ROME \u2014 The CEO of Italy\u2019s Leonardo has suggested that the dip in his firm\u2019s share price was due to an \u201cexcessive\u201d reaction by the market in the wake of less than glowing results.<\/p>\n\n\n\n
Leonardo\u2019s share price dropped by around one-fifth on Nov. 10, after the firm announced it was reducing its year end forecasts thanks to trouble in its helicopter division.<\/p>\n\n\n\n
Long a source of steady profits thanks to lines like the AW139 helicopter, the business has taken a hit partly due to a downturn in offshore business.<\/p>\n\n\n\n
\u201cThis segment is still suffering from unfavorable market conditions coupled with delays in achieving adequate profitability in specific products and industrial performance below expectations,\u201d the firm said in its third-quarter results.<\/p>\n\n\n\n
As a result, Leonardo said it was cutting year-end guidance on new orders from \u20ac12-12.5 billion to \u20ac12 billion; and revenues from \u20ac12 billion to \u20ac11.5-12 billion.<\/p>\n\n\n\n
The forecast for earnings before interest, taxes and amortization was dropping from \u20ac1.25\u2013 1.3 billion to \u20ac1.05\u20131.1 billion, it said.<\/p>\n\n\n\n
JPMorgan Chase downgraded the stock to \u201cneutral\u201d from \u201coverweight,\u201d claiming other issues may emerge, as the extent of problems at its helicopter business was only discovered in the last few weeks.<\/p>\n\n\n\n
On Friday, Leonardo CEO Alessandro Profumo gave an interview to an Italian newspaper in which he said he had been \u201ctransparent\u201d about performance at the helicopter unit.<\/p>\n\n\n\n
\u201cWe needed to explain it. Then, my experience of finance tells me that sometimes the market reacts excessively,\u201d Profumo said.<\/p>\n\n\n\n
He pointed to the recent appointment of former Chief Financial Officer Gian Piero Cutillo to head the helicopter division as evidence the firm was looking to turn the situation around.<\/p>\n\n\n\n
He also said the naming of Lorenzo Mariani as Leonardo\u2019s new marketing chief would be \u201cfundamental for increasing the order book.\u201d<\/p>\n\n\n\n
European naval cooperation<\/b><\/p>\n\n\n\n
In the interview with Italy\u2019s Corriere della Sera, Profumo also warned again about Leonardo being shut out of a naval cooperation deal between Italy shipyard Fincantieri and France\u2019s Naval Group.<\/p>\n\n\n\n
The two shipyards are currently discussing an integration of their military work, leading to fears in Italy that radars, combat systems and armaments work on future Italo-French ships might be taken by France\u2019s Thales, which could have a head start in talks because it holds a 35 per cent stake in Naval Group.<\/p>\n\n\n\n
\u201cI would not want us to head towards an agreement \u2026 without taking into account the fact that Leonardo has capabilities in combat systems, sensors and radars and is competitive at a global level and possibly ahead of French systems,\u201d he said.<\/p>\n\n\n\n
\u201cWe hope, and we are counting on being able to have our say as a company, also in order to protect the Italian sector,\u201d he added.<\/p>\n\n\n\n
Asked if Thales could be favored in talks, he said: \u201cThe temptation could be there.<\/p>\n\n\n\n
\u201cLooking at the long term, the embryonic European defense must be multipolar and include to all effects Italian, French and British capabilities.\u201d<\/p>\n\n\n\n
The need to include British capabilities, he said, would not change with the pending exit from the European Union of the U.K., where Leonardo owns and operates numerous facilities.<\/p>\n\n\n\n
\u201cIt would be a mistake not to use defense as a way to keep British ties despite Brexit. In this, Leonardo is one of the elements that could be a catalyst in this process,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"
Leonardo\u2019s share price dropped by around one-fifth on Nov. 10, after the firm announced it was reducing its year end forecasts thanks to trouble in its helicopter division.<\/p>\n","protected":false},"author":7,"featured_media":58326,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_yoast_wpseo_meta-robots-noindex":"","_yoast_wpseo_meta-robots-nofollow":"","_yoast_wpseo_canonical":"","_acf":"","_yoast_wpseo_primary_category":12,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","_smg_distribution_targets":[]},"categories":[160,46,11,12,16,36],"tags":[],"coauthors":[3345],"class_list":["post-55681","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-daily-news-roundup","category-europe","category-global","category-industry","category-naval","category-newsletters"],"acf":{"subheadline":"","legacy_arc_id":"46XSJGESFBBZJBQDPUCKCS6UHI","arc_canonical_url":"\/industry\/2017\/11\/17\/leonardo-boss-calls-market-reaction-excessive-in-wake-of-lower-forecast\/","remove_feature_photo":false,"is_sponsored":false,"subtype":"","redirect_url":"","disable_inline_ads":false,"native_logo_pretext":"Presented By:"},"yoast_head":"\n