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UPDATE 1-Leonardo pays first dividend in 6 years; CEO's future in question
March 15, 2017 / 6:45 PM / 9 months ago

UPDATE 1-Leonardo pays first dividend in 6 years; CEO's future in question

* CEO Moretti’s job coming up for renewal

* May be replaced after train disaster sentence-sources

* CEO says investors back him after successful revamp

* Leonardo to pay 0.14 euros dividend on 2016 results (Recasts, adds details and quotes)

By Giulia Segreti

MILAN, March 15 (Reuters) - Italian state-controlled aerospace and defence group Leonardo declared its first dividend in six years on Wednesday after a broad revamp by Chief Executive Mauro Moretti, whose future at the company will be decided in the next few days.

Moretti, appointed in 2014, is one of several leading executives at state-controlled companies whose positions are due for renewal. The treasury is expected to make its choices known by March 20.

Sources have told Reuters that the Treasury, which has a stake of just over 30 percent in Leonardo, could replace Moretti after he was sentenced to seven years in prison in January for his alleged role in one of Italy’s worst train accidents.

However, under Italian law he can appeal against the sentence twice and he will not have to serve any time in jail until that process is exhausted.

Moretti said on Wednesday he had the backing of investors to stay on at Leonardo.

“Let’s leave it to the (top) shareholder to decide,” Moretti told reporters when asked about his job, adding that “all the players who invested in Leonardo in the past few years” believe he should be confirmed as CEO.

Moretti has reduced Leonardo’s debt from nearly 4 billion euros in 2014 to 2.8 billion euros in 2016. He has also streamlined its business, shedding non-core assets to focus on aerospace and defence.

Leonardo expects new orders to total between 12 billion and 12.5 billion euros this year, after 19.9 billion euros in 2016, when orders were boosted by a big Eurofighter order from Kuwait. Comparable orders in 2013, before he joined the company, were 13.2 billion euros.

The EBITDA margin has risen to 15.9 percent from 10.9 percent in the last four years, according to a company slide, at a time when weak oil prices, a slowdown in emerging markets and cuts in state defence budgets have hurt demand for military equipment.

“Somebody come and tell me that this is a story of failure. It’s not a miracle but the result of a lot of work,” Moretti said.

However, Leonardo’s helicopter business - which accounts for nearly a third of the group’s revenues - is still struggling with low orders and not expected to pick up this year.

It said earlier on Wednesday it would pay a dividend of 0.14 euros per share, its first since 2011, and also aimed to pay dividends of 0.16 euros on 2017 results and 0.18 euros on 2018 results.

Moretti was convicted for the 2009 train disaster, in which 32 people died, in his position as former chief executive of the national railway company. He said on Wednesday the sentence related to a role he covered in the past and did not imply his own direct responsibility in the tragedy. (Editing by Ruth Pitchford)

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