July 30, 2018 / 5:59 PM / 5 months ago

UPDATE 1-Italy's Leonardo lifts 2018 sales, cashflow guidance on Qatar deal

(Adds details and executives’ quotes)

By Giulia Segreti

MILAN, July 30 (Reuters) - Italian defence group Leonardo lifted its 2018 revenue and free operating cashflow guidance on Monday to reflect a 3-billion-euro helicopter deal with Qatar.

The deal for 28 medium-sized military helicopters was signed in March between Qatar and the NHI consortium, which includes the helicopter divisions of Leonardo and Airbus’ and Dutch aircraft manufacturer Fokker.

State-controlled Leonardo, which is the prime contractor, has previously said its share in the deal would be over 40 percent.

Leonardo raised its 2018 revenue guidance to between 14.0 and 14.5 billion euros ($17 billion) from a previous 12.5 billion-13.0 billion euros.

Free operating cashflow at the end of the year is seen at between 300 million and 350 million euros from a previous target of about 100 million euros. The outlook for orders and profits remains unchanged.

“The new guidance reflects the Qatar contract, which had only been partially included in (Leonardo’s) earlier guidance,” Chief Financial Officer Alessandra Genco told analysts in a conference call after the company released its first-half results.

In January the group said it aimed to return to double-digit profit margins by 2020 - half-way through its five year plan - after it cut revenue and profit guidance last year over issues with its helicopter business.

“First-half results were in line with expectations, we are focused on the execution of our industrial plan. Recovery of the helicopter (sector) is moving ahead.... guaranteeing the group a sustainable growth in the long term,” Chief Executive Alessandro Profumo said in a statement.

In the first half of the year the group’s revenues rose 1.7 percent from a year earlier to 5.59 billion euros.

Net income, however, halved to 106 million euros, dragged down by an estimated 170 million euro one-off cost linked to a retirement plan involving up to 1,100 workers.

The group said its helicopter unit, its Achilles heel in recent years, was recovering in line with the company’s plan and that deliveries this year would exceed last year.

“This year (the helicopter) business is performing in a more linear and upward trajectory,” Genco said.

She said the group’s AW139 helicopter was the most profitable programme, adding orders were skewed more towards emergency and medical services and search and rescue operations than to offshore activities.

Offshore business was nonetheless largely recovering, she said, after the slowdown in the oil and gas business had hit sales.

$1 = 0.8535 euros Reporting by Giulia Segreti; Editing by Susan Fenton

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