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FINCANTIERI The BoD approves Q1 2019 results

The BOD approves Q1 2019 results: revenues up 13%, order intake at euro 6.5 billion with 11 cruise ships. Total backlog at new record level of euro 34.3 billion.

  • Order intake at euro 6.5 billion, record amount of orders in the cruise business area: contracts signed for 11 cruise ships in a single quarter for 5 different brands (Oceania, Regent Seven Seas Cruises, Viking, MSC, Princess), in addition to the order by the US Navy for an additional Littoral Combat Ship (LCS) unit
  • Total backlog[1]at euro 34.3 billion, covering approximately 6.3 times the 2018 revenues: backlog at euro 30.7 billion (euro 21.8 billion at March 31, 2018) with 104 ships in the order book; soft backlog at approximately euro 3.6 billion (approximately euro 5.9 billion at March 31, 2018). Fincantieri further strengthens its global leadership and ensures long-term visibility for the Group and its supply chain, while confirming its ability to convert soft backlog into firm orders  
  • Revenues increased by 13.0%: revenues at March 31, 2019 at euro 1,385 million (euro 1,226 million at March 31, 2018)
  • Group results: EBITDA at euro 90 million (euro 89 million at March 31, 2018), EBITDA margin at 6.5% (7.3% at March 31, 2018), Net debt[2] at euro 505 million (euro 494 million at December 31, 2018)
  • Delivery of 8 vessels during the quarter, of which two cruise ships VIKING JUPITER and COSTA VENEZIA – first vessel for this Italian shipowner specifically designed for the Chinese market – and a naval vessel for the US Navy
  • Inauguration of the Fincantieri Infrastructure plant and first steel cutting for the bridge over the Polcevera river
  • Ongoing focus of the Group on sustainability: the newly appointed Board of Directors goes beyond the regulatory requirements of gender diversity with an equal number of elected men and women

*   *   *

Rome, May 9, 2019- 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, 2019[3].

During the Board meeting Giuseppe Bono, Fincantieri's Chief Executive Officer, said: “The results of the first quarter 2019 strengthen our role as a leader company, capable of quickly transforming the soft backlog into firm orders. This strength gives us a key role in the Country, thanks to the long term contribution that we are able to provide, as testified by the growing trust shown by our clients. The orders for the 11 cruise vessels signed in these three months translate into almost 27 billion euro generated to the benefit of the territories where we are located: this figure speaks for itself.

I would also like to recall the strategic initiatives that we are carrying on with determination, both in the naval business area and in the development of an in-house center of excellence in engineering and information technology services. Furthermore, we are keeping up with our diversification efforts consistently with our engineering capabilities: I’d like to mention the cooperation agreement that we signed with Eni, CDP and Terna, featuring highly innovative content and particularly important from an industrial standpoint”.

Bono concluded: “This is the first glimpse of a challenging year ahead of us, which will allow us to show our excellent production and system integration capabilities”.

 

ECONOMIC DATA

31.12.2018

(euro/million)

 

31.03.2019

31.03.2018

     5,474

Revenue

1,385

1,226

414

EBITDA

90

89

7.6%

EBITDA margin

6.5%

7.3%

In the first three months of 2019 Revenues increased by 13.0% compared to the same period of 2018, in line with the growth expectations for 2019.

Group EBITDA at March 31, 2019 stood at euro 90 million (euro 89 million at March 31, 2018) with an EBITDA margin of 6.5%, compared to the 7.3% of the first three months of 2018; such trend was mainly due to the positive performance of the Shipbuilding and the Equipment, Systems and Services segments on the one hand, and to the negative margins of the Offshore and Specialized Vessels segment on the other.

Shipbuilding

31.12. 2018

(euro/million)

31.03.2019

31.03.2018

restated

(***)

31.03.2018

published

4,678

Revenues(*)

1,113

1,023

916

3,226

Cruise ships

821

726

619

1,434

Naval vessels

291

292

292

18

Other activities

1

5

5

395

EBITDA (*)

83

65

74

8.5%

EBITDA margin (*) (**)

7.4%

6.3%

8.0%

 

(*)Before eliminations between operating segments

(**) Ratio between segment EBITDA and Revenue and income

(***)The 2018 comparative figures have been restated following redefinition of the operating segments

 

 

 

Revenues in the Shipbuilding segment at March 31, 2019 were equal to euro 1,113 million, increased by 8.8% if compared to the euro 1,023 million of the first quarter 2018 restated. The increase in revenues was linked to the higher volumes generated by the construction of cruise vessels, that recorded an increase of 13.1% if compared to the same period of 2018.

EBITDA of the segment at March 31, 2019 was euro 83 million (euro 65 million at March 31, 2018 restated), with an EBITDA margin of 7.4% (6.3% at March 31, 2018 restated). The EBITDA margin benefited from the progress in the construction of sister cruise ships with higher marginality. The profitability of the segment was nonetheless impacted by the low margins of some VARD Cruise business unit projects, due for delivery in 2019.

Offshore and Specialized Vessels

31.12.2018

(euro/million)

31.03.2019

31.03.2018

restated

(***)

31.03.2018

published

681

Revenues(*)

224

155

245

(20)

EBITDA (*)

(2)

18

9

-2.9%

EBITDA margin (*) (**)

-0.9%

11.4%

3.5%

 

(*)  Before eliminations between operating segments

(**) Ratio between segment EBITDA and Revenue and income

(***)The 2018 comparative figures have been restated following redefinition of the operating segments

 

 

Offshore and Specialized Vessels revenues at March 31, 2019 stood at euro 224 million, with an increase of 44.5% compared to the same period of 2018 (euro 155 million). Production volumes of specialized vessels increased as a result of the diversification strategy, recording a still sub-optimal utilization rate of the production capacity. In the context of the diversification strategy, on April 19, 2019 an agreement was signed with Eni, Cassa depositi e prestiti and Terna to develop and build wave power stations on an industrial scale.

EBITDA of the segment at March 31, 2019 was negative for euro 2 million (positive for euro 18 million at March 31, 2018 restated), with an EBITDA margin of -0.9% (+11.4% at March 31, 2018 restated). As compared to the first quarter 2018, positively impacted by the development of the “Module Carrier Vessels” (MCV) program, the trend recorded by the segment in the first quarter 2019 is affected by the complexity of the current, highly challenging, specialized vessels’ portfolio, that features different projects and categories of vessels under construction at the same time. The segment is facing a depressed market environment where the acquisition of high-potential projects comes alongside other orders with lower profitability.

Equipment, Systems and Services

31.12.2018

(euro/million)

31.03.2019

31.03.2018

651

Revenues(*)

170

167

73

EBITDA (*)

18

15

11.2%

EBITDA margin (*) (**)

10.3%

9.2%

 

(*)  Before eliminations between operating segments

(**) Ratio between segment EBITDA and Revenue and income

 

Revenues of the Equipment, Systems and Services segment were equal to euro 170 million, substantially in line with the first quarter of 2018. They include the contribution from the launch of Fincantieri Infrastructure activities.

EBITDA of the segment at March 31, 2019 stood at euro 18 million (euro 15 million at March 31, 2018) with an EBITDA margin of 10.3%, increased in comparison with the first quarter of 2018.

 

FINANCIAL DATA

31.03.2018

(euro/million)

31.03.2019

31.12.2018

1,818

Net fixed capital

1,801

1,703

869

Inventories and advances

813

881

904

Construction contracts and client advances

1,064

936

(684)

Construction loans

(545)

(632)

658

Trade receivables

520

749

(1,664)

Trade payables 

(1,856)

(1,849)

(143)

Provisions for risks and charges

(135)

(135)

20

Other current assets and liabilities

92

94

(40)

Net working capital

(47)

44

1,332

Equity

1,249

1,253

446

Net financial position

505

494

 

Net fixed capital was euro 1,801 million (euro 1,703 million at December 31, 2018), increased by euro 98 million. Among the main impacts is the inclusion of the utilization right of the leased items following the first application of IFRS 16 (euro 83 million). Net working capital was negative for euro 47 million (positive for euro 44 million at December 31, 2018). The main effects include: i) the decrease of the Inventories and advances (euro 68 million) mainly due to the delivery of a vessel accounted for in the inventories following the order cancellation, then sold; ii) the increase in Construction contracts and client advances (euro 128 million) due to the volumes generated in the period; and iii) the reduction of Trade receivables (euro 229 million) mainly due to the cash-in of the final instalment of the cruise vessels delivered in the quarter.

Construction loans, specially dedicated credit instruments used for the exclusive financing of the project they are referred to, amounted to euro 545 million at March 31, 2019, recording a reduction of euro 87 million; of these, euro 395 million were related to the subsidiary VARD and euro 150 million to the Parent Company.

Net financial position, which excludes construction loans, reported a net debt balance of euro 505 million (euro494 million in net debt at December 31, 2018), consistently with the production volumes developed by the Group and with the delivery schedule of the cruise units. It also includes the financial liabilities arising from the application of IFRS 16 (euro 85 million).

 

 

OTHER INDICATORS                               

 (euro/million)

Order intake

Backlog

Capital expenditure

 

31.03.2019

31.03.2018

restated

(*)

31.03.2018

published

31.03.2019

31.03.2018

restated

(*)

31.03.2018

published

31.03.2019

31.03.2018

restated

(*)

31.03.2018

published

Shipbuilding

6,312

927

750

28,974

20,820

20,005

30

16

12

Offshore & Specialized Vessels

39

39

217

920

493

1,363

1

1

5

Equipment, Systems and Services

168

167

167

1,607

1,196

1,196

6

2

2

Consolidation adjustments/Other activities

(64)

(57)

(58)

(759)

(679)

(734)

5

2

2

Total

6,455

1,076

1,076

30,742

21,830

21,830

42

21

21

(*)The 2018 comparative figures have been restated following redefinition of the operating segments

DELIVERIES

(number)

31.03.19 completed

2019

2020

2021

2022

2023

Beyond

Cruise ships

2

6

8

9

7

7

13

Naval >40 m.

1

2

6

6

7

3

5

Offshore

5

17

4

1

1

1

1

 

BUSINESS OUTLOOK

The Group expects 2019 results to be in line with 2018 and consistent with the economic and financial forecast announced within the 2018-2022 Business Plan.

In particular, for FY 2019 the revenue growth trend is confirmed, with an EBITDA margin in line with 2018.

Net debt is expected to rise due to working capital financing needs.

In the Shipbuilding segment, in the next quarters of 2019 the Group expects to deliver 8 ships, 6 cruise units (two of which, the LE BOUGAINVILLE and the HANSEATIC NATURE, were delivered in April by VARD respectively to the shipowners Ponant and Hapag Lloyd) and 2 naval vessels (one of which, the FREMM “, ANTONIO MARCEGLIA was delivered in April to the Italian Navy). Also with reference to the naval vessels business area, the launch of two vessels included in the fleet renewal program for the Italian Navy is scheduled, including the Landing Helicopter Dock currently under construction at the Castellammare di Stabia shipyard, while the program for the Qatari Ministry of Defense is coming into full swing, with 3 vessels under construction and first delivery scheduled for 2021.

In the Offshore and Specialized Vessels segment, the construction activity related to the backlog acquired as a result of the diversification strategy put in place following the Oil&Gas sector crisis will continue, as well as the focus on execution aimed at margin recovery. Among these is the reorganization of production facilities, with the alignment of headcount to the current workload at some yards.

In 2019 the Equipment, Systems and Services segment is expected to confirm its revenue growth trend, thanks to the development of the naval orders, to the higher volumes of production of cabins and public areas for the cruise business activity, to the lengthening projects and to the activities in the infrastructure sector, where the construction of the bridge over the Polcevera river started in the first quarter.



[1] Sum of backlog and soft backlog

[2] Excluding Construction loans

[3] Prepared in accordance with international financial reporting and accounting standards (IAS/IFRS) and unaudited

May 13 2019


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