Leonado and Iveco earnings slide as group agrees to acquisitions

(Alliance News) - Leonardo Spa and Iveco Group NV on Wednesday reported weaker second quarter earnings, as the latter announced its acquisition by Tata Motors Ltd and the sale of its defence unit to Leonardo.

Shares in Rome-based defence and aerospace firm Leonardo closed up 0.2% at EUR47.94 in Milan on Wednesday. Turin, Italy-based commercial vehicle maker Iveco ended 0.2% lower at EUR19.01.

Mumbai-based automotive company Tata closed down 3.5% at INR668.00.

Leonardo on Wednesday announced it would acquire the defence business of Iveco for EUR1.7 billion.

Iveco Chief Executive Officer Olof Persson commented: "This agreement propels Iveco Group's Defence Business into its proper dimension as a key contributor alongside Leonardo in the creation of a focused, world-class player in land defence activities. Our colleagues in the Defence Business - who have done a tremendous job in building this business, responding to the growing need both for land defence vehicles and the technologies we have developed - will become part of a group with the scale and integrated capabilities to compete on all levels and for all platforms, with all the positive potential for innovation and continuous development."

The remainder of Iveco will be sold to Tata in a deal worth EUR3.8 billion, the firm said Wednesday, creating a commercial vehicles company with "the reach, product portfolio and industrial capability to be a global champion in this dynamic sector", Iveco said.

Iveco's largest shareholder Exor NV has irrevocably committed to support the offer and tender its 27.06% shareholding and 43.11% of voting rights.

The sale expected to close in the first half of 2026, conditional on the completion of the Leonardo deal, which it expects to close no later than March 2026.

In February, Iveco decided to separate its defence and commercial vehicles units to provide both with "greater focus and strategic flexibility"

The annoucements came as Leonardo and Iveco reported declines in net profit.

In the six months to June 30, Leonardo net profit fell 2.3% to EUR542 million EUR555 million. Earnings before interest, taxes, depreciation, and amortization rose 4.1% to EUR884 million from EUR849 million.

Second quarter revenue improved by 12% to EUR8.92 billion from EUR8.00 billion a year prior.

Revenue increased in all sectors, despite the change in the perimeter related to the sale of its Underwater Armaments & Systems business in January, Leonardo said. The company noted contributions from Defence Electronics & Security, Helicopters and Aeronautics.

First half new orders totalled EUR11.24 billion up 8.9% on-year. Orders rose 9.0% in Defence, Electronics and Security; 6.1% in Cyber and Security Solutions; 53% in Aeronautics and 23% in Space. Orders declined 5.2% in Helicopters.

At June 30 the order backlog stood at EUR45.03 billion, up 3.9% on-year.

Chief Executive Officer Roberto Cingolani commented: "Execution of the Industrial Plan is progressing in line with the Group's strategic priorities. First-half 2025 results confirm the Group's solid industrial momentum, with a further reduction in debt, validating the effectiveness of the actions undertaken."

Cingolani added: "We are strengthening our competitive positioning across domestic and international markets, reaffirming our role as a leading player in the ongoing consolidation of the Defense industry. The development of joint ventures with Rheinmetall and Baykar is advancing, and the GCAP program has entered its operational phase. Recent M&A transactions in the cybersecurity domain mark another step forward in the expansion of our product portfolio, underscoring our commitment to inorganic growth."

The group has raised new order intake guidance to between EUR22.25 billion and EUR22.75 billion from EUR21 billion, factoring in the acquisition of jumbo orders. It now sees free operating cash flow at EUR920 million to EUR980 million compared to EUR870 million prior, as a result of good operating performance and cash advances related to additional orders.

Guidance for EUR18.6 billion in revenue and Ebitda at EUR1.66 million is confirmed.

For its part, Iveco second quarter net income slid 35% on-year to EUR106 million from EUR162 million. Earnings slid to EUR0.39 from EUR0.56 on a diluted per-share basis. Ebit was EUR213 million, down 25% from EUR284 million.

Second quarter revenue declined 3.6% to EUR3.78 billion from EUR3.92 billion. Industrial Activities revenue was EUR3.70 billion compared to EUR3.82 billion.

Iveco said higher volumes and better mix in Bus and Defence partially offsett lower volumes in Truck and Powertrain and an adverse foreign exchange rate impact.

CEO Persson said the quarter "unfolded broadly in line with our expectations, shaped by reduced industry demand across the European Truck and Powertrain segments. Market softness was most notable in light commercial vehicles, where the year-over-year comparison was negatively impacted by last year’s pre-buy effect."

"In response to these challenging market dynamics, we remained agile, aligning our production levels accordingly, while maintaining disciplined execution and consistent focus on our long-term strategic vision," he added.

The group has cut year-end guidance due to "persistent macroeconomic uncertainties and the delay in the recovery in the light-duty segment", particularly in chassis cab and rental fleets.

It now expects revenue to decline 3% to 5% on-year from "flat" growth projected initially. It sees Ebitda between EUR880 million and EUR980 million, cut from EUR980 million to EUR1.03 billion. Free cash flow between EUR350 million and EUR400 million is forecast, compared to a EUR400 million to EUR450 million range projected initially.

By Aidan Lane, Alliance News reporter

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