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The Board of Directors of Fincantieri approves Q1 2021 results

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Rome, May 13, 2021 – The Board of Directors of FINCANTIERI S.p.A. (“Fincantieri” or the “Company”), chaired by Giampiero Massolo, has examined and approved the interim financial information at March 31, 2021 . 


During the Board meeting Giuseppe Bono, Chief Executive Officer of Fincantieri, said: “The results of the first quarter picture an healthy Group able, as expected, to confirm the guidance, with growing revenues and increased margins. Alongside such an encouraging performance, together with an overall slight economic recovery and also by virtue of the progress made in dealing with the pandemic, we welcome both the cautious resumption of cruise activities in Europe and the one that will shortly follow in the United States. Those steps forward have only been possible through the rigorous implementation of all the health protocols applied by shipowners, making ships a safe place, and through the technologies, for the air sanitation and for countering the chance of infections, that have been developed to date. It should as well be noted how the cruise booking trend for 2022 is in line with and, in some cases, even better than the pre-pandemic levels.”

Bono concluded: “I would like to point out that at the heart of our operations lies an important task we are carrying out, at the service of the Italian government, alongside with other large national and international Groups; we truly believe that a collaboration among the best industrial companies, for projects developed as part of the Recovery Plan, will actively contribute to our Country’s renaissance”.

In the first quarter 2021, revenues and income, at euro 1,426 million, excluding pass-through activities (euro 222 million), increased by 9.1%, compared to the same quarter of 2020. Q1 production volumes exceeded those reported in the first quarter last year, fully recovering the shortfall caused by the suspension of production activites at the Group’s Italian shipyards and production sites, owing to the COVID-19 outbreak. The results are in line with expectations, marking a step forward towards 2021 targets, with revenues expected to increase considerably in the remaining part of the year as a consequence of the ramp up needed for the development of the hefty workload and to meet the delivery schedule. 

The higher revenues and volumes achieved are driven by the full resumption of production activities in all the Group’s shipyards and production sites. The increase, compared to the first quarter of 2020, is a combination, on one hand, of the positive trend in the Shipbuilding (+12.8%, excluding pass-through activities) and in the Equipment, Systems and Services (+13.4%) segments and, on the other hand, of the decrease in revenues recorded in the Offshore and Specialized vessels segment  (-23.5%).

Group EBITDA, at euro 101 million (euro 72 million at March 31, 2020), recovered well beyond the margin  lost in the first quarter of 2020 due to the lack of progress on naval projects during the suspension of activities (euro 15 million); EBITDA margin, excluding pass-through activities, stands at 7.0% (5.5% at March 31, 2020). The improved marginality confirms the performance of the fourth quarter 2020 (6.9%) and it is in line with the guidance for 2021. 

Revenues in the Shipbuilding segment at March 31, 2021, excluding pass-through activities (euro 222 million), amount to euro 1,278 million, up by 12.8% compared to the same period of 2020. The cruise ship business area marks an increase of 11.6%, while the naval vessel business area registers a 16.2% growth, excluding pass-through activities. They respectively account for 58% and 22% of the Group’s revenues and they are in line Q1 2020 results. 

Cruise ship business area revenues confirm the path already set in the fourth quarter 2020, with production back in full swing in all the Group’s shipyards. 2021 production schedule for the Italian shipyards envisages the delivery of five units, of which one, Viking Venus, already delivered on April 15, three units to be delivered in Q3 and one unit in Q4. Vard Cruise’s lower production volumes for the quarter, compared to March 31, 2020, affect the revenue trend of the business unit, with two luxury-niche units to be delivered in 2021, instead of the three delivered in 2020. 

The surge in production value for the naval business area, excluding pass-through activities related to the FREMM unit delivered in April, is driven the progress of the renewal program of the Italian Navy’s fleet, whose first unit “Vulcano” was delivered last March. The increase in revenues is attributable as well to the progress in the program for the Qatari Ministry of Defence, with the first delivery scheduled for the second semester of the year, and for other orders acquired by Fincantieri (two submarine units U212NFS for the Italian Navy and four forward-sections as part of the “Flotte Logistique” program for the French Navy). Moreover, the business area records the contribution of the US subsidiary FMG, with the progress achieved in the LCS program and in the Foreign Military Sales program between the United States and the Kingdom of Saudi Arabia. The subsidiary, prime contractor in the FFG-62 program (previously known as FFG(X)) for the US Navy, has launched the design phase of the first-in-class unit.

The segment’s EBITDA, at euro 100 million as of March 31, 2021, has improved compared to the 2020 first quarter (euro 72 million), confirming the growth strategy and the guidelines outlined by the Group before the pandemic. 

EBITDA margin stands at 7.8%, excluding pass-through activities (6.7% considering total revenues), up from Q1 2020 EBITDA margin of 6.3%, proving that the levels of marginality embedded in the current backlog are within reach. 

Offshore and Specialized Vessels revenues at March 31, 2021, are equal to euro 96 million, down by 23.5% compared to the same period of 2020. Such trend reflects, on one side, the decrease in volumes led by the downsizing of production capacity with the shutdown of the Brevik shipyard, still active in the first quarter of 2020, and, on the other side, by the redefinition of the product portfolio and of the backlog, in view of the repositioning into more promising sectors such as the offshore wind energy one. Such strategy shows little evidence on the results of the quarter. During 2020 and in the first months of this year, Vard has succeeded in becoming a reference player in the renewable energy sector as well as in the high-tech specialized vessels one. Confirmation of such repositioning is to be found in the order received for 3 SOVs (service operation vessel), which will be employed for the maintenance of the world’s largest offshore wind farm, Dogger Bank, located off the North-East coast of England, in the North Sea. 

The segment’s EBITDA as of March 31, 2021 is positive at euro 2 million (negative at euro 1 million at March 31, 2020), with an EBITDA margin at 1.6% (-0.8% at March 31, 2020). Q1 EBITDA benefits from the effects of the restructuring and reorganization plan launched in 2019 and it carries the first signs of the repositioning strategy in sectors with wider market opportunities.

Revenues from Equipment, Systems and Services segment account for euro 232 million, up by 13.4% compared to the first quarter 2020. The increase is mainly attributable to the Complete accommodation business area, driven by the cruise volumes developed during the period. Moreover, the segment’s business areas are ramping up production activities of their backlog while strengthening their own positioning in the respective markets. 

The sector’s EBITDA at March 31, 2021, stands at euro 10 million (euro 12 million at March 31, 2020), with an EBITDA margin at 4.5% (6.0% at March 31, 2020). Q1 marginality reflects the different combination of products and services offered in the period, while being affected by a lower contribution of the Ship Repair and Conversion business area in the quarter.

Net fixed capital is equal to euro 2,091 million (euro 2,035 million at December 31, 2020), up by euro 56 million. Net working capital is positive for euro 328 million (negative for euro 202 million at December 31, 2020). The main change refers to the increase in Construction contracts and clients advances (euro 812 million), attributable in particular to the progress of the cruise ship building program with 7 deliveries scheduled for the year, of which one already delivered in April. 

Construction loans, dedicated credit instruments used for the exclusive financing of the projects to which they are referred to, stand at euro 1,506 million, up by euro 181 million compared to December 31, 2020. Of these, euro 1,100 million are related to the Parent Company and euro 406 million to the subsidiary VARD. 

Net financial position  reports a net debt balance at euro 1,617 (euro 1,062 million in net debt at December 31, 2020). The change, in line with forecasts, is consistent with the developed production volumes and with delivery schedule, which envisages seven cruise ships to be delivered in the remaining part of the year (of which the first one delivered in April and three expected in Q3). It should be noted that the Net financial position is affected by the strategy of the deferrals granted to the clients, in order to preserve the sizeable backlog as well as to strengthen the relationships with them. 

In view of the completion of the ongoing vaccination campaign, by virtue of the health and safety protocols put in place in all Group’s shipyards and production sites and in the absence of negative developments due to the pandemic with unforeseeable repercussions, Fincantieri expects to keep production in full swing, as in the second half of 2020, allowing the Group to go back to pre-pandemic growth levels. 

With regard to the cruise market, while in the United States the Centers for Disease Control and Prevention indicated mid-July as a potential starting point for the resumption of activities, some shipowners, whose routes are not affected by US directives, have already resumed or are about to resume navigation. For instance, Costa Smeralda of Costa Crociere started its Mediterranean Sea operations earlier this month. 

Despite the crisis triggered by the COVID-19 outbreak, the Group is going back to its growth path, thanks to a sizeable and diversified backlog, that it has been able to fully preserve (in particular in the cruise business area) also thanks to the strategy to support shipowners.
Q1 2021 performance allows to confirm the 2021 guidance, with revenues up by 25-30% when compared to the 2020 (excluding pass-through activities) and EBITDA margin levels close to 7%.

Net financial position is expected to increase during the first half of 2021, consistently with the cruise shipbuilding business specific financial dynamics and with the reassessed delivery schedule, which includes 7 cruise units, of which 4 scheduled for the second half of the year. Consistently with the deliveries timeline, the net financial position will tend to settle, at the end of 2021, to a value in line with the 2020 one, including the full CapEx plan scheduled for the year. 

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