, in most cases, 3 shifts in the plants. It's not a stationary condition. We are really pushing. I mean it's -- let me say, it's a growth company. It's a growth company. So still growing.

Afonso Osorio from Barclays. Can I just double check on your Michelangelo projects given that you expect the EUR 6 billion in terms of new orders by 2030? How do you see that in terms of revenue contribution by 2030? And also the splits by division would also be very helpful. On the drone side, to follow up on a previous question, I believe before you highlighted EUR 600 million contribution via the partnership with Vicor by 2029. Is there a new number that you can share with us by 20 and how you see that market evolving over the next 5 years? And then lastly, given the signing of the new helicopters contract in the U.K., how do you see that that contract contributing to your 2030 revenue and profit numbers.

You want to go first with the revenue and then I say.

Yes. Revenues for Michelangelo are, of course, for the reasons we said during the presentation, are spread across all the division. Of course, the bigger part currently -- it's an electronic division because it is assumed to be the prime in most of this activity. But the involvement is overall across all the business, so it's spread over all the divisions. Main numbers currently are in electronics. It will be, of course, it will not be EUR 6 billion of revenues because that's the value of the orders. So the value in terms of revenues is a portion of the EUR 6 billion that's accumulated EUR 3.5 billion or something like that.

sorry, actually, I cannot identify you Oh, yes. The second question was about the forecast of Baykar. Is that right? The market of the drones, okay? Well, I have a good very big expectations for the drones in that we have small companies that are now discussing with for the production of small payload. Let's say, the case per kilos, okay? That can be multi-operations. And then the big stuff with Baykar is for medium and big payloads from hundreds of kilos to a couple of tons.

So for me, the picture is rather simple. One chapter is the jack fighter jet. This is really -- it could be a breakthrough because in the end of the day, if you have a fighter manned fighter jet, you get really an interesting tool. And in the Michelangelo scheme, it could communicate to another aircraft manned aircraft. So you can anticipate or simplify the sixth generation fighter concept, which is, of course, state-of-the-art, but with a very cheaper and more flexible approach.

The second level is what is presently done by the repair and a few other drones, which is missing in Europe. If you think now in Europe, they're not -- we don't produce any drone with a payload the range of hundreds of kilos or maybe 1 ton. So for us, the fact that we started production in Italy in certification in Italy, therefore, in Europe opens a market that other boards would have been impossible for Baykar entirely with Leonardo payload. So state-of-the-art sensing, radars, command and control. Don't think for a while to Michelangelo, but even the drone itself, is missing in Europe.

At the moment, you don't have big offer, and you have to buy from the usual provider that are making very high prices for very old platforms and ours can be much customized because of the availability of different sensors, weapons and so on. So I think this is a big request in Europe only, it is a big request not to think about the gold and other areas. And then the small payloads, the very small payloads, there, I believe, a big company like Leonardo, it's much easier to buy, make a merger and acquisition or maybe a more joint venture participation in the company rather than starting production ourselves. It doesn't make much sense, and we produce thousands of pieces. So it's not our characteristics, okay? This is more motor bike company or a small automotive company.

So we better go and make a joint venture alliances and we should see in that case, what to do. On top of that, you have rotorcraft. Rotorcraft has a very unique, especially for landing on the ships for special emergency requirement whenever you need a vertical takeoff or lending. So I think the perspective is big. We do have numbers in terms of a credible market, okay, in Europe, and that they're quite big. I even don't dare to say those numbers because that could be so many billions that it is too optimistic.

But for sure, it's not a niche. It's something important. And my target is to position Leonardo as a main provider at least in Europe. Then you asked about the U.K. We were extremely proud of this good new. It allows us and the U.K. government to relaunch substantially the plant. Our Director in the Helicopter division the hell of work together with our colleagues in Leonardo, the U.K. and the U.K. institutions. So the very good news is that this contract allows us to launch a new era, a new phase for. And the agreement with the infusions and the U.K. institutions with Secretary State and the Minister of Finance that I was talking personally is that because now we have a long-term perspective, we're going to invest there, particularly to create a center for the development of rotorcraft roles.

And you understand this is a very, very timely as a technology and very suitable for the capability because they make an the helicopters, the MH will be 149 basically with the unmanned one. So we start to create a center of excellence for that specific technology. For us, it's fantastic. If we do that there, we don't need to do somewhere else.

So in terms of internal economy and the synergy is fantastic, very positive.

Gabriele Gambarova from Intesa Sanpaolo. The first question regards your assumptions in terms of total addressable market. You're going to see orders growing by 6% on average. I was wondering if you see the market doing -- I mean basically, if you intend to grow in terms of market share. So just an idea on this? And the second one is on your EBITDA margin expected to grow by 280 basis points was wondering what could be, let's say, the role of efficiencies and other moving parts, possibly a little bit more of granularity on this. And third, if I may, sorry, what is if you see any kind of risk in the execution of your plan, what could be, if any?

So about the total addressable market, I think that as soon as we close the deal with Iveco and close a few other things that are, let's say, towards a conclusion like aerostructure and so on, we will be able to make an analysis having no pending issues, talking about a few months, and we could be more precise. In general, I would like to understand -- I mean, the total addressable market is, of course, something financially very important. But from my point of view, I would like to understand what is the position of Leonardo global level as a, let's say, a global defense company, which includes understanding what is the total addressable market, but also the financials.

So we're going to work on those things in the next few months. Now we have to finish a few things. And then I think we will be more precise. However, I leave this to Giuseppe because he has, of course, some preview. Before passing the word to Giuseppe, let me tell you about the EBITDA margin that Joseph will complete, of course, but look, our EBITDA margin must increase substantially. First of all, because we were too below the standard. So that was mandatory to correct now because I think we made a lot of efficiency in terms of production digitalization. We have increased substantially the component of services in all our platforms. Maybe it's difficult to separate, but you have to consider now all our platforms, more or less are increasing the level of servitization. We have seen already in helicopters how important was to increase the securitization, but now it's happening the same in other areas.

Cyber is growing fast and of course, cyber margins that are higher than hardware specialists. Space will grow because services are important. So in terms of EBITDA and in general profitability, I think the role of services is very important, then efficiency and a lot of efficiency has been done. And I believe that those things will ensure the achievement of the target. -- the risk of execution, very big always.

We are not -- as I said, we're not in the comfort zone, not at all. We are ready to make how to say, hard choices, if necessary. But at the moment, I think that the company reacted so well in the last 3 years to the challenge of increasing efficiency, increasing competitiveness and improving execution that I believe that everybody is committed.

So the first plan was inventing, changing, cleaning. The second plan is execution, execution execution. Yet not forgetting that if we don't innovate, we don't win. And since we are a high-tech company, there is no competition if we are not competitive in the product. So baseline is capability to innovate and then, of course, to execute.

If we look at the total addressable market assumptions, we are planning to grow more than what we plan to -- for the global market, which is at around 4%, 5%. So we are planning to have an overall better positioning, which comes from the fact that we are part of some very important multiyear programs. So this gives solidity to the assumption we are doing to grow in all the markets. As regards EBITDA, of course, one key point is the efficiency. We are not repeating now because we said in February, but we are starting -- we are continuing going old with the execution of the saving plan, we set the first industrial plan.

We are doing better than that plan. So we are targeting to complete that saving plan to have 100% of that saving that, of course, translates into EBITDA where we have, of course, also, as Roberto was saying, the increasing weight of services and customer support.

So Helicopter is a very good example. It was below 8% -- 9% in the past. Now it's more more than 9%, we are planning to be double digit over the plan, thanks to the increasing efficiency further on time, on quality deliveries and production and also to increase the weight of customer support, which, of course, has a higher margin. So -- but it's true for all the sectors because at the end, what we see -- what I see after 4 months in Leonardo CFO is that we are growing at a very important pace in all the sectors, which gives solidity to the overall budget plan.

A question from the webcast for the CFO, will bond issuance be part of your financing plans in the next few years?

Of course, we have just refinanced part of our debt, which was expired early January 2026. So for the reasons we said at the moment, we are not going to increase our debt. Of course, as part of the refinancing strategy we have, I mean, we are far from the DCM since 2020. So it's something that we need to be back on the DCM. But as part of the refinancing road map we have -- we don't see at the moment the need to increase our debt. We have seen the cap allocation table, which we think we have the funds necessary to habilitate our growth for the future. So as part of the refinancing options, of course, bond issues could be one of those.

I don't know if there are other questions from the audience? Yes No. So this was the last question for today. Thank you, Roberto and Giuseppe.

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Just to thank all the team, they were working like crazy.

Thank you to Roberto and Giuseppe. Please remember that the Investor Relations team is available for any further question you may have. Thank you all for your participation in our event. And now will be served on the left on your left. And for the press, we invite you to follow Leonardo press office team. Thank you.

Good afternoon to everybody, and welcome to our 2025 preliminary results presentation. I'm Claudia Introvigne, as I think you already know me. I'm responsible for Investor Relations here in Leonardo. And today, I'm really pleased to have with me our CEO, Roberto Cingolani; and our CFO, Giuseppe Aurilio, who is at his first report here in Leonardo. We are pleased to present our preliminary results, which will be focused on 2025. Please remember that you are all invited on the 12th of March to our industrial plan presentation. when we will also present to you our 2026 guidance. So please bear it in mind in the Q&A session that will follow. Thank you. And now I will hand over to our CEO, Roberto.

Thank you. Thank you, Claudia. Hello, guys. Nice to see you again digitally. As usual, we make the pre-closing the preliminary of the year, the Q4. And then in about 3 weeks, we will have a much longer session about the update of the new industrial plan. Somehow, this is the last Q4 we celebrate together. So it's a fairwell session, up to be back the day after the 12, of course, March. Today, we want to share with you some of the data. And first of all, let me acknowledge the fantastic work that we did with the new team with Claudia that you already met a couple of, I think, in the last report, the Q3 and with Giuseppe Aurilio, who was integrated immediately in the team.

The transition was extremely smooth. Giuseppe knew very well the company, was in the company for many, many years, and we were extremely effective. So maximum satisfaction from my side about the progress of the work and the reporting with the new team. So let's see the numbers. Numbers for the Q4, though preliminary, they're almost exact, I would say, they are very satisfactory. Let me start with the comparison year-over-year. About orders, we were expecting something in the range of EUR 22 billion to EUR 22.7 billion. So that was the updated guidance, and we closed with EUR 23.8 billion to be compared to EUR 20.8 billion last year. So it's plus 14%. Concerning revenues, we closed with EUR 19.5 billion, plus almost 11%. The guidance was EUR 18.6 billion. Last year, it was EUR 17.6 billion. The EBITDA is also remarkably growing. We closed EUR 175 billion, so plus 18%.

Our guidance -- updated guidance reported EUR 1.66 billion. Last year, it was EUR 1.48 billion. The return of sales is increased by 0.6%. So we go from 8.4% to 9.4% this Q4. Cash generation also here, I mean, for the first time, we break the psychological threshold of EUR 1 billion. I think we finished EUR 1 billion plus some little money extra. The updated guidance was EUR 0.92 to EUR 0.98.

Last year, it was 0.84. And the net debt is reduced by 44% down to the level of EUR 1 billion. Last year was EUR 1.8 billion. So we -- I think we got all the results we had in mind, slightly better than the updated guidance. Let me make the story because this is the last Q4 in the mandate. And I think it's interesting to discuss with you the significant growth and the financial transformation that Leonardo underwent over the last less than 3 years. So orders have been growing by 38%. When we started our mandate, they were in the range of EUR 17 billion.

Today, we are in the range of almost EUR 24 billion. Revenues were growing by 33% over the 3 years from EUR 14.7 billion to EUR 19.5 billion. And I think this is encouraging, but I think it's even more encouraging to see that EBITDA and free operating cash flow were growing super linearly compared to the orders and revenues. As you see, the EBITDA was rising from EUR 1.22 billion up to EUR 1.75 billion, 44% and the free operating cash flow grew by 88% from EUR 0.5 billion to EUR 1 billion.

Now I think this is -- this deserves some consideration. First of all, let me remind you my usual gesture. At the beginning, I said orders, revenues, EBITDA and FOC, we're not happy because the orders were growing, but the FOC was not growing properly. And the -- actually, the target was to have something like this. So the curve should have been kind of parallel. I think we are on the right track.

For sure, orders and revenues are growing, but you see EBITDA and free operating cash flow are growing faster. That means our recovery in terms of performances, efficiency, cleaning the portfolio and so on and so forth are now giving the right results. Concerning the analysis of the other KPIs, let's say, in the last 3 years, the net debt, as I told before, was going down from EUR 3 billion to EUR 1 billion.

Actually, this 67% reduction comes from, first of all, the savings, the efficiency and the rationalization of the portfolio we did so far. It comes from the sale of the undermarine activity, that was. And on top of that, it comes from the higher cash generation that really allowed us to go down to a debt level that is unprecedentedly low in the history of the company, recent history of the company. The dividend, that's very important for us. When we started, we had rather modest dividend that was stationary for many, many years.

We were in the range of 14 EUR 0.14 per share. This has been increased regularly every year. Today, we are at EUR 0.52 per share. So the CAGR was plus 275%. What is important for us is that the dividend yield now is aligned to the European average of the peers. We were below the lowest decade in 2022. And the CAGR of the growth of our dividend is much faster than the one -- the average one of the peers in Europe. So we are now -- we grew up by 55%. And what I would like to anticipate -- I mean, for me, this is very important. I would like Leonardo to be always attractive and satisfactory for our investors.

This year, we're going to increase further the dividend. Of course, we are making the detailed calculation. This will depend on the net income. Very likely, we will improve kind of plus 20% because this will follow the expected increase of the net income. So anyway, this is very important for Leonardo because we have to be in the right range as a company with ambition. And of course, we want to reward our investors. Finally, the employees. When we started, we were about 50,000 people. Today, we are about 73,000 people. The growth is 22%. What is very important is not only the absolute number, but also the typology of people and the age and the gender. In the 3 years that we just finished now, we hired net 17,000 people, 1-7, 17,000 people. The important thing is that about 70% of those people are STEM. So they own essentially a technology degree in science, engineering, mathematics, whatsoever.

More than 20% -- more than 30% are women. And what is more important is that 55% of those are below 30, below 30 years old. That means that in these 3 years, we also started an unprecedented transformation in the human capital, getting younger people, much more technology oriented, which followed the portfolio transformation of the company because we need by far more STEM to be competitive in terms of new technology and new solutions for defense and security. So at the beginning of the 3 years, that was the picture. We summarized on the left orders.

This have been discussed already, revenues, EBITDA, EUR 1.2 billion, free operating cash flow, EUR 0.5 billion. Dividend per share, 0.13, 50,000 people roughly, and the market cap was EUR 4.6 billion. Our portfolio, our matrix portfolio was relatively complex. We had in the air domain, all kind of aircraft and helicopters, not yet a sixth-generation fighter, a lot of electronics in all domain, land, air, maritime, space. And we had some starting cybersecurity activity and very poor digitalization. So at the very beginning, 3 years ago, there were businesses that were in silos, not interacting very well to each other.

So far from the modern multi-domain concept, interoperability concept that are becoming essential mandatory for the future defense. There were several unresolved issues in terms of performance and and efficiency and capacity. The product portfolio was fragmented. We had to clean it substantially, also cutting development lines that were absolutely off core business. There was a very limited digital capability. I'm sure you remember this was one of the first point when we started our enterprise. Innovation was quite slow and maybe the confidence of the investors was not so high. Now over these 3 years, we were working quite hard.

I'm not going to read again the numbers. Just reminding that thank you to your trust. We could go up in the market cap to $34 billion, and I thank you for this investment believing in Leonardo. But what is more important is that the metrics of products now is very complete. We cover the entire air domain with all platforms, manned and unmanned, which is very important.

There was no unmanned whatsoever before. Electronics is getting -- is becoming the glue of all the platforms. Digitalization is transversal to all our platforms from digital twin to digital toolkit for manufacturing. AI, more than 2,200 people that are using AI in production and more than 200 developers of AI capabilities. We doubled our computational power and our storage with the new [indiscernible] supercomputer. Land, with the recent agreement with Rheinmetall, the acquisition of Iveco, other agreements we KDS another company we are starting to discuss with. In land, we cover all the manned and unmanned platforms. infantry vehicle, main battle tanks, wheeled and with trucks.

Maritime, we own absolutely the control of the combat system of warship. Space, we started our constellation. We developed with a lot of effort, a new division, and now we own the entire spectrum of satellite services applications. And as you know, we are discussing the constitution of big company at European level with our peers, Thales and Airbus. And cybersecurity underwent a strong impulse that you've seen from the numbers. But later, Giuseppe will give you more details. So what happened in those 3 years?

New product and portfolio rationalization that was essential to complete the matrix. Without this complete matrix, we cannot be in the multi-domain as a leader and not as a followers. We made a number of strategic partnership and joint venture and selective M&A acquisition. This part is what we -- you remember at the beginning, we presented as our inorganic growth plan. The strategic partnership are bringing in very good results. We now have all the platforms for drones. By the way, I anticipate that in April, we will launch our first drones from the [indiscernible] plant in collaboration with our friends in [indiscernible].

GCAP, everything, this is the Edge wind company has been constituted and we are up and running. Actually, I think this is the last big consortium left in the international landscape. So we're in a very good position. Bromo for space, I already mentioned, selective M&A moves, especially in the field of cybersecurity we're very convincing. We now own in cooperation with our partners, Zero Trust capability, and we are developing very quickly the portfolio of cybersecurity.

We accelerated the digitalization in a way that has never been done before, including the doubling the power -- the global power computation and storage that we have with the company. We have launched the capacity boost program. I'm happy to say that the capacity boost program has now reached a maturity point. We have more than 300 manufacturing and production pilot programs, and there is a team of about 100 people distributed in the company that are working directly onto the production line. So this went from theory to production line in about 6 months.

And then, of course, we are pursuing our disciplined capital allocation program. This is fundamental. The numbers are good. The net income is good, free generation -- free cash generation is good. Debit is under control. This is the time to make a very ambitious but disciplined capital allocation to accelerate further the growth of Leonardo for the next years. So at the beginning, 3 years ago, we had a rather complete portfolio, little digitalization in that some cybersecurity was the only thing available.

And of course, we knew at that time that was very important to create the capability for a multi-domain technology. Now actually, after 3 years with the effort we did, we are able to face the market with a very complete portfolio. There is everything from the constellation to all the managed and unmanaged flying systems to all the land man and unmanned flight system, entire suite for global combat system in the ships. And the space has been substantially improved in terms of data analysis, constellation, ground stations and so on.

On top, high-performance computing and cloud for AI generation has been improved substantially. Cybersecurity has been reinforced and it's growing fast. And as I said before, the constellation is there to provide data and supervision. In the end of the day, we said 3 things 3 years ago, bullets and bites. At that time, it sounds like a very exotic statement, but I think now it's commonly accepted everywhere in the world. A large part of the effort in defense goes through digital technologies. coupled to bolus technologies, let's say, mechanical or platforms. The second message was no one can make it on its own.

So joint ventures, acquisition alliances are fundamental to accelerate the response towards the dramatic demand that we have on the market and also to facilitate the creation of a European space of defense, which is before being political, this has to be industrial. And finally, we are preparing ourselves to face a real challenge of the next decade and possibly more than one decade, which is passing from the bare defense, which means essentially weapons and weapon system to a much more complicated global security approach, which should defend our countries by the hybrid wars. So no matter whether we will have conventional wars in the next decade or all the wars will finish, and we will have another kind of war, which is a cyber war, safety, security of the infrastructure, energy security, food security, all those things will cause damages and economical losses that are incredibly high. So we are preparing Leonardo ready to face both challenges.

This will be the content of the new plan, the updated plan that we will introduce to you guys on March 12. I don't say more. I cannot spoil more. There will be numbers, there will be forecast, but of course, there will be strategies that will design, will pave the way to the future of Leonardo. I conclude before giving the words to Giuseppe, with a bit of sustainability. I'm very proud to say that meanwhile, Leonardo was growing quite fast in terms of group revenues. So basically, in a few years, we grew up by 40%.

You -- well, of course, consider that this was the COVID time. So that was a very complicated period. Let's say, most of the growth was in the last 3 years, as I said before. We were able to work quite effectively on water withdrawal, waste production and reduction of emission by Scope 1 and Scope 2. And you see how counteracting are the -- is the growth of the business compared to the improvement in terms of sustainability, Scope 1, Scope 2, waste produced and water withdraw. Those are the numbers, if you like to see them.

And on top, the workforce, as I told you before, was increasing substantially, improving diversity and improving the global fraction of young people below 30 and also reinforcing the innovation because today, we have reached approximately 20% increase year-over-year in innovation. So today, Leonardo can safely state that we invest 15, 1-5, 15% of our revenues in R&D, which is actually the safest way to be very competitive in the future at the level of the best companies in the world. Now the -- what we did so far has given a very good results in terms of ESG rating. In this radar plot, you see Leonardo now a day. Those are the main ranking that I'm sure you're familiar to, so I'm not taking time to go through them, where we are always in a very good situation. And this curve is the radar curve average of the peers.

So it seems that Leonardo has gained a very prominent advantage in terms of sustainability of the business compared to the peers. Of course, the core business is to make the best technology ever, but also being sustainable is very important. Now before concluding and giving the stage to Giuseppe Aurilio, I want to anticipate 2 things that I'm sure you're going to ask me because I promise you to give some important update about Aerostructures and about Iveco. So I'm going to do this now. Happy to answer your question, of course, but I think it's good that I anticipate the core.

So concerning Iveco, -- the closing, we confirm the closing by March this year. So we're very close to accomplish the acquisition -- to finish the acquisition. It's -- we are very happy in terms of industry opportunities, wheel and track the systems. The demand is very strong. We are delivering already to the Ministry of Defense, the early machines with Rheinmetall and the capacity will increase, thanks to the Iveco absorption. Concerning the trucks, our colleagues in Rheinmetall are now testing the situation with the antitrust, of course.

So this is a mandatory step. So we will give them approximately 6 months of exclusivity in order to check how this can be developed. Anyway, we're going to close because the agreement is that we close, we are in a hurry to increase our capacity. The truck business itself is a truck business is a business that has a rather good margin, 12% to 13%. There is absolutely no warning, and there is quite an interesting backlog of orders. So we look forward to see what the antitrust analysis that our colleagues in Rheinmetall will do together with the Leonardo team.

And then we will decide how to proceed by, I think, by the mid-'26. There are also other potential companies interested. But as we told you since the very beginning, we try to pursue the strategy with Rheinmetall, wait for the antitrust and then make a decision. There is no worry at all whatever will be the outcome of those analysis in the next few months. Concerning Aerostructures, I have news that are important. So we -- I was personally visiting the top management of our counterpart, potential counterpart.

They still ask some confidentiality for 6 months, but I can tell you where we are in a very detailed way. So our stand-alone plan was accepted and evaluated very well by the partner. We evaluated the stand-alone plan of the partner, which is very interesting. The idea is to create a joint venture, which is going to be something like 50-50 at the beginning as an international company. The brain at the beginning stays, of course, in Italy, but we push substantially the production because our partner is both financial and industrial, and they have a strong demand of components for civil aviation, but also for military aviation, rotorcraft and in the near future, potentially also space. So this is going to be a gate towards a new global company that starting with aerostructure going is to open to big markets in the, generally speaking, their domain, aerospace domain. Everything is ready.

The due diligence lasted 14 months so far, there were approximately 70 items, 70 assessment lines. About 7 should be finalized this month. The others are completed, green spot, so they are done. Our partner is waiting for the confirmation that some incentives will come by the local ministers that will complete the financial plan. And the commitment because the exclusivity is given up to June is to sign before that date.

I think industrially speaking, we finished our work. Our customers, so the main builder are aware of that. We, of course, confirm at the very beginning, we will keep absolutely the quality as usual in our plants, while we transfer some of that technology, some of those technologies in the company, in the partner plants. So we expect a very smooth transition, quite an announcement of the business which is going to be -- because it's going to be a global player, not a limited division, let's say.

And I expect also to see a positive impact already in the 2026 balance sheet as soon as we complete. I can't say more details because confidentiality is a primary requirement for our partner. But I think I gave you a clear picture. You know where we go, and you know that 95% of the job has been done. Thank you very much for your attention. I give the stage to Giuseppe for the financials, and then we'll be happy to answer your questions. Thank you, guys.

Thank you, Roberto, and good afternoon to everyone. I'm very pleased to be here presenting our full year results, our strong performance for the year and looking forward to meet you as many as possible of you in room when presenting our updated industrial plan. Let me start with some initial consideration as I'm now serving as CFO of Leonardo since 3 months. So as Roberto was saying, the -- my transition was very smooth. I found a very strong management team and a very strong team. So this is helping me a lot in understanding the complexity of our business. I found a company and a group which has a very clear strategy.

I was impressed when reading back all the papers that we were presenting to the market how linear is the connection between what we said at the beginning of the 3-year mandate and what we have been doing during these 3 years. And I found also a group which has transformed a lot at a very quick pace. I see from a financial point of view, the difference in terms of profitability and cash flow generation. As you were seeing where Roberto was presenting the results for the 3 years, the increase in EBITA and free operating cash flow is much bigger compared to the top line. This means that we have been doing a great job in recovery efficiency and improving cash flow generation. So very strong performance, as I said, we exceeded all the guidance in all the KPIs.

So orders are around EUR 24 billion this year, driven by successful export campaign. We will see when discussing about the divisions that this increase is spread over all the divisions. Of course, there is a focus -- a specific focus on aeronautics because it's where we got the Kuwait service order follow-on very big order in Kuwait. Revenues were at EUR 19.5 billion, so well above our guidance. And the same for EBITA, EUR 1.75 billion. So the EBITA increased both for the volume effect, but also because we recovered profitability with a return on sale up to 9% from 8.4%. So 60 basis points up.

Free operating cash flow was above the EUR 1 billion threshold, which was impressive to me. If I think back about my first period in Leonardo, I was also in the CFO department, we were struggling every day on cash flow generation to improve, but with the level of the target, which was completely different. So being above EUR 1 billion is a challenge -- was a challenging target, and I'm very happy about these results. And this has led the debt -- net debt down to EUR 1 billion. Of course, we have here the positive impact of the cash flow generation for the year, but also the proceeds from the disposal of the UAS business early 2025.

So as I said, we are growing. We are continuing to grow it, but increasing profitability and cash generation. So let's focus on the orders. For the year, orders were up 15% year-on-year with total backlog at EUR 47 billion. As you can see, the book-to-bill was above 1 in all the division at 1.2 at group level with a very strong increase, as I said, in Aeronautics, where we have the effect of the extension of the support service contract for the EFA Kuwait, but also very good momentum. So new orders on trainers, C27J. And of course, we have strong opportunities also for the future. Defense Electronics, we see there is an increase of 5%, 8% if we look at Europe, you know that inside the Electronics Defense, we have Europe, U.S., DRS plus the contribution at least at EBITA level of our JVs.

So Leonardo DRS was negative year-on-year, but just because of the exchange rate of the translation of the dollar, which was negative. Otherwise, it will be positive by 4% compared to 2024. Helicopters market a growth of about 5%. So Here, the growth was driven also by the customer service activities, which is very important in our strategy as it is part of the road map we have to increase profitability in helicopters, and we will see later on some results on that.

Finally, so we are growing a lot in our 3 bigger pillars, electronics, helicopters and aeronautics. But I'm happy to highlight that we are above EUR 1 billion orders per year also in cyber and space, which were very small when starting the execution of this industrial plan. You may remember that cybersecurity was about EUR 0.4 billion in terms of revenue in 2022 -- now we get at EUR 1 billion orders. Space was not a division. It was part of other division.

The activities in Space were part of other division or were operated through the Space alliance. So now it's a division with EUR 1 billion orders and EUR 1 billion revenues per year. So I think this is a very good sign of the proper industrial plan, which was set at the beginning of the year and the execution of that industrial plan. This increase in orders, of course, has pushed up also revenues, which were up 11% compared to 2024.

So double-digit growth, double-digit growth also over all the divisions. So we have growth at group level, but also at the same pace in all the division. So Defense Electronics & Security, we have a strong growth in Europe, 11%, but also in Leonardo DRS, again, this 8% that you read on the table, of course, is affected by the negative translation difference on the dollars. Otherwise, it will be above 10%. So very strong increase also in Leonardo DRS. Helicopters were up by 11% compared to last year.

So 1 year ahead of industrial plan targets. where we were supposed to get the same level of revenues in 2026 and higher volumes driven both by the helicopter and the platforms, but as I said, also that the customer support. If we look at the deliveries of the helicopter division, this year, we are slightly down in total compared to last year, 182 deliveries versus 191, but the mix is completely different because in 2024, the weight of light and very light helicopters was much bigger. So for instance, we had 42 light helicopters against 14 this year for the U.S. Navy. So you can understand that the number in total of deliveries is lower this year, but the mix is more favorable in terms of unit per delivery.

And I want to underline also increasing contribution of customer support. where we have higher margins, and this is an important part of our road map to improve profitability in helicopters. Aeronautics performed in a very solid manner. I think we are well progressing in all the main programs, IFA, proprietary platforms, GCAP, JAF, so very solid performance. Aerostructure were slightly negative, but in line with the budget, and we will come back on this point while discussing about the profitability because I think Aerostructure was a key point. And of course, cybersecurity pace are increasing following the success we have on the commercial side.

So revenues at the end, EUR 19.5 billion with Italy accounting for about 23%. So the international dimension of the group is increasing every year as planned in our industrial plan. This increase in revenues has an effect -- a positive impact on EBITA, which is up 18% year-on-year -- this is not only because of the volume effect that you see on the table that a portion of that increase is linked to the volume effect. But of course, we have also a significant increase in profitability. We said that the return on sales has gone up by 60 basis points from 8.4% to 9%. And so this is a clear effect of the actions we are doing to improve our profitability and cash generation.

Also here, we had a small negative impact for the translation of the dollar figures of DRS, but quite small. If we look at the EBITA by segment, I think it's interesting to deep dive on each division. Starting from Defense Electronics, which is this year above EUR 1 billion in terms of EBITDA. with a return on sales close to 13%, slightly better apparently compared to last year. But then I think as I said earlier, we need to look at the composition of the value of the EBITA for the division. As you know, we have 4 building blocks. We have Electronics Europe.

And here, our EBITA was about 11% from 10.3% in 2024. So very good increase. We have Leonardo DRS, which has increased its profitability from 10% to 10.4% -- and also, we have the contribution of our JV and strategic partnership, MBDA and Est, which in total gives a contribution of EUR 180 million, which is about EUR 20 million less than 2024. So if we look at the overall ROS, we see a slight -- only a slight increase, but because it is affected by the negative variation compared to last year of our JV.

So a little bit surprising this negative variation, I will explain better why. As you know, we put in our EBITA the net result coming from the JV. So we put on our EBITA also the impact, which is below the EBIT line of those JV. So mainly tax, which were this year higher in EBITDA. EBITDA is a group which is performing very well. This year is going to be close to EUR 6 billion in terms of revenue with a backlog of EUR 44 billion. So double-digit profitability.

So it's performing very well. But if you go to the last line of the profit and loss, we got a tax charge because of the tax reform in France, which has affected the net result. So profitability in Electronics division growing slightly, but only because of this impact on the JV. Helicopters, we have increased our profitability from 8.8% to 9% ROS. So here, we see the benefits from our actions, both on the efficiency on engineering and our supply chain management, but also the increased contribution from customer support.

As I said, we have higher margins on customer support, and this is part of our strategy. Aircraft, again, very solid performance in Aircraft division, close to 13%, driven by the programs I was mentioning before. Aerostructure was negative by EUR 130 million, around EUR 130 million. So still negative, but in line with our provision, and this is true for all the KPIs of Aerostructure, including cash flow.

So the plan we made is solid. During the year, we increased also the shipset rates on B787, you know that it is our bigger program in aerostructure. And during the year, we started from 4 shipsets per month. We arrived at 7 at the end of the year. So a very good progress. We got an agreement also with Boeing that makes our rate plan also for the future much more robust and reliable, and this gives confidence about the solidity of the plan we made on Aerostructure. An additional point about Aerostructure.

If you look at Q4 only, you see that Aerostructure is at breakeven. This is due to the impact, of course, of the increase of the rates on B787, but also on the closure of some smaller programs, which has allowed us to release some contingency. So it's a very good sign because it implies a progress and a benefit on the activities we do for Boeing, but it's also not an indicator of the trend going forward. We expect Aerostructure to be in a loss position also in 2026, and we maintain the plan we said in the past.

We will go in more detail, of course, in March, but I can anticipate you that, of course, if you see breakeven in Q4 is not what you have to expect in 2026. As said, very important milestone, the agreement with Boeing. It's around 50% of the business. Then we have other activities, which are more or less fine and this is reducing the issues on Aerostructure on around 30% of our revenues. It is the activities we do with ATR and Airbus.

But Boeing now has a more solid profile. Cybersecurity is up 63% compared to last year. Of course, this is mainly due to the different scale. We are increasing scale a lot in cybersecurity. So the fixed costs have been absorbed much better than in the past. SG&A as well were lower in contribution to the revenue. This has increased the margins. Also, I have to say that we have some very good new programs, which are contributing to the EBITA. Finally, Space, where, again, we have a very significant increase, plus 90%. This is part, let's say, organic. It means the activities we do on the Service segment, where we have been doing very well this year, very strong increase in revenues, a very strong increase in profitability, but it's also due to the lower loss of Thales [indiscernible] Space.

We put here the 33% of the net result of TAS. Last year was negative by around EUR 50 million. This year is still in a loss position by EUR 23 million, but of course, the reduction is a benefit for the result of the division. TAS is progressing in its recovery plan, still negative, but it's progressing as expected on its plan. The results -- I said the results include also the benefit from our efficiency plan that we launched at the beginning of our industrial plan when executing our industrial plan. We see that also this year, like in the past year, the benefit from the efficiency plan exceeded the budget. We were higher than the budget.

So this is -- this gives us a strong confidence that we will be able to achieve also the scale that we have in the plan for the future years. So we are progressing very well also in the efficiency plan, and this is sustaining our EBITA. And the increase of our EBITA, of course, is increasing our free operating cash flow, which is 21% up compared to last year with the same conversion rate, which means that this year, we have been able to translate all the improvements we have done on the operational side on the EBITA in cash, very important because this is a key factor for our future development. So operating cash flow was EUR 2.3 billion, and it was able to pay back also additional investments. We are this year at around EUR 1 billion, increasing compared to last year.

And of course, this is a trend that we will see also in March when presenting the new industrial plan. Of course, we paid also interest and taxes for EUR leading to a free operating cash flow of EUR 1 billion. Again, this is the best ever. It's a comment that is applicable to all the KPIs because it's the best ever for all the KPIs. But in free operating cash flow, as we were seeing when looking at 3-year mandate of the current Board of Directors is the most powerful indicator of the improvement of the group.

Thanks to this cash flow generation, group net debt has gone down by 44% year-on-year, starting from EUR 1.8 billion and closing at 1.0. We have, of course, also the benefit coming from the proceeds of the sales of the U.S. business, EUR 0.4 billion. But also, as Roberto was mentioning at the beginning, we paid a much higher dividend this year, EUR 0.3. So net final position, EUR 1 billion. I think it's important also to look inside this EUR 1 billion to understand how it is built up, to understand also our -- how flexible and solid is our balance sheet. We have a group net debt that is in total EUR 1 billion, but excluding lease liabilities and net payables to joint venture is positive by EUR 0.9 billion.

Now what is this line? This line borrowings, loans to joint venture is the cash that our joint venture deposits to us, mainly MDA, of course. So it's our share of cash in the joint venture. As I said, the trend in EBITDA is such that, I mean, this is cash we usually have in our hands and it's owned to MBDA to the JV, but of course, it's our share of cash in the JV. So if we look at the subtotal before those 2 lines, we have a positive net financial position by EUR 1 billion.

Very important also to link with the commitments we have, the potential outflows we have in 2026. In March, when closing the Iveco deal, we will have cash outflows that before the cash in the company is around EUR 1.7 billion, but we have the money available to pay that amount. So very good results. very well positioned for the 2026 also based on a strong fourth quarter, which is part, by the way, of the actions we are doing on the cash flow generation and the profitability, trying not to be too much concentrated in the last part of the year. So derisking the free operating cash flow also trying to anticipate and be compliant with the milestones we have during the year in order not to be too stressed at the end of the year.

Still some area improvements because if you look at the trend of the free operating cash flow, it's, of course, negative and probably it's something related to the business, which cannot change, but it's strongly negative over the first 3 quarters. but much less compared to the past. So this is an effort that we are doing. We are trying to make revenues, profit, free operating cash flow more linear over the year. I think this year, we have been quite successful in doing this. Of course, to do that, you have to focus mainly on the execution of the contract, on the achievement of milestone and then our revenues and EBITDA to be sure that you are able to cash in the money before the year-end. So again, this is our full year results. This makes us very confident about the future development of the group.

Thank you, Giuseppe. So now I think that we are ready to take your questions. The first question is coming from Sam Burgess from Goldman Sachs.

Can you hear me? Can you hear me? Given we're getting some guidance in a couple of weeks, I'll try and contain myself on any forward-looking financial questions, but I saw R&D had a very strong 20% year-on-year increase, running well ahead of sales growth. Can you just give us some color on the areas of investment here and whether this level of investment is likely to continue? And a follow-on from that, in your discussions with the Italian government customer, are there any capability areas that you are not currently delivering where they would like to see investment? That would be really helpful. And then a third, if I can ask a third would be within your cybersecurity business, are you seeing any new market entrants anywhere you compete that might be kind of AI-focused start-ups?

Yes. Thank you, Sam. Complex question. I'll try to simplify the answer. The pillar of the R&D investment, for sure, are digital, particularly doubling the computational power and the storage capability. This is necessary because we plan to have ground stations for the data analysis that are produced in the multi-domain, and we need a very fast machine for algorithms and decision-making in real time. Of course, good investment is being done through the NATCO for the drones and the adjunct for the GCAP, for the Swarm intelligence. That's very important because as you can imagine the GCAP itself is a platform, but the NATCO are developing kind of synergistically but independent to each other, their drones and their -- so the adjunct and their swarm intelligence capability. So that's very important. We are investing a lot in command and control because, of course, within the [indiscernible], as you might remember from the previous presentation, the idea that we have to develop a module that becomes a upper layer of communication among different platforms and the module itself is agnostic with respect to the platform or to the effector. So it could be adapted to let an aircraft manufactured by a company and the tank manufactured by another company with the same -- under the same command and control and under the net umbrella, that requires a specific investment in terms of new electronics and of course, the sensors. We are investing on the long-range radars because we have started the activity on the 1,300, 1,400 kilometers range radars that will be the last ring of the chain for sensors, radars that go from 30 kilometers to almost 1,000. Investment then is done in many other areas. Cybersecurity is presently undergoing a strong acceleration in that whatever we will do in the future, either cyber war, anti-threat or multi-domain [indiscernible], whatever, we will need a strong capability in cybersecurity. All signals will be wireless. So you really need to be strong in terms of cybersecurity. Those things are developed in parallel compared to the past, those are not silos. -- or silos. Those are synergistically developed programs in which all divisions and all engineers are to each other. And I think this is the main difference. There is a coordination in terms of how we develop the new technologies for the multi-domain application, let's say, dual-use hybrid war applications and so on and so forth. Concerning our estimate of the competitiveness in the future landscape of hybrid war, That, of course, it's a very complicated question. Let me tell you something we are now developing -- we are starting more than developing. I mean you see in some of the important sites where the statistics are developed for defense and so on. You see that, for instance, the cost of the Ukraine war is in the range of a fraction of 1 trillion, 0.4 trillion or so over the years. But then you read that the forecast for the damage caused by cyber war, cyberattack in the future is going to grow exponentially. In 2020, the cyber crime caused losses for approximately EUR 1 trillion in a year. The forecast for 2030 is 1 trillion per month -- so obviously, if you compare the expectation of the market that will be involved in the anti-threat for the hybrid war, this is much bigger than the conventional defense. It's hard to say what part of this market can be targeted by a company at the moment. No one has this kind of statistics. This is what we are doing now. We're trying to evaluate where we can focus our attention. And for sure, cyber threats will be central. For sure, there will be infrastructural threats that can be primarily reduced by satellite observation. So all those things are being analyzed at the moment. I think by March 12, we're going to bring you some forecast, at least a large of what could be our positioning and what could be the size of the hybrid war products in terms of financials and R&D effort, whereas the one in terms of standard war, let's say, multi-domain war, that's much more clear, and we know exactly where to go. We will get all the numbers in a couple of weeks' time.

So next question is coming from Alessandro Pozzi from Mediobanca.

I have 3, if I may. The first one on Aerostructures. I think it's positive to see that you've turned a profit in Q4, even though it was mainly driven by contingencies. Can you perhaps quantify what was the impact of contingencies in Q4 there? And while on the topic, in your opening remarks, you mentioned that the deal is getting closer with your with your partner. Can you perhaps maybe tell us what the new JV in Aerostructure could look like? What could be the perimeter and what could be the potential for growth there? The second question on margins. I think you've broken down the elements of the margin increase volumes versus mix. I was wondering what is the impact also from the cost efficiency that you are implementing into allowing the company to increase margins at the EBITA level. And final question on free cash flow. I think it's good to see that you're increasing cash conversion. Can you give us a sense of whether there was any positive working capital impact on cash flow and thinking more in terms of advanced payments.

All right. So Alessandro, I'll give you a partial answer. And then, of course, I will ask Giuseppe to complete the answer. So concerning free operating cash flow, I will leave the stage directly to Giuseppe in a minute. Concerning to margin and cost efficiency, we have a maniac approach in cost saving. I will not bother you anymore every 6 months telling you how much we are saving in the saving plan, but I can assure you we are exactly on track. That famous EUR 1.8 billion savings done on the direct and indirect procurement, it's absolutely in agenda. It's a tach. There is a strong commitment -- so no departure from the commitment. Second, a lot of efficiency in the production. The capacity boost that we mentioned we presented to you a few months ago is now operating in most of the hardware platforms where there is a lot of work to be done. We're incorporating Iveco for the land defense. We are doing a lot of optimization also in helicopters. Electronics, obviously -- I mean, I think you noted how fast was growing electronics. I think we were growing from a few billions to almost 8 billion this year. So obviously, electronics has to update its organization because it's so central in the payload strategy and in all the joint ventures that Leonard is doing. I mean, we are providing weapons and sensors and payloads to land defense, to the GCAP to drones. So basically, this is at large all electronics. There, we are working a lot in efficiency and not reorganization, but efficiency in the organization. That includes hiring new engineers, hiring new people, improving the industrial capability. So those things are rolling. It's a continuous progress. What I can say, but then, of course, Giuseppe will be more precise, the fact that in 3 years, we grew up by, let's say, 20% to 30% orders and revenues. And by 40% and 80% EBITDA and free operating cash flow means that though with some jet with some delay, you do see now that things are improving the way we wanted. Of course, Giuseppe is monitoring this with very specific measures that will tell you, but I can guarantee there is absolute attention and commitment in the company to keep the -- all those parameters in terms of efficiency and margins high. Concerning Aerostructures, yes, the deal is closed is getting close indeed.

We -- at the beginning of the company will be a 50-50 company. You have to consider that it's very important for the trust of our customers that are important customers such as Airbus and Boeing that we have to guarantee that, of course, we keep the standard. Meanwhile, we build something much bigger with a much bigger market. We are making the calculation of what -- how big this market could be. So this will be disclosed very soon. But I can tell you, I mean, it's by far more than what we have now in terms of Aerostructures. It's substantially higher, maybe triple or so. Let's see for the numbers also what will be the incentive policy that the country we are talking to will be able to put on the table. But the numbers are definitely quite big. I think that in the future, we will be able to place the position in terms of size of the new company in the top 3 around the world, let's say, as an indication, okay, which is definitely much bigger than Aerostructure.

Look, concerning me, I will be ready yesterday. Concerning our partner, I think they're also impatient. But as I said, there are also kind of political steps that they are not in our hands. But the agreement is that we give the exclusivity for closing up to June. So I believe that, yes, that should be the range.

Okay. [indiscernible] about the release of contingency in Aerostructure, the order of magnitude is about EUR 155 million. Consider also that we had an acceleration on the delivery rate just in the last quarter. So we delivered and we took a marginal so small in the last quarter of something that has been produced earlier and it was in the stocks. So -- but the order of magnitude is in that range, EUR 15 million, EUR -- about the cost efficiency, Roberto has perfectly replied. So of course, it is included in the improvement that you see in the EBITA when we talk about improvement of profitability is driven by these efficiency actions. And free operating cash flow, of course, it's a mix of different divisions, different type of contracts. We got some advanced payments as it is customary on the export contracts. On the other hand, in some divisions, we had a negative impact deriving from the acceleration of the production. So overall, the working capital is going to contribute more or less in line with last year, so slightly negative to the free operating cash flow. And by the way, it is important to underline that the more we grow, especially on the international market, the more we get recurring advances. So it's a recurring event, I mean.

Okay. The next question is coming from Carlos Iranzo from Bank of America.

I actually have 2, if I may. First one, I would like to come back to Aerostructures. And regarding the split in the joint venture, the 50-50, is it always going to be 50-50? Or could you progressively transfer ownership to the partner down the line? And then I just wanted to see if you can share a little bit of color on the Electronics Europe margin in 2025 ex the joint venture contribution, basically looks like there is a very little margin improvement year-over-year. So what are the reasons that have prevented you from increasing margins a little bit more in 2025? Is it mix? Is it R&D? Is it phasing of some contracts?

1

Okay. Thank you, Carlos. I'm going to answer first about Aerostructures. I think I can safely say that the original -- the starting 50-50 is going to change, primarily because this is a long pathway towards transferring or doubling technologies are very complex like in aerospace. And I believe that it's very natural to think that while we make the new plant in partner country, we need to train and create the conditions to produce components that are certificated. So what I imagine normally is that you improve the quality of the fabrication, you gain certification and then you can transfer more and more their activities while you develop brand-new activities somewhere else. So yes, I believe that with progressing the standard of the industrial setup and industrial capability in the new company, there will be the possibility to change the ratio between the share among the 2 partners. So I think so. Now the timing for that, it depends on the results. How fast the quality will grow, how soon they will be capable to reach the right standard for aviation authorities and so on and so forth. But we are totally committed. And the good thing is that we're not making something to make it shorter. We are expanding substantially the product portfolio. And of course, there will be -- there is even more job force that will be employed. It's really a think big program. It's not a think small program. So for sure, there will be an evolution, dictated by the standard of qualification and the standard of fabrication. Concerning the margin of electronics, of course, I'll leave the stage to Giuseppe in a minute. But I just want to wrap up one thing. The big program where you expect, how to say, big margins and big money to come are land defense Rheinmetall. That started 1 year ago, and we delivered the first, I think, 6 infantry vehicles. And we are presently developing the complete version of what we call the Italian version that integrates all the sensors and the weapons and command and control electronics into the machine. I think the first machine will be delivered in the next months. And then we are now starting to work on the [indiscernible] main mettle tank prototype. So if you see the order profile that we presented in the plan, but I will eventually update this and remind you in the presentation on March, the delivery should start in -- should rise in 2028, 2029, 2030 with about 100 pieces per year. At that point, you will see massive impact because there will be massive transfer of those technology. At the moment, we are talking about small units, 6, 7, 10 maybe and also still at the development level.

Because we are -- especially on the main battle tank, we are making the first -- we're working on the first prototypes. So I think there is a kind of a little jet lag between when you start producing the platforms or delivering the first 5, 6 platforms and when you go into the massive production, which is expected to be in the next 2, 3 years. I think for the infantry vehicle is from '27, the massive growth. I think next year is something like 15. I don't remember exactly, but 27 growth. And for the main battle tank, it's around 29, 30. So at that point, you will see big numbers coming.

The second big program is drones. Now drones, we had a spectacular acceleration because in 8 months that is in April, we will have the first midsized drones produced and assembled in [indiscernible], our plant in Northern Italy. And we are working on a daily basis with Bicar to integrate brand-new technologies. There are important things I will tell you in 2 weeks when we will present the update of the plan. telling you that we are making a really paramount effort on accelerating drones and unmanned flying objects, including rotorcraft, not only fixed wing. But also there, before selling hundreds of pieces, there will be kind of 1 year, 6 months of delay. We have to demonstrate the machines landing in special conditions or serving in a crew -- sorry, in a swarm -- operating in a swarm.

So those things are planned for the next few months. Once again, you will see the impact on electronics immediately after. GCAP, well, I mean, this is a longer program. But again, there, we are investing at that level. So I think this is quite normal. But the very good thing is that we are slightly ahead of schedule with the drones, absolutely on schedule with the land defense systems. And the GCAP is doing well. And by the way, it remains the only one program worldwide. So I believe that you will see the development of the margins and the numbers of electronics in due time without any surprise.

Yes. And Carlos, about the margins in electronics, when we look at Europe only, it has been increasing over the year. It was 10.3%, I think, in 2024, and now it's close to 11%. So again, the slight increase of electronics is due to a dilution coming from the JV. So not from the trend of Electronics Europe, which is doing very well. So of course, R&D is increasing, as I said, but we are paying back with the profitability we are producing.

Yes. And Carlos, one last remark. Of course, you've seen our intention, our plan with the Michelangelo Dome that we presented just a few months ago and will be a strong part of the future plan. And there, even if you are platform agnostic, so in principle, we could not sell a single platform in principle. There will be a lot of electronics in terms of radars, sensors, weapons and command and control modules that will be immediately added to the portfolio. So I expect that also to be an important source of upside for the electronics profit margins, but also for the entire group. It's going to be something big collective for all the divisions.

Now the next question is coming from Martino de Ambroggi from Equita.

Again, on Aerostructures, sorry, just to have a rough figure on what was the free cash flow because we know the EBITDA, but what was the free cash flow for Aerostructures stand-alone in '25? And just a follow-up on the previous answer. If I understand correctly, I don't know if it's your main goal or if it's an option, but there is a possibility to see Leonardo going below 50% of the new entity. I have another question later.

Okay. I will start from the free operating cash flow. The loss at EBITDA level this year was something like minus EUR 130 million. Of course, we invest in our structure. We are still investing in our structure because to be prepared to the plan that Roberto was describing, in any case, we need to invest. So the investment this year was about EUR 40 million, EUR 45 million. So you can easily get that the free operating cash flow was negative in the area of EUR 0.2 billion.

Concerning your question, Martino, about deconsolidating, let me say, in my rote language. Yes, I don't see any problem in the future. The point is that this is not simply consolidating or deconsolidating. The point is that we have to provide an horizon a future to the entire aerostructure business, not only connected to our traditional customer, but also to military machines and extending -- expanding the market to big airlines and so on so forth. So that deconsolidating or consolidating in any case, this has to be positive on itself.

Having said this, yes, I think that we will evaluate with great attention that the quality of the manufacturing will reach the right standard. And at that point, we can easily change our share. No problem at all. Anyway, the workforce will be unaffected. I think that the market -- the player will be very big on a very big market on a large market area in the world. So I think the vision is very positive. The outlook is very positive.

Okay. And the second question is on 2 future opportunities. Any update on the U.K. Jumbo helicopter order? And on the recent agreement you signed with an Indian partner, is this something that could be reflected in your business plan in the next business plan or it's more much further away?

Martino, I'm bound to -- for maybe 24 hours to confidentiality issues. if you have the questions to wait for 24 hours, we're going to talk again, can I tell you more? Okay. So about the -- we -- I can tell you that we've been working very, very intensively with our U.K. branch and with the U.K. government. Let's wait for 1 or 2 days and things will come clear. Sorry, which was...

Wait time for India [indiscernible]

No, no, not for India only for U.K. India, Giuseppe is going to tell you.

Yes. Related to India, we set up a partnership with [indiscernible] Group, which is instrumental for addressing the growing India military demand, creating a hub for helicopter manufacturing and sustainment. You know that there will be the need to replace 1,000 units in the next few years. So it's a very big market for us. We are currently responding to Navy and Army tenders for about 300 helicopters. We'll see. However, we see also a strong potential on the civil market because the kind of the country. I think also the civil market, there is a strong potential. So it is our best interest to be present there in the way we can.

Yes, Martino, sorry, because I never like to keep analysts and investors hanging on -- I will tell you tomorrow after 3 months. So I don't like this, the way I'm transparent is against my issue, let's say. But I can tell you one thing. As long as I will be here for the next years, I promise that Leonardo will be an international company, a truly multinational company, not an Italian company, but a multinational company. In this respect, -- you can imagine how important for me -- for us is that our second and third domestic countries such as U.K. and U.S. are fundamental to be considered a truly multinational company with very high tech capability and not simply a domestic company making domestic defense. I'm telling you this, I'm anticipating you this because the commitment that I got with the authorities in U.K. is that I strongly want a powerful, complete committed Leonardo U.K. because this is essential, not only for us, for our multinational vision, but also for the future of the Continental European defense. I know the U.K. is not European Commission, but it's Europe continentally. So this was my first statement with the authorities. And I think it will be reflected in the forthcoming decisions. So I'm very, very optimistic.

Let's go to the next question from Sebastian Growe of BNP Paribas.

First of all, can you hear me well? The first one would be around Defense Electronics. Giuseppe, you pointed to the 4 drivers behind the EBITA in the ES segment. Apparently, MBDA has played an increasingly important role over the last years. And based on the disclosure that we received from Airbus last week, it looks as if MBDA's operating profit margin declined by about 200 basis points and that despite almost 20% revenue growth. So the question I'm having simply is, what is the driver behind this margin contraction? And can you provide any more color how to think of the cadence with regard to the mentioned EUR 44 billion order backlog at MBDA? And then I would have one more around Aeronautics, but maybe we can take the question first.

Okay. Yes, relating to EBITDA, I think, again, the company is performing very well. It's well above double digit. It was even higher last year probably. But again, it's more than 10% return on sales. Of course, they are investing a lot. They are preparing themselves to execute a EUR 44 billion backlog. So they are investing both in CapEx and in R&D to be ready to execute that backlog. But the main impact you see in our numbers, as I said, it's below the line. it's because of the increased tax charge they in France. It was supposed to be a one-off. Probably it will be also in 2026, confirmed for 2026, but it's tax charge, which was not there in 2024.

Okay. Got you. And can you eventually give some guidance or indication at least in regards to the future top line dynamics at MBDA. I think we have seen now over the last 3 years growth rate accelerating from about mid-single digits to then 10% in '24 and now getting close to 20%, as said, in the year '25. So how to think really about the trajectory of that EUR 44 billion backlog?

We will reflect, as usual, the net profit in our numbers. So of course, I mean, I cannot give you guidance about the MBDA performance in the future. I know what they are doing. We will reflect in our plan. But I mean I cannot give you guidance on the top line of MBDA because it's something they have to do.

Okay. Fair enough. And let's move on quickly to Aeronautics, please, and more specifically here to the aircraft business. I noticed that the margin was down year-on-year, which I assume is due to the consolidation of the GCAP program. And talking about that very consolidation, it looks as if GCAP added about EUR 300 million or so to revenues. However, the EBITA addition was less than EUR 10 million from what I could reconcile. So I guess my question is, how do you think of the future sales and margin trajectory for the GCAP program in particular?

You were perfect in getting the right answer because, of course, in GCAP, we have aircraft is acting as a prime, of course, so the margin is a little bit diluted, not at group level because, of course, also the other divisions are contributing to GCAP. But if you look at aircraft stand-alone, of course, there is a small dilution. But -- in terms of trends for the future, I think, I mean, based on the programs we were mentioning, Eurofighter, M-346, C27J, JAF, the man, I think the profile of aircraft is very solid.

Next question is coming from Afonso Osorio from Barclays.

I'll just stick to these M&A deals that you've been doing here. So 2 questions, I think it's quite quick. The first one on the Iveco deal. Thank you, Roberto, for all the detail you've given us. You mentioned giving the exclusivity for 6 months to Rheinmetall. But given that you will close the deal by March, how should we think about the contribution from this business for you specifically this year in 2026? Are you basically assuming 100% contribution for you this year? Or will you, in 2 weeks' time, give the targets for 2026, assuming you sell a part of that to Rheinmetall? And then the second question is on -- and apologies for coming back to your structures, but just to double check, will you consolidate to the numbers or deconsolidated numbers once you announce the JV?

Okay. Alfonso, concerning Iveco, so at the beginning, we -- let's say, we closed and we buy it all while our partners are discussing with -- waiting to understand what could be the situation with the antitrust. This seems to be usual now also with Bromo is the same. We need to wait. We do all the industrial work and then we have to wait for months and months to see what happens with the antitrust. So okay, let's see. Obviously, by the time we buy it, this will be fully incorporated in our finance and our balance sheet. And by the way, as I said, it's absolutely not bad because they have a very good backlog of orders. The margins of the trucks is not absolutely not bad. It's a double digit. quite solid. I should also mention that we are discussing about future programs for big artillery mounted on trucks. And therefore, that could be also instrumental to the creation of new products.

So I believe that's a very, very safe situation in terms of industry product. Also, I'd like to tell you more industrial detail in the plant of Paca, there's currently a double capacity in that in the same plant, we can -- we produce -- they produce both trucks and armored vehicles. So even in the case, we decided to split this to carve out -- we need to do some in the industrial optimization. And so this would require some months.

So it's absolutely under control. Whatever we do, I could say whatever we do for the next maybe couple of years would be anyway safe. I think the decision should be made before depending on the outcome of the antitrust. And at that point, we will see. As I said before, there are other companies that will be interested having no problem with the antitrust. But of course, we would privilege at the moment, the relationship with Rheinmetall because this was the plan. If this will not be possible, we're going to find -- we're going to have other solutions. But as I said, we are ready to go work. We have the pipeline of orders. Things are running. We didn't stop 1 day, the plant. So it's really safe situation.

2

Yes. Regarding the deconsolidation, the potential deconsolidation of our structure, of course, as Roberto was describing, the partner is not only a financial partner, is a financial partner with an industrial interest in the combination. So of course, the governance we are discussing reflect this point. They -- of course, they want to have also and therefore, not allowing us to consolidate our structure.

Okay. We can proceed with the next question from Christophe Menard from Deutsche Bank.

I have 3. The first one is on -- you mentioned prepayments. Can you tell us what level of prepayments you had at company level in '25 versus -- and how it compares to 2024? Second question is on Aerostructure. Again, you mentioned a number of investments that could be coming in the future. What would be the free cash flow outlook for Aerostructure as a consequence? I mean, we understand EBITDA will -- there will be some EBITDA breakeven going forward, but should we expect a series of CapEx investment in the coming years? And the last question is it's probably a little bit granular, but on Defense Electronics in Q4 in Europe, it seems the sales dropped quite a lot. Is there any reason for this? I mean, I have -- versus my expectation, I have a miss of around EUR 600 million. So I just wanted to see whether that was related to a specific program.

Okay. Regarding the first question, we look at the working capital as a wall. So I think I said working capital is contributing negatively the same area than in 2024. Of course, the line items may be different, but the overall contribution of working capital is in that range. Aerostructure, I said, I mean, we are progressing also with executing our industrial plan in our structure. And of course, as part of this plan, we have an investment plan to digitalize the factories to improve the efficiency of the divisions. And so of course, we are investing. And this is consistent with what we are discussing with the partner.

[ Giuseppe ] that was instrumental for our partner to accept and evaluate very well our stand-alone plan. Without those improvement would have been less attractive. But this was -- I mean, this is kind of past due is done.

Yes. And so this is factored in our plan when we said that it will be a breakeven in '28, '29, we will see the updated plan, but you can easily understand that we are there, we are still there and the investments are already included in that plan. Q4 Electronics, I think compared to last year, Electronics Europe was something like 7% higher. But the point is that back what I was saying when commenting the cash flow as a general trend, we are working a lot to make the trend more linear over the year, not to focus on the last quarters for deliveries, invoices, cash in. This is a big effort. Of course, the results you see that we do improve. We do better in the first 3 quarters, maybe we are less focused on the fourth quarter.

But this is important to us as an action because, I mean, you can have a better management of cash flow only if you are able to make this trend more linear. So you see maybe the negative side of the coin, but for us, it's an effort to be more linear over the year. We will not be, again, cash positive probably during the year because of the trend of the payments of the customers. But knowing that we have to be able to progress on making more linear our milestone, our invoicing and our revenues.

We move on with the last question coming from Adrien Rabier from Bernstein.

I just had one, please. A few months ago, you told us you were reviewing the hands tech. So I was wondering if you had any update on that side, please.

Yes, Adrien, thank you for the question. I spoke recently to the CEO of [ Hensoldt ]. Actually, the plan was to meet end of February, beginning of March to update the mutual situation, primarily their situation in Germany. And then very likely, I will go to Germany, talk to the authorities to see what -- if and how we can proceed with the deal. There are different options on the table. One could be essentially selling part of the shares to let the German government, for instance, to grow in their share in Hensoldt like it's happening in other companies, but we are very open to this. So all the options are on the table. And I think by March, we should -- end of February, beginning of March, we should have a touch base. Having said this, the numbers of Hensoldt are okay, what they expected, no particular warning about that. So we decided -- we're trying to go towards a conclusion by the first -- the second quarter, basically, so before the summer to see what to do.

Thank you. Thank you. Thank you all for your participation in our conference call at this point. And we hope to see you all in room on the 12th of March for our business plan update. Thank you, and good afternoon.

Bye.

Bye-bye.

Dear all, nice to digitally meet you again today for the presentation of the third quarter of 2025. Before getting started with the numbers, I'd like to share with you some of the news. You have partly read something on the communicate. First, I'd like to introduce you on my right, Claudia Introvigne who will be the new chief of the Investor Relations. There will be a new direction at the direct report of the CEO for Investor Relations.

So welcome, Claudia, and thank you for being here today, joining us today. On my left, of course, Alessandra. Alessandra today, there is an important announcement. Alessandra, for personal reason, will leave the Leonardo. She will be with us continuing today the presentation and the last things for the Q3. And of course, she will pass the -- most of the information for the balance sheet of next year and for -- closing of the budget.

We already have a succession plan in place in the company. This is existing since a long time. So there will be no break even for 1 second. And I thank you very much, Alessandra, for giving this availability to give total continuity to the business and to the operations. And of course, I want to thank Alessandra heartfully because she really did a great job with us, and thank you for staying with us and also helping us in closing this very dense period of work.

So we go now to the numbers of the third quarter. And then, of course, as usual, Alessandra will give most of the information concerning the division and the KPI -- the financial KPIs and then the question and answer. Thank you, and I go to the Board now.

Okay. Here we go, as usual, with our lead wall. The quarter 3 of 2025 turned out to be particularly good. As you've seen -- you can see here from the numbers, the new orders year-over-year are growing by 24.3%, reaching -- passing the threshold of EUR 18 billion at month 9 of 2025. On the same footing, we have an increase in revenues in the range of 12.4%. So we are reaching this month, EUR 13.4 billion. The EBITDA is growing by 22.7%, reaching EUR 945 million. I remind you year-over-year last year, it was EUR 770 million.

And return of sales is growing by 0.6 points. That is we reached 7%. Free operating cash flow is improving by 22.3%. That is very satisfactory for us. And the net debt is under control with a decrease of 25.9%. So those are the numbers that are characterizing our third trimester. As usual, Alessandra will give you much more information about the -- how this is shared by the different divisions and business units.

But the highlights are reported in a very synthetic way in this slide. So in general, all divisions performed rather well. There is no -- there are no spikes in terms of geography or there is no killer product that jeopardize all the other performances. I would say performances are well distributed across the portfolio of products.

About electronics, there is a solid order intake across all domains. The Eurofighter and the GCAP are performing well. I'll give you more information later. The Naval business with the frigates and also with the multiple purpose offshore patrol vessels are doing quite well for Indonesia in this specific case. Land defense, particularly with the new contract with the Ministry of Defense is growing as expected.

DRS is also showing a good performance actually, a strong performance, especially on electric power and propulsion technologies. And this is -- this class of products has to do with the Columbia Class programme, which is one of the leading program of DRS. Concerning helicopters, there is a rather solid order intake across all regions. This is driven primarily by defense and governmental customers and the offshore sectors. They are both very well distributed, strong revenues across both platforms and services that you remember, I'm sure, helicopters are growing in services continuously.

Aircraft is doing quite well, strong sales. Those are reflecting the Kuwait Air Force business. It's a jumbo order, EUR 2 billion plus. We cannot give more details, but it's a big one. On top of that, solid contribution from the GCAP. At the moment, we have in the range of a bit less than EUR 0.5 billion programs, which has been already funded. I'll give you more details later.

And even the C-27J has been growing as a business with an order in the range of EUR 100 million. There is a lot of increase in the training services, not only the customers, we now have even the U.S. Air Force customers, but also the number of flight hours that have been delivered by the IFTS, the training school, that corresponds to something like EUR 90 million. So that's a very, very encouraging result in terms of training services.

Last but not least, the 345, the small trainer aircraft is finally in the phase of having a syllabus at the Italian Air Force bases. So this is now going to be an operating machine. Aerostructure, in this -- in the area of Aerostructure, we are satisfied because we confirm the rate of increase from 5 to 7 fuselages in Q2. And moving towards 8, I'm sure you remember that we -- the plan we are making together with the potential partner for the creation of a new joint venture is based on a progressive improvement of the situation, which is actually in line with our forecast at the moment.

I will give you more information about the aerostructure situation later on during the presentation. On top of that, I should add that the Airbus 2020 rear fuselage contract has been awarded. So we now are double source for those components for our colleagues in Airbus as well as the NEMESI optimization program for manufacturing has delivered the first fuselage of ATR.

That's an important result because it took a bit of time to optimize the manufacturing. Now we're happy with what we have. Cyber is undergoing a strong growth. I mean numbers of cyber are extremely interesting, thanks also to the inorganic growth program, the acquisition of the Zero Trust Technologies. So at the moment, the secure digital transformation program is running very well with the governmental and defense customers.

There is a strong acceleration in the business with the European institution like European Commission, eu-LISA and the European Space Agency. And finally, the cleaning of the product portfolio and the production of new products that are proprietary of our division is clearly impacting on the improved profitability of the division. We are very satisfied of this trend at the moment.

Finally, concerning space, there is a strong order performance across the service market, including earth observation both in Italy and for export. And I should say that our new activity related to the earth observation constellation is growing fast. We inaugurated recently our facility together with our colleagues in Thales, the facility in Rome for the fabrication of satellites. And we are now starting the construction of the constellation and also the contact with other important countries that are interested in investing in new constellations.

Before going to the technology news and the product news, I'd like to comfort all of you about the tariffs. You remember there were a bit of doubts at the beginning, what could have been the impact of tariffs on our business in the American market. I'm sure you remember that the preliminary evaluation was that tariffs would have impacted on less than 5% of the global market we have in U.S. So we expected something in the range of EUR 20 million as an actual impact.

Now fortunately, the US-EU trade deal has been officially implemented and now is exempting the civil aeronautic sectors and also the components for the civil aeronautics and even the helicopters. As a matter of fact, at this point, we expect a clawback for the September cash out of approximately EUR 2 million. This is actually no longer a complex issue. We don't have to go to the court. It's something we do with the form fit basically.

And we are starting now the potential clawback for the cash out that has been done before the trade deal implementation. So I can say safely that with this piece of information, we can consider right now with the situation that we have at the moment, we can consider the tariff issue as a marginal one, I would say, even closed. We don't expect any surprise under the present conditions.

Update about the efficiency plan. This is running exactly as agreed. We are on schedule. As already reported in the previous quarters, most of the savings come from the procurements, primarily great attention in the procurement, but also renegotiation of long-term contract. And this renegotiation is fundamental to keep under control the prices and of course, the mitigation of the inflation. At the moment, we are approximately at target.

We were planning to have a saving in the range of EUR 20 million to EUR [ 30 ] million in 2025. We are very close to this value. And apparently, the trend, which is you can see here with the green dots, this is the actual trend, is very close, slightly better than the expected trend, which is the pink line. So no news from this point of view. I think the machine is well started. People are very committed.

So we will continue informing you about those numbers, but I think there's no surprise because the technology for the implementation saving plan seem to be operating very well. Now let's go to the description of the large-scale initiatives. As you remember, at the last quarter presentation, I told you that was -- that started as inorganic growth, but now most of this is becoming organic growth because it's now in our -- it's incorporated in the plan of the company and a lot of work is running. I will go analytically one-by-one through the different initiatives.

Let's start with the Leonardo Rheinmetall Military Vehicles. You remember very well that in this specific initiative, we -- the execution means that we have to integrate payloads, weapons and turrets on existing machines to see motors, transmissions. So basically, the challenge here is to have a very efficient integration of top-notch electronics, weapons, control systems and top-notch military carriage technologies.

At the moment, commercial and operational actions are underway because we have to secure that the delivery, which is for the first period is shown here is respected. Actually, we already secured a contract for the Advanced Infantry Combat systems, which are those smaller with smaller gas, but multipurpose. And right now, we have -- already EUR 400 million have been allocated on the AICS and another EUR 350 million program is supposed to be launched very soon, the second phase of the program.

So we are starting the real business. Five of those machines will be delivered by the end of the year. In the meantime, we are all working on the MBT. It is more complicated, of course. The chassis has to be prepared, and we have to start the system integration on the Main Battle Tank, which will come later compared to the AICS. As you see from the plot, the red is the AICS and the blue will be the MBT.

Now the peak of the red start rising earlier, whereas for the Main Battle Tank, we expect the first prototype between '29 and 2030. But anyway, we are on track. We are working with our partners in Rheinmetall. And I would say the team is really attuned and committed to results. At the moment, I don't have anything -- any danger or any, how to say, uncompleted part to communicate. The program is running well.

On the same footing, I can tell you more about GCAP. Now in the scenario in which the competitors like those in U.S. or like those in Europe seem to be -- seem to progress very slowly if they are progressing. GCAP is really now up and running. The Edgewing organization, which is actually the top company that coordinates the activity of the NatCo, has currently reached 180 people. The target is going to be something like between [ 20, 2050, ] so it's almost completed. The ramp-up is progressing very well. And also new governance and operational procedures are in place. So the Edgewing mother company in the GCAP is actually almost ready, fully operative.

In the meantime, we have launched the consortium that involves Leonardo, Mitsubishi and others to deliver the next-gen of ISANKE, so the integrated sensing and non-kinetic effect electronics and Integrated Communication System, ICS. Those are essentially fundamental, crucial elements of the GCAP architectures. They represent the heart of the communication and control. And now we are working to the delivery of the next-generation technology for the ISANKE and ICS.

On top of that, I should say that at NatCo level, so now I'm dealing with the NatCo connected to the Italian funding of the GCAP, quite a substantial budget has been secured at the moment. We are EUR 1 billion plus. And this is being used -- this is by the end of the year. It's being used to cover the national technology program that should essentially incorporate high-performance computing and AI technologies into the building blocks of the future GCAP architecture.

The concept and the assessment phase for the Adjunct, the Adjunct is simply a fighter drone that could be universal, controlled by GCAP or by any other sixth-generation fighter. And finally, the working environment and the digital infrastructure that will control all the components of the system of systems. So this is now initiated at NatCo level with our domestic funding, and our engineers, our teams are already working on the development of those components.

Now last but not least, there is also another good news from this point of view. GIGO, which is the governmental structure on top of the GCAP is now discussing and negotiating the first international contract that will be provided to the Edgewing and the Edgewing with that money will boost the activity of the three NatCo. This is going to be not only national activity, but coordinated sovereign national activity of the GCAP consortium, having to do primarily with the platform and so on and so forth.

So apparently, the GCAP machine is moving. The company is up and running. And I think if we work seriously, and we're all committed in getting the results on time. I think our GCAP road map will grow properly. And that's very important because apparently, our competitors at the moment are slowing down for different reasons. Let me go now to the third initiative. This has to do with the Baykar and Leonardo collaboration, the LBAs, Leonardo Baykar Advanced Systems. So what are we doing now? We are working, first of all, with the regulatory -- for the regulatory approval because we are making a sovereign national joint alliance.

And this, of course, needs several regulatory approval, not only antitrust, but also authorization, certification. So we do need a lot of work to make sure that those machines can fly because, as you know, in most war combat area, war scenarios, drones are not certificated. But now we are thinking to an industry that massively produce machines of different payload, different size, and we want to have machines that are certificated and can be sold everywhere in the world, not only in Europe.

In the meantime, we are progressing in the integration of payloads and platforms. Now let me show you a bit more in detail, I'll just expand the plot here. This is the industrial plan. So I start with Ronchi dei Legionari, our plant in -- close to Trieste in Northeast. This is the Leonardo plant that originally was involved in drone fabrication and design. So here, we're going to assemble, make the final assembly of the TB3, which is one of the cash cow of this category of machines. And in the meantime, we're also recovering, improving the Mirach, which is a Leonardo platform actually.

It's in the range of 200 kilos with a payload of approximately 50 kilos, which is a lot for a machine like this. It's pretty much like a missile more than a standard drone. And this will be assembled in our Ronchi dei Legionari plant. So integration of electronics, payload, sensors, weaponization will be done there, starting from these two platforms.

In Genoa, close to Genoa, Villanova d'Albenga, we're going to make the final assembly of TB2 and Akinci. Akinci is the bigger machine, 22 meters wingspan. They have quite a big payload, and those machines will be assembled there. Meanwhile, in Torino, where we do have a lot of aircraft activity, aviation activity, we have all the engineering and certification activities, which are crucial for the future expansion of this market.

In Rome, now in our plant -- in the electronic plant in Rome, we're now -- where we did our roadshow 2 years ago, we are now developing in the new multi-domain facility, all the technology that are needed to control, to govern the multi-domain situations that involve drones. And finally, in Grottaglie, which is our plant for aircraft, civil aircraft, carbon compounds and so on and so forth, we're going to make composite manufacturing and final assembly of the Kizilelma. The Kizilelma is the fighter. It's a real aircraft, something that looks like an aircraft.

And this one actually is going to be our adjunct -- universal adjunct fighter that can be coupled to any machine as long as you can develop the electronic for the control. And this is, of course, what we do because this is one of our specialty. So now as you see, the geographical fingerprint of the drone activity is quite well organized at the moment. We are making all the necessary investment and upgrade of the production lines. We are working on the integration.

And as soon as the regulatory issues will be fixed so that we are working daily with the authorities, including the Ministry of Defense, I believe that already next year, the first product will be delivered to the market. Let's go now to the Iveco Defense acquisition. Iveco Defense, of course, it's -- you know the story, it's quite recent. Now what are we doing with Iveco? This is a rather young initiative. 3 months ago, we completed the agreement. And now we are working on, first of all, regulatory approval that is quite very important at the moment.

And of course, we are negotiating to ensure the deal closing. Now to be clear, Iveco Defense at the moment needs to fix a few important things. The first one is that the supply chain has to be guaranteed. Originally, Iveco had a sort of mixture of civil and military technologies. So some of the components were produced by the civil part of Iveco, and they were delivered like an internal supply chain delivered to the military part.

Now, of course, we own -- we are supposed to own the defense Iveco part, but the civil part will go to another owner. So in collaboration with the government, we are working through the prescriptions in the Golden Power to make sure that this internal supply chain will be ensured for at least 1 decade under the same conditions. This is very important to have no interruption in the production pipeline. It doesn't seem to be a problem. There is maximum availability.

And I have to say that this negotiation discussion is progressing very well. We don't see big obstacles, big hurdles. But anyway, it's something we have to fix supply chain first. Then a second thing which is very interesting is the technology of land drones. At the moment, we are studying together with our partners and colleagues, I should say, in Iveco, land drones that are ranging between 600 kilos and 2 tons. So those are land drones with trails, not on wheels, but can also be on wheels. And they can mount and transport different payloads.

They have different functions. And of course, in the concept of the multi-domain interoperability, having land drones together with all the other manned machines, it's very appealing. So we -- there is a special focus now in our technical teams and commercial teams about the land rules. The third issue that we are developing, we're studying is that -- I'm sure you remember, originally, we were discussing with our partners, Rheinmetall, about the possibility to carve out the trucks as opposed to the armored vehicles.

Actually, now that our teams are working together, we are studying all the perspectives. It is yet unclear because the due diligence is in progress, whether it's more convenient to keep things together or to carve out them. This is just industrial analysis. It depends on how much money you have to put to change to double, to split a line or so. But one thing is sure, the trucks that at the moment, Iveco can offer 6 x 6, 8 x 8, 10 x 10, 12 x 12 wheel traction can be very interesting for a number of applications, including the transportation of different weapons and different payloads, massive payloads.

And so we are now analyzing also what kind of market openings we can have by combining different payloads, different GaNs or different missiles or radars with the different platforms for transportation. This is now under examination. We have to see -- basically, it's just an industrial analysis. We have to see whether it's more convenient to split, to double or to concentrate. It will depend, of course, on the financial and commercial analysis, which is in progress.

But for sure, the more we work on the Iveco analysis, the more we are convinced that this is a very promising -- it was a very promising choice from the technology point of view. Needless to say that Iveco ensures the possibility to offer the same armored vehicles on trucks or on trades or on wheels. And this is a unique possibility now we have, depending on the market, we can offer wheeled machines or machines with trails or with trucks that can go in different ground and different combust scenarios, so you -- of course, you will be informed continuously about the evolution. I think we are online. We are on time on the -- for the closing of the deal that should be the first quarter, if I remember correctly, of 2026.

So the teams are working continuously on this assessment. I go now towards Aerostructure. I know this is -- you're very much interested to the aerostructure issue. So let me tell you that the good -- very good thing is that we are really progressing according to the agenda. You remember in July, our counterpart, our partner -- potential partner approved our stand-alone plan and gave a very positive evaluation, financial and technical. Now it's the other way around.

They are making their own stand-alone plan that should be complementary to ours to create synergies. They're working with our people. Basically, on a 2-week basis, we are at their place or they are at our place. There is a number of important things. I mean we -- of course, we are working on the deployment of the synergies that the merge of the two partners can make, and this is the most interesting part. At the moment, we have -- so the teams working in commercial and industrial synergies, this is done by a joint working group, which is quite consistent, quite big.

We are working at the same time with the key stakeholder. Needless to say, we have to share our vision and the idea of this joint venture with our main customers, those for which we build the components. And this is already in progress and reaction seems to be interested. And then we are working on the joint venture governance and organization, which comes out of the industrial choice, but also on the sovereign national character of the initiative.

There is a detailed joint venture implementation road map at the moment. To make a long story short because of the confidentiality constant given by our partners still very strong. They gave us a disclosure only to discuss with the key stakeholder, client suppliers basically. But to make the story short, we maintain our target to sign the partnership agreement by the end of the year. Of course, we are working very, very hard for closing this very complex negotiation.

We believe we can keep at the end of the year as the target, and we will make a special session, information session, communication session to you guys, of course, not waiting for the first quarter of '26, that should be months after January. So the sooner, the better, as soon as we close, we call you and disclose everything. But as you can imagine from what I told you, after almost 1 year of work, clearly, there is a strong motivation, very strong motivation. And also, I have to say there is a strong interest by the governments of both partners.

So that's an extra guarantee that we are on the right track. I can't say more, as you know, about that, but I inform you about the progress and you see -- and you can see that with this kind of progress, clearly, our partners really want to make things, want things to happen for real. Least but not last -- last but not least, capacity boost. Now, I -- we explained to you the concept of capacity boost in the last quarter.

Now the capacity boost team and the external adviser and our dedicated team is now focusing on a number of specific actions. So let's go on the -- let's consider this column. Engineering is responsible for 30% to 40% of the extra workload, so millions and millions of hours that is necessary to improve the efficiency in production. Manufacturing is responsible for at least 10% to 15% of the extra workload necessary to improve our capability.

And finally, supply chain is responsible for 10% to 20% of the total strategic supplier -- well, actually not responsible. In the space -- in the supply chain, we have identified 10% to 20% of the strategic suppliers, which are classified as critical, and this has to be addressed by the capacity boost. So those are the three pillars where we are moving.

Now about the engineering, we are working essentially on engineering digitalization. So the infrastructure is fundamental because if -- the more we digitalize the engineering, the more efficient is the process. We have selected a few partners for engineering, optimizing the partnership to have basically more hours, less price and of course, more focused collaboration.

And we are working a lot on talent attraction. That will be the first talent attraction campus in close to Napoli, where is Aerostructures, but this is now being extended to many other manufacturing areas and engineering areas of Leonardo. Just to let you know, within the industrial plan period, we plan to hire 17, 1-7, 17,000 people, partly replacing retirements, maybe 9,000 or so, but most of them are fresh brains.

And of course, those fresh brains will be STEM primarily, and they're going to contribute to the efficiency of the engineering. Now in order to make a very good hiring program, we need to invest on talent attraction. And this is exactly what we are doing now, and our HR department is fully committed in developing this strategy. Second, manufacturing. Now because we want to reduce the inefficiency in manufacturing, that sometimes really impact on margins.

We have now a number of case studies. In La Spezia, we are making a very strong analysis and improvement for the land platforms. This is crucial for the Rheinmetall program for the land defense program. We are investing in Cameri, in Caselle, in Venegono, which is a pilot experiment for helicopters. So in that case, we are really working on the divisional plans to improve manufacturing.

That means many things, process engineering, rules, supply chain, warehouse organization. There is a lot to be done, and we are working full time on that. Finally, about the supply chain, we are working on the supply chain. There is a program for the supply chain. By the way, this is also supported by funds, not necessarily from Leonardo. We need to invest in our supply chain, not only financially, but also, for instance, moving productions of products that don't have big margins, but they can fill the capability of the supply chain.

So we are really working in the optimization and distribution of workload with our most important supply chain representatives. Now last thing that I didn't mention before is a new program that we call mixing the blood. I mean this sounds a little bit like a one-time movie, but that's very important because recently, I've been in Washington, visiting our colleagues in DRS. And by the way, welcoming the new CEO, John Baylouny, that I think is starting in these days.

And then we've been in London talking to our guys in the various plants that are distributed in the U.K. area. Now the point is that, I need much more integration, I need much more synergy. We cannot do sort of independent industrial plans because we belong to the same multinational company. There must be synergy. No problem at all in deciding that a company, DRS makes something, and we don't make it in U.K. or in Italy as long as this product is the best and also it's available to all the others in the Leonardo Galaxy, in the Leonardo family.

So the mixing the blood program means that we will start soon in having top managers in U.K. from Italy, top managers from U.K. to Italy, being resident and working side-by-side with the others and also revisiting a little bit the synergy with DRS, which is very important because there are new areas where DRS is starting, for instance, space, for instance cyber where we can really benefit of each other.

We can open much more market for DRS in Europe, and they can open much more market for Leonardo Europe in U.S. We have to exploit the synergy. Otherwise, we miss big opportunities and frankly speaking, big money. So the mixing blood program is basically a program performed, carried out by a team of HR strategy, operations in collaboration with the divisions and the plants because we have to accomplish this in the next 6 months.

We have to improve a situation that at the moment gives fragmentation, zero synergy and ultimately loss of good opportunities. We will make also jump to see what is the situation in Poland. Most important is that when I was in U.K., I spoke to the Under Secretary of Defense, honorable [ Healey. ] I will meet him again in [ Naples, ] mid-November because we are trying to boost the collaboration with the U.K. government.

We have a company -- we have a plant in Yeovil that is not getting industrial grants, public governmental grants from the U.K. government since 14 years. And you understand that in order to make sure that this plant is not only subsidized by Italian orders and technologies, we need to have more participation. So we are negotiating a bit more attention to our industrial presence there.

Anyway, I can say, as I found good faith and good willingness by everybody, I'm sure we can make much better than in the past. This will be the commitment for the next few months. I just go now to the -- towards the conclusion, and I want to tell you a bit more about the future and the future has to do with the recent news that I'm sure you've heard. We've been working for more than a year, almost 1.5 years with our colleagues in Thales and Airbus for the creation of a giant. We signed this agreement with Airbus and Thales to create a key European player for space technologies.

The new company is expected to be operational in 2027. We have about 1.5 years or so, maybe 1.5 years or 2 years to -- first of all, to face the antitrust situation and then to coordinate and develop the synergies. But most of the conceptual work has been done. We aim at creating a European space of space basically. Till then, Leonardo will work -- I mean, every company will work on its own. And of course, Leonardo and Thales within the Space Alliance. And we will try to do our best to provide -- to develop satellite constellation, promote end-to-end solutions like expected, like proposed by the industrial plan.

However, we are all in the mindset that we have to converge, carve out those things, merge into a unified new company and work together. This is crucial from our point of view, in view of the multi-domain solutions in which space is a key pillar that would be necessary for integrating air defense and earth observation. So the Bromo company, which is this new company that we -- you have heard about, and we mentioned so far, mean to establish European space global player that can compete with the big players in U.S., China, very likely India and other emerging countries.

We will be very careful not to jeopardize the PME, and the small medium enterprises, sorry, [ SME ] and the start-ups. But of course, we need at global level, a very competitive big machine. The governance structure in a simplified form, the Space alliance, Thales plus Leonardo is at 65%. Airbus is at 35%. Within the Space Alliance, as you see, Thales and Leonardo are equivalent, 32.5%. The JV will be based on five NatCo, Italy, France, Germany, Spain and U.K.

This reflects the geographical fingerprint of the constituting companies. And there is a matrix where you have the six domains and five NatCos. And if you are sitting at the head of a NatCo, you will be responsible of the domain, which is relevant for that NatCo and all the activity will be done by the NatCo. The domains are earth observation, SatCom, navigation, exploration and science, equipment and ground operations.

Now there's a lot to be done. But the very important thing is that in this -- in the idea that we have of Bromo, actually, the NatCo, they're going to have legal autonomy and profit and loss management, so they have a balance, so they are real companies. They have the responsibility for the sovereign decision of the government in dealing with security because we have -- of course, we have to consider that each country wants to have sovereign dominance of the security area.

And of course, each NatCo, will be in charge of the supply chain to make sure the supply chain is boosted and not jeopardized. Anyway, this is now in a nutshell, what we will do with Bromo, we're going to work in the next, let's say, 18 months to making this thing happen for real. So the concept, the scheme is clear. Now we have to see how this will work in a very operative way.

We need a lot of good managers, a lot of participation and goodwill to make this work, but it's going to be a very competitive company in the world if we make a good job. At the moment, the revenue profile is approximately EUR 6.5 billion with 25 people -- 25,000 people involved. And the synergy in a very conservative way, we expect easily EUR 0.5 billion synergies from scratch. Of course, we have much, much bigger opportunities.

This is just to give you a very rough idea of day 1. The ambition is really high. I conclude because I want to wrap up what has been -- what has happened in the last 2.5 years. And what could be the Leonardo's architectural vision for the future. This has to do with the integrated air defense system that I'm sure you remember, I introduced you at the last quarter, that was my last slide when I introduced you the “Michelangelo Dome, this concept of air defense dome that should be customer-friendly, very flexible, adaptable to any effector, any missile, any weapon.

So not a rigid system, but something which really makes the difference because it essentially takes advantage of all the strategic choices that Leonardo has been doing in these 3 years. Number one, creating a space division, launching the constellation and creating Bromo at European level, launching a large-scale initiative on drones. So cutting the edge and basically accelerating the drone technology.

The GCAP for the sixth-generation fighter, which has been launched and as you've seen before, is up and running. The land defense boost given by the Rheinmetall-Leonardo collaboration, Iveco acquisition and so on and so forth. The strong investment on digital high-performance computing and artificial intelligence as a connect home of the entire company, which allow us to produce electronics, which is for command and control, combat systems, almost ubiquitous in all our platforms.

We can do platforms for all domains, land, sea, space, air, sharing a concept electronics, which is meant to interoperate all the platforms in the multi-domain approach. And finally, the strong investment on cyber technologies, which has brought to a strong increase of our cyber technology capability and also of our cyber technology product. Now all these things should converge into something that takes advantage of the fact that Leonardo produces all kind of state-of-the-art radars from 30 kilometers to 1,000 kilometers, produces all kind of platforms, drone, land system, contribute to ships, sixth-generation fighter, all the ground systems, all the armored vehicle.

We do -- we can do all platforms. We start now working with our constellation, but of course, Intercom with other constellations. So if you have all the ingredients, the problem now is the interoperability, to develop the proper electronics that makes it possible to enable any platform to enter in this sky dome and to neutralize any threat from 30 kilometers in that zone to 3,000 kilometers, no matter whether it is hypersonic or subsonic or whatever.

I can't say more now, but I want to tell you that on November 26, we're going to present this program, the “Michelangelo Dome, the “Michelangelo program to our Ministry of Defense and all the military forces in Italy. And on November 27, we will present the “Michelangelo project to the market and to the most important stakeholder. So please save the date, you will get an invitation. The presentation will be done in detail at the multi-domain center that we created in the Tiburtina plant in -- close to Rome.

For most of you attending the first roadshow when we -- 2 years ago, 2.5 years ago, we presented the industrial plan, you were there. So this will be the place. And I hope you will realize how the vision developed in this almost 3 years that was really making a new Leonardo, now will be transferred into the Leonardo of the Future, which is the interoperable multi-domain machines, multi-domain company that has to guarantee global security for any kind of threat.

This is now the system of system evolution of the effort we did so far in Leonardo. I look forward to seeing you on the 27th in Rome, either by video or in presence, we will show how this will be deployed. Thank you very much for your attention. And now I'd like to give the stage to Alessandra, who as usual, will give you all the details about divisional activities and KPI -- financial KPI in a much more precise way than I'm able to do. Thank you very much for your attention, guys.

Thank you, Roberto, and good afternoon, everybody. I'm very pleased to be talking you through how we have delivered another good quarter and so very solid 9-month results. We're continuing the positive trends that we saw earlier in the first half, especially in our main Defense and Security businesses. We're seeing new orders coming through at a good pace, and we're delivering off a record backlog of EUR 47 billion. This is driving higher volumes and solid double-digit top line growth and high double-digit operating profit growth and higher profitability.

We have also delivered another quarter of improving free operating cash flow, and we are reducing net debt with disciplined capital allocation aimed at supporting growth while improving shareholder returns. We are on track on all our key metrics, and we're confirming the full year guidance that we have upgraded a few months ago in July.

We see strong performance across all group KPIs with increased order intake, growing volumes and profitability. Let's now look at the key group KPIs. In the first 9 months, group new order intake was EUR 18.2 billion, an increase of 24% year-on-year. We have also seen strong commercial performance across Defense and Security in Electronics, Helicopters and especially Aeronautics with a very strong recent quarter, which includes the recently signed extension of the Kuwait Eurofighter multiyear support contract.

This order intake is consistent with the upgraded guidance that we set out in July when we flagged potential large orders in the pipeline. Book-to-bill was 1.4x. We're seeing sustained demand all across Defense and Security and fast growth in areas like cybersecurity. Then group revenues grew 12.4% to EUR 13.4 billion. We have continued to see across all divisions the capability to deliver versus last year.

By virtue of good visibility in our backlog, we see strong growth going forward. Plus, we have a strong capability and focus on program milestones and good support from the supply chain in general. And this has translated into higher EBITDA across the group, an increase of 23% to EUR 945 million with good performances across the group. Return on sales improved to 7%.

And as we saw in the first half, we are proceeding at improving profit at almost twice the pace of revenue growth. And we have continued to strengthen our financial position. In the 9 months to September, we saw an improved free operating cash flow with a cash absorption of EUR 426 million versus an absorption of EUR 548 million last year.

As at September, our group net debt was significantly lower at EUR 2.3 billion versus EUR 3.1 billion last year, in part because also of the proceeds of EUR 446 million from the sale of the underwater business, which we completed in January. In August, we received another credit rating upgrade from Fitch, and we're very proud of it. So a good first 9 months on track, and it underpins our confidence in our targets for the full year.

Now let's go deeper into the results and performance at business level. Starting with Helicopters. We saw continued positive momentum supported by a good flow of business with progress on all programs as well as customer support. New order intake was EUR 4.9 billion in the 9 months, a good performance against a strong comparator for the previous year. Continued solid order intake on defense and governmental, including the AW249 program for the Italian Army, governmental orders in Malaysia, customer support orders from the U.K., MoD for its Merlin fleet and orders for the Italian military for ground-based pilot training systems and other logistics and follow-on orders also in the U.S. -- from the U.S. Air Force on the MH-139.

Helicopter revenues increased to EUR 4.1 billion, up 13%, driven by increased activity on the AW family, the dual-use area as well as the good contribution of customer support and training. And this was all supported by good resilience in the supply chain. This is an element that Roberto stressed whose importance we can't absolutely under-evaluate.

Leading -- all of these results have led to an EBITDA of EUR 320 million, up 18% with a slight improvement in return on sales, supported by consistent program delivery. So a good performance from Helicopters with strong demand across the business and good growth in revenue and EBITDA.

Now moving on to Defense Electronics, which continues to perform very well across all segments, both geographically and across domains. Electronics Europe achieved good growth in orders, volumes and profitability. In the first 9 months, new order intake was EUR 4.9 billion, up 2.5% year-on-year, excluding the underwater contribution. And the book-to-bill was 1.4x. All of this is showing growth across all domains and especially in Defense Systems and good demand for the upgrade and renewal across a broad range of platforms.

We saw additional orders for the MK2 radar for the U.K., Eurofighter Typhoons for our Royal Air Force customer as well as Defense Systems for the 16 Eurofighter for the Italian Air Force. And in the naval sector, the order for combat systems for the Indonesian Navy Patrol vessels.

Electronics Europe revenues were up 13% at EUR 3.5 billion, reflecting higher volumes as we delivered off the growing backlog. EBITDA rose to EUR 450 million, an increase of 18% and return on sales increased to 12.8%. Contributions from strategic joint ventures were in line with expectations, and MBDA continues to perform well, thanks to a continuous flow of business and strong program margins.

At the same time, as you have heard last week, Leonardo DRS has also reported a good 9-month performance, showing new order intake of EUR 2.8 billion, up year-over-year about 9% with continued broad-based customer demand across the business and especially for counter UAS, advanced infrared sensing, naval network computing and electric power and propulsion technologies.

Revenue rose to EUR 2.3 billion, up 11.7% on the back of growing volumes. And EBITDA grew to EUR 217 million, up 15% with an increased return on sales of 9.4%.

Moving on to cyber, Cyber & Security, where we see the first 9-month volumes and the profitability continuing to trending up significantly compared to last year. New orders were EUR 700 million, up almost 20%; revenues of EUR 532 million, up 19%; EBITDA EUR 41 million, up 86%, with return on sales rising from 4.9% to 7.7%. So continuing its positive trajectory with increasing profitability driven by higher volumes and product mix.

Order intake included various orders for Italian public administration through the PSN fund for digitalization, the cloud infrastructures and the secure communication as well as new governmental orders in the U.K. and elsewhere.

As we mentioned at the half year, we are now presenting the Aeronautics division. This reflects our role as a leading player in fixed wing aeronautics in both the military and civil sectors, with our Aircraft and Aerostructures units combined. And it also now includes our participation in the next-generation GCAP. You remember that the GCAP program was previously reported under the other activities.

We're also developing our activities in unmanned aerial systems. You can see the aggregated Aeronautics division's high growth in orders and revenues, while the EBITDA fall reflects the losses in the first 9 months in Aerostructures and ATR. To make operating performance comparable, we are also setting out for you the KPIs for aircraft, now including GCAP and then for Aerostructures.

You can see aircraft has been performing very strongly this year, especially with new order intake. After an excellent third quarter, new orders in the first 9 months have now grown to EUR 4.3 billion, well over double the previous year's level, benefiting from the follow-on logistics support contract for 5 years for the Kuwait Eurofighter program.

We are also seeing orders coming from the GCAP program and export orders for the C-27J multi-roll aircraft, as Roberto mentioned at the beginning of his speech. Revenues have grown in the first 9 months to EUR 2.3 billion, up almost 16% on the back of higher volumes across military programs such as C-27J, GCAP and JSF. EBITDA grew to EUR 265 million and maintaining strong double-digit profitability.

We have previously mentioned that now about 1/3 of the Aircraft division's revenues are coming from customer support. And that is representing an attractive margin and cash flow business, which also is showing how we have successfully been implementing the servitization strategy over the last few years, which was one of the pillar and is one of the pillars of our industrial plan.

Now moving on to the civil side of Aeronautics. In Aerostructures, order intake in the first 9 months increased to just EUR 789 million, up on the previous year on the back of orders from Boeing. Revenues were $510 million and EBITDA losses rose slightly to $135 million, excluding ATR. As planned, we have just returned to a second shift per day in Aerostructures and are increasing production levels relative to the first half of the year when we were unwinding inventory, which, by the way, we continue to unwind. And this is leading to better underperformance -- under absorption of fixed cost and reduced losses in the second half.

Our actions are taking effect to narrow the gap in line with the ramp-up by Boeing for the B787 to 7 ships per month. Separately, ATR's contribution in the 9 months was negative $34 million, with lower deliveries impacted mainly by supply chain constraints, which are currently being addressed. And we're now pleased to see more positive signs at ATR in terms of new order intake.

Turning to Space. We have continued to see improving commercial performance and profitability. New orders were EUR 655 million, notably in Telespazio Satellite Systems and Operations and geoinformation segments, also leading to increasing revenues. The more positive EBITA contribution reflected the confirmed profitability of Telespazio and also partial recovery in TAS following the efficiency plans launched last year, which benefits mainly on the SG&A line with close attention on program deliveries.

You've heard Roberto talk earlier about the exciting proposed combination of our space activities with those of Airbus and of Thales to create a leading European player in space. Our higher group EBITDA in the first 9 months also helped drive a better bottom line performance. EBIT grew to EUR 722 million, up 13.5% and the group net result grew to EUR 466 million versus EUR 364 million in the same period of 2024, with lower financial expenses in line with our reduced debt levels. The bottom line net result of EUR 735 million benefited from the capital gain recognized on the sale of underwater business to Fincantieri completed last January.

We have also made continuous progress in improving our cash generation, which, as you know, for us, is one of the key highlights and key drivers of performance metrics. It is driven by robust performance on defense and governmental. And year-over-year, there is a reduced outflow with a cash absorption of EUR 426 million versus EUR 548 million in the last year 2024. This is reflecting our improving operating performance and higher EBITDA and the efforts we have been making to manage working capital and cash ins. You know that this is a key area of focus for us, and the culture of cash is being permeated within the company.

We have full confidence in our 2025 free operating cash flow targets, which we have raised last July to a range of EUR 920 million to EUR 980 million. Then we continue to focus on executing on our disciplined financial strategy. And you can see how, over the last 3 years, we have achieved a very solid investment grade, receiving repeated upgrades in rating and in outlook. Most recently in the last few months, there have been 2 upgrades in our rating and 1 upgrade in our outlook.

We remain fully committed to maintaining a very solid investment-grade status while supporting growth and improving shareholder returns. We also recently announced a successful renegotiation of our ESG-linked revolving credit facility. It was oversubscribed 3x, confirming the positive sentiment and the support that the market has for Leonardo. We also achieved a margin reduction of up to 30% and savings on financial charges.

These improved terms reflect our stronger balance sheet and the solid investment grade we have achieved. We also are including new ESG indicators in the credit line, which are in line with the financial and sustainability strategy we have put forth.

Let me finish with the confirmation of our full year guidance. You have seen in the period to September that we have continued our good start earlier in the year, and we are on track with our expectations. We continue to see clear momentum. And as such, we confirm the full year upgraded guidance, which we gave you in July. Our main businesses on the defense governmental side are delivering strongly in order intake, revenues, profitability and cash flow. We're seeing good demand for our core defense and security products, technologies and solutions with solid commercial performances across all divisions.

New order intake has been very good and especially in the last quarter, and it gives us confidence. Orders are an indicator of the future. They are not linear, as you know, but overall, the trend is positive and a step up again this year. We're pleased with not just the level of orders, but also the quality. And as I said earlier, this order intake is consistent with the upgraded full year guidance we gave you of EUR 22.25 billion to EUR 22.75 billion when we flagged potential large orders in the pipeline.

We're also confirming the full year guidance for revenues and EBITDA with top line revenues growth as we deliver from backlog and improved profitability and the full year free operating cash flow that we upgraded in July. So now to conclude, we are continuing to deliver well on track with a good performance across all key metrics.

Thank you all, and I will now hand you over to the Q&A.

Thank you, Alessandra. Good afternoon to everybody also from my side. I think that it is now the time for the Q&A. We can use the remaining 20, 30 minutes for the Q&A session. So I leave the word to the operator, and you can open the line. Thank you.

[Operator Instructions] Our first question comes from Alessandro Pozzi with Mediobanca.

And let me start by saying congratulations to Claudia for the new role, and I wish all the best to Alessandra. The first question on results, clearly, very strong set of numbers. The only issue here is that you haven't changed the guidance, and therefore, Q4 looks really low, especially when you -- the implied guidance for Q4 once you factor in the seasonal trends.

And I was wondering how you feel about the guidance and the reason why perhaps you haven't upgraded the guidance, especially for order intake, which seems to be really strong in Q3 and also in light of the fact that there are probably new contracts that you will sign in Q4, very large, like the Turkish Eurofighter, the Germany Eurofighter contract, just to name a few.

The second point I would like to discuss is Iveco Defense. I believe that you are doing an industrial analysis at the moment. And I don't know whether I understood correctly, but maybe the carve-out of the truck division of Iveco Defense is not on the table anymore or maybe it's perhaps. So I was wondering whether there is a chance whereby you end up with 100% of Iveco Defense.

And maybe the last one, you mentioned synergies with DRS. Historically, it's been really difficult to create synergies between the European subsidiaries and U.S. subsidiaries. And I was wondering how do you think you will be able to improve that? And longer term, what's your view on your stake in DRS?

Yes. Thank you for the set of questions. Okay. I will be, at the very beginning, a bit qualitative. And then obviously, I will ask Alessandra maybe to point out a few aspects of my answer. To be frank, guys, at the last quarter, I had a discussion maybe because of my scientific background, but I like to have kind of algorithms or KPI that are giving us a guideline. I mean, of course, they are very flexible, but they give a criteria for us to make actions.

For instance, I was wondering whether it makes sense that we update the guidance every quarter because there is an increase of 1%, 2% of the specific KPI. So I just proposed, but that was a very flexible proposal, okay, just to give a criteria, not because I would say it's not mandatory. It was just a proposal. Let's communicate a change of guidance when we expect, let's say, 10% increase on a specific KPI, which was the case. We might argue and discuss, I'm totally flexible, no ideology at all. If you think 10% is too high, we can make 5% or whatever.

I was just trying to give to the team an idea that we have a target. If we go above that target, we changed the guidance. If we are below, even if we grow, maybe it's not so relevant to give a marginal change to the guidance. For instance, -- to be honest, I'm pretty sure, guys that we go well above EUR 19 billion. We already have EUR 19.2 billion or so for revenues, and we possibly break the roof of EUR 1 billion for the free operating cash flow, okay? I'm very confident this will happen.

So in some sense, I would feel very confident to give you -- to propose you an upgrade in the guidance. But it's going to be 2%, 3% because we are growing, we are growing fast. We did a lot of work, and now I expect to grow rather continuously. Maybe there is no point to update the guidance every quarter. But with the same transparency and honesty that I told you in my premise, if you think it is better to update even a marginal increase 1%, 2%, we do it. We're not, how to say, hiding or protecting or acting in a conservative way.

I'm sure we're going to pass the target this quarter or the next quarter, for sure. I wonder whether it is useful to anybody to give an upgrade of 2% or 2.5%. If you think so, we are ready to get the lesson and to do it. I mean, really, we are absolutely agnostic in this respect. So I know that it's a nonconventional way to answer. But as I said, I feel confident with the numbers. So at the end of the day, for us, it doesn't make any big difference if you say we correct the guidance every 3 months, plus 2%, plus 3%. We can do it. Or if you look at the single line algorithm, we don't disturb you if it is less than 10% or 7% or so.

Now concerning Rheinmetall, as I tried to explain before, the due diligence in the industrial analysis is really very complicated now. So we know exactly what we could do in Iveco, for instance, splitting an internal supply chain line or doubling a production line in the plant. Now we have to see whether the investment to do it is worth to make it to carve out a specific part and maybe to sell this to our partners or we better keep all unified and anyway, having commercial agreements with our partners, which would have exactly the same result in the end of the day without a massive investment.

We're going to make this analysis in the next weeks. There is a team of about 20 people, including advisers that are working with us. As soon as we are clear this with the numbers, of course, we will make a proposal. But to be honest, we cover both scenarios, 2/3, 1/3 or everything for Leonardo. There is no, how to say, financial problem for that. We are ready to both. We want to make the things which is more effective and requiring less investment. I think you had another question. Which one?

Yes, synergy for DRS. Yes, what we conceived with our colleagues in DRS is to create a mixed team of top managers that from U.S. are staying in our place and from Leonardo, let's say, Europe, they move there to have a more -- a much closer interaction of people and of course, to update and align the industrial plan that DRS has made and of course, Leonardo has made and not always coincident or maybe sometimes overlapping with less synergy and more repetitions or overlaps.

Now maybe some thought about the operation of the proxy can also be done. But this is one of the avenues we are discussing together. I mean we have a common aim to integrate more, to make more synergy, mixing the blood means mixing the people and also the product. And this is what we're going to study in the next 3 months. But by the end of the year, beginning of next year, we should have 1 or 2 scenarios to propose and develop. I hope I answered. And of course, Alessandro, if you want to say more...

I think you have covered it all, Roberto.

Okay. So we move to the next question.

I also agree on raising the guidance only when you think you can beat by a certain amount. So again, raising -- changing guidance by 2% to 3% every quarter, maybe -- yes, I agree with you on the style. And also on the equity participation of Avio, maybe can you say something? You announced the sale of a 9% stake in Avio. What is the longer term?

So first of all, thank you for stressing the point of the guidance. I'm very relieved that you understand how flexible we were. There was no intention to do anything strange. It was just a basic thing to feel confident at some automatic decision system. So happy that you -- that is acceptable. But of course, always happy to receive suggestions and criticism because we are trying only to speed up the machine.

Concerning Avio, so the point is the following. Avio has made an industrial plan, which moves the central mass of the company from launchers to, let's say, missiles and propulsion systems towards missiles, moving the business in United States progressively and somehow, how to say, seen by us in Leonardo, we were in Avio because our interest was 90% on launchers because we do the missiles with MBDA. So for us, it would be a nonsense to nurture 2 competing missiles activities in 2 companies that we control, we participate in, while losing the focus on launchers.

So in a very collaborative spirit, we discussed with Avio that we are not interested in the augmentation of capital in this new initiative because that will be, first of all, for us, quite an amount of money to be invested to stay at 28% in a company that, however, is moving the business towards a direction which is competitive to what we already do with MBDA. So industrially, I don't think my Board and even you guys that are investing on us would understand the philosophy.

Why are you duplicating something and losing the focus on launch that was the original idea, even though it was not very successful. But anyway, that was the idea. So we didn't want, however, to stop Avio because I think they have the right and they want to play their cards, obviously. So we said, of course, we agree on the augmentation of capital, but we don't participate directly. I mean, to be honest, this happened exactly the same with Hensoldt if you remember, a couple of years ago. So it was a very mild way to say, okay, we don't follow you, but we understand your reasons, okay?

Now technically speaking, that meant not participating in the augmentation of the capital, but we had to sell the right of options [indiscernible] residual value. So in doing this, we collaborated with the group of the bank advisers, and they suggested something like selling a bit of shares and then using part of the income of the sale to resubscribe some of the share of Avio. This is not actually augmenting -- participating in the capital augmentation, but subscribing again, of course, brings us around 18%, 19%, which is the minimum participation Leonardo should have in Avio, not to abandon Avio because also the government wants to make sure that we still have some presence in -- not the government, the Minister of Finance, which is our main shareholders.

There is some presence ensured in Avio for the -- at least for the beginning of the action. So we diluted from 28% to 18%, 19% or so. We monetized in an amount in the range of EUR 20 million to EUR 21 million or so, our rights. And now we are there, not making hurdles to have on one hand, but on the other hand, meaning that we cannot follow the plan towards the missiles in the United States.

Now there are other companies that would be interested, for instance, MBDA and so, but we are discussing those things went very fast. So no one could take a decision. We were prudent, and we decided to follow this strategy. So in the end of the day, we get some cash. We diluted from 28% to 18% or so 18%, 19%. I don't remember the exact number, but we'll see in a few days. And then in a couple of weeks, we confirm we're going to resubscribe some of the shares to stay constantly at 18%, 19%. And then we will see how the market behaves and how the initiatives takes off. And of course, we wish the very best to Avio in the meantime to be successful with the new strategy.

The next question comes from Ross Law with Morgan Stanley.

Hope you can hear me. So 2 from me. The first is similar to Avio, but more specific to Hensoldt and your stake there and how you're thinking about that? And then the second one is just on the NHI deal with Norway. You flagged that your free cash flow guidance now includes the impact. Can you just confirm what the magnitude of that impact is? And does it all fall in Q4? And is this payment in line with your shareholding in NHI? Or is it slightly different?

Okay. For Norway, I'll leave the word to Alessandra because she closed fantastic of the deal. I will tell you a bit more about Hensoldt immediately after.

Okay, Ross. So on the closing of the transaction with Norway, the cash outflow -- total cash outflow for Leonardo will be EUR 125 million, which is 41% the stake that Leonardo has in NHI of the settlement amount, EUR 305 million. The distribution from a timing standpoint of this outflow is mainly in '26. This year, we're going to have a negligible EUR 10 million to EUR 15 million payment, and the majority will be in 2026.

Clearly, as you know, the closing of the transaction is a very positive event for us. This is a legacy contract, 20 years old. The risk has been -- from a court stance perspective, the risk has been tangible. We could have had a much worse outcome at the end of the day. So we really brought down the amount of exposure down to EUR 300 million of a consortium. So it's a really good outcome that we are satisfied with, and we are closing once for all the topic. Back to you, Roberto.

Yes. So Ross, about the Hensoldt. After the contact I had with my colleague, Oliver Dörre, the CEO of Hensoldt, we met a couple of times recently. So we are now studying what next. Of course, this has to be integrated into a very complex situation. On one hand, we have the extra funds from Europe, the SCAF program, ReArm Europe and so on and so forth. And on the other hand, we have the big boost that the German government is putting on defense, which means that they need the German companies to be really committed on the domestic programs.

So I gave my complete availability to discuss any scenario with Hensoldt and eventually with the authorities on about -- what could be the best scenario for them and, of course, for Leonardo. So the discussion is in progress, very constructive, very friendly. Well, of course, we have to see how the Bazooka German program is deployed to understand what is the best solution for both of us.

At the moment, however, the collaboration is ongoing on the legacy programs. The numbers are, okay, good, we cannot complain. I mean there is no red light anywhere. But in order to have a strategic choice made, we need to talk to our German colleagues when they have a clear planning of the situation. And at that point, we'll try to adapt our strategy to their strategy.

In the end of the day, staying like this would not be bad. The point is, can we do better or can we do somewhere else something better? And this we will discuss with our colleagues as soon as they have a clear scenario in front of them.

And the next question comes from Martino De Ambroggi with Equita.

I know the trend in orders is not linear. And you already talked about the guidance for the current year for sales and free cash flow, which may be better. I was wondering on the order intake, very strong in the 9 months. Q4 implicit in the guidance would mean at the lowest absolute value over the last 10 years in a much more favorable environment. So I was wondering specifically on order intake if there is the same conclusion that you mentioned on sales and free cash flow.

And on Hensoldt, a follow-up on the previous question. When you talk about open to different opportunities and so on, does it include divestiture, either merger with other activities? So it's 100% every kind of possibility or I don't know, because you also mentioned if we stay as we are today, we are happy in any case.

Yes. I'll give it the word for the first question, then I will specify [ Borenzso. ]

So Martino, on orders, you said it, orders are not linear. We are very pleased with what we have seen in the 9 months. And clearly, that's a very good outcome. And it's a performance that is also reflecting the jumbo order of the contract -- the [indiscernible] contract for customer support. So if you project into the full year, we confirm the guidance between EUR 22.250 billion and EUR 22.750 billion, and we feel very confident that we will hit that range.

Martino, about Hensoldt, so let's say so, but this is my personal interpretation, and I believe it's reasonable. I think we could consider as totally abandoning this idea, the original idea 6, 7 years ago because I was even not in Leonardo when they started that one day, Leonardo could be -- could own 51% of the share of Hensoldt because that was another -- before the war, before everything.

And now I'm sure that the profile of Hensoldt is growing a lot and the strategy of the German government is very clear. I'm sure they don't want to leave the control by another company of an asset such as Hensoldt. So this, we can discard. 2 years ago or 3 years ago, could have been yet still the case, but for sure, not now.

Now what can we do? We can, of course, create -- we can divest, obviously, getting out. But I mean, this must have -- from our point of view, divestiture is made because we make money to reinvest in something which is very strategic. We don't sell things to make money, and that's all. We sell because we want to have money for a strategic investment. We did a lot of work so far, actually, a lot of new initiatives. Now implementation is really the challenge. And even if you have infinite money and you buy infinite new things, then you have to make them profitable, to make them efficient. And this means find managers, proper organization, so on and so forth.

So I wouldn't do anything that would create extra load, extra payload to our managerial activity and industrial activity, unless it's really crucial for the global security program, for the multi-domain interoperability program. I think we are very close to have all the elements, and I don't want to do things that could make the machine more difficult to drive.

Having said this, let's see also what our German colleagues propose. There are potential synergies between Leonardo and Hensoldt that could be further studied and developed. And this is also one of the areas where our teams are discussing. But as I said, I think now the ball is in the field of the German partner for domestic political reasons, for strategic reasons. We are happy to contribute to the discussion, but we look forward to having indications by Hensoldt to see what could be also for them a good way to go.

And in the end of the day, we are rather flexible. We don't see any red flag, any red light anywhere, as I said, because the program is running, we are doing things together. Margins and numbers are satisfactory. So for me, it's much more important to fix in a permanent way other loss-making situations, as you know. So in this respect, you find me rather relaxed and flexible. But we are discussing quite intensively any possible scenario.

And the next question comes from Gabriele Gambarova with Intesa Sanpaolo.

The first one is on aircraft. You got this huge contract with Kuwait. And at the same time, I remind that during your, let's say, March business plan, you assumed that aircraft margins would go down by roughly 200 basis points starting from next year. So I was wondering if this Kuwait contract, jumbo one changes anything about this?

Another question is on the U.K. Roberto, you mentioned [ Yeovil, ] the plant, and we know that there is this new medium helicopter program ongoing. You are the sole contender. I was wondering if something is moving there, if you have any update on this? And the third one is housekeeping -- just housekeeping on the below-the-line items you expect for 2025.

Okay. Will you go with this expectation for aircraft? And I go for Helicopters.

Sure. So Gabriele, the margins on aircraft that we have projected factored in a portion of the contract and of the servitization strategy that we had in place. Having said that, as you know, the aircraft division has proved to deliver very strongly at top level margin systematically year-over-year. So I would say that in the context of the opportunity that we see throughout the fighter business being Eurofighter in export, being Eurofighter for the 4 core nations, the JSF, which is a continuous positive contributor to the overall volumes as well as the GCAP, we will have a consistently solid and top level profitability in the division.

So the question was the other one...

The NMH in U.K.

Yes, the NMH in U.K. So Gabriele, look, the reason for me to go to U.K. and talk to the Secretary of Defense, Honorable Healey was just to make sure that things are coming and moving because there was a sequential delay of the decision point for the helicopter tender. And so we made clear that we are waiting. For us, time matters at this point. We cannot subsidize Yeovil forever. It's 14 years, 1-4, 14 years that we don't get any contract from the U.K. government.

It's getting difficult for us to keep this big plant alive without institutional collaboration. I think the minister was very serious, very -- he's working on that. As I said, we will meet in Naple very soon. And our team, [ Clive Egans ] and team in U.K. are really working and kind of chasing the institution to see what happens. So I think we can be positive. But of course, we have to see what happens in the end.

I mean those -- as you know, those are very complicated tenders, and there is a lot of political influence behind. And therefore, it's not simply an industrial issue. It's a kind of geopolitical issue. We want to see what happens. But of course, should this not happen, well, we should seriously consider why we keep a plant there for 15 years, not getting anything. So -- but this is part of the efficiency plan that we might consider in case things will not run properly. But I think we made a very clear statement, and we found a very collaborative and responsible answer.

So let's see what happens in the next few weeks. The decision is made -- should be made by the end of the year. So we are really at the last mile, okay, we should not wait for long.

Gabriele, on your last housekeeping point, the expectation for below the line, before the closure of the NH90 program, I would have responded to your question as approximately in line with 2024. I have to say that given this extraordinary item, which is accounting for EUR 125 million, we may be slightly above last year.

And our last question comes from Christophe Menard with Deutsche Bank.

The first one is on the NH settlement. What is the impact, I mean, on the 2026 free cash flow guidance? You're obviously spending EUR 125 million or I mean that's the -- I mean, a little bit less than this, but what is the impact on what you guided? The second question is on capacity boost. Can you also remind us the free cash flow impact that it could have, if any, in the coming years? And the last question is on the [ Christophe ] project. I was wondering how it actually fits with the European Sky Shield initiative. What is the plan or strategic plan to insert it within ESSI? And also my best wishes to Alessandra.

Thank you, Christophe, for your well wishes. And let's start answering your question on NH90 settlement and impact on next year free cash flow. What I can tell you is that we will work our hardest to compensate that outflow with other inflows and maintain the outlook that we have provided last year. Clearly, this is a cycling -- budgeting cycling process, which has just started, and we will keep you posted. But the goal for us as management team is to not have a negative impact next year from this settlement.

Okay. Christophe, concerning the capacity boost, let me remind the main motivation for the capacity boost is that we know already that with the exponential growth of demand that we're going to have in drones, aircraft, land defense systems, we soon are going to meet a bottleneck in our production capability. So before telling you what is the expected amount of -- the expected improvement in terms of cash, I want to fix the main problem, which is we need to deliver, for instance, in the case of land defense, 1,250 heavy armored vehicles, approximately 250 main metal tanks and approximately 1,000 advanced [indiscernible] combat vehicles.

And we don't have the capability right now to deliver because we need a strong efficiency in our production capacity. So somehow, the -- how to say, the revenue or the money that we can get, it's a consequence of the fact that we can deliver more. And we don't deliver -- if we don't deliver, of course, we don't earn money. So that was the first motivation. And so it's a kind of indirect analysis we can do. But if you consider that we have about $20 billion program -- more than $20 billion program in 10 years for the land defense.

That's an example, but I could tell you the same for GCAP for other things. You divide by 2, us and Rheinmetall, and you can see that the margin can be 15%, okay, you easily get how much money we can earn if we are able to deliver. If we don't deliver, this money is not taken. The second point is that we are facing something like -- I don't remember exactly, but we are talking millions and millions of offload engineering hours. And this is a cost. It's a net cost that goes against the marginal -- the margins of our manufacturing. Of course, in order to satisfy the demand, if you have to pay 10 million, 11 million, 15 million of engineering hours, you're going to pay that. And this is going to be a reduction in the margin.

So reducing the number of hours of offload that we buy, it immediately turns into margins and of course, into euro or dollars or whatever. So we are not able to make the calculation now because we are trying to cut this 30% to 40% extra workload in the engineering, 10% to 15% extra workload in manufacturing. And if we manage, then we can give you an equivalent in euro. But clearly, the algorithm is very simple. The point is to act in a way that we can make the capacity boost.

In terms of investment because, of course, you could ask, okay, but you have to put money on the plants to make them more efficient. Obviously, we invest in the optimization of manufacturing as long as the investment is below the expected gain in 2, 3 years in the budget plan. This is exactly what we're doing now, and it seems to be very effective as a model. So sorry for not giving you a number, but those are big numbers, to be clear.

There was any other question? Yes, Michelangelo. Sorry, Christophe, I would like to ask you, can you repeat the question? Because you said how do you integrate your Michelangelo -- don't mean something, but I didn't understand the acronym. What did you say exactly?

Yes. Yes, I was hinting at the European Sky Shield initiative that Germany sponsored, which is a multilayer defense system.

Okay. Sorry, I didn't understand. Yes. So we do have a product portfolio of approximately 150 components in electronics, radar, sensors, effectors mounted on land defense systems, vessels, aircraft, helicopters, and we built our own constellation. These things are already on the portfolio. So I'm talking about the largest integration program ever in the defense industry, but we do have all the components.

I don't think anybody else has the portfolio ready. So one thing is to say, I would like to do this. One thing is to say, I have these components, I want to integrate them. So I'm not able to compare because I know what I have, but I'm not aware of what they have. But for sure, they don't have all the platforms and all the components. So I think they are a little bit -- if I remember correctly, they made a statement that we candidate ourselves to drive the design of the air defense system. Fine. It's a candidature. What I'm going to present is a product.

Yes. Looking forward to the presentation.

Sure. We'll be happy to give all the details as long as we can disclose everything, but it will be very clear.

Okay. I think we are to the end of our presentation. Thank you for your participation. And I leave the last word to Alessandra.

Thank you. Thank you, Claudia. And let me make -- let me say a few words here. Our journey together started exactly 8 years ago in November 2017. These 8 years have been phenomenal, extremely intense and Leonardo throughout this time frame has become bigger, stronger, more profitable and more cash flow generative. I thank Roberto for this great time we spent together, and I thank you all for the fantastic journey that we have done together. And I'm confident that Leonardo will continue to do great in the future. I look forward to crossing path again with each and every one of you in our future.

We will, for sure.

Good afternoon, everyone, and welcome to our 2025 half year results presentation. I'm Alessandra Genco, CFO of Leonardo. Today, our CEO, Roberto Cingolani, will update you on the highlights of the first half of this year as well as the strategic progress that we have made. I will then take you through the first half 2025 results and performance across the group and guidance for the full year. We will then welcome your questions.

The supporting slide presentation is available for download by registering to the webcast, and all the first half results materials are available on our website under the Investor Relations section. Please note that throughout the presentation, we will be making forward-looking statements. So I invite you to refer to our safe harbor statement, which applies to this call as well.

Now I will hand you over to our CEO.

Thank you, Alessandra. Hello, everybody. It's a big pleasure to see you again for this first semester of '25 will be a very dense presentation. We didn't expect to have such a concentration of new programs, results and so on, all in this afternoon. But that's the agenda you see here. We'll start with the highlights of the group, bringing to your attention the results of 2025, some quick analysis of the main financial KPIs, then the usual update on the efficiency plan and a short focus on the tariffs in view of the recent discussion and claims that were done, and we all read on the press.

Then we will move quickly to the organic growth analysis. In particular, I will inform you about the status of the 3 joint ventures that we launched. We call them organic now because they are all up and running, and we believe this is the last time we will consider them as inorganic contributions since the next quarter that will enter into the normal organic streamline of growth of the company.

Third will be the capacity boost presentation. You remember, I promised you to describe the methodology we're developing for increasing capacity and efficiency into the company in view of the strong growth that we all expect because of the geopolitical situations and also because of the reorganization of the business.

And the fourth point, we have the inorganic growth, the new inorganic part, which means updating you about the merger acquisitions that we did in the cybersecurity area and a big acquisition related to the Iveco land defense, Iveco defense systems that has been finalized in the last hours.

Fifth point will be Aerostructures. As promised, we are at the July '25 milestones, and we have news to give you. And last but not least, the new initiative about the integrated air defense scheme that is the completion of our multi-domain interoperability strategy that is the fingerprint of the entire industrial plan of Leonardo.

So let's go now and see the numbers first. We'll start with the main KPIs. Orders have been increasing 9.7% from EUR 10.3 billion to EUR 11.2 billion year-over-year, first semester '24, first semester '25. Revenues have been growing by 12.9%, up to EUR 8.9 billion this semester. Return on sales is increasing 0.1%. The free operating cash flow has been growing 19%. And the net debt has improved by 27%.

We are quite happy of those results, primarily because we see finally a trend in version. The orders are increasing, but the other KPIs are increasing super linear faster than the orders, indicating that very likely all our efficiency effort and our efforts in rationalizing the portfolio and improving the global efficiency of the company is finally giving measurable results.

This is for your analysis basically in the last 24 months since we started our activity altogether, we had an increase of orders. Today's guidance is EUR 21 billion for orders at the end of '25. And you see the revenues are growing slightly faster. The EBITA is growing a little bit faster and the free operating cash flow that was the weakest KPI we had over the last years is finally accelerating.

So I'd like to remind you that I was using this simplified expression, orders, revenues, EBITA and free operating cash flow that we didn't like so much. Now they are progressively getting parallel or possibly slightly super linear, which we believe is healthier.

The additional achievement to that, of course, we increased the investment by 15% over the last couple of years. We increased the dividend by 3x over the last 2 years. We made a number of global alliances following the light JV model. It seems to be very promising. We made bolt-on merger acquisition you will see today.

The tools where business and product rationalization, strong digitalization and increasing effort for optimizing the operations. Priority in the investment that was fundamental, working capital management and a very disciplined capital allocation strategy; and finally, investing a lot of effort into the efficiency plan.

Now in view of those results, we believe it's a good moment to propose a new guidance. Actually, we proposed to increase by 7% our guidance in orders from EUR 21 billion in 2025 -- end of '25 to something between EUR 22.25 billion and EUR 22.75 billion. So it's an increase on average 7%. And the same on the free operating cash flow with a net increase of 9% from EUR 870 million expected at the end of the year up to EUR 920 million, EUR 980 million. That's the range.

I mean to be honest, as you know, big orders impact not only on the orders themselves, on the order portfolio, but also the free operating cash flow because of the down payment but also because of the increased efficiency that we realized over the last 24 months. We believe that revenues and EBITA will grow a little bit later. There is a little bit of jet lag, so you don't see the immediate effect in the 6 months. But I'm sure from '26 onwards, we're going to see the positive effects of this important order increase and efficiency increase.

It's important to mention, however, that we are now proposing this new guidance with a substantial increase, 7% to 9% because we have to admit that this increase is important for us, and we believe it's just the beginning of an even better improvement of the other KPIs in the years to come.

As usual, I report you a short update about the savings plan. We're on target. The company is fully committed on that. This year -- this semester, we've been saving according to the initial forecast, 76% on procurement, more than EUR 100 million, about 10% on corporate and travels and about 14% on the disposal due to the disposal of core business activities for a total estimate of EUR 142 million savings, which is approximately 1/2 of the savings plan for the 2025. Considering that last year, we had an extra saving of EUR 41 million. We were supposed to save EUR 150 million, we saved EUR 191 million.

We can say that for the current year, we are approximately 65% of the target. So we're doing, I think, in a satisfactory way. And I confirm that procurement is the key saving driver for our saving plan action. The achievement, 2025, are on line with expectation, slightly better possibly because of the good heritage of last year.

And as usual, I'd like to remind you that this curve that you see here, this one, is the expectation in case of standard inflation. Then, of course, we had a second curve, the one that we mitigate because we do -- we sign long-term agreement to mitigate in the midterm the cost of the procurement. And the brown line here, this one is the forecast that we had in our saving plan.

The dots are the experimental points, those that we measure every quarter or every semester. And as you see, they are slightly below the model, pretty much like if the inflation were around 2.9%, 2.5%. So this is promising. We keep insisting. We're very committed in the saving plan. We want to bring the result of EUR 1.8 billion in 5 years at home. And I think this is a global commitment of Leonardo.

The update on tariffs. Well, you heard just a couple of days ago, there was a meeting between President Trump and President von der Leyen. We got some message like 15% tariff flat, but not so many details have been released. So it's very difficult to calculate the impact.

We heard about using money for American Defense platform, but this is concomitant to the use of the same money for European -- for the European defense space. So we are looking forward with our government and many other European governments to understand a bit more. However, we continue with our analysis.

The key considerations are shown here basically. Direct impact is not very important. We don't have big exposure because in general, governmental sales and defense are not touched so much by the tariffs. The indirect impact, this has to be evaluated because the scenario is changing continuously. For instance, the 50% flat, we still don't know exactly how it will be distributed with different goods. So we are tuned and we're trying to understand more, and we will inform you by the next quarter.

The international footprint is safe. I mean we have our American domestic market. And there, we don't have any important impact. We expect, like we said last time that out of a business in the range -- a global business in the range of $4.1 billion in the U.S. market, we expect just relatively small tariffs in the range of $10 million to $20 million this year and next year, excluding any mitigation actions. So this number has not changed. It's very -- I think it's encouraging.

The impact assessment indicates that the military programs, including Leonardo DRS and military helicopters are not touched by the tariffs. The B787 also will not be touched. Leonardo is not responsible for U.S. tariffs in this specific case.

For the helicopters, apparently, there was a decision that everything flying will not be touched by the tariffs, but it's unclear whether this applies only to fixed wing or also to rotary wings. We look forward to have information. We still don't know. But of course, we're going to calculate this as soon as the information will be clear.

One point of attention, as you see here, we label this red and green because it's digital. If this doesn't apply to the helicopters, we'll calculate the numbers. If this applies to the helicopter too, there will be no extra impact on our helicopter business.

Okay. So I think I can go ahead to -- to be honest, I think the financial part, what I've shown you now, it's the most important financial part, but I want to complete the information for this half year by informing you about the 3 main joint venture that we launched over the last year. And particularly, I start with the Leonardo-Baykar joint venture for the drones. We are really running fast here. The joint venture has been established recently. We already started the integration and the production.

First of all, let me anticipate, we expect by the first quarter of '26 to start the sale campaign. So we are really moving fast.

In Ronchi dei Legionari, where we have our traditional drone plant, we are not only developing a program with the Mirach, which is our own machine, but also we have equipped everything to prepare the final assembly of the TB3 that will integrate the Baykar drone that will integrate the payload done by -- all the payload done by Leonardo.

In Turin, the team is ready to work on engineering and certification activities, which is mandatory because we want to export those machines Europe-wise and possibly outside.

In Villanova d'Albenga close to Genova. We have set up the final assembly of the TB2 and of the Akinci. Akinci is the big one with a big payload. The TB2 is a smaller drone also with a remarkable payload.

In Rome, the team has set up a capacity -- high-capacity program for the multi-domain technology and innovation hub, preparing all the payloads that will be integrated in the different drones. And in Grottaglie, which is currently the Aerostructure area, we are preparing the composite -- the composite manufacturing technology and the final assembly of the Kizilelma. Kizilelma being a very interesting product. It's a jet. It's a fighter. It's a drone jet drone fighter that could be the adjunct of choice for us because it's very flexible with a big payload, I think, 1.5 tons. And so this anticipate quite a lot of our capability in producing adjunct also build the GCAP.

So this is actually up and running. It's the last time I will tell you about the Baykar-Leonardo joint venture as an inorganic event. This is now in the network of Leonardo, and you will see the numbers over the next quarters.

On the same footing, I will give you the Leonardo Rheinmetall military vehicle update. The joint venture is up and running, as you know, the governance, the top management is in place. Actually, what you see here, this envelope here is just the supply to the Italian Army. But of course, this does not include by any means export, which hopefully and very reasonably will, for sure, develop an extra demand. And of course, we are working -- we are already working on the integration.

But if we stay on the domestic program, the good news is that we are slightly ahead with respect to the original plan because we already delivered 5 infantry vehicles. It was 0 this year, but we are anticipating. And we are planning to anticipate also a couple of main battle tank, the international version, in order to allow our forces, military forces to become familiar with the new platform. This should be done by next year. So we are slightly anticipating.

That means the hope is to accelerate as much as possible. Of course, here, there is an important issue of capacity and efficiency, and I will give you the information in a minute when we will discuss the capacity boost. But from the Leonardo Rheinmetall point of view, things are running, and we are moving in the right direction.

Let me go to the GCAP. That was the last big initiative. So the GCAP, as you remember, was supposed to create the GIGO, which is the umbrella company, the JV. This has been launched. And it's named Edgewing, what you see here, the Edgewing Company. It has been incorporated on June 2025. It includes, of course, BAE Systems, Leonardo and the Japan Aircraft Industrial Co.

The company is in charge of fabricating -- designing, fabricating the first sixth-generation combat aircraft by 2035 that will operate at least up to 2070. And the top management has been appointed. Marco Zoff, who was the former Chief of the aircraft division in Leonardo is now the Chief Executive Officer of the Edgewing. And Herman Claesen is the Chairman.

So the machine is up and running. So they are working. There will be in October, the first ramp-up of workforce, approximately 200 units will start. And in the meantime, by the end of '25, the NatCos, the Italian, the U.K. and the Japanese companies will be launched with their own programs. This is very important because we will go parallel. So the platform will be developed. We already started basically and the NatCo in parallel will develop very important parts of the program.

For instance, in our case, the CRUD and CRUD operations, the adjunct and all this warm intelligence that is needed to put in contact to operate the drones by the fighter, by the sixth-generation fighter.

Importantly, the role of Leonardo is also quite crucial within the platform because as I told you already in the previous reports, -- we'll be in charge of the Sanket, command control, flight control. So the very core of the electronics that's very important for the performances of the platform over the next years.

So those are the 3 joint ventures. Now they are incorporated. They're up and running. We don't consider them anymore inorganic. You will see them embedded in the huge amount of activities that Leonardo will develop over the next years. But all this requires a lot of effort to deliver on time, increase capacity in production and increase efficiency. And this very thin boundary between efficiency and capacity is exactly what we are targeting with the capacity boost that I'm sure you remember, I proposed, I launched in the first quarter, so 3 months ago, promising you a first outlook of this program at the semester. So here we go.

Let me tell you, first of all, why capacity boost. So the international scenario is, though complicated, it is very clear. NATO defense strategy is targeting at a substantial budget increase in defense. Roughly speaking, 3.5% of GDP of the countries should be in defense platforms, plus something like 1.5% of the GDP in security, infrastructure and digital. So globally, we expect something like 5% versus the 2%, maybe 3% in some country, which is actually the size.

Europe-wise, the defense strategy through the Readiness 2030 program has launched a number of measures also with different names. But for the time being, for instance, the SAFE program plan to provide funding to the member states with a very long and low interest loan, very convenient, to be honest, almost 0 as an impact. And the expectation after talking to our main shareholders, the Ministry of Finance, is that there should be something like EUR 18 billion to EUR 20 billion dedicated by the SAFE to the increased spending in defense and security. This is over the next 3, 4 years. I mean those numbers will be, of course, certificated by the state, but we just have an indication.

And then country-wise, on the Italian budget, we were advised that there will be something like EUR 4 billion increase in defense expenditure per year over the next 5 years, at least 2030 because this will enable the country to approach 3% over the next decade. That's for defense only. Then there will be all the rest of the infrastructure.

So as I told you in the last meeting we had at the first quarter, we could estimate that every point of GDP increase in investment in defense, Leonardo is going to intercept something like EUR 2 billion to EUR 2.5 billion, roughly speaking. This is just an order of magnitude that gives you an idea. So if in the current year, we had an organic growth of EUR 4.8 billion over the EUR 17.8 billion that we made by the past activities. A inorganic contribution and upside because of the initiatives by EUR 1.5 billion. The expectation by the end of the budget plan is to be around EUR 24 billion revenues in 2029.

But if we include all the contribution that I told you now that are coming from national and international institutions under the drive of the NATO request, very likely, in a conservative estimate, we can expect that EUR 24 billion that we have at the end -- we forecast at the end of 2029 could be much more because at least another EUR 4 billion to EUR 6 billion could come in revenues because of all this increased investment in defense and security.

So the question was, are we ready to go in 5 years, in 4 years from EUR 17 billion, EUR 18 billion revenues to something like almost EUR 30 billion. Are we efficient enough? Are we capable enough to deliver with such an almost exponential growth in demand and of course, resources? That's why we decided to develop something new.

I mean we have to start from something. It's a very quantitative methodology, the one we developed. So we consider, first of all, the capacity boost addressing 3 divisions that are making themselves almost 70% of the Leonardo revenues, basically aircraft helicopters and defense electronics. According to the plan, this is how they are supposed to grow.

You see each division has an important growth, 7% electronics, almost 5% helicopter, 9.7% aircraft. So the point is, can we increase efficiency? Can we increase capacity in production to guarantee an average CAGR of 6.2% per year in a market that normally grows slower?

So what we did, therefore, was to create a group that will be permanently operating in the company over the next 5 years at least. This is coordinated by capacity boost core team, 7 people. They all have industrial experience from different industries, not only defense. We have gathered in this team about 75 people from the divisions. This clearly tells you the commitment of the divisions that are now those who produce the goods.

So 25 from Defence Electronics, 25 from Helicopters, 25 from Aircraft, taking care of the engineering, manufacturing, procurement, supply chain, human resources and of course, project management. And then we have a corporate team of approximately 20 people that includes Leonardo Logistics, so LGS, the procurement headquarter, Leonardo Logistics for the logistics of the initiatives and the most important division like finance, HR, security, business strategy and technology and so on and so forth.

So in numbers to date, 3 core divisions were aligned working towards the shared objective of increasing capacity and efficiency. More than 10 key functions have been engaged to create a cohesive execution. So the corporate here acts like the brain controlling a distributed brain into the company. More than 15 production sites have been analyzed in detail. More than 100 people are involved [ 24/24 ] on this activity. More than 200 hours of working sessions have been done so far to assess the needs and to identify the key initiatives to develop the capacity boost program.

Now I will be -- I will give you more numbers in a minute, but just to let you understand the methodology. The 3 inputs are engineering, manufacturing and supply chain. Those are the 3 key factors that impact on efficiency and capacity.

Each division has different streamlines. IBP stands for integrated business plan, so it's the industrial plan. LRMV is the Leonardo Rheinmetall joint venture. LBA System is the Baykar joint venture. National is what we are negotiating in terms of capacity boost with the Chief Army Commander and all the Ministry of Defense. It's classified. I cannot give numbers, but it's a big -- it's a very big database, more than 170 items that requires clear answers and capability to deliver on time. And then the Readiness 2030 program, which is Europe.

Now where you see green, we have completed the assessment. Where you see yellow, we still have to work primarily because of Readiness 2030, that's a little bit unclear at the moment. Classified, we are quite ahead, but we can say for obvious reason of confidentiality for national security, but it's also doing very well. So the methodology consists in comparing expected workload and resources for the budget plan '25-'29 with the actual capacity and trying to understand which are the needs of the division.

Now if we were in a very inertial model without making any effort, I could forecast -- we could forecast that only for the engineering, we might need something like 6 million to 7.5 million extra hours of engineering. For manufacturing only, we would need something like 1.7 million to 2.3 million hours for manufacturing only. And at least we should focus on something like 30 to 60 key strategic supplier that are the most important in the broad supply chain that we have to manage continuously.

So considering that 1 working hour would cost EUR 90 or EUR 100, you can easily see that this would be EUR 1 billion investment just to fulfill the needs in terms of working hour, engineering hours, so on and so forth. That will be not sustainable in the mid- to long term. I mean we want to avoid to make huge investment to guarantee a capacity and efficiency in the short term and then in 5 years, finding ourselves with gigantic installations that don't have the demand anymore.

So we have to be flexible. And this is exactly what we're trying to do. We don't want to make another Aerostructure situation basically. So we want to be clean, lean, agile, but we need to intercept and understand the needs in terms of efficiency and capacity of all our divisions.

How we do this? It's a bit complicated, I'm sorry. There are 5 priority intervention areas, commercial focus and product portfolio rationalization, efficiency boost efficiency stands for manufacturing, digitalization, engineering, capacity growth, which is really industrial footprint redesign, people attraction and development. So we have to work on brains and upskill the people and then effective and reliable supply base.

So there is 5 priority intervention areas and 7 flagship initiatives, product portfolio, manufacturing, digital AI factory, next level engineering, industrial footprint, Leonardo Academy and resilient supplier ecosystem. So those are the initiatives. Those are the priority intervention areas. I skipped the vision. I mean, it's clearly -- it's very clear what is the vision of each of the flagship initiative. What is most important is the target that we want to have.

For instance, for new product portfolio strategy, we need to rationalize 30% of the product. either withdrawn or optimized or integrated or eventually moved to the supply chain where it's more convenient. For manufacturing excellence, we have to quadruplicate the efficiency in the land platforms, increasing by 40% the efficiency in helicopters of the production rate and 35% in aircraft. Considering digital in a factory, we need to have a 10% extra productivity in specific selected processing product that can only come by a strong digitalization and so on and so forth.

Now you have the data. I don't want to bore you just reading the numbers. This is on the slide you have, but it's clear that we went from a method to numbers. That will be reported to you every 4 months. The commitment we have with the structure in Leonardo and with the market is that we are going to report every 4 months, there will be a report of basically every couple of quarters, we are going to tell you how this is progressing.

In order to move towards the implementation of the method, at the moment, we have 177 teams and projects that have been launched, 9 in the portfolio, 40 in the efficiency, 24 in the engineering, 54 in the industrial footprint. And those are specific vertical projects that we are making in the specific division for specific products in order to get the results that we promised.

It's a neural network. So those are the -- this is the Galaxy like we -- how we like to call it. It's a crossing between people, strategy, capital allocation, supply chain, engineering, manufacturing. Those are interconnected, of course. They're not independent. And there are a number of warnings, how we allocate resources to core products, how we allocate talent, how we allocate resource -- how we align resources to the growth objective, how we digitalize and with what priority, how we manage the workload of the engineering. So those are the big warnings.

In order to do this, we have clustered the project, as I told you, we call it Galaxy because we name them like Cassiopeia, Hydra, [indiscernible]. Those are teams with allocated programs that are targeting the new product portfolio strategy, the Leonardo Academy for Human Resources, the resilient supplier ecosystem, the next level engineering, the manufacturing excellence, the industrial footprint redesign and the digital AI factory. And ultimately, they have to deliver those numbers that will be under control, will be reported continuously and will be 24/24/7/7 and the team of approximately 120 people will be dedicated. We are ready to expand this team if necessary.

To make you quite, we are not going to put billions on that because the divisions already have the capacity boost in their budget plan growth. They are aware of that. We will need extra resources that will come from the extra revenues, extra profit, but this will be done in real time, measuring the needs and trying to report the results that we are promising.

The key takeaways for the capacity boost are very simple. More than 100 people engaged for industrial capacity and efficiency optimization with a continuous monitoring and formal reporting every 4 months. So everything will be super transparent. This is a method, but it's also a quantitative process.

We empower the supplier ecosystem because we want our supply chain to be able to scale up production capacity. Those are -- in principle, most of them are small, medium enterprises. We can suffocate them with increasing demand without stopping. We are big and we can maybe do extra sacrifice, but for the small, medium enterprises, that will be a deadly effort. So we have to nurture. We have to support the supply chain in a way that can follow our growth.

Finally, the method is meant to be solid, flexible, sustainable compatible with a sustainable growth model, and it's focused on operational efficiency before any scale up. So once the operational efficiency will be at the maximum level, then we can scale up, eventually building new plants or so. But first of all, we have to reach excellence in efficiency and capacity of delivery. This is our commitment now, and you will be reported about that continuously. We'll show you the results.

Let me go now to the inorganic growth. We have very good news here. I want to make a short stop. I mean, I'm sure you remember this was last quarter. The inorganic growth strategy as presented -- has been deployed by creating the joint venture, Baykar, GCAP and then with Rheinmetall and then the Fincantieri for the ships, the Space Alliance, we're working on space. And we said we have to go towards the multi-domain completion.

So we will focus now on 3 areas: land, this one. We'll focus on cybersecurity, this one. And last but not least, about the space and the constellation. So I will give you 3 pieces of information that are very important for our future.

The update on the M&A updated to last week, 24 target companies have been the subject of our due diligence in the last 15 months. Of course, this number is increasing. Last time it was 22, now it's 25 -- 24. For the time being, there are 4 offers still ongoing. 12 were stopped, 5 were refused. There was another winner, but 3 acquisitions have been signed. Particularly, I will tell you today about the acquisition of Iveco Defence. Give me a couple of minutes because I want to do before the agile acquisition, the small acquisition, especially those in the cybersecurity division.

We have acquired Axiomatic full ownership. And the minority stake of SSH, both crucial for our industrial plan in cybersecurity. We have another couple of due diligences in the space, but this is the subject of the next quarter. Let me show you what is the upside given by the cybersecurity strategy.

Now I'm sure you remember that 2 years ago, we launched a transformation program for the cybersecurity division that had a plan that was too spread up over different fragmented small programs. So we decided to increase order generated by proprietary products. That means investing in technology, innovation, increase the relevance of defense and cyber digital business, less public administration and more serious defense cybersecurity, reached a very challenging target of EUR 1 billion order by 2026. At that time, I don't remember, I think it was EUR 400 million or so. I don't remember now. I don't have the number here. But no, I think I have in '23, okay. And then rationalize the product portfolio.

You see from this plot, you see here very clearly, in '23, orders were EUR 0.7 -- now the target was '26 to go to EUR 1 billion. I'm happy to announce that in '25, we go to EUR 1 billion. The acceleration was really powerful. CAGR was around 20%. This is because of the rationalization of the portfolio and then the strong investment in new technology. And being primarily software technology, obviously, the pie back is better than the hardware. When you have to build concrete things, hardware, you need more time to see the results with software in general services, you're much faster. And I think this speed reflects the fact that choice was good.

And if you remember the opportunity metrics that we had 2 years ago, where essentially most of our products were in the low success probability axis with low impact access. We said, no, in 2 years, you have to be here in the challenging part of the success metrics. Well, I think this clearly shows that we are growing in the right way.

Now what do we do with these 2 acquisitions. The 2 acquisitions are perfectly inserted into the strategy of the division. We are targeting the accomplishment of zero trust capability, never trust who is operating with your data and always verify who is operating. Now to make it clear, Zero Trust is a security approach that is applied within the NATO and will be progressively applied and adopted all security requirements in the civil context. So having Zero Trust capability in authentication and authorization means that we are already compliant to the NATO standard, and we can offer a much stronger product portfolio, essentially because we have a dynamic and real-time privileged access management of our products. And also, we can monitor continuously what type of user access and what type of resources and which circumstances those resources are used.

So Axiomatics from Sweden guarantees at a cost of EUR 33 million, a very powerful package in Zero Trust for authorization. The 1/4 -- the 25% of share in the SSH communication security company, which is listed at the stock market for EUR 20 million investment ensures us the authentication capability in all our cybersecurity products. So for secure cloud, endpoint security and response, cyber threat intelligence and advanced managed security services.

This makes our product much stronger. The participation in SSH from Finland is very important because we got basically the license to adopt this technology in all our products, in every cybersecurity by design platform, in any other cybersecurity-related product. This widens the market to SSH, but also improved substantially our portfolio.

We made a rough calculation. We could consider over the budget plan from today to '29, something like let's say, valuation of the Zero Trust capability. It could be evaluated as an estimated target market in the range of EUR 250 million, EUR 260 million for the authentication and EUR 270 million for the authorization. But the synergy of the 2, the fact that we can offer both together simultaneously adds another EUR 20 million, 90 million target market. That means globally some EUR 0.8 billion additional estimated target market because of this introduction of this new capability in our portfolio.

Of course, we will monitor this continuously, but we are extremely satisfied of this acquisition because this really makes our portfolio stronger, our product much stronger and opens the geographical footprint of the division and, of course, accelerates the success of the cybersecurity that in the frame of the multi-domain picture that I reminded you before is fundamental because all the components in that volume space where the multi-domain interoperability should be insured must be cybersecure. And of course, within the NATO standard with authentication capability and authorization capability, Zero Trust, we cannot be compliant to all the military needs. That's very important.

Now let's go to the land platform and Iveco Defence. Now you've heard a number of rumors about that. 2 years ago, there was a possibility we explored the possibility to create a joint initiative with Iveco. But you know that recently, there was a strong acceleration. So let me summarize, first of all, why land domain has become so interesting, so strategic over the last, say, 12 months.

So first of all, there is an increasing demand of land vehicles at the moment. The market is estimated to be approximately EUR 100 billion by 2030. And importantly -- more important is that the -- let's say, the ReArm EU, the European defense investment is targeting something like 40% of the funding for land defense and 70% approximately for the complete package land and air defense. So this is perfectly fitting with our multi-domain interoperability vision.

Now so land defense was not so critical even 2 years ago. I would like to remind you that this also comes out of the -- what happened in Ukraine. I mean people have realized that Europe has 118,000 kilometers of borders into the continent, 118,000. It's a huge number. And more or less the same amount of borders is on the east side. Very few other continents have so many borders to protect. So land defense gets very important together with air defense.

Obviously, the fact that we launched this huge enterprise with Rheinmetall, with our partner, Rheinmetall on the next-generation main battle tank and on the next-generation advanced in the vehicle that will be interoperable, satellites connected, brand-new machines. If you compare -- I mean, the most recent machines have been designed in the year 2000, more or less. We are talking about the future here.

Well, this has made the interaction with Iveco very strategic. For instance, I'm sure you remember in the joint venture between Leonardo and Rheinmetall, 15% of the workload was supposed to be transferred to Iveco through the consortium, Iveco Oto Melara. Oto Melara is the land defense plant that Leonardo owns, just to distribute the effort, the capacity and production in the country.

Now all this becomes entirely Leonardo. And the collaboration with Rheinmetall is also very strategic because Rheinmetall is not only world-class expertise on land defense system, but also on trucks. And the Iveco Defence contains a component, which is military trucks also, not only civil trucks, and this is also part of the design.

So we believe the integration of the acquisition of Iveco is a unique possibility to offer worldwide both tracked and wheeled platforms. And we are the only one that can offer on wheels and on trucks, all kind of platforms, inventory vehicles, main battle tanks, light, heavy harm, partly armored.

The acquisition of Iveco guarantees an increasing capacity boost in capacity of production because there are 3 plants in Italy and another couple of plants around the world that can be used to complete our capacity effort. And last but not least, Iveco started studying land defense unmanaged system drones, and that would complete our multi-domain interoperable strategy, which adopts drones everywhere in the sea, in the land, in the air.

So the acquisition of Iveco Defence further enforce Leonardo's strategic position in the land domain. And this is something really new because we have to be fast in accepting the new market demand and the change in the global security landscape.

How is Iveco doing? Well, I mean, the key financial numbers are here, 1.1 -- more than EUR 1.1 billion revenues this year. EBITDA, EUR 129 million. EBIT, EUR 180. by region, they sell 47% in Europe and plus 25% in Italy, 12% in North America, 9% in the rest of the world, 7% in South America. By product, it's about half-half. Land vehicles and trucks. Part of -- most of the trucks are military. So they can carry radar, they can carry weapons.

The workforce is about 2,000 people, primarily in Italy, rest of Europe and Brazil. More than 250 R&D engineers and 5 production sites, 3 are in Italy, Bolzano, Vittorio Veneto and Piacenza. So one is in Germany and the other one is in Brazil, where we do have also quite a lot of activities. It's also very encouraging that there is a German-Italian connection into the plants that it mirrors the joint venture with our partners, Rheinmetall. And the commercial offices in 9 different places with 6 R&D centers. So this is a healthy representation.

At the moment, the portfolio includes armored systems, so tracked, wheeled and amphibious with a gross margin, 31%, very interesting. Multirole and uncrewed military vehicles, margin 14%. The complete light tactical multirole protected and unprotected vehicles that complete the portfolio.

And then there are the trucks, military and super heavy duty. And a small part, which is for mining application, oil and gas, this is a relatively small, 11% of the production. But this is a very interesting portfolio.

We've been working on the synergies, of course. But let me tell you -- let me give you the numbers. Given the EBITDA that we gave you before and assuming the average international multiplicating factor 12x for this -- in this period of our history and for this specific class of products, the enterprise value has been estimated to be EUR 1.7 billion, which is a fair price.

We're going to go for the acquisition immediately. So this is done by Leonardo, but we have a term sheet already signed with our partners in Rheinmetall because we will discuss over the next few months how to share the -- to distribute the truck activity and the armored vehicle activity. So this will be done over the next few months. By the end of the year should be completed, of course, subject to regulatory clearance for our partners in Rheinmetall that they have a big experience in the field of military trucks.

But of course, this is also a big help for us because the joint venture with Rheinmetall gets stronger with a bigger fingerprint. And it is very important now that we have already -- we started estimating the synergies with Rheinmetall that, of course, are not included in our evaluation. But if you consider that we will become the first integrated OEM that can offer wheeled and track systems with a full value proposition, we can benefit of an expanded commercial network because we also absorbed the one of Iveco.

We make a very strong -- we have a very strong benefit by the fact that all the combat electronics, weapons and sensor suite are produced by us. So we make a uniform electronics strategy for all our land systems, for all our drones and for all our interoperable multi-domain platforms. We optimize the manufacturing because, of course, we share the plants. We, of course, increase our capacity in production because we have more engineers, we have more capability in production. Well, all this together, including the logistic network expansion.

At first glance, gives something like EUR 30 million plus in the EBITA on average because of the synergy among those technology characteristics. But with a multiplier of 12, it's a big number. It means that we do have a very good possibility to accelerate innovation and product development, leveraging on our excellence in Europe and also outside Europe from both entities. So this is the rationale. Those are the numbers. We closed the deal.

Starting from tomorrow after tomorrow, we're going to work on the integration, full integration to fulfill the requirements of the military forces and of the market. This can only increase in the mid- to long term. So on a long time scale, our capability, also opening the way to the unmanned land system technology that in this way, like we did for the flying unmanned system can really be accelerated joining forces with the Iveco people.

Let me go now to Aerostructures. That's a very important appointment. So let me tell you, first of all, the disclosure. Our partner authorized us to say the principles, not yet authorized to disclose the name. They have very strict rules, very well explained. We understood perfectly. But of course, we explained that we need to give the vision now where we go, and there are important news that we're happy to share with you.

At the moment, our partners made a very detailed due diligence with a number of visits, analysis, 2 international advisers, a very, very deep analysis of our stand-alone industrial plan. This is the one you already know. We call it the third scenario. I'm sure you remember. Optimization of the industrial setup of the Aerostructure division, restructuring the supply chain, improvement of the operational performances, diversification of the product and to increase revenues. This is what we are doing already. And our partner over the last months, we're working on the due diligence.

And as you remember, July '25, this semester, this day today was the go/no-go day. That means that after this due diligence, our partner could have said, okay, we don't continue because we don't see reason to continue. or he could have said, we want to continue and study now the partnership for a joint venture. So I can communicate officially that our partner said, we want to continue, enter Phase 2, the second phase. So we have now the green light to go towards the second phase of the program, which is explained simplified in this slide.

We want to define a joint venture with a partner. Phase 1, so the analysis of the stand-alone Leonardo Aerostructure business plan has been completed successfully. The green light means that now we start the second phase, this one, in which we will develop by the end of the year. That's a target for us. The partnership plan for the joint venture based on the commercial and industrial synergies that we are going to develop together. This means how the market will be expanded, which new products, what technology we transfer and so on and so forth.

With the discussion of the key stakeholder, we have to engage a stakeholder because, of course, as you imagine, we now are ready to go with our partners to talk to our stakeholder, namely those big companies that are giving us orders of Airbus and Boeing because we're going to share with them the strategy, which is a constructive growth strategy. And of course, we have to share with them how to make it.

We will work on the joint venture governance and organization and the implementation road map for the next few months. This work is in progress. And I think -- well, I mean, 1 month ago, that was an important target for us to know that today, we could have said, okay, we can enter Phase 2.

Just to make short, we want to create a global leader in the Aerostructure business, combining Leonardo distinctive capabilities with the synergies enabled by the new partnership. This is a target. We have to close by the end of the year. There is still the possibility that we don't find, how to say, the good way, a satisfactory way for everybody, but we -- all the fundamentals now are very clear. We are both very much committed. The partners has been very, very serious in the analysis, very collaborative. We're doing our best. And I think the probability of success is very high, very high. And this is what I can communicate at the moment.

Sorry for not giving you some numbers and some name, but I think you have to understand how important and delicate is this transition phase. And this for us is the most important. We want to do something that will fix in a disruptive way and a definite way, the problem of Aerostructures in the years to come for Leonardo.

Before concluding, after 24 months, we started. I want to go back to the original design. You remember, this was 2 years ago, the little boy that was making the drawing of the multi-domain and we were starting creating alliances trying to design the future. So I told you now why land defense. So land defense is over. I told you why artificial intelligence and cloud computing, this is over. This is running very fast, very well. We closed the agreement with Fincantieri for the ships.

Baykar drones, everything is fine. GCAP and the next-generation fighter, this is up and running. Cybersecurity strongly improved. We have seen the numbers and the expectation. What is left? Space. The division is doing well. We're still talking to our partners, of course. But you know that we are now launched the constellation program. with the Minister of Defense. This will be a national security program, very advanced.

This is the last component, electronic acting like the glue of all the strategy. This is the last component of the draft we made 2 years ago. And the last component means that we are now ready to propose the Leonardo integrated air defense solution, which is missing. And this is not for Italy, this is for export for all the world. Primarily, this takes advantages by the full portfolio that now Leonardo has in its arsenal.

We fabricate all kind of radars. I think we can easily say we're Europe leader and among the top in the world from 30-kilometer range to 1,000 kilometers. We do have all the drone technology. We do have our constellations in construction for both infrared observation and tracking of trajectories.

We do have land system, land services. We do have aircraft of any kind. We do have drones on ground and in air. We do have everything to create our Leonardo Integrated Air Defense solution. The point is that if you -- I mean there are 2 competitors basically, the patriots on one hand and the Israel defense system. But our idea is to be much more flexible.

We want to revert, we want to invert the paradigm. We don't make the integrated air defense solution starting from the effector from the miss side. We start from the technology. We can install any kind of radar on any kind of land platform on our platform, providing any kind of ground service, interoperating any kind of machine on the sea, in air, in land with a cybersecure protocol that makes communication very secure under the observation of the constellation, which is under construction, will be launched '27, '28. And the effector is the last thing.

The system will be adapted to the effector. Whatever is the missile you have, we're going to adapt the system to your missile. Pretty much like we don't start from the bullet to fabricate the GaN. We fabricate the GaN and then the GaN will have a caliber that can be adapted to all bullets.

In this way, we think we can offer a sort of partnership with any country, especially in the Western system to defend our air in combination to the land defense because I explained you what we're going to do with Iveco and with Rheinmetall according to the new plan, having a cybersecure environment, strong capability in artificial intelligence and computational power. That is the most important thing to guarantee the decision is made quickly, having state-of-the-art electronics command and control, combat system, cloud combat and so on and so forth.

And finally, being the only one sixth-generation fighter program that is alive because as far as we know, GCAP is the only one that is running at the moment. So we can look at the future with some optimism in this respect.

And with this, I want to conclude. I thank you for your patience. It was a long presentation, I'm sorry, but this after 2 years, we completed the design and we have good numbers. And I pass the -- I give the word on the stage to my friend, Alessandra, for some of the more financial information about what we did so far. Thank you very much, guys, and I look forward for your questions later.

Thank you, Roberto. I'm very pleased to be walking through our results for the first half. They show a good commercial and financial performance across the group with very solid double-digit growth levels across order intake, revenues and EBITA, while further improving free operating cash flow and reducing net debt.

So we have continued to build on the positive trends that we saw in Q1. You can see this across the group and across all the KPIs. New orders of EUR 11.2 billion, up 9.7%. Group revenues, EUR 8.9 billion, up 12.9% EBITA EUR 581 million, up 15%, slightly improved return on sales of 6.5% and the lower free cash flow outflow of EUR 408 million at half year. We're seeing good demand for our core Defence and Security products, technologies and solutions with strong commercial performances across all divisions and in particular, in Defence Electronics, helicopters and in the Aeronautics. This reflects good position in key domestic markets as well as export markets.

This first half group order intake is again well balanced with a good spread both geographically and across business areas and without any concentration in any single country or any single customer and no jumbo orders. Book-to-bill was almost 1.3x, and our group backlog has risen to EUR 45 billion as at June. New orders and our ability to deliver off this backlog drove solid growth in our core top line and volumes.

We have then been able to continue increasing our profitability and cash flow generation at a faster pace than we have been growing our top line, benefiting, as you have seen, from efficiency measures, from operating leverage and from tighter working capital management.

Our first half free operating cash flow was EUR 480 million, an improvement of almost 20% on last year in the level of cash absorption.

As of June, our group net debt was also significantly lower at EUR 2.2 billion versus EUR 3 billion in June 2024, including the sale proceeds totaling EUR 446 million received in January and in June from the sale of our underwater business. And at the same time, we have increased investments in the business and also doubled the dividend. So overall, a solid first half performance on track and it underpins our confidence in our targets for the full year.

As Roberto said earlier, we are increasing our guidance for new order intake for the full year to the range of EUR 22.250 billion to EUR 22.75 billion as we see more visibility in the second half pipeline, reflecting potential jumbo orders.

And we also are raising our full year free operating cash flow target in the range of EUR 920 million to EUR 980 million. Given our solid operating performance and the higher order intake expected for the full year with the associated advanced payments from customers. And we're now also expecting a greater reduction in our year-end net debt. So let's go deeper into the first half results and performance at business level.

Starting with Helicopters. We saw continued strong positive momentum with good progress on all programs as well as customer support. New order intake was EUR 3.4 billion in the first half, a good performance against a particularly strong comparator for the previous year. Continued solid order intake on defense and governmental, including the AW249 program for the Italian Army, plus multi-platform orders for governmental customers in Malaysia. Orders for customer support from the U.K. MOD for its AW101 Merlin fleet, plus orders on the civil side in the offshore oil and gas segment and for orders for the ground-based pilot train system for the Italian military.

Revenues in helicopters increased to EUR 2.8 billion, up 15%, driven by increased activity on the AW family of products as well as the good contribution of customer support and training. All of this led to higher profitability, EBITA of EUR 202 million, up 17.4%, and this was also supported by good resilience in the supply chain. So a good first half performance from helicopters and continued good commercial momentum with solid demand across business areas.

Next, Defence Electronics, which was a good performer as well across all segments. Electronics Europe achieved good growth in new orders, volumes and profitability. In the first half, new order intake was EUR 3.7 billion, up 11.7% year-on-year, excluding the UAS contribution. The book-to-bill was 1.6x and showing growth across all domains and geographies, especially in Defence Systems. Good demand for the upgrade and renewal across a broad range of platforms.

In particular, additional orders for the MK2 radar for the U.K. Eurofighter Typhoon as well as defensive systems for 11 Eurofighters for the Italian Air Force and in the naval sector, the order for combat systems for the Indonesian Navy Patrol vessels.

Revenues in Electronics Europe were up 12.6% at EUR 2.3 billion, reflecting higher volumes as we delivered off the growing backlog and EBITA rose to EUR 294 million, an increase of 17%.

Return on sales increased to 12.7% and contribution from strategic joint ventures were in line with expectations.

At the same time, Leonardo DRS had also reported a good first half performance, showing good new order intake of $1.8 billion, up 5%. Further orders for the electric propulsion components for the U.S. Navy Columbia-class submarines, plus additional orders for sensors for the second-generation infrared vision system for the U.S. Army Bradley.

To mention also the award of a contract to provide combat management systems hardware to the U.S. and to allied navies. Revenues rose to $1.6 billion, up 13% on the back of growing volumes. EBITA grew to $143 million, up 18% with an increased return on sales of 8.8%.

Moving now to Cyber & Security Solutions. Volumes and profitability were up significantly compared to the same period last year, as Roberto had anticipated.

New order intake was EUR 453 million, up 6%. Revenues, EUR 359 million, up 19%. EBITA, EUR 29 million, up 81%, with return on sales increasing to 8.1% and continuing its positive trajectory with increasing profitability driven by higher volumes and product mix.

Order intake growth was mainly driven by domestic markets and included various orders for the Italian Public Administration through the PSN fund for digitalization, cloud infrastructure and secure communications as well as new international governmental orders.

As we have mentioned, we are now presenting the Aeronautics division, grouping together our aircraft, Aerostructures business unit and capturing more potential opportunity across our fixed wing activities. This reflects our role as a leading player in aeronautics in both military and civil sectors, and it will also now include our participation in the next-generation GCAP program.

We will also include activities that are developed in the unmanned aerial systems. There is a single stewardship now with a consolidated vision across both the fixed wing businesses and the newer developing areas, maintaining their distinct strategies and plans. The aggregated division's size is shown on the table and on the chart in financial terms with growing orders and revenues and with EBITA reflecting the first half losses in Aerostructures as we had anticipated and ATR performance.

To make operating performance comparable, we are still setting out for you the KPIs on the next slide for our business units, aircraft, now including also the GCAP, which previously was reported under the other activities, then Aerostructures and also the ATR joint ventures.

Now let's start with the Aircraft business. Strong performance in the business unit. Orders grew in the first half to EUR 1.6 billion, up 42%, driven by orders in the GCAP program and export orders for the C-27J multi-role aircraft. Revenues grew to EUR 1.6 billion, up 18.6% on the back of higher volumes across military programs such as the C27J, GCAP and JSF. While EBITA grew to EUR 180 million, up 5.9% and maintaining strong double-digit profitability.

It is important to note that around 30% of aircraft revenues are now coming from customer services, representing stable revenues, attractive margins and cash flow and shows how we have been successfully implementing the servitization strategy over the last few years. So an important contribution on the defense side from aircraft.

Moving to the civil side of Aeronautics. In Aerostructures, in the first half, we saw further progress in line with its recovery plan. Orders increased to just under EUR 700 million, almost double the level of the previous year on the back of orders from Boeing. But Aerostructure revenues in the first half were lower at EUR 334 million, and its EBITA losses increased to EUR 96 million. As we have mentioned before, this reflects the decision to slow Aerostructures production hours on the B787 program to a single shift per day during the first half of the year with the purpose of unwinding the inventory of fuselages.

The plan is then to increase production level again in the second half of the year, in line with the planned ramp-up for the B787 from 3 to 7 shipset per month by year-end. And this will lead to better underabsorption of fixed costs and reduces losses in the second half of the year.

ATR contribution in the first half was negative EUR 29 million, with performance impacted mainly by supply chain constraints, which are currently being addressed. And we're now pleased to see some more positive signs in terms of new order intake.

Turning to our Space division. In the first half, we saw an improving commercial performance and profitability with new order intake higher at EUR 413 million, notably in Telespazio Satellite System and Operations in the Geooinformation segments. This led to increasing revenues and the more positive EBITA contribution is reflecting the confirmed profitability at Telespazio and also the partial recovery in the TAS joint venture as it began to benefit from efficiency plans launched later in the year.

Our strong group EBITA in the first half also helped drive a better bottom line performance. EBIT grew to EUR 432 million, up 10.8%, while the ordinary net result grew to EUR 273 million versus EUR 189 million the previous year, with lower financial expenses. The bottom line net result of EUR 542 million benefited from the capital gain recognized on the sale on the underwater business to Fincantieri completed in January this year.

Importantly, we have continued to make further progress in improving our cash flow generation. It's driven by the robust performance on the defense and governmental side. We saw an improved free operating cash flow in the first half with a reduced outflow of EUR 408 million. It reflected higher EBITA and good improvement in the level of cash absorption in the first half. We are pleased with this performance. And again, it reflects the efforts we have been making to manage working capital more tightly. It also underpins our confidence in raising our full year target, as was mentioned before by Roberto.

So you have seen in the first half, we have continued our good start to the year and are on track with our expectations. Our main businesses on the defense and governmental side are delivering strongly, especially in order intake, revenues, profitability and cash flow. We are confirming the full year group guidance that we gave you in March for revenues and EBITA with top line revenue growth as we deliver from backlog and improving profitability.

While we are increasing our guidance for new order intake for the full year to the range of performance and the cash advances also associated with higher orders, we now have a lower target for net debt. At year-end, we plan to have a EUR 1.1 billion net debt figure as a result of higher free cash flow and also because of the postponement to next year of some expected large portion of the M&A transactions.

As we have previously said, our guidance is based on our current assessment of the effects of geopolitical and macroeconomic environment on the global economy and our assessment of tariffs, supply chain and inflation and assuming no major deterioration.

So now to conclude, the first half showed a good performance across all key metrics. We have made some solid positive steps, and we are on track delivering our upgraded full year guidance and industrial plan. We're confident of our path ahead of us. Thank you, and I will now hand it over to the Q&A.

Thank you, Alessandra. We are now ready to take your questions, and we would like to start from conference call. Please go ahead.

[Operator Instructions] We will start with Alessandro Pozzi with Mediobanca.

A big part of the presentation was on capacity boost. And forgive me if I've missed some of the comments, but it feels like there's going to be a first phase where you will focus mainly on productivity gains and efficiency and perhaps a second phase where you could deploy more CapEx and expand production. Is that right? And can you give me perhaps more color on these 2 parts of the capacity boost? That's the first question.

And second question, on Iveco Defence. I was under the impression that the JV would have made the acquisition of Iveco Defence, the Leonardo Rheinmetall JV. Instead, it looks like Leonardo will be buying Iveco Defence and then it will sell the trucks business to Rhemetall. Can you give us an idea of the time line for that? And what could be the cash in from the sale of the trucks business to Rhemetall?

And if I can, the final question on order intake. Any color on the jumbo orders that you expect to receive in the second half? And on free cash flow guidance, how much comes from the guidance upgrade? I mean, how much it comes from the improved underlying cash performance versus down payments?

Yes. So thank you for the question. Let me -- first of all, I'd like to answer the question you made about the capacity boost. I would generally confirm your interpretation in that at the moment, with the 177 programs -- projects that we are running are essentially going towards rationalization of products, increase of productivity in selected programs, manufacturing capacity in selected areas. So clearly, we are in this first phase, we are starting, first of all, because nothing like that has been ever done in the past with such a in such a depth, but also with such a broad vision, very transversal.

And second, I think that what we want to accomplish initially is to have very good efficiency because there is room for increasing efficiency. Once we make sure that the efficiency is high enough as we expect, I mean, close to 1, maybe it's too much, but 0.8, 0.9. At that point, for sure, we should start the second part, which you don't make a new production line or a new plant if you don't use 3 shifts per day in the plant. And to have 3 shifts per day, you need everything digital, everything well done. So indeed, we have to improve the situation before and then eventually going towards more massive investments and change in the production lines. Same with the supply chain. We need to have the most important company -- most important members of the supply chain at the beginning, and then we will go more in a more capillary and fragmented way into the smallest one.

Concerning the question of Rheinmetall, Iveco and Leonardo. So well, first of all, the joint venture between Rheinmetall and Leonardo was done on purpose without industrial assets. I'm sure you remember, in order to start very fast, we made a joint venture that was very light, Leonardo and Rheinmetall keeping their own industrial assets and working primarily on -- the joint venture was working primarily on the war share. So it was 60-40 or if you wish, 50-50, but this was based essentially on a very well-designed war share analysis.

So for that kind of joint venture like [indiscernible] if want similarly, where you don't have an industrial asset hardware CapEx infrastructure given to the joint venture, it is difficult to face such a big purchase because anyway, it's quite big. So in any case, the acquisition would have done by Leonardo and Rheinmetall.

Originally, we thought there was a possibility was to go directly us and Rheinmetall together, making the purchase. But then discussing with the Iveco colleagues, it was difficult with the time constraint we had, we want to finish by the end of July, having all the carve-outs and all the detailed information that could have led Rheinmetall and Leonardo independently to make -- to close the deal, taking the entire EV Iveco Defence perimeter.

So we decided in this way. We do it -- and we already have the term sheet with the friends in Rheinmetall. And since tomorrow, we start discussing how to make internally any kind of carve-out distribution of the specific production lines. And we want to conclude this by the end of the year, of course, we get 4, 5 months because anyway, the entire deal will be closed -- should be closed by the end of the year. So times are very short.

Consider that Rheinmetall and Leonardo are already working together. So it's much easier for us to discuss on a daily basis how to make things than waiting a perfect separation done by the seller in that case, Iveco and then intervening separately with the 2 boards and making the operation simultaneously. So that was simply simpler and more convenient. That's all. And I'll leave Alessandra the stage for the third question.

Yes. Thank you, Roberto. So Alessandro, on your question on the jumbo orders, -- as you may appreciate, we are pursuing in the second half of the year a number of opportunity, both in domestic and international markets on platforms as well as on the electronics domain. And we do see our visibility today is higher than the one we had when we defined the original guidance in March, and we do see an opportunity to capture a share of those jumbo orders that we have factored in the new guidance that we have given to you.

With respect to free operating cash flow, the free operating cash flow upgrade in guidance, which is sizable, it's almost 10% is driven by both our confidence in the operating performance of the business, which, as you have seen in the first half has been doing well. We have increased our free operating cash flow performance by almost 20%. And there is also a contribution from the fact that with these jumbo orders, we will be receiving some anticipation of cash flows from customers, customer advances. So it's a combination of both elements.

Thank you. We now take a question from the webcast, Christophe Menard of Deutsche Bank. Can you comment on how you will be financing the Iveco transaction? Is it debt? Or could you dispose of some assets?

Christophe, we have available cash, abundant available cash on our balance sheet. By year-end, we expect to have approximately EUR 2.5 billion of cash -- so we will have no challenges in financing the acquisition using the cash available.

Thank you. Now a question again from webcast, Nick Cunningham of Agency Partners. The outlook for Space in Europe seems to have rapidly transformed from decline due to commercial competition from SpaceX to instead strong medium-term growth because Europe needs to replace U.S. supply capability with European sovereign controlled space assets. Does that mean that the consolidation and rationalization with Airbus space needs to stop? Does it also imply you may have to leave with poor financial performance from TAS for a little while longer before defense demand come through in space?

Thank you. That's a very, very interesting question. Let me say so. I think it's still worth to try to make a giant of space operation in Europe. So we're still in due diligence with our friends in Airbus and Thales, and we still try hard to make it. That's primarily for satellite services.

Another chapter, of course, is launchers because don't forget that we might be good to fabricate payloads and to sell services, but then we have to launch them in the space. And I think this is where the supremacy of United States started because the first thing was to make good launchers. They can launch 90 times a year, we kind of do this. So those are 2 areas with different pace and different difficulties. But we still -- I think we still should try to do something together.

On the other hand, we have to be very realistic. I mean in U.S., more than 50% of the investment in space comes from private resources. In Europe, I think it's 85% from public. So the 2 markets are inherently not comparable because in the fragmented European landscape, states are putting money on space. And if a state puts EUR 1 on space wants to have a return on its own balance somehow.

And of course, this creates a little bit of imbalancement compared to the American situation. As long as the money for space will be primarily public and will be state-driven, basically taxpayer driven, it will be very difficult to think to a space system in Europe comparable to the American one. However, companies such as ourselves and the other big operators in aerospace and defense, they can start investing.

I mean maybe we're not like -- we don't have the capability of the mask, but we can invest substantial amounts of money. This is what Leonardo is doing with the constellation. We do it because we believe it's time to reinforce the capability in selling end-to-end satellite services. This is strategic for defense as well as civil application for earth observation, I mean.

And so sometimes we have to play the industry risk. And the market opened by the space economy is really a big market. And 70% of that market will be on satellite services. So I think it's a relatively low-risk investment if you consider how many opportunities we have in front of us investing in space. That is something that clustering companies in Europe in a unified entity could reinforce the capability of investment.

So I think we have to accept that the model is different because it's different in the economical landscape, there's less private money, but joining forces can be very useful. Having said this, states want to have the rewarding, and they want to make sure that what they invest is under their control. So a trade-off must be found.

Thank you. Another question from the webcast, Ian of UBS. On Aerostructures, great to hear progress is being made here. Can you confirm that the partnership plan will be completed by the end of the year and so a partnership agreement will not be signed until 2026? On Aerostructure again, is there an opportunity to return to cash generation without a partnership?

Okay. Concerning the first question, we are totally deeply and strongly committed in closing as soon as possible and respecting the deadline at the end of the year. This for us is mandatory because we want to really open a new opportunity, a new market and fix the problem and launch the new initiative. I think on this, we are both committed, us and our partner. I mean, of course, there is a lot of work to be done. But as I said, I'm very optimistic.

Concerning -- imagine there is no partnership, there is no new initiative, we do see measurable improvement in the Aerostructure situation. And for the time being, our pathway would be if we were alone to reach breakeven point in '29.

To be honest, I'm a bit scared in giving numbers because we were very optimistic when we presented the industrial plan 3 years ago, we were really at reach of reaching the breakeven point in '25. And no one could expect this very difficult situation that we had to face with the problem of Boeing. So before saying again that the breakeven point is that year, I would be prudent to not say anything. But the numbers clearly are pointing towards a breakeven point in '29 if we are alone. The problem is this will never be a business with high margins.

So I think that a company like Leonardo, which is making a transformation towards super high tech, global security and so on and so forth, should in a way strategically consider to invest solely in a business like that with low margin. If we don't do something to change completely the approach, the product portfolio and even the strategy of Aerostructures, this would never be very satisfactory. So I think it is necessary to create partnership to launch a global player.

So the next audio question comes from Martino Ambroggi with Equita.

The first question is on the capacity boost. So I clearly understand that the works are in progress, but do you believe the capacity boost could probably penalize operating profitability because you need to hire people and free cash flow because you need sooner or later higher CapEx?

Second question is still on -- again, on Iveco deal. Just two clarifications. I understand that you will sell assets, not share assets. So you will have a cash in with the deal with Rheinmetall. And the EUR 30 million synergies are for your perimeter or for the whole Iveco vehicle?

And connected to this, I clearly understand, Alessandra, your answer. So you will use the cash to finalize the acquisition. But does it change your priority in terms of new deals or would suggest to accelerating some additional divestiture?

Okay. Thank you for the question. Concerning the capacity boost, I can guarantee that we started with these 3 divisions making 70% of the global business of Leonardo because they were strongly involved in the GCAP and the payload over production required by the land defense and by the drones and helicopters, which is traditionally overwhelmed by the orders and sometimes having problem in delivering on time.

So those 3 divisions that are big. They already had internally a plan for efficiency and capacity increase. So most of this is already inside their business plan. It does not need a specific investment at the moment, let's say, not big CapEx investment. In the future, there might be some. But our perception after making this preliminary 3, 4 months of assessment is that efficiency, first of all, has been improved and efficiency in that specific case is not expensive, relatively cheap, let's say.

In order to have higher efficiency, we need to optimize processes, digitalize, optimize the manpower resources. There are a number of things that we can do. And we are not at all worried about the start of the capacity boost.

In the future, mean '27 or so or second part of '26, if there will be the need of some investment, CapEx investment, this will be in front of big orders that should be habilitated by the new joint venture. So in that respect, we don't plan to -- we don't have the need of a big amount of money to be invested.

It will be not the case if we don't do this because if we don't do anything, we don't work on the efficiency on the capacity in a very scientific way, the solution will be the usual one. Let's buy millions hours of engineering, millions hours of manufacturing. And even in offload or if you hire people, those become recurring cost and you increase the cost and obviously, the profits go down. So basically, we don't want to do the usual approach, which is a massive one.

Concerning the Rheinmetall and Iveco, yes, I confirm, it is not sharing. Rheinmetall was ready to participate in the acquisition. They have a lot of interest in the truck part, obviously, because they have a long tradition in that area. And so now we will start analyzing how is the situation in more detail, and we'll see what is the most convenient way to do it. But I confirm that they are going to -- they want to sell.

And of course, also they are doing this because strategically, they are a top line for the investor. They are getting stronger in areas where we have not interested, but they're very complementary. Typical example is that if you own the capability to make 8x8 traction trucks or 10x10 traction trucks, you can install on those things, radars, you can install weapons and so on. So by the combination of military trucks and our payloads, you can do brand-new platforms. And so this is -- this will be ideal for the joint venture between us and Rheinmetall.

Having said this, clearly, Leonardo doesn't have a track record in trucks. So it will be rather unusual for us to keep the truck alive, being so small in an area in a field in a sector that is populated by giants, not only Rheinmetall, but other big automotive company.

The EUR 30 million EBITA estimated, this is a preliminary estimate done over the last couple of weeks are dealing with primarily with Leonardo Technologies and Leonardo synergies. So it's estimated by our Electronic division. We didn't have the time, the capability, the possibility to talk to our friends in Rheinmetall to do the similar calculation with them. Very likely, this integrates also some joint activity. But I'm sure that there is something else also from the side of Rheinmetall, but we didn't have time to do it. This is just for Leonardo as an estimate.

Okay. Martino, on your question on the cash financing of the Iveco transaction and the priority in other deals. Well, if we go back to the capital allocation framework that we shared with you a couple of months ago in March. You may recall that we had over the 3-year horizon, 2025 throughout 2027, EUR 1.5 billion allocated to M&A. And those were mainly bolt-on acquisitions and potentially strategic deals that would be really fundamentals for Leonardo's growth path. And it checks the box, basically what we have done. The 2 M&A done in the cyber business described by Roberto are bolt-on acquisition of minor size, but exactly bringing the technology we needed to the business and to -- as an add-on to the product portfolio.

The EUR 1.7 billion acquisition of Iveco is also fitting on the strategic path of being an asset that Roberto was very clear is a strategic one because it's vertically integrated, a key chain in the supply and value chain of a core program for us. and a core segment of business. So all of those are really priority deals as we frame the capital allocation priority set. They match where we want to land, and we are in the ballpark. We may be EUR 100 million, EUR 200 million off, but that's clearly not something that is of concern to anybody. We are where we wanted to be in the scale and most importantly, in the scope of our priorities.

Thank you. Another question from the webcast. Carlos of Bank of America. Helicopters top line growth going better than expected. How should we think about the growth in helicopters in the second half of the year?

Well, helicopters have been growing really nicely, mainly leveraging the AW family, and that's by virtue of a combination of both the commercial market, which continues to do well. We continue to see strong interest for our products as well as the institutional governmental market, where we're capturing opportunities, both domestically and internationally. And for example, the 189 has proved to be a key platforms globally for a multitude of applications, both oil and gas, transport missions. And because another product, the Sikorsky product is no longer operational. The 189 proved to be the successful substitution product for a number of customers. And that is the evidence of the performance of the first half, and we expect to see a good performance throughout the rest of the year, always anchored on a contribution, which remains key in the business from the customer support and training.

Okay. We are really out of time. So I want to thank Roberto and Alessandra for the time, and thank you all for being with us this afternoon. As usual, the Investor Relations team is available for follow-ups. Thank you very much.

Bye-bye. Thank you.