Welcome everybody and thank you for coming today at the Leonardo Capital Market. We are in the heart of the Electronics Division . It's truly manufacturing place. We have created this environment for a full immersion in the so-called Digital Continuum which will be a recurrent idea in our presentation. Before starting with the description of the plan and the discussion we thought it would have been useful to give you some numbers so you know exactly why you're here. This is a synthesis of the key financial figures of the plan. By the year 2028 so the end of the plan we expect the orders to grow up to EUR 22.6 billion with an increase of approximately 25%-26%. Revenues growing to EUR 21.3 billion about 39% more than today. EBITDA almost doubled EUR 2.5 billion as opposed to EUR 1.3 billion today.
Free operating cash flow more than doubled, 1.35. return on invested capital growing by 70% compared to today and return on sales reaching double digit in 2026 and approaching 11.5 in 2028 at the end of the plan. In addition, I'd like to mention that yesterday our board has approved the proposal for our assembly that should be approved in May to double the dividend per share from 0.14 EUR to 0.28 EUR in 2024. And there's a strategy of course for the years to come. Before keep going with the discussion, I should mention that the emergency exits are left and right. So if you don't like the number you know how to go out immediately.
Down there is the quite quiet place and also there but that one is bigger. Nothing will happen but safety first. During the discussion we'll have an architecture, a description of the architecture of the industrial plan. Business overview of the division that will be very transparent, very direct. You will see the numbers. The targets of the group at the end, the global targets of the group and finally a few relevant initiatives. So before starting this discussion there's an inspiring movie that has been elaborated by our new Digital Hub . And I hope this will be useful for the forthcoming presentation. And I ask guys please launch the movie. Thank you. It's just one minute and a half.
Did you know that there are more than 50 different conflicts happening in the planet right now? Something similar happened in 1945 during the Second World War. The conflicts were fought on land sea and air with conventional weapons. Today things have changed. You can see this in the Ukrainian War. Drones mobiles satellites and other digital technologies have become more and more important to protect people. Our security will be depending on digital technology in a way that we would have never thought. So kids your new assignment for the weekend is to figure out how to defend peace in the future okay? See you on Monday.
How can we defend peace? If we're defending on land we can be surprised and be attacked from the air or sea. I couldn't find the right solution. But then I realized data, people, and new technologies—it's all connected. This is exactly how together we will defend peace.
You forgot to put your name.
The young Leonardo gave us a bit to the future. It's interesting because you will see this drawing that was done by a kid will come back in our plan as a new idea that will inspire all our technologies for the future. So what did we learn out of the recent happenings I mean namely the Ukrainian War? I think there are three lessons that we should not forget after what happened in the last two years. First of all, warfare is changing. There's a combination of traditional weapons that was the same for centuries and new civil technologies like mobile phones satellites for internet drones and the normally bring along cameras that used together in an orchestrated manner can destroy machines war machines that are worth of millions. So bullets and bits seems to be the new approach.
This unprecedented introduction of digitalization in the warfare never happened before of course and we have to be ready to face this change. The second lesson is globalization is an element of fragility. When this war started just at the periphery of Europe the first impact was energy insecurity. At that time I was Minister of Energy. I believe it was a nightmare. And then we had food insecurity and then we had cyber insecurity and then we had infrastructure insecurity. And lately we realized there was a war at the corner of Europe one of the 55 wars unfortunately. So maybe defense is not enough. We should think in a different way. Defense is just a set of measures within a much bigger scheme which is a global security. Defense into global security. The third lesson was no single European country can make it on its own.
We've seen the fragmentation. How weak was the approach when we fragment our effort. We're not coordinated. So security is a continental problem. It's not a domestic problem. It's not national. Now let's see one by one these three lessons. This is, if you want, the manifesto of the technology we want to develop. Now we have to create an artificial intelligent dynamic cross-domain in which all the domains are interconnected and the platforms of each domain can talk to each other to communicate. They are orchestrated synergically so to be more effective. This is under the umbrella of the satellite vision geolocalization looking at the landscape. Well, in the past we had the sentinel on the top of the hill. Now we have the satellites in the space.
And all the signals that are interconnecting the platforms or the domains have to be cybersecure because they cannot be intercepted. And Electronics by the way here we are in Electronics and Electronics is the glue what makes this possible. Now if you have this scheme high performance computing connected to a powerful cloud makes it possible to make decisions in real time to simulate to forecast to predict to make decisions. And this is gonna be the new multi-domain interoperability that we want to accomplish. This is the technology that has to be developed. I mean it's a mandatory pathway. No one can do this, how to say, protect peace without doing this. In order to do this we have to develop command and control communication standards modeling simulations and training global monitoring so space as I said before system of system architectures.
Very likely we have a mother platform with many drones or well loyalty machines. Cyber and resilience has to be guaranteed and autonomous systems have to be developed. Now this is possible because we should be able to create a Digital Continuum. The Digital Continuum is exactly what we we said before. Cloud we're talking about petabytes at least. Computing power we're talking about petaflops that 10 to the 15 floating point operation per second big things. Resilient broadband communications because everything has to be protected. Satellite and sensors well very clear network of sensors on ground and satellites on the top. Digital Twin because those things can be simulated only if you have the Digital Twin of all platforms. And artificial intelligence as the brain that orchestrates all the platforms and all the and all the do and the interconnect all the domains.
Well, Leonardo has everything in the portfolio. All those technologies are developed by Leonardo. The point is to create the orchestra to put them together. The second lesson is from defense to global security. I think it's clear from the previous description that this is the way to go. But even market-wise this is convenient. This is not only a technical requirement or a technical choice. It is convenient even from the point of view of market. Because if you see, defense is growing at a CAGR of 4.5% this is including the 2% GDP increase expected by the NATO in the NATO alliance. But cybersecurity and space are growing even faster on average. So even market-wise it seems to be convenient to approach this way.
The third lesson, security as a continental problem, has to be fixed especially in Europe very soon. You can see this this plot is self-explanatory. This is the procurement budget of the United States in 2023 that has been around $250 billion spread over or allocated over 12 different platforms: land, sea, air. That means on average $20 billion per platform. If you see Europe well it's investing a bit less let's say let's say a bit less than one half but it's still plenty of money. But this is allocated over 30 platforms. Every country in Europe have wants to have its own aircraft its own tank its own machine its own platform. So on average we invest $4 billion per platform. This is not effective not not efficient. We have to do much better.
So, orchestrating, creating the synergy, creating the link means also changing the way we allocate resources. And of course industries play a role in this. So the question is, is Leonardo ready to face those challenges that I mentioned so far, that I described so far? Well, the answer must be yes, of course. We have first of all to strengthen our core business, so the platforms have to be competitive. Aircraft, tanks, whatever we do, whatever hardware we do, it has to be competitive. High-tech. So we have to consolidate the core business. This means first of all rationalize and optimize the portfolio, choosing only the best platforms, the best technologies. Focus our R&D and implement massive digitalization throughout the portfolio. That's compulsory. This is to answer the bullets, to address the bullets, and the lesson.
The second is to address defense and global security, forge international alliances, and eventually joint ventures. No one can do it on its own, at least in Europe. So we have to create alliances. We have to work for synergies. The second part, the second action to be ready. It paved the way to the global security challenge. So we have a narrow window of opportunity to integrate cybersecurity and space in this picture of the inter-domain, oh sorry, cross-domain interoperability, which means enhancing cyber capabilities for defense, space, and national strategic organizations. And in the meantime boosting our presence in the space. We're gonna create—as we have created—a Space Division you will see in a minute, boosting Space Alliances and focusing on high-value segments for the picture I've shown you before. And this addresses the security as a continental problem.
So, this is the answer other question: are we ready? This means transforming a company working in multiple divisions and related domains: Electronics, Helicopter, Aircraft, Aerospace, Cyber, and Space. This is our picture now. And those are the domains: air, land, maritime, space, cyber—into a company working in a cross-divisional, multi-domain environment powered by the Digital Continuum that I mentioned before. So, if the question is, are we ready, the answer is yes, we are ready. We do have the toolkit. All the toolkit are in our box, but we have to synergize them. By the way, this is not a too much capital-intensive effort. So, I like it also because we go towards a massive digitalization, whereas we are historically manufacturing companies that has to invest a lot of money capital allocation for hardware technologies that of course are heavy.
That's why when you do manufacturing unfortunately your life is harder than in other industrial segments. This generates a growth model. Now forgive me. I'm, for I was a scientist for most of my life and I need formulas from time to time. This is very exemplificative. It's just an example. This is the generic financial KPI. It could be free operating cash flow, EBITDA, whatever you want just to give you a basic idea. The summation over the years of the plan and the summation over the organic growth, efficiency boost, and inorganic growth should result in different contributions that ultimately should bring us to the forecast. Now how do we compute those things? Let's go here. The organic growth consists of three contributions. Focusing R&D and technology innovation.
Primarily focusing on digital technologies such as artificial intelligence, digital twin, cloud computing. By the way, we were among the first in the world in 2019 installing high performance computing and with a fast cloud computing interface, one of the largest in the aerospace and defense sector. That gave us some competitive competitive advantage. You know, the disadvantage in this field maybe it's 6 months, 9 months; it cannot be years. We have to rely on that competitive advantage. We are investing a lot in terms of brain and infrastructure. Second, massive digitalization and solution and operation of solutions operations. The key enabler to improve our product competitiveness and to streamline our processes, of course, is digitalization. This has to be done immediately. We're working on that now.
Third, increasing the services because if we digitalize our platforms we have new services and normally services have very good margins. So we like servitization in our platforms and of course customer proximity. There is a massive advancement in our customer proximity network. We have a directorate for that business and operation. So this is really a strong effort. The efficiency boost which is this part of the curve or this part of the curve consists of three contributions. The first one is increasing the efficiency group-wide and corporate cost reduction. So guys, I'll be very clear. Well, there's a plan for EUR 1.8 billion savings in five years. This is unprecedented in the company. Everybody's committed to that. We know it's kind of hard job but we will do it.
Group-wide efficiency and corporate cost reduction means optimization of procurement cost reduction of the headquarters. I know that you expect this and we're doing this very seriously. In terms of organization and processes, business and product focus and rationalization, we are investing in high priority actions activities. We're divesting off-core business actions. You will have some example. We have closed businesses, joint ventures, and products that are not promising or maybe not so central to the strategy. Finally, broad optimization of manufacturing. Sometimes we are victim of our own success. And accelerating the conversion of the backlog of orders into revenues is mandatory. So this goes through exploitation of digital capabilities, automation effort in engineering. And this is what we're doing now. Last but not least, we expect to have an inorganic growth obviously given by serious global alliances.
As I told before, it's a continental problem, global security. Merger and acquisition in emerging technology markets, we are selecting; we have a number of due diligences at the moment, selecting companies that could add services that we don't have or could improve techno could add technologies that it's cheaper to buy than to develop in-house. However, to be very clear, the numbers, alright, battery over. No, here. The numbers I gave you before just taking into account for the final forecast organic growth and efficiency boost. This is real. We're doing that now. The inorganic part is of course not included in those numbers I gave you before because this is in progress; it's ongoing. We are here since 10 months. We're doing a lot of work, but this needs the crystal ball to be quantified at the moment.
But this means also stay tuned. There is margin for further improvement compared to those numbers. Let's go now to the short business overview of the division. For sector transparency we want to give you an update of what every division's gonna do with the forecast of the financial main KPIs. I think this is maybe heavy to read and even to say but it's good to have an idea of how Leonardo is getting organized in view of this transformation. A key point is that this transformation is not the discontinuity. It would be a mistake to think of a digital jump. We do have all the technology and the skill in-house. We just have to change the mindset and make them homogeneous and synchronized.
So that makes the reorganization or if you want the jump not discontinuous but quite massive. So let's see the business overview. This is in a nutshell the entire plan. You have the four, let's say, hardware platforms or divisions: Electronics, Helicopters, Aircraft, Aerostructures. We have to strengthen the core business as we said before. And then you have the, let's say, the new entry, the new players that become important for the exploitation of the inter-domain strategy which pave the way to the global security challenge. Now we go one to one. This is what is now; this is where we want to go. You will get this. I don't waste time to read and to present you the details. We will go now one to one in a drill down.
So let's start with electronics. We are in the. Our host is the Electronics Division. So we're here. The target of electronics is to go from second largest European player in defense electronics and to become global player with European leadership and to catalyze European cooperation. Now first of all consider that over the last decades the content of electronic technologies in any platform has been increasing dramatically. A few decades ago about one quarter or less of the technology high-tech content of a platform was electronics. Right now or recently we were around 40 and now and onwards we are going towards one half. This means that electronics is playing a more and more dominant role. And obviously because electronics is the hardware that makes it possible cybersecurity interconnection simulation forecast.
So this is the glue of all the technologies that the company like Leonardo produces. With this in mind, the first thing we have to do and this is something the Electronics Division is doing now, we have to rationalize 20% of the current portfolio. I guess electronics has about 500 products at the moment. About 20% yeah about 20% under the supervision of Marco Zoff who's the director of the division. You know, rationalizing the current portfolio allows us to have better capital allocation. The main area of rationalization are if you customize the C4 command and control communication land and naval radars old generation and other legacy products that maybe are less relevant at the moment.
to increase the competitiveness across all domains. At the moment, electronics is pushing a lot because we have to update the core platform, for instance, for the Eurofighter. There's a massive job of massive work of optimization for the aircraft in particular. And enable the new programs to start, in particular the GCAP, so the sixth generation fighter and the armored machines combat machine that will become important element in the future for interconnected domain applications. Finally, electronics has to continue to invest and update on the traditional leading products: radars, sensors, communication, command and control. So you see there is essentially a two-fold approach: keep alive and update continuously the existing platforms, getting ready for the new platforms, and continue to invest and update legacy programs.
On the other hand, we do have another challenge which is catalyzing European cooperation and possibly expanding the international reach. Now consider having wider access to European market means unlock synergies in a wide portfolio. Radars for airborne and electronic warfare for airborne combat system for next-generation frigates so this is maritime. Land sensor solution in wide networks advanced air defense systems optronics. And this is part of what we are discussing with Hensoldt in the frame of a large-scale collaboration. Of course this is the technical discussion. We'll see where this will land but it's a work in progress. Then we have a contribution to land defense. This is what we are studying and developing for the European space based on armored vehicles particularly the collaboration with KNDS the main battle tank program.
So this is work in progress because where there is a large opportunity both at domestic level and at international level at European level. And finally there's a collaboration ongoing in the naval area in the maritime area with Fincantieri particularly the Orizzonte Sistemi Navali for the full warship capability. Well I mean there's a floating part and electronic part and weapon part. The synergy is quite clear. And we are also discussing about future underwater defense systems. So with this kind of approach that is very synthetic we can go and see quickly what is the expectation for the Electronics Division . Orders growing up to EUR 6.9 billion in 2028 with this they are steadily growing with the backlog reaching EUR 17 billion by the end of the plan. Today it's around 13. Revenues growing to EUR 6.4 billion with a remarkable CAGR.
The return on sales going up to being always double-digit growing up to more than 12% with an EBITDA reaching EUR 0.79 billion with such a CAGR. So those are healthy numbers promising. And as I said before no inorganic part is included in those analyses. Those are just an indication for the time being with the organic growth plus efficiency boost. Let's go to the next division which is helicopters. This is a slide that just summarizes the portfolio of the helicopter division now and then now and tomorrow. Of course we don't have time to go through. You will love it. You can see whenever you want.
We'll focus on some key products like the new single motor the multipurpose machine like the 249 and the most advanced platforms like the tilt rotor or the rotor unmanned systems. In a nutshell, Helicopters has huge backlog of orders. Now they are making an effort to optimize the industrial model scaling the in-house industrial capacity to accelerate the transformation of backlog into revenues. They are increasing standardization improving industrialization process by digitalization and supply chain of course. They're gonna force to reinforce the portfolio because they have both services both in terms of services which is a remarkable part of the income and platforms namely the new single motor AW09. They are developing the so-called Smart Helicopter so introducing further connectivity autonomous capability digitalization in the platforms.
And of course they have to do the generation upgrades for the AW family. This is to keep the machines competitive anyway. But the news are coming also from the other side of the ocean. You know the American authorities they have done recently a number of important choices. And particularly for the new requirements of the U.S. and NATO that for fast machines that should have a range of 1,500 kilometers taking off and landing vertically but in the meantime flying much faster than a standard helicopter. So apparently all those technical choices by the authorities is to point towards the tilt rotor as the only viable and mature technology. And Leonardo has been investing quite a considerable amount of money over the years.
Now we have one of the two possible platforms in the world that are close to certification particularly for civil use. On the same footing rotor unmanned systems are now confirmed to be the main system for exploration in battlefield in complex battlefield scenario by the U.S. Army authorities. Those things are actually rewarding the effort we've done over the years. This is the rotorcraft you see that can take off with vertical rotors and then moving like a standard aircraft. Of course this opens up the way for exploring international cooperation. The good news here I'm sorry this is written just at the bottom is that in Anaheim recently we have signed an MOU between Leonardo and Bell during the Heli-Expo 2024. This outlines the perimeter for a potential wide-ranging cooperation on the tilt rotor technology.
They could, this could be joint advocacy of technology for its future programs but also more like industrial cooperation across the entire value chain. This is very promising because in the end of the day we now have a competitive advantage that comes from the investment done over the last years. The numbers for helicopters are those you see here. Orders are increasing to EUR 6.2 billion at the end of the plan. The backlog is increasing but this should be very likely a faster transformation of backlog into revenues because of the optimization which is ongoing. The revenues are growing up to EUR 6.2 billion with such a CAGR. And the EBITDA is also growing to EUR 0.63 billion with 8.4% CAGR reaching the double-digit condition between 2026, let's say 2027. All right.
Let's go to the third division. This is aircraft. I'm sorry for the compilation but I think it's important to have a clear picture. Aircraft also in this case this is the menu of the portfolio. We are not going to discuss everything but you're gonna see those things whenever you want later. You will love the slides of course. We will focus on some key technology key platforms. Primarily we need to continue to boost the Eurofighter campaigns because the Eurofighter at the moment is one of the key platform for the division. And by the way we expect to still to have a quite a long lifetime of this aircraft in the next maybe 10-15 years. In the meantime the Aircraft Division is committed in this is the Eurofighter.
The Aircraft Divisio n is committed in upgrading the platforms especially for the trainers with strategic operation M-346 M-345 and some unmanned technologies. But of course there is something which is coming out now which is very promising. This is an M-346 for training. We are boosting integrated simulation and training in a sort of service business. The example is the school of training that we open in the in Sardinia, the Decimomannu, which is a collaboration with the military forces where if I remember correctly Marco you can confirm it's in 60 countries are training their pilots there right? And this is a mixed training in about one half in the simulators that are more and more advanced thanks to the digitalization that we could develop in-house. And of course real training on the aircraft.
Besides this, we have to secure another important another important technology which is a key role in the GCAP consortium. The GCAP is a sixth generation fighter Japan U.K. Italy. So we are discussing, I would say, quite intensively at the moment how to secure a key role in this consortium. Where here the challenge is of course the platform itself stealth high performance and so on and joint unmanned development so basically the big drones that will be controlled by the sixth generation aircraft and air combat cloud because we need to have a complete well actually we could contribute completely in all the in all the technology aspect of this consortium. Finally it's important to nurture industrial partnership. Well we need to upgrade and develop our trainer solution. There are many countries interested in that business.
There are next-generation airlifter and of course there is plenty of activity in the market of unmanned systems you've seen in Ukraine and not only. Of course this is at the moment something we are working on. Nothing that we can anticipate specifically but there is great attention to this kind of evolution. The numbers of aircraft are here. Orders increasing to EUR 4 billion with a CAGR of 11% by the end of the plan. Revenues EUR 4.2 billion by the end of the plan CAGR 7%. And the EBITDA being in the range of EUR 0.5 billion by 2028. Now you have to consider that while the the Eurofighter market will smoothly reduce in the meantime we expect the GCAP to grow up. So there will be a crossing point.
We are keeping this of course continuous under control. I mean the Aircraft Divisio n has best-in-class profitability. You see the return on sales is always double digit. Here we had after the Kuwait jumbo orders but it's always double digit so we keep the standard as much as possible like this for the years to come. Aerostructures is the fourth division of the business to be consolidated. Once again this is the menu of our products. Wide-body segment primarily Boeing narrow-body Airbus regional the ATR. And there are new segments like the supersonic or some vertical machines and another bunch of exploratory actions including the GCAP. Now the most important thing here is that we are fully committed in keeping the breakeven point at 2025. So this is confirmed.
The division has made a gigantic investment during the COVID in the worst moment with the institutional funds to be through the NEMESI program to shorten production time cycle to reduce inefficiency and to increase production flexibility. At the moment our quality is outstanding. You know that there are problems in Aerostructures manufacturing at the moment in the world. I think we can guarantee quite an advanced standard. We are trying to diversify the current product portfolio entering selected high potential segments Eurodrone supersonic aviation but those do not require important investments that to be clear. And we are of course evaluating potential industrial partnership.
The important thing is that due to the effort done to optimize this and due to the fact that the aircraft market is restarting now after the COVID, the numbers we expect for the Aerostructures division is as follows: orders at EUR 1.4 billion at the end of the plan with a backlog staying almost constant. Revenue up to EUR 1.4 billion with 16% CAGR. And the EBITDA getting positive finally in 2025 as promised since the very beginning. That's our main target obviously with the return on sales that is increasing over the next years. All right. So this is for the core business that is gonna be consolidated over the next years.
Now we enter into the last part which is pave the way to the future how we approach the cyber challenge and how we approach the space challenge. About cyber today we are a domestic player. The ambition is to become a European key player over the plan horizon. That means first of all rationalize and focalize all the existing product portfolio. This means we have to leverage big data computation artificial intelligence to improve existing products. One class of products is cyber and resilience. That means we make smart systems that already exist like threat intelligence but we should make it predictive extending detection response cyber operation and command and control. All those things can benefit of the additional AI and digitalization and digital approach to the platform. Second is secure digital platform. We need to rationalize all the current platform.
We have a number of digital platforms. We'll be rationalized into one single artificial intelligence-driven architecture which will orchestrate or secure all kinds of cloud solutions: private and hybrid multi-cloud solutions to match defense, governmental, and even customer needs. That's what makes the offer extremely flexible and ambitious. And finally, mission-critical communications. We have to transform from narrowband to broadband. This is fundamental for mission-critical communication. Now another aspect of cybersecurity is that we do produce platforms everywhere: helicopters, aircraft, satellites, and so on. And we are one of the few companies in the world that can make cybersecurity by design so designing our new platform directly since the very beginning introducing cybersecurity as a key concept. So I don't want to have a mobile phone where I put the app for security.
I just want to have a mobile phone which has been designed to be secure. This is the concept. We are among the few that can do this. Of course we need to accelerate some merger and acquisition for strategic partnership. We are working on that. There are several due diligences in course. I will tell you how we will allocate capital later just to make you how to say be safe that there is no big discontinuity. Capital allocation will be very disciplined. Okay. In the end of the day this rationalization will move in the matrix of quality. This is industrial attractiveness vertical versus ability to win. Today we are a little bit spread. So we remove a number of off-core business. We concentrate the investment and the resources. We improve the quality of the platforms.
Choosing eight classes of products we're gonna be in the top part of the industry attractiveness ability to win matrix. Basically just to give you a key indication 87% of the orders by the end of the plan we are expected to come from cyber and resilience and from secure digital platform. We will quadruplicate the defense business. I mean of course because I told you before what we're gonna do for the interconnected domain so the defense should be involved in this. And finally today we have about 30% of product which are proprietary. By the end of the plan it should be 70%. That's very important. Know-how which is developed in-house. Numbers. Orders will grow to EUR 1.4 billion. Today we are rather small 0.78 with a CAGR which is very high.
Revenues have about doubled with a CAGR which is very high. And expectedly the EBITDA gonna be growing very fast. Okay. You you might say okay you're small it's easy to have a big number at the beginning. Okay. But we have to start growing. And this is what we're trying to do. Last but not least space. Now you've seen the kid making the design of the of the interconnected interdomain scenario. I had difficulties myself to describe properly the initiative that we're we're gonna launch the rationalization we're gonna launch in space. So this I did myself. Before being a scientist I was a drawer of comics. So my nature comes out here. This was done between night and and early morning yesterday. And then perfection during the board of directors shouldn't say this but ha ha we were drawing.
At the end of the day, I decided with the digital people here that they hate me because I interrupted the nice full immersion with this bad design. But this clarifies a little the idea. So basically Leonardo can do everything in space. We are in launchers, we are in SatCom, we are in satellites, in services. The point was that till last year there was no clear selection. We were fragmented in a number of joint ventures. Good stuff of course. But there was no presence of a real space fingerprint in the balance sheet of Leonardo. Now because we have all the knowledge, if we oversimplify with this little drawing, so we're strong in ground services, big infrastructure, Fucino, Matera, so we can really do a big thing. This is an infrastructure is solid.
We're strong in satellite services downstream. We send a number of images or whatever information. Those are processed like satellite as a service: geolocalization, navigation, infrastructure control, military telecom, even SatCom, even though we're not going to make SatCom ourselves. In the future we're gonna want; we don't see any more green now. We're gonna put Space Cloud . So we're starting to develop; we have a program to develop Space Cloud , which could become fundamental to improve our capability in satellite as a service. So we don't even send down the data; the data come already processed. And Space Cloud could be even an asset to offer services to other constellations. What you see from there is something which is not possible at the moment. And then of course we are good in exploration and space logistics.
So those are the four markets. Ground services market one, satellite market two, SaaS satellite as a service market three, logistics and exploration market four. We're not going to invest on launchers. We don't need this. We participate in Avio; that's good. But this is not our business. We're not going to go to do SatCom primarily because this is not our business. We do some SatCom for specific needs of the country, institutional needs, but it's not our core business. Now with this simplified idiot-proof picture, it's much easier to understand the actions that we do in space. So first of all, we establish, for the first time, a division, so a business division that makes space activity. We now consolidate Telespazio. Telespazio is the company. It is a joint venture with the French in Thales.
Two-thirds, or 66%, are essentially under Leonardo control. Now it's consolidated in our budget but also in our balance sheet, but also we have extracted the line of business of Space Electronics from Electronics. And this now is synergistically incorporated in the business division because we have the possibility to make sensors, infrared multispectral technologies. And all those things together with the hardware capability and the ground segment give us the opportunity basically to be independent vertically on all satellite services. So I don't need to enter in the single details: mission and satellite operator end-to-end integrated space as a service offer, geoobservation, geointelligence, exploration, logistics. All those things are now synergistically incorporated in this division. And this division lets Leonardo to be a good reference at even the European level.
We now have a structure. We don't go there fragmented in with different entities and joint ventures. Of course we wanna integrate we wanna embed cybersecurity into space application. You've seen before how important it is having the umbrella of the mesh of the satellites to exchange data that are secure. And of course we are leveraging within. We're starting inorganic actions. Well, I have to say it's very important what's written here. Both Leonardo and Thales believe a lot in the Space Alliance. We have a high growth potential in satellite services and infrastructures for Earth observation satellite communications operations position navigation and timing and in exploration logistics. So with Thales we plan to develop Telespazio also through mergers and acquisitions that are properly agreed.
This sentence is agreed with my colleague Patrice Caine in Thales just because we want to give a clear message that this synergy has to be developed and we believe in this synergy. Well, this is less precise than in the case of cyber. But once again rationalizing things we get more competitive. In blue we actually have transversal markets. So all the satellites and ground operational transversal can be used for many applications military civil environmental agriculture geoposition and so on. And in red of course geoinformation which is sort of a market vertical because this is a market in itself. And I think I convinced you that because we can do almost everything in-house I would say everything in-house we can be really strong if the organization works properly.
Last but not least, I'd like to tell you that in the past so currently not in the past 83% of the funding was institutional and only 17 of the funding was private basically. This is gonna change over the next five years with a remarkable increment of private funds non-institutional funds. And this is very interesting because we have to be ready to be competitive towards private investors. You know in the United States maybe the the ratio is is the upside i+is the other way around much more private than institutional. But the transition is is occurring in in Europe too. And I think this this organization will help a lot in in being more competitive. All right. So numbers well clearly up to 2023 the division did not exist. So we are actually making a sort of pro forma report here. But since 2024 it exists.
We started with about EUR 1 billion order portfolio. Today the revenues are in the range of EUR 0.9 billion like we started now with the consolidation. We expect revenues to grow up to EUR 1.4 billion with a remarkable CAGR. And also the EBITDA being actually doubled compared to what it's today with a remarkable CAGR. The return on sales was gonna be double-digit in 2027. But please remember this is only organic and savings. The inorganic is not here. So somehow I think we should stay tuned for that because there is room for improvement. All right. This is a drill down of the different divisions. Let's go to the final picture which is the group targets that I anticipated at the very beginning.
So you know already the final results and nobody went away so I think it was acceptable as a number. This is for the entire group of course this also includes not only the divisions but also the participation in our joint venture and MBDA the other components that are introduced of course to complete the numbers. But anyway you see we have an order portfolio that will exceed EUR 22 billion by the end of the plan with a backlog which is increasing from the current EUR 41-42 billion to EUR 59 billion. What is important is that this portfolio has no concentration or exposure in single countries. It's very well distributed which is healthy. We have some flexibility. The book-to-bill is gonna be 1.1 throughout the plan.
The total expected accumulated orders in the budget plan is exceeding EUR 100 billion point one trillion. Concerning revenues we expect to pass EUR 21 billion at the end of the plan with a very balanced growth across the businesses. We don't have a big imbalance. Of course the youngest divisions need to grow more but it's rather balanced. We expect accumulated revenue portfolio of EUR 95 billion over the budget plan. This is the EBITDA that we expect 1.8x so from EUR 1.3 billion up to EUR 2.5 billion at the end of the plan getting double-digit growth in 2025 around here. Finally we have the free operating cash flow that was one of the weak points.
When I came here I was told that this was one of the weakest points over the past. But I think the efficiency, the saving plan, and the organic growth and hopefully the inorganic that will come to even improve the situation we expect to more than double the free operating cash flow at the end of the budget plan with 15.7 CAGR with a cash conversion that for my understanding I'm a physicist I like standard formulas. I know that the cash conversion is calculated with different formulas depending on the definition. What we do here is the ratio between free operating cash flow on adjusted EBITDA. It goes up to 83% at the end of the plan and it starts today 69%.
I know that you can calculate with slightly different numbers. I don't think it's important the absolute value. It's important the variation. In this case the cap should be 100%. So there is a remarkable variation due to this efficiency plan organic growth that we that we have planned. And hopefully something better will come also by the inorganic part. By the way, I should mention this is very important. I was forgetting a statement that we'll anticipate the capital allocation slide. Cash flow will support disciplined capital allocation strategy. I will explain this sentence later. It's very important. I know this is crucial. So give me 1 minute and I will go I will go to the capital allocation. Efficiency boosting that was what I told you at the very beginning. This is the plan of efficiency. My laser is gone.
Is there any other laser in the organization that I can use? Okay. No laser. So EUR 1.8 billion over the five years. This is our estimate. EUR 150 million this year. 280-360 this is the growth. It's it's serious stuff. To give you an idea we go from 10% of the EBITDA this year up to more than 20% at the end of the plan. So it's a serious commitment commitment by everybody. At the moment we have an idea how this can be well a plan how this can be accomplished. The efficiency measures will represent 70% of the total plan direct procurement travel energy real estate information technology all the other indirect procurement advisory sponsorship and so on. This is approximately right now what we expect to do.
Those numbers of course can may change from year to year but clearly the indication is given. The corporate centre restructuring this includes many items including personnel is gonna weigh 20%. And at the moment the contribution the disposal the phase out of businesses that are off-core business like the production of electric buses or the Skydweller solar drone or the cleaning of the portfolios and other activities that we're doing this is a continuous efficiency. Today represented 10%. I might inform you in the future how this will evolve. But clearly the road is clear. And I think it's very important because this is a commitment of the headquarters and of all divisions. Don't say it's easy. I cannot say it is easy but it's feasible. Laser. Sorry. Thank you.
Now just a summary of the disciplined capital allocation strategy to support the growth. Now under the control of my CFO and all the experts in finance I think we have three principles: stronger flexible balance sheet so debt payment and maintain of course while maintaining investment grade. We are investment grade at the moment from the three major rating agencies. Investing in growth this is essential because you have seen what we're going to do. That means CapEx the criteria IRR always larger than the WACC plus hurdle rate which if I understand correctly is 2% roughly. But then Alessandra Genco will help me in those thank you. Thank you very much. Wow. And then merger and acquisition focusing on strategic areas of growth.
I told you before either new products that will complement our arsenal or new services that will improve margins that will be easier to buy than to develop in-house. And finally return to cash to shareholders. We know we have to improve the payout ratio to shareholders. The company is between 9%-11% is paying back to the shareholders around 10% today of the net income. This is not enough. So what we do for the next few years debt repayment we're gonna go 50% regularly repaying the debt. Today we are much better than last year already. Organic growth we plan to we plan to invest something like EUR 750 million-EUR 850 million let's say this should be regular growth over the next three years per year annual investment.
It goes on Electronics and Cyber about 40% Helicopters 30 Aeronautics 20 Space 10. But those are just very basic information to let you understand what could be the kind of allocation. But of course it has to be flexible and we have to be ready to change depending on the market opportunities and also technology opportunities. Inorganic growth to be very clear we will not allow operations that cost more than 15 maybe 20% of the division turnover. Even if the corporate would make an acquisition should stay should undergo this criterion. Otherwise it's not credible. If you your size is 1,000 you don't buy you don't buy something which is 500. It's too heavy to undergo. So I think this is a quite a prudent approach.
And finally, as I told you at the very beginning, we double—sorry, we double—the dividend in 2024. Today we're paying EUR 83 million every year. We go to EUR 165 million for this first year. I think we're reaching some 25% of the net income. It's a—it's a good signal to our shareholders, but it's not the last signal. If things will go as we said, we should—we should go better, we should improve. And we'll—we consider also share buyback over the plan horizon as a further support to grow. So this is our plan to do. And I'm finishing with something that's—that's very important, maybe less quantitative, but so important in terms of the reputation and visibility of Leonardo. So those are a few enabling factors that underpin our strategy. Well, first of all, sustainability.
Guys, obviously we have a plan of sustainability that is really ambitious. As you know, Leonardo is always among the very top in the aerospace and defense in all the rankings. I don't list you the names, but we are really always among the top. This venture started in 2019. I think when I was hired as a CTIO of the company in September 2019, actually I started the first sustainability plan. At that time there was nothing. We were starting to consider the sustainability balance sheet at the end of the year. So we started. Then I had a post for two years. Raffaella Luglini got this in her hands and things are doing very well. The plan is very ambitious. Has been approved yesterday by the board.
So we integrate sustainability along the entire value chain, technological innovation, and of course people and the environmental factors, supply chain, which is important. We create new business opportunities thanks to the increase of competitiveness, and we are quite strong in mitigating ESG environmental social and reputational risks. This is very important as you know, and the plan will be public I think today will be accessible. You can see here just in a nutshell those are the main ESG in the area of research and innovation, see the environment, operations, different solutions and social. You can find quantitative targets for all those areas. I think it's very interesting to see how we started recently to use new safe environment fuels for the rotorcrafts.
This, I think, in November we had one of the first public demos developing aircraft with which are more and more sustainable by technology, investing a lot in Science-Based Targets Scope 1, 2, and 3 smart water program energy cell production. A lot of investment in digitalization and optimization of the Factory of the Future . NEMESI what has been done in Aerostructures division is an example. We have an unprecedented precision in manufacturing and a very high quality in the final product carbon fiber recycling. A lot of work on the supply chain. You will see the targets in a minute. Space simulation awareness a lot of digitalization AI and so on. A lot of work on satellites for simulation and training in aircraft and satellites for global monitoring and so on and so forth.
Now the main indicators the main KPI are by the end of the plan by 2027 I'm sorry having more than 500 key suppliers that are trained on strategic sustainability topics. Today I think they're less but already something has been started. More than 70% of the major tenders will include ESG criteria by 2028. These are quite aggressive numbers. Digitalization we're continuously upgrading and updating our computational capability. And actually by 2025 we will increase by 40% the compute and storage capacity per capita. At the moment Leonardo owns a supercomputer for 6.1 petaflop and about more than 30 petabyte of memory. So the per capita is calculated very easily. And this is for us an indicator.
The higher the computational power per capita and the storage per capita, the stronger you are from the digital and AI and interconnection point of view. Decarbonization, I think we are one of the few companies on the track for 50% reduction in emission by 2030. We did a terrific effort despite we are a manufacturing company. And finally a lot of work on diversity and equity inclusion. Okay, considering where we're starting from, 20% of women in employees in management by 2025 is not that exciting. But we were starting from very low. So the derivative is very good. And 30% of women in STEM new hires by 2025 is promising. But we have to improve, but we're committed. The new organization at the moment has much less first report to the CEO and to the president.
But there's almost 50% gender ratio. So this has to be spread out to all the company. Embedded in the plans of the divisions that we have seen so far on the KPIs we evaluate something like EUR 20 million-EUR 70 million for sustainability. This is not additional. This is already embedded in what the divisions are doing because they are already working with the idea that sustainability matters as an element of development. Okay, I think this gives you an indication. You will see the plan as much more of course much more detailed. The second thing is that we are gonna introduce artificial intelligence for as a business intelligence to improve our administration. Everybody has a planning and control.
But I think this will be one of the first in the world, the planning and control on an iPad where you can monitor real time all the KPI financial KPIs of the company. In any place in the company in the world, any item you wanna see, just click and see how it develops. I mean, to me this is really a step forward in planning and control. This is now developed by Simone Ungaro and people together with the CFO. I think this is a tool because we have to check that all what we said is progressing, especially the savings. So this is very important to have in your iPad at home. You can connect and use it everywhere. Supercomputing that is our asset.
It created a competitive advantage to Leonardo over the last few years. We need to nurture this competitive advantage. So not only we improve the computational capability and storage capability but we also invest in the Leonardo Labs for artificial intelligence. At the moment we're committed in putting artificial intelligence capability and in general digital capability in all our platforms. And the Leonardo Labs are developing a new group of young people more than 100 people at the moment expected to grow. That will become a transversal asset for the entire company because as you see if you wanna make digital twins of all the platforms if you wanna have autonomous systems in all divisions if you wanna have digitalization everywhere for administration from administration to engineering you need to have those brains available for everybody.
Last initiatives I wanna say is the creation of this outreach digital content and brand. This is our digital production site. We can work in augmented reality. We can produce any kind of digital content. And this is by the way responsible for this for this thing where you are today. And this is a plan for digital STEM so science technology engineering dissemination. We will leverage on schools education from the very youngest level because we believe the social responsibility of Leonardo is not only to develop technology and to ensure global security and to catalyze European things as I told since the very beginning but also we have a social responsibility in spreading a high-tech message to the young generation. Finally human capital strategy. I don't have movies here I don't have pictures. People are here.
Everybody is very committed and thank you very much for your attention. Three minutes rest. We'll put the stands here for the question and answer. Just wanna tell you that if you continue that way there's a corridor so the immersive experience does not stop. And you go in the exhibit area where you can see demo of the interoperating platform tanks simulators. It's really nice to see. So now we'll make the question and answer session but then I really invite you to go there. There will be some lunch, some finger lunch for everybody. And it's very nice to see the demo area that we've prepared which is in continuity with this place where we are today. I would like to ask the CFO Alessandra Genco to join me for the Q&A session.
I think Valeria will be in touch with the network and giving us all the other questions. Oh thank you.
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Mm-hmm.
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Okay.
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Capital strategy, you have it.
Okay.
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Let's start the Q&A session from the room. Tristan, you've got the mic. Please state your name before the question. Thank you.
Thank you, Tristan Sanson from BNP Paribas Exane. Thank you very much for your invite to Rome and your presentations. I have two questions. The first one is a fairly generic question for Roberto. I would like to understand in your view what are the main hurdles that you see in implementing that plan that you need to overcome over the next few years. The second one is for Alessandra. I'm seeing in the plan that there's a jump in the free cash flow conversion that is expected from 2027. So you have 70% until 2026 and a jump towards 83%. Can you explain to us what are the drivers of that expected jump in free cash flow conversion? Thank you.
Thank you. I must say that the audio here is a bit difficult, but it seems we don't understand English, but for some reason the direction allowed speakers. Sorry. So you asked me, I believe, the hurdles that I see for the implementation of the plan. Okay, first of all, I have to say I'm absolutely optimistic because, as I said at the very beginning, all the most of the technology and the capability is already in-house. Here is more a matter of homogenizing these things, harmonize. And if I see a hurdle, I can see primarily in the culture that has to be developed within the company.
Obviously, if you've been working on kind of vertical silos, you know, slightly separated, now having a transversal warehouse of data, a transversal culture so that divisions or platforms that traditionally never talk to each other are forced to talk now and to share vision design, this could be a difficulty. But to be honest, I prefer this difficulty which is cultural brain-driven rather than an infrastructure difficulty. That will concern me much more.
So, Tristan, on cash flow conversion over the plan horizon. What allows us to double our cash profile is a result of a number of things. The first one is clearly we're growing and we're gaining operating leverage through this growth. We're building into efficiency measures that Roberto discussed that strengthen profitability which converts into cash flows while we're continuing to invest in the key product developments throughout the group as well as in expanding our facilities to support growth going forward. The element that we are highlighted is the step up in tax payments as in 2026 we end the net operating losses carried forward. We will have fully utilized them. That's a good news. It means that we are very profitable and we're using those items. So from 2027 onwards we'll be paying from a cash standpoint the full tax rate.
Wow.
Another question? Okay, Martino, you've got the mic and then.
Good morning. Martino De Ambroggi, Equita. Morning. My focus is still on free cash flow and net financial position. The first is the disciplined net working capital that you expect, so just if you could elaborate on this in order to understand the contribution. On the cost-saving plan, if you could quantify the cash out of the restructuring cost that I suppose will be present and maybe this is affecting the improvement over the years for the free cash flow. And last, always on the financial structure, what is the firepower that you have in mind for M&A? And since it was mentioned on public newspapers, Iveco Defence Vehicles and torpedoes are part of the M&A deals. Thank you.
Okay, I maybe get started with some general arguments, that's general topics, and then I pass the word to Alessandra to clarify a little bit better about the capital allocation. So first of all, last question. We read about it in the newspaper recently but we were not the source of that information. At the moment there are two entities working between Leonardo and Fincantieri. One is the Orizzonte Sistemi Navali that essentially coordinates for the frigates and then the ships the electronics and the warfare together with the floating part which is fine. And then we have a table open which is discussing about potential collaborations in the submarine area. This includes torpedoes electronics for torpedoes but there is nothing at the moment nothing yet decided.
We are as usual at this stage collaborating, checking the numbers, checking the market opportunity. Needless to say, the relationship with Fincantieri is very good. This has been kind of relaunched recently, I think, since I joined Leonardo again. We'll do all our best to create synergies. But we are still in the technical phase, trying to find the good numbers and the situation that satisfies everybody. That's concerning the last question. Then I would like to anticipate in general terms the strategy for the saving plan. And of course Alessandra is gonna add maybe more quantitative our information. This idea of the rationalization came after a long internal analysis.
So, you know, in part is is money that can be saved, in part is unspent money, in part is something that we close and we redirect that money on some more promising investment. In my kind of low-level economic description, part of this will be free operating cash flow, part of this will impact the EBITDA. Honestly, at the moment is not important as long as we keep the EUR 1.8 billion stable in our calculation. Then, of course, Alessandra can can clarify better where things come. Second second point is that as you might understand, if you wanna make a massive optimization procurement, this is not only saving money on the single object, it's changing procedures. And of course we know that we have to do this. We are working on that. We are gonna change the procedures but this will take a few months.
So you and this is why also you see an impressive growth of the savings over the years because maybe right now we can kind of save what we can save. But the structural saving will come after the procedures and the processes will be optimized. So as I said before staying the target which is at reach there will be an internal evolution that will be communicated from time to time. And that's why we need to have a planning and control real-time with business intelligence because those things have to be measured on most real times. So it's new but we know where we have to go.
Thanks, Roberto. So on the cost-saving, building on what Roberto said, the way I would think about it, Martino, is not a restructuring but an efficiency plan, which means that we don't have upfront cost as the pre-retirement portion on the headcount is fairly minimal compared to the overall contribution that the other savings are providing us. And so on the efficiency fronts, we're using all the tools that are available to us. So in procurement, as Roberto was mentioning procurement. Let me give you some examples. We are looking at existing contracts, going out to suppliers and asking them to renegotiate terms. In some other instances, we're launching new tenders to revise who is the supplier of that product and looking for a second source. In other contexts, and this is a plan that is deployed over a five-year horizon, we're also looking at restructuring demand.
That was the process component that Roberto was talking about. So think about the real estate right? We are a growing company. We are spending also a portion of our CapEx in real estate. We want to make sure that as we are building new assets those are standardized across the group so that we can go the team that is procuring these assets can go out with RFPs that are standards and get the best out of those RFPs get the best price out of those RFPs. So these are all concrete examples. Let me give you another example travel policy. With the HR head we restructured the travel policy and we said let's look into who is traveling and how we are traveling. As Roberto puts it it's the price and the quantity element that goes into the equation.
Yeah.
The price is the renegotiation. The quantity is let's think about who really needs to travel. Is it to visit and see customers or is it just you know for internal travel? In that second case we can get rid of that.
Okay.
Do it differently using telecommunication remote instrument and also escalating the authorization to the top, the prime reports of the CEO so that we make sure that the number of people who are traveling are really those that need to travel and not beyond that.
Yeah, P+P times Q will be the algorithms. P, so price depends on the good negotiation which has to be better and better. Q, the quantity depends on the policies how we authorize or not. This is the simplest case of travels, of course. But travels, well, they matter. Overall, I think it's more than EUR 100 million, maybe EUR 120 million in the company. So we have to go and carve out any single individual item and make savings there. This is really mandatory. It's again it's a cultural approach not only a technicality.
Firepower and Iveco? The total firepower under the new business plan and Iveco if could be interested or not?
Okay concerning Iveco we also read the newspaper. At the moment there is no discussion ongoing.
Okay. Monica, who is close to Martino. Thank you.
Thank you and thank you for the presentation. I'm Monica Bosio from Intesa Sanpaolo. I have two questions. The first one is in the space segment. What is in your view the optimal size for the space segment and how does this cope with the rule of thumb of 15%-20% of the divisional turnover? I'm just curious about this. A second question is on the cumulative order intake. I'm just wondering if you're planning some jumbo orders across the plan and if yes if you can detail it. The very last. Okay, the company is growing, will grow through external growth, very disciplined external growth. Fine, then you have also the helicopter. Would it make sense to put on the market a small teeny part of the helicopters and to fund the remaining to grow? Just a question. Thank you.
Yeah. Okay, can I get started here?
Absolutely.
Concerning space, I know that seems all well-conceived, but this new division actually starts now. It's the result of a lot of work done over the last few months. This idea came. I'm here since 10 months. It came 6 months ago and all the space people were fully committed in working on that. We are seeking on the market for hiring new people. So you know it's brain-driven, it's a brain-driven growth. It's a infrastructural growth. It's a business growth. Give them time to grow. Clearly, the market is huge. Space is exploding as a market. But we have to find the most profitable areas. We cannot do everything.
I think with the selections we did, let's say satellites as service or satellites as infrastructure and service is definitely where we are competitive and we can be very competitive because we basically we do everything. The satellites, the services, the AI, the payloads. So we don't need much. We just need focusing and integration and that's the right strategy. I think the marginal growth are higher than those you've seen. This is organic and efficiency as I said inorganic is not there. Now how big can be an acquisition? To be honest I think in general at least at this stage of the transformation for Leonardo we should never target mergers and acquisitions that are too big because then you have to manage them. You have to handle them.
Whereas we are in a phase that maybe for us is more convenient to select specifically what kind of service or what kind of technology we need to integrate this in the strategy. Maybe letting the company that we acquired grow in its environment. So the 15%-20% for the time being is reasonable. But we expect a growth. So today it's a number. In three years could be another number. And this is obviously supported by this capital allocation that we have described that should give us the opportunity to continue to invest. Don't forget that we have a triple challenge. Given the cash we have to grow, of course. But given the capital, part of this will keep the debt under control.
Part of this will be investment for growing and part of this of course will be remuneration. So we have to be very disciplined but we should never stop investing for the growth in the right way of course. Concerning jumbo orders, obviously they're not included there. At the moment we did things that are, let's say, under control—incredible. And concerning helicopters, well, helicopters, you know, it's worth living as quality as visibility. We are now we have very favorable indication especially in the U.S. of the of the requisites for the future rotor technologies. This is good news for us and they rewards the investment that has been done so far. That was very massive. So fortunately now we are happy with what we have.
Let's see how this can develop also in view of strategic alliances in the next years. You understand now technical tables are formed. People are discussing. You have to analyze complementarities market opportunities. But clearly it's a very good moment.
Hey George, you've got the mic. Up to you.
Yes. Hi, George Zhao from Bernstein. First question on, you know, Aerostructures . You know, you have the 7% EBITDA margin target by 2028. That seems to include ATR. So how high can Aerostructure s margin get without ATR? And could we just confirm that the 2025 break-even that you've said for a long time?
Yeah.
That, you know, you can get there without, you know, ATR. Second one on buyback. You said you would consider buyback over the horizon. What would you need to see to get there? You know, is it delivering on the cash flow according to your plan or is this dependent on cash use for M&A?
We can see.
Okay, George. So on Aerostructures we confirm the break-even in 2025 at the end of 2025. And with respect to margins of the business going forward clearly the business is doing from an industrial standpoint well. What, you know, that is missing are still the volumes explicitly on one single contract the B787. However according to the last schedules we have received from Boeing volumes are confirmed to ramp up between 2024 and 2025 delivering the target as well as supporting continued increase in margins going forward. I have to say that Aerostructures remain a segment where clearly the leaders and the market makers are the OEMs. So in a market that is really competitive our goal is to maintain a highest standard compared to our peers of profitability going forward. ATR is included in the segment. Yes, it is.
With ATR you will see so mostly at the end of a plan a ramp up in delivery with an associated margin increase. With respect to buyback you know I think that what Roberto mentioned.
Yeah.
It is very clear. We want to do things in steps. So we felt that the shareholder return to date was not adequate compared to the peers. And the board of directors yesterday decided to double that remuneration. As the plan progress we will reassess the entire situation and we will have an updated view with respect to other avenues to boost shareholder returns.
Ian, oh sorry, Alessandro, you've got the mic.
Alessandro Pozzi from Mediobanca. Thank you for your presentation. I think it was the first time I've seen such a clear vision laid out during the Capital Markets Day. And also appreciate the fact that you only limited yourself to one easy formula this time. You talked a lot about interoperability and the digital continuum as well. How long will it take to change the approach across the business and how long will it take for it to make a big difference when pitching to Leonardo clients to from pitching for Leonardo products to your clients basically? That's the first question. The second question is of course during the plan you have an increase in margins and especially in electronics. And in electronics I think we see a big bump up in margins in 2025 and 2026.
What is the visibility that you have about that increase in margins and what is the main driver? The final question is sorry to go back to M&A. You have a cumulative free cash flow target of EUR 5 billion over the plan. How much of that will be allocated to M&A? Is it half or is it less?
Okay. Thank you for the questions. How long it takes? First of all, I have to say that all the production divisions seems to be very committed in working towards accomplishment of that vision. I mean, don't forget that where you are today this is the parking of the electronic plant here. And it's more than two weeks that we're working to create this place. And so really this tells you how people want to see also something new. And clearly digitalization what we're doing now is new. And the division seems to be very committed also because the indication of not only the market but the real technology I mean unfortunately of the wars are showing that this is the way to ensure global security. How long it takes technically speaking is not easy.
But I will give you numbers. I joined Leonardo in September 29. 29 would have been in September 19. But I look back you know. In September 19. And the first initiative, a launch, was the Leonardo Labs for AI and the high-performance computing capability that was inaugurated in 21. I think the inauguration happens when I already left Leonardo because of my let's say appointment as a minister. So since then it's been 3 years maybe. 10% of our platforms are digitalized. So we're moving fast towards creation of digital twins. Helicopter starts first and then all aircraft are moving everybody's moving in this direction. Now we might say that by the end of the budget plan if not everything but a large portion of all our platforms should be digitalized.
So digital twin for most of the platforms. This is a gigantic effort of course but it's brain-driven. It's digitally driven. You don't need CapEx investment that are unaffordable. It's just brain. And that is for what we sell. But now consider inside the same approach for business intelligence in administration or for optimizing manufacturing like what we did with NEMESI in Aerostructures. That is terrific. And this should be the new approach to efficiency in even in the manufacturing and industrialization. I'm not saying it's easy. If this were easy it would have been done already. But for sure it's a stretch because we did all the homework before. Concerning electronics well first of all the electronics is making an effort in rationalizing the portfolio. All this will be moved into more productive things investment. And also electronics is very good.
People are very good. They're good. And in this field you win, you sell if you have good engineers and in general good products. So don't forget that we can make all the—I mean, we are a high-tech industry. We make industrial policy. We don't make politics. We're not the industry of politics. We make industrial politics, which is totally different. So we have to be good, and if our products are good, we will win. So where we're pushing now is in having high-tech content in all our things, rationalizing things and making an effort, maybe focusing less platforms, less products, but you know, better done. And I think this will be the trick. And definitely electronics is interpreting this role because it's the glue of all our platforms. You've seen Airborne C-IST, it's everywhere.
And so they have the advantage that they can make a sort of unified approach to the electronics to make all the domain interact with each other. I'm really strongly confident that this will happen. Yeah, about how much we want to put on the capital allocation, I gave some numbers before for investment. It was EUR 750 million maybe this year moving towards EUR 850 million. This depends, of course, on the results. But we keep growing and we keep direct investment. What is maybe to be changed will improve for sure how amortization will progress. So we will make reasonable capital allocation. This is under the control of the CFO.
Yeah, in terms of CapEx for M&A, so that is on top, I guess. And of the EUR 5 billion free cash flow over the plan, how much will there be dedicated just to M&A?
Okay, in the first, well, should we say the real number now? Let's say, let's say at the moment, let's say this year we have a portfolio given the recent operations we did in the range of a few hundred million that we can use for the start. Over the next years we will follow the same criteria but let's see what is the budget we have every year. But anyway I think for the moment difficult to give a number but.
I'm asking that also because I'd like to know where the net debt profile is gonna go over the next four years. Clearly the M&A part is quite big.
Oh, it's surmounted, yeah.
Oh, I mean, let me try to help you here, Alessandro. I think you know what Roberto described is an organic growth boosted by an efficiency plan and a boost from the industrial standpoint with a strong commercial momentum that Leonardo is relying on. As he very clearly described, the exogenous component is not yet depicted. So stay tuned, you know. We are clearly looking; the group is clearly looking at strategic opportunities, joint ventures, potential acquisitions. Stay tuned.
Let's say at the minute there is maybe a dozen of due diligences we're making for relatively small to medium small companies that undergo the criteria 15%-20% of turnover division depending on the division of course. And then maybe larger initiatives that takes more time because they are international. So by the time this will be more and more public and manifest you will make the calculations very easily. But of course they have to stay within this.
Framework.
Disciplined and prudent approach to capital allocation.
Yeah understood. Thank you very much.
Ian.
Thanks very much. Yes, it's Ian Douglas-Pennant at UBS. I'm up at the back, Roberto. Hi.
Oh yeah, sorry. I'm blind with the lights here. Sorry.
No worries. You're having light and sound issues. You've given us very detailed forecasts. What are the error bars on those forecasts? In the U.K. we have a saying that every plan doesn't survive contact with the enemy. What are the error bars on those? And crucially how will you update the investors as your plans change over the next few years? And the second question if I understood the annualized cost savings targets they appear to be relatively back-end loaded in the plan. How well defined are those cost saving opportunities and why are they not I guess earlier if I understand that chart correctly?
Okay. We had the discussion recently about the error bar whether we should say ±5% in the guidance or ±2% or simply make round units you know without decimal numbers. So in terms of guidance I think we do about or.
Yeah.
We give some range. Here we just report the root you saw the model. That was a summation over the years and summation over the different contributions. So it is apparently exact but of course it's a forecast. And the more you go far this the more this is less precise. And of course in the guidance year by year we can give a margin of error. But I mean I believe that technically speaking something like ±5%-10% should be kind of inherent when you make such a long forecast. It could have been much more precise on a two-year scale on five-year scale of course. This is almost nominal. Yeah, I don't know Alessandro, you wanna add something but this is just a good sense from our side.
Yeah, what I would say is that the number that you see which is in our budget and plan is a result also of a risk and opportunity analysis that every division run and that we centrally then confirm. So there is always as you can appreciate there is always you know a reserve plan that we all have in case what we have exactly planned doesn't come. We also have risks that we face that were not planned. So the important thing to me is that this risk and opportunity analysis lands in a point that is close enough to where we are setting the bar for the baseline.
And sorry, in terms of updating investors over the next few years, will we get these numbers annually or?
Annually. I'm sorry annually right?
Yeah, I mean, yeah, I guess we haven't thought about it. I mean, this you're raising a question that I think I haven't thought about it personally. Maybe Roberto.
Oh, maybe annually, but yeah, to be honest, I would do this annually, but to be honest, I don't know what the practice is.
Yeah.
So we'll let you know.
Thank you. And the cost savings?
Sure. On cost savings, well, there are two elements here. There is one element that is clearly, you know, you are building up year after year actions. And not all the actions can be put in place year one because otherwise the disruption that you will be causing on the business may be not effective. So there is a gradual buildup of action number one. And the other element is that the process is in phases. So the first line items are associated with renegotiating, maintaining the status quo. The second phase is changing processes and controlling at a deeper level demand. So that's the stage process that you see also reflected in the figures.
David?
Hello, it's David Perry from JP Morgan. So just a couple of clarifications please. Just, I know you've not guided on the associates, the JVs throughout the presentation, but do you have a rough feel in aggregate how much they will be contributing at the end of the plan? So how much of the EUR 2.5 billion of earnings? And then just slightly detailed ones. I'm just a bit confused how much is are you moving some sales from European Defense Electronics to space over and above the Telespazio consolidation? Can you just confirm that? And is cyber now a new division or is it just for our interest and it stays parts of Defense Electronics? All right. Thank you.
Cyber is not a new division. It was existing. There is a restructuring and a focalization of the business. To be honest, I didn't understand the previous question about space and electronics. I didn't catch it.
So, no, in the Space Division, you fully consolidate Telespazio.
Yeah.
Are there other changes in the perimeter there or not?
Yeah, of course. I mean, we are prioritizing the activity. We will now, you know, what we're doing now, we are identifying areas where we wanna invest more and areas that maybe are less marginal. This is part of this reorganization and the work is in progress. And also, new people very likely to be hired. So compensating some gap in some areas.
Yeah. I'll add one there.
Go go guys.
No no no I think David's question is perimeter. So what's happening is we're taking out a piece of electronics that does space activities and put it into the dedicated.
Yeah.
New division.
We had within electronics there was a line of business that was producing hardware for space exploration robots electronics. And there is a lot of activity in sensors and payload for satellites. This was spread in different areas. Now those are actually within the new perimeter because we are recollecting and restructuring a little bit the action to create internal synergies. That's very important because you know if you make the spectrometer or whatever the payload of satellites they are better under the same umbrella under the same business strategy.
Yeah, how much are those sales that you're moving across?
Originally, this was something in the range of EUR 150 million revenues, Marco. I think I'm right. So this part is in Tuscany. Part is in the area of Milan, right? So this were teams that were now they are much more homogenized in the new Space Division because they are now not really doing something as electronics but they are really embedded into the Space Division. So it's an efficiency that helps a lot in the planning.
Yeah, all clear. And the associates, what you're assuming?
Sure, David. So associates are fundamentally not changing in terms of contribution over the plan time by the result of a number of offsetting elements. Meaning MBDA continues to perform really well and have a positive trend. On the other hand, the manufacturing component of the Space Alliance, as you have heard from our co-shareholders Thales, is going through a restructuring process in the commercial telecom satellite market that will determine a lower contribution of that segment within the overall associates. So you know, plus and minuses overall slightly positive but nothing major.
Yeah.
Any other question from?
down there?
From Virginia, sorry.
Hi, Virginia Montorsi from Bank of America. Thank you for taking my question. Going back to M&A and your pipeline, how should we think about the key time frames? And would Hensoldt or DRS potentially be a source of fund for your M&A pipeline?
Okay. Clearly M&A is always a two-body problem or sometimes even three-body problem. So we can have expectations but you have to take into account that you don't decide everything. With this in mind there are relatively simple acquisitions that we can think of typically small medium enterprises. This is rather simple. For large initiatives like with big groups of course the situation is more complicated especially in some domain which is also of governmental interest. So you have to combine you know different requirements and needs. However the good thing is that there is an acceleration so our technical tables are working. Well depending on the outcomes I think maybe in the next couple of years we could see something. But of course as I said it's not something we control. We don't have the watch we don't control the watch.
We try to do as fast as possible but not necessarily those discussions or exploration or whatever technical table might go to the point that we decide something. So you know those things can fail. But I'm confident that we are on the good track.
Okay. Any other question from the room? Yes, Gabriele. Could you please
I was gonna say.
Give a mic, sorry. Okay. Could you please give a mic here?
Valeria. I think there was a gentleman there already.
Okay. It's done.
Okay, so it was yeah.
No, it's just a matter of giving all the people the chance to ask.
Yeah.
At least one question and then we can start with the second wave of questions.
I will wait. I will wait.
Okay. Gabriele Gambarova with Banca Akros. Thanks for taking the question. I would be interested in any comment on your MOU with Bell. We know that there are just a couple of tilt rotors on the planet basically. One is your AW609. So I was wondering how do you see this relationship evolving? What's your, let's say, positioning under the technological standpoint even because they had lots of problems, if I'm not wrong, with the Osprey, the.
Yes.
The military platform. So any idea on this?
Okay. I'm very open, very convinced that this is something we have to explore deeply. I do see the difficulties, but once again we are in the high tech. If things were easy, they would have been done already. So we have a competitive advantage. We are at the edge. Our model is more for civil certification towards civil certification. I think they have developed a platform more for military application. There is a lot of potential synergy. And I'm real enthusiastic about the fact that we open a discussion. I do foresee a big opportunity, but of course first technology then market. And if the two things match, we're gonna do something big. If they don't match, okay, right, we did our best.
The point is that we invested a lot and it was the right choice because now we have a leading edge product. You know, some I come from my history is in technology since I was born. Unfortunately very often you invest and you're not successful. This is a case in which you invest and you get something good in the end. Though you have invested a lot like when you buy a big house and you make a big loan. But this is good. I mean it's very promising. I think we should boost this discussion.
Okay, thanks very much. If I may, another couple of questions. On DRS, basically you didn't mention much about it. So any idea of the future?
Oh, the relationship with DRS is perfect. They are gonna present their strategic plan in a couple of days or so. I spoke just yesterday. We had contact with Bill Lynn the CEO. We exchanged information. All good. We need this window, let's say, this door in the United States. They're doing well. They have good technology. The business works. So there is really, I mean, it's all good and there is no surprise coming at the moment. So we, I don't have anything to say because, you know, no news means that things are doing well.
Last, thank you. And last one on aircrafts. Basically, you are projecting very moderate growth. We know that the jumbo contract with Kuwait is going to come to an end in a couple of years, I would say. So I was wondering, what are the assumptions, let's say, beyond 2026?
Okay. Well, I mean, with Marco Zoff is here and I mean can complement, but my understanding is the following. First of all, the Eurofighter, as I mentioned before, has a long tail. It's not something that it will be distinguished as a program in 2 years. Maybe 10 years or so and we are fully committed in expanding the market traveling around. We have now a number of negotiations ongoing. And of course in upgrading the machine continuously. Because this is the machine that at the moment ensures high margin to the division and this is our state of the best-in-class margins. 12% on average so it's good. Of course other platforms have less margin. But this is an extra reason to improve them and to explore untapped markets.
With this in mind because you have to assume later on at a phasing down of the Eurofighter we are putting all our efforts on the GCAP and future generation aircraft. Because if this were just too simple mathematical function the GCAP would go down and over the next years the GCAP is supposed to come. So the point is don't have a depression in the crossing of the two curves. This is what we are working on at the moment. But I think it's okay. It's reasonable. And the growth at the moment is still interesting.
Okay, thank you very much.
Tristan.
Thank you, Valeria. A couple of follow-ups, please. The first one is on the cleanup of the portfolio. You said you have 500 products. You want to trim that by 20%. Can you give a time frame to complete such transformation? Is it within the next 2 years or by the end of the 5-year plan? Second question is, can you give a feel for the evolution of the R&D to sales ratio over the time frame of the plan? And the last one, I'm still a bit confused about the development of cash conversion at the back end of the plan. But can you tell us what are the big areas of investments that you have in mind for the last years of the plan to prepare for the further step of development post 2028? Okay. Thank you.
Concerning the cleaning of the portfolio, this Marco is just in front of you, the head of the division. I think this is something in progress at the moment. Of course, quantifying the impact is not immediate because this is in some cases are marginal products or legacy products or products that are less interesting at the moment because they had a long history or they are replaced by new products. I think over 2024 this will be clarified and yeah you will see the impact. Maybe one or maximum two years. Marco, okay, let's say a couple of years should be the average to give a final answer and also to compute the total impact.
About capital allocation we had a long discussion of course Alessandra can tell you but this is something we've been discussing a lot. Combining growth investment and discipline in the allocation for positive cash at the end of the year. You can say if you want. If you wanna say.
Yes, yes. So, Tristan, on R&D over sales, if we combine the R&D that is expensed in our income statement and the one that is capitalized, we are around 4%-5% of sales. And with respect to major programs and major projects, I would say that clearly a portion of the CapEx relevant is associated with development of top programs, some of which are completing programs in the trainer business, in the helicopter business, the 609, the single.
The TH.
The single-engine 09. And another portion is associated with stepping up our production infrastructure to support the growth path for the group. Both in terms of expanding sites as well as increasing the facilities' capacity as well as digitalizing our facilities, the digital factory, and making them more interconnected in order to become more efficient in production cycles and accelerate the entry into services of new products.
Yeah, let me add one thing. I mean generally speaking I understand that you're worried about the future. We are we are all worried about the future. But today if I have to think about the safest way to invest is for sure digitalizing. I mean as you know in many other markets the digital services have the largest margin because in the end of the day they are more brain intensive than CapEx intensive. So I think we move towards a way that we are gonna digitalize production digitalize manufacturing introducing digital content AI computation in all our platforms. This could be revolutionary in terms of performances of the machines but in the meantime it's what costs you less compared to any other hardware investment. So let me it gives me some grief if I consider the future.
I believe in the future there will be more and more digital investment than CapEx investment in terms of heavy, you know, metallic things or hardware things.
Christophe, could you please give a mic over there?
Christophe Menard , Deutsche Bank. Just one question. Do you have a target of services as a percentage of total sales by the end of the plan? Where is it at the moment? And how can we on our side measure it?
Thank you. Let me take the good example of helicopters. I think they have something like 30% of revenues from services. Sorry?
Forty-four.
40. 40%. Because they are ahead in digitalization so you can make, you know, many things like training and predictive maintenance. You can train not only the pilots but also the maintenance, the technical staff. So the more you introduce digital services, the more your platform increases the margin. So under the, let's say, under the forefront job work done with helicopters, we're following the stream. For it should be very similar for aircraft. We are improving a lot in any of the field. So I believe that maybe I cannot give you now a percentage, but if I take the experience of helicopters getting 40% incomes revenues from services, it should, it could be an achievable target for most of the hardware platforms.
That's why I like very much the idea that I don't need to invest so much in digitalization but digitalization means higher efficiency, more sustainability, and servitization. So if I increase the services I get better margin. If we can do this we make the square round. And I believe that maybe 40% that actually the question is very good because we don't have a projection. But now that you asked we could make an exercise division by division. For instance space is gonna benefit a lot of all digitalization. Because if you introduce generative AI for analyzing images or information this is gonna be a much more remunerative product. Well cyber needless to say if you make your platforms cybersecure by design you force your customer to update the platform every let's say 3-4 years.
This is actually a lifelong revenue that costs you very little because, I mean, all the digital investment has been amortized before. So we will make a focus about that. But as I said, the experience in helicopters is really giving the direction.
Okay. Any other question from the room? No.
Molto giusta questa domanda. Non dobbiamo fare questo esercizio. È ottimo. Giusto?
Okay. We do not have question from the web. So if there are no other question from the room, we can end.
I can ask question myself if you want.
Well, up to you.
No. Okay, I considered that this was exhaustive during the presentation, maybe. I just want to go for lunch.
George, do you want to ask a final question?
Yes, yes, George Zhao from Bernstein. On cyber, right? How do you assess the opportunities between, you know, military versus, you know, commercial? Is most of your priorities on acquisition and growth going to come from the military side, or would you consider, you know, the commercial cyber as well?
Thank you.
And this and the last one on, you know, European defense integration—you know, it's been talked about for a long time, but we haven't seen much success here due to a lot of differences between countries on, you know, work share, export policies, et cetera. So, what's going to change, or, you know, are there geographies within Europe that you think is gonna be more conducive to this?
Yeah, thank you for the question. Maybe I forgot to show this because it was in the slide. I wonder what I didn't say. Concerning the cyber portfolio, just reading from the slide I projected before, we expect to quadruplicate the orders from defense business within the budget plan horizon. So yeah, the answer is yes. We believe we're gonna be more attractive to defense than in the past primarily because we are focusing the business more than before and we have chosen specific areas of rationalization and investment that are of interest for the defense. So we estimate at the moment quadruplication of the defense orders within the budget plan.
I see Andrea, the head of the cybersecurity division, so just confirming what I'm saying. And on top of that, the fact that we go from 30% proprietary cyber product today to 70% proprietary cyber product in the budget at the end of the budget plan means that we're gonna be much more flexible in adapting solutions, developing kind of custom-tailored solutions. So this makes me very positive, to be positive, with the idea that we can really offer more than now because now we are more rigid. 30% is ours, the rest is adapted. When you get 70% yours, you can be much more effective in the offer. This was your first question. The second, I hope I answered. The second question is much more complicated. Yeah, you're right.
The European space of defense seems to be far to come. I think the good thing now is that people are starting to talk about that but because of fear because of the situation people are afraid. Never like this since 1945. I mean this was as we said this in the introduction. We have conflicts just at the border. I don't know whether this will be enough for the Europeans to understand that at least in defense they have to get together. The point is that every big country in Europe has its own aircraft its own tank its own torpedo its own everything.
And, of course, when you want to make a joint European space of defense, you have to give up something because either you contribute to a unified platform or there will be inevitably unavoidably a competition on each platform. So this will become an industrial competition. So I do see a couple of potential solutions, but this is in the long term. I mean, not what we do in a few months. One thing is that European institutions should really consider that some choices that are of continental interest should be done in the interest of citizens. So maybe antitrust and rules like those do not help in being safer. There are a few areas in which Europe should understand that rules for the free market apply in a peaceful period.
But in a war economy like the one we are free market and then antitrust rules can be a hurdle an obstacle to the accomplishment of security of citizens and you know global security. So this is something more political. I know that this is not my job okay. So I'm talking like a European citizen. So I'm not I cannot force the company to do something in this respect. But as a European citizen I'm fully convinced of that. The second issue is that companies can be proactive. So we do have a model in Europe that works well even in war period which is MBDA which is a triple joint venture. Lorenzo Mariani who general director for business operations has been the CEO of the Italian part. This is a virtuous model.
Triple joint venture, roughly 1/3, 1/3, 1/3 between three countries. Not necessarily 1/3, 1/3, but the statute and the rules give equal dignity to the participants. And in this way, in a specific area like well, in that case missiles, this company became the first in the world for revenues and efficiency. So maybe we should consider having triple joint ventures in which net then the point is not to compete with our individual platforms but joining forces contributing to a stronger platform that takes the best from all the other platforms. And then the point of competing on the revenues is no longer a point because you have a triple joint venture. I mean on paper it's easy. I understand business-wise it's complicated. But the private so the companies can be proactive.
The institutions should understand that we're not in a normal historical time. So we cannot really apply standard rules for a peaceful period like antitrust in a moment in which there is a war at the corner at the border. And you know we need to care for the security of citizens in Europe and elsewhere. I hope with my very personal opinion I answered your question.
Martino, a follow-up.
Yeah, thank you, Martino. Here.
Oh yeah.
Just a curiosity. Could you consider the listing of one of our assets, your asset, for instance cyber like it happened for DRS? Maybe just to have a paper with better multiples to be used for M&A. And two housekeeping questions on R&D because you mentioned Alessandra 4%-5% of sales. The balance between capitalized amortized was EUR 100 million and will stay more or less in that region going forward. And financial costs since you are generating a lot of cash probably will collapse.
So. Okay, I I I answer you first strategically and then of course Alessandra can consolidate from from number points of view.
But what I wanna tell you with the picture I've shown before, I cannot work without a strong cybersecurity contribution because this interoperable cross-domain picture needs space to observe and localize sensor on ground all the platforms talking to each other in the different domains. But all this is wireless and all the platforms have to be cybersecure and all the signals have to be protected. Now imagine I come to you and I show this, let's say, nice presentation that the Leonardo, the kid in the movie, the young Leonardo has made in the drawing. And I forget to say I don't have the cybersecurity. That would be a technical suicide. And I'm sure that ultimately the analysts and the competitors will laugh about that because how can I be successful without cybersecurity.
So I have to really invest in cybersecurity because we need a strong cybersecurity European leader. Now if then something I don't know disruptively happens and there is some great opportunity at European level to create for instance an MBDA of cybersecurity. But I know this is impossible because this is a very fragmented market and I think Andrea can confirm. But imagine there is some high-level institutional initiatives. Of course we could consider this. But at the moment this is science fiction. Whereas at the moment I do need cybersecurity a lot to complete the vision and to make Leonardo much stronger. So the commitment is to invest and keep it strong. And fortunately the investment in cybersecurity is not very heavy because it's not let's say hardware intensive. So this helps. Once again the advantage of digitalization.
I spent most of my life in doing, you know, microelectronics now technology. You could not move one step if you didn't have EUR 100 million equipment for doing technology. I'm so happy that I can do something that I don't need EUR 100 million pre-investment to be competitive. So in this respect this once again gives me a good feeling for the future. That's a strategic point. Alessandra, maybe you wanna say something about
Yes, the two technical questions you asked me, R&D above and beyond amortization, the target that we have around 100 that you have in mind around 100, I can confirm it. And with respect to the financial costs, they are going down in terms of absolute value certainly. We also have to take into account that compared to the last few years there is going to be some increase in interest rates as we repay debt that has is maturing at very very low rates. There is a bond maturing at 1.6% interest rate this year. So clearly current rates are higher. But the trend is clearly having interest expense go down over the plan horizon.
Okay, I think this was the last question so we can end the webcast here for.
That way, there is the exhibit with all the interoperable domains that you can see tanks moving. We don't shoot because we want to save money for the bullets, but you can see the tank moving. And I hope you enjoyed the demo that is there for you. Thank you for your coming.