German-Italian tech conglomerate Leonardo expresses intent to enhance Hensoldt's technologies
Unleashing the Arms Race: Leonardo's European Ambitions and the German Weapons Offensive
Italian defense conglomerate Leonardo is steering its focus towards European alliances, banking on a positive surge from Germany's colossal arms offensive. In a recent presentation of the quarterly results, the CEO, Roberto Cingolani, highlighted significant progress in joint ventures with Turkish drone powerhouse Baykar and German armor manufacturer Rheinmetall. However, talks with Airbus and Thales (Project Bromo) seem sluggish, currently stuck in the due diligence phase. Airbus recently voiced reservations about the project's potential success.
Dao of Due Diligence: Project Bromo's Slow Progress
Milan
Project Bromo, spearheaded by Airbus and Thales, should, according to Cingolani, bring mutual benefits. The project is under scrutiny due to losses in the satellite business of Airbus and Thales Alenia Space, as well as business and antitrust concerns in both Italy and Germany. OHB CEO Manfred Fuchs considers the joint venture a "real threat" to OHB.
Synergies for all
Leonardo notched up a 20.6% increase in order intake to 6.9 billion euros and revenue by 14.9% to 4.2 billion euros in the first quarter. Net profit jumped by 23.7% to 115 million euros. Cingolani anticipates a boost from Germany's colossal arms plans and increased defense spending in Italy. He's shown interest in escalating his 23.9% stake in German Hensoldt.
Offer for Iveco Defence
The joint venture with Rheinmetall is thriving, reported Cingolani. An armored vehicle of the Lynx type has already been delivered, with four more expected by year's end. The equal joint venture targets producing around 1,050 armored vehicles and 272 combat vehicles based on Lynx and Panther models by 2040. These vehicles will be "Italianized" and roll out from the La Spezia plant. According to the CEO, Leonardo, along with Rheinmetall Iveco, has submitted a non-binding offer to acquire their military division, Iveco Defence, in Bolzano.
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In the wake of Germany's extensive defense offensive, Leonardo, through its joint ventures with European allies like Rheinmetall, aims to capitalize on the surge in defense spending. The ongoing Project Bromo, a collaboration between Airbus and Thales, is also anticipated to bring mutual benefits, although its progress has been slow due to geopolitical factors, competition, and regulatory hurdles.
