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OTTAWA, May 29 (Reuters) - Leonardo SpA's 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. (Reporting by David Ljunggren; editing by Grant McCool)