Fincantieri revenues up: the BOD approves 9M 2021 results
Thursday, November 11, 2021 7:04 PM
Rome, November 11, 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 September 30, 2021
During the Board meeting Giuseppe Bono, Chief Executive Officer of Fincantieri, said: “The growth of the Group, supported by the current backlog, reflects the order preservation strategy we adopted during the pandemic. We have already reached one of the highest marginality levels in the industry, that we now aim to improve, along with volumes, also thanks to the significant investment plan carried out across all our shipyards.
Our engineering and project management skills are among the best worldwide and our shipyards are on the cutting edge both in terms of production and quality. This comes mainly from the sense of belonging of our people. We are well prepared to face the upcoming years, also strengthened by the recent recruiting program of young employees able to quickly embrace the company culture and the competences needed for the job”. Bono concluded: “In the collective consciousness, the ship is a vision: to build it, strong and always evolving skills are needed together with a strong passion. Therefore, I want to thank all Fincantieri employees and our supply-chain that allow us to maintain the Group global leadership, ensuring our sustainable growth in the future. In this endeavor, I am sure we can count on our stakeholders and on the network of companies we work with”.
In the first nine months of 2021, revenues and income stand at euro 4,536 million, excluding-pass-through activities, spiking by 28.3% compared to the same period of 2020. The increase in revenues showcase the positive trend across all the Group segments. The Shipbuilding revenues were up by 28.5% (excluding pass-through activities), with production volumes at record level in the Group’s Italian shipyards +34% vs 9M 2020 (12.3 million of production hours as of September 30, 2021), confirming the pre-pandemic growth trajectory and marginality levels. Revenues in the Offshore and Specialized Vessel segment increased by 15.3% in the first nine months of 2021, recovering the volumes lost in the first part of the year. The Equipment,
Systems and Services segment revenues increased by 29.1%, driven once again by operations in support of cruise and naval vessels, and partially by the acquisition of INSO group. As of September 30, 2021, 88% of the revenue base has been represented by international clients, higher than the 85% reported last year. In the first nine months, the Group EBITDA, at euro 330 million (euro 200 million at September 30, 2020), reflects the significant improvements in production volumes and marginality. EBITDA margin, excluding pass-through activities, is equal to 7.3%, compared to 5.7% at September 30, 2020. 9M marginality reflects the positive operating performance, with four ships delivered in the third quarter alone. As of September 30, 2021, Offshore and Specialized Vessels EBITDA stands positive, in line with the previous quarters of the year, as a result of the repositioning strategy in more promising sectors.
Revenues in Shipbuilding segment, excluding pass-through, amount to euro 3,989 million in the first nine months of the year, up by 28.5% compared to the same period of 2020. Revenues for the period refer to the cruise ship business area for euro 2,849 million (euro 2,267 million at September 30, 2020), up by 25.7%, and to the naval business area for euro 1,140 million (euro 837 million at September 30, 2020), up by 36.3% vs 9M 2020. They respectively account for 56% and 23% of the Group’s revenues, showing a higher contribution of the naval business area when compared to September 30, 2020 (57% and 21%).
The cruise business’ revenues trend is boosted by the resumption of activities at full speed in the Group’s Italian shipyards, with record production volumes despite the safety protocols put in place to face the spread of COVID-19. The ongoing focus to create further efficiencies in engineering and production processes, together with the investments carried out in the last few years, allowed the Group to fully ensure the production programs, with six cruise ships delivered in the period, four of which in the sole third quarter.
The surge in production value for the naval business, excluding pass-through activities related to the FREMM unit delivered in April, is mainly related to the progress in the program for the Qatari Ministry of Defence, with the third corvette of the program launched at the end of September and the first one of the “Al Zubarah” class delivered at the end of October. Moreover, revenues of the naval business record the positive contribution of the Foreign Military Sales program between the United States and the Kingdom of Saudi Arabia, as well as the contribution of the FFG-62 program developed by the US subsidiary FMG. These programs respectively envisage the supply of four Multi-Mission Surface Combatant and the construction of the first frigate within the Constellation program.
The segment’s EBITDA at euro 303 million as of September 30, 2021, up by 58.4% when compared to the first nine months of 2020 (euro 191 million), confirms the Group strategy to take the operating performance back to the pre-pandemic levels. EBITDA margin at 7.6%, excluding pass-through activities (7.2% if considering total revenues), improved significantly from 6.2% recorded on September 30, 2020, thanks to the improvements of the engineering and production processes mentioned above.
The Offshore and Specialized Vessels segment recorded euro 313 million revenues as of September 30, 2021, with a significant increase compared to the same period of 2020 (+15.3% vs 9M 2020). Such trend reflects the successful repositioning strategy towards more promising segments like the offshore wind. As of September 30, 2021, VARD’s order book includes eight SOV (Service Operation Vessel) units on top of four options for the maintenance of offshore wind farms, mostly acquired during the first nine months of 2021,
becoming market leader.
As of September 30, 2021, the segment’s EBITDA stands at a positive euro 6 million (zero at September 30, 2020), with an EBITDA margin at 2.0% (0.0% at September 30, 2020). The EBITDA quarterly trend confirms the successful repositioning strategy towards segments characterized by broader market opportunities.
Revenues from Equipment, Systems and Services segment account for euro 764 million, up by 29.1% compared to the same period of 2020. Such increase is mainly related to the development of the solid backlog for the services provided as part of naval programs and to the Complete accommodation business area, driven by the cruise volumes developed in the period as well as by the impacts of INSO group acquisition, consolidated starting from June 2021. The segment’s EBITDA at September 30, 2021 stands at euro 52 million (euro 37 million at September 30, 2020), with an EBITDA margin at 6.9% (6.3% at September 30, 2020). The third quarter marginality is significantly higher than the previous quarters of 2021, thanks to the positive contribution across all business areas, despite the lower Ship Repair and Conversion contribution.
Net fixed capital stands at euro 2,256 million (euro 2,035 million at December 31, 2020), up by euro 221 million, mainly thanks to the investments of the period (euro 258 million). Net working capital is negative at euro 398 million (negative at euro 202 million at December 31, 2020). The decrease mainly refer to the reduction in Construction contracts and clients advances (euro 526 million), due to the delivery of cruise vessels in the period and the subsequent reduction of Construction loans and of Other current assets and liabilities (euro 70 million). This was mainly related to the decrease of credits with shipowners as well as the increase in payables to personnel for deferred wages.
Construction loans, dedicated credit instruments used for the exclusive financing of the projects to which they are referred to, as of September 30, 2021, amount to euro 976 million, with a decrease of euro 349 million compared to December 31, 2020, recorded to the parent Company for euro 815 million and to the subsidiary VARD for euro 161 million.
Consolidated net financial position9 reports a net debt balance at euro 1,059 million, substantially in line with the figure as at December 31, 2020 (net debt at euro 1,062 million) and with the expectations for 2021. Such figure is consistent with the production volumes trend as well as with the delivery schedule, which saw four cruise vessels delivered in the third quarter 2021. Furthermore, it should be noted that the Net financial position is still affected by the strategy of the deferrals granted to clients (euro 298 million at September 30, 2021) adopted in order to preserve the sizeable backlog and to strengthen the mutual relationships. Such payments, according to the deferrals agreed with the shipowners, are deemed to occur during the fourth quarter of 2021 and in 2022.