March 14, 2019 / 3:08 PM / 5 months ago

REFILE-Shares in Leonardo rise 12 pct as CEO's strategy starts to bear fruit

(Refiles to add company RIC)

By Giulio Piovaccari

MILAN, March 14 (Reuters) - Shares in Leonardo were set for their biggest one-day rise in more than seven years on Thursday, recouping some of their steep losses since January 2018, after the Italian defence group said net profit surged and it saw sales rising in 2019.

Leonardo’s strong performance last year, supported by lower charges and taxes and a 5 percent rise in sales, helped consolidate a strategy presented last year by chief executive Alessandro Profumo, based on cost control and aggressive commercial expansion.

Analysts said the so called ‘One Company’ approach, built up by Profumo to make the company more efficient by streamlining its separate divisions, was starting to deliver.

“The implementation of the One Company approach is finally bearing fruit, as improved internal cooperation translated into improved financial results in 2018,” Mediobanca analyst Alessandro Pozzi said.

Shares in Leonardo were automatically suspended on the Milan bourse after gaining more than 12 percent to 9.62 euros.

They have only recovered around half the ground lost since January 2018 however, when Profumo unveiled a five-year plan heavily criticised by analysts for what they saw as conservative targets, sparking a share sell off.

On Wednesday Leonardo said net profit rose 83 percent last year, topping market consensus

It added revenue would grow up to 5 percent this year to between 12.5-13 billion euros ($14.7 billion), after rising 5 percent last year supported by sales of helicopters, electronics and defence and security systems.

Mediobanca Securities said its investment case for Leonardo was underpinned by ongoing recovery in its helicopter division.

State-controlled Leonardo said on Thursday it might even exceed targets set for 2022, and confirmed it aimed to reach a double digit profitability for its helicopters business by 2020.

“A slight contraction is expected in helicopters market due to military expense reduction, but the company is well positioned,” the head of helicopters division Gian Piero Cutillo told analysts during a post-result conference call.

Leonardo is the world’s largest producer of civil helicopters. Europe and the United States are its biggest markets, though the company said Asia is expected to grow.

Profumo said the company aimed to deliver annual savings bigger than the planned 200 million euros. ($1 = 0.8846 euros) (Reporting by Giulio Piovaccari Editing by Alexandra Hudson)

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