OTTAWA, May 29 (Reuters) - Leonardo SpA's LDOF.MI U.S. defense unit is growing significantly as the American military budget increases and the return on sales should increase, Chief Executive Officer Alessandro Profumo said on Wednesday.
Leonardo, a major Italian defense group, bought DRS Technologies in 2008 and last year said it was not yielding adequate returns. The United States represents about 28% of Leonardo's total sales.
"It (DRS) is growing significantly, mainly thanks to the fact that the defense budget is growing," Profumo said in an interview on the sidelines of a security and defense conference in Ottawa.
"We are going at a faster pace than the defense budget and we are winning a huge number of small and medium programs so we are very diversified," he said.
By end-2022 Leonardo is aiming for close to a double digit compound growth rate for DRS and a double digit return on sales.
"Today we are close to 7% and we want to go up at least to 10% in terms of return on sales," said Profumo.
Leonardo is also diversifying into services and by the end of 2022 wants 25% of total revenues to come from that sector, up from the current level of between 18% and 19%.
Profumo said he was "pretty confident" Leonardo could meet the 25% target.