News

• Results in line with the Business Plan 2018-2022 targets: revenues at March 31, 2018 up 11% compared to the same period of 2017, EBITDA margin at 7.3%, up 22% from the 6.0% margin of the first three months of 2017
• Total backlog[1]at over euro 27.7 billion, covering approximately 5.5 years of work if compared to 2017 revenues: backlog as of March 31, 2018 was euro 21.8 billion (euro 20.8 billion at March 31, 2017) with 104 ships in the order book; the soft backlog at the same date was approximately euro 5.9 billion (approximately euro 5.8 billion at March 31, 2017)
• Further commercial  developments in cruise business: agreement with Viking for the construction of additional six units which will be developed based on the successful characteristics of the previous ships. VARD signed a contract for the design and construction of two additional luxury expedition cruise vessels for French cruise company PONANT. VARD also signed a Letter of Intent for the design and construction of two special cruise vessels for Viking, with an option for two more vessels.
• Fincantieri,  through the Ship Repair and Conversion unit of the Services division, and Grimaldi Group signed a contract for the lengthening and refurbishing of the cruise ferries “Cruise Roma” and “Cruise Barcelona”, built by Fincantieri in the Castellammare di Stabia yard.
• Sound operational performance with the delivery of Carnival Horizon
• Net debt[2] at euro 446 million (euro 314 million at December 31, 2017). The change is mainly due to financial flows of the Cruise business, characterized by significant growth of volumes, as well as by the cash-in of final payments for the cruise ship delivered in the period.

*   *   *

Rome, May 7, 2018- 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, 2018[3].

During the Board meeting Giuseppe Bono, Fincantieri's Chief Executive Officer, said: “The First Quarter 2018 results are a confirmation of the strategic lines of development set forth in the Business Plan we presented at the end of March, and are in line with the growth trends registered in the past two years. With production volumes and margins yet again growing, our company continues to prove its ability to create value in an extremely complex sector.”

Bono concluded: “Bolstered by this important first step, we will continue along the growth path that will see us taking center stage in the world shipbuilding industry in the coming years”.

ECONOMIC DATA

In the first three months of 2018 revenues increased by 11% compared to the same period of 2017, in line with the growth expectations for 2018.

EBITDA as of March 31, 2018 stood at € 89 million (up 33% year-on-year) with EBITDA margin of 7.3%, improved from the 6.0% of the first three months of 2017; such trend is substantially due to the positive performance of the Shipbuilding segment.

Shipbuilding

The year-on-year growth is mainly attributable to the increase in the volumes of the cruise ships business due to the larger size of the vessels under construction (with cruise ship revenues now accounting for approximately 47% of the Group's revenues before consolidation adjustments). Revenues increase was also influenced by the progress in the Italian Navy's fleet renewal program and the starting of design activities for the Qatari Ministry of Defense contract.

Shipbuilding margins confirm the positive trend, reporting further improvements due to the construction of more profitable cruise ships and to the positive contribution of the advancement of the activities related to Italian Navy's fleet renewal program.

Offshore

Offshore revenues recorded an increase of around 17% compared with the first three months of 2017, despite the negative impact of changes in the Norwegian Krone/Euro exchange rate (euro 18 million). This performance is largely due to the continuation of diversification strategy operated by VARD, which has generated an increase of production volumes, especially in Romanian shipyards.

In a context of gradual recovery of revenues growth, the segment’s profitability reflects the continuing process of adjustment of the production structure to the challenges of the portfolio diversification efforts.

Equipment, Systems and Services

The revenues of the Equipment, Systems and Services segment, which increased above those of the corresponding period of 2017 (+72%), benefitted from growth in volumes related to after sales activities, life-cycle management services (especially related to Qatari contract) and in the cabins and public areas business, made internally of the Group to support cruise ships business.

The marginality reflects the change in the mix of products, heavily influenced by the strong growth in cruise volumes.

FINANCIAL DATA

Net fixed capital increased due to investments during the period on Intangible assets and on Property, plant and equipment, partially offset by amortization and depreciation of the period as well as the positive change in Other non-current assets and liabilities, mainly related to the positive effect of the fair value measurement of currency derivatives.

The main changes affecting Net working capital were: (i) an increase in Inventories, Construction contracts and client advances as well as in Work in progress and in Trade payables, primarily due to the growth in cruise ship production volumes; (ii) a reduction in Trade receivables, after collecting final payment for the cruise ship delivered in the period and iii) a reduction in Trade payables.

It should be noted that the stake in VARD Group has risen from 79.74% at December 31, 2017 to 82.73% at March 31, 2018.

Net financial position, which excludes construction loans, was negative for euro 446 million (euro314 million in net debt at December 31, 2017). Most of the Group's debt is dedicated to finance current assets associated with cruise ship construction and is therefore directly connected with the financing of net working capital. On the other hand, net fixed capital is financed through equity and other long-term sources of funding. The change in Net financial position is mainly due to financial flows typical of the cruise ship business, characterized on one hand by significant growth of volumes and on the other hand by the cash-in of final payments for the cruise ship delivered in the period.

Construction loans, specially dedicated credit instruments used for the exclusive financing of the order to which they are referred, amounted to euro 684 million at March 31, 2018; of these, euro 634 million were related to the subsidiary VARD and euro 50 million to the Parent Company.

OTHER INDICATORS                         

DELIVERIES

BUSINESS OUTLOOK

Full year 2018 results are expected to be consistent with the 2018-2022 Business Plan targets. For 2018, the Group confirms a growth in revenues of 3/6% and an EBITDA margin around 7.5%, mainly related to higher profitability in Shipbuilding.

Regarding the Shipbuilding segment, in 2018 the Company expects the delivery of 10 units, of which 4 cruise ships and 6 naval units, the full operating production for the Italian Navy's fleet renewal program and the start of design activities for the Qatari Ministry of Defense contract.

In the Offshore segment, VARD is continuing with the business diversification actions already started, as well as focusing on the products with greatest potential in its reference markets. The development of synergies with Fincantieri S.p.A. will continue, specifically with regards to the cruise line of business. As previously mentioned, in a context of gradual recovery of revenues growth, the segment’s profitability reflects the continuing process of adjustment of the production structure to the challenges of the portfolio diversification efforts.

During the year, the Equipment, Systems and Services segment is expected to confirm the positive results achieved, also thanks to the deployment of the backlog associated with the Italian Navy's fleet renewal program and with the Qatari contract. Commercial and organizational actions will be implemented to ensure stronger foothold and development of the after sales business in the cruise ship segment and in the most important geographical areas.