Strategic Overview

A technological platform with a global footprint, ready to seize further opportunities across businesses

Solid financial results with revenues up 28.3% YoY, EBITDA at €495 mln up 57% YoY (EBITDA margin at 7.4%)

Back to profitability with net result adjusted at €92 mln (€-42 mln in 2020) and net profit at € 22 mln (€-245 mln in 2020)

Best-in-class execution, the ability to create production efficiencies and the sound funding capacity enabled us to preserve the delivery schedule, a sizeable backlog and maintain a solid financial performance, notwithstanding the pandemic and price increases

A fully-fledged technological platform, able to create synergies across businesses, leveraging upon a unique and wide set of competences, strong engineering & well proven system integration capabilities, a diversified product portfolio and a loyal client base

Improved ESG ratings confirming our commitment to a sustainable business: A- by CDP; Advanced by Vigeo, and 1st among peers in the Mechanical Components and Equipment sector; Score of 87/100 by Gaia; Score of 58/100 by Standard and Poor’s; Sustainalytics positioned Fincantieri in the “Low Risk” range

Executive summary

Revenues up by 28.3% and EBITDA +57.4%, total backlog at €35.5 bn. 2021 guidance on marginality exceeded

Revenues

▪  Revenues excluding pass-through activities +28.3% YoY

EBITDA

EBITDA at €495 mln and EBITDA margin at 7.4% excluding pass-through activities

Revenues and EBITDA by quarter

  

Net debt (€ mln)

Net debt at €859 mln, consistent with expected delivery schedule and decreased by 19.1% vs FY 2020. NFP still impacted by payment extensions granted to clients (ca. €195 mln)

Positive operating cash flow at €594 mln (vs €-14 mln in 2020), after the repayment of €268 mln of construction loans, more than compensating Capex needs

Total backlog with 115 units at €35.5 bn, 5.3x 2021 revenues: backlog with 91 units at €25.8 bn and soft backlog at €9.7 bn

Order intake at €3.3 bn

Strong production volumes with 16.4 mln production hours at Italian sites, +24.5% YoY

19 ships successfully delivered from 12 different shipyards

Capex at €358 mln to support shipyards upgrade, digital and innovative solutions and increase production efficiencies

Please note that throughout the entire presentation:
1. FY2020 and FY2021 data are reported excluding the effect of pass-through activities
2. FY 2019 and FY2020 data have been restated following the reallocation of VARD Electro and Seaonics respectively from the Shipbuilding and the Offshore & Specialized Vessels segments to the Equipment, Systems & Services segment

Business update: quarterly key events

Consistent business operating performance throughout the year

  Q1 Q2 Q3 Q4
  ▪ MoU between Naviris and Navantia to develop the European Patrol Corvette
▪ Fincantieri joins the Sea Defence Project within the EU Defense Industrial Development Programme
▪ Prime contractor for the supply of 6 FREMM frigates to the Indonesian Ministry of Defense
▪ Second Constellation class frigate ordered by the US Navy
▪ 4 cruise ships delivered, 3 in a month, among which MSC Seashore, the largest ever built in Italy ▪ First corvette of the Program for the Qatari Ministry of Defence delivered
▪ Contract for the construction of a second Logistic Support Ship (LSS) for the Italian Navy
  ▪ 3 SOVs ordered by North Star Renewables to be deployed in the Dogger Bank Wind Farm
Cable repair vessel ordered by Orange Marine
  ▪ 2 SOVs ordered by Rem Offshore
▪ 2 SOVs ordered by Norwind
▪ 1 SOV ordered by North Star Renewables
    ▪ Partnership with MSC for the construction of a new state-of-the-art cruise terminal at PortMiami ▪ Finalized the acquisition of IDS group  
  Enel X on port infrastructure with low environmental impact Almaviva on digital solutions for transportation and logistics
Comau for robotized steel welding solutions
▪ JV Power4Future with Faist on lithium-ion batteries
MSC and SNAM on first hydrogen-powered cruise ship
Enel Green Power on green hydrogen production and infrastructure
Sustainable Finance - first trade finance credit line for construction of green cable layer
ENI on decarbonization
First sustainability-linked construction loan

ESG Update

Fully committed to guarantee the highest environmental, social and governance standards

1. Number of Injuries/hours worked * 1 million

ESG ratings and awards

Tireless effort to become a model of excellence acknowledged at the international level

CDP
In 2021 Fincantieri was awarded with the score A- , from a scale from A, the maximum, to D for its commitment and transparency in fighting climate change

V.E.
In 2021 Fincantieri achieved a score of 70/100, holding its position in the «Advanced» range and ranked first among its peers belonging to the Mechanical Components & Equipment sector

GAïA
Gaïa Rating improved the overall score of Fincantieri to 87 points out of 100 from 85 points in 2020

S&P GLOBAL (NEW)
On December 20, 2021 S&P Global ranked Fincantieri 24th out of 186 “IEQ Machinery and Electrical Equipment” companies with a score of 58/100 in the Corporate Sustainability Assessment (CSA)

SUSTAINALYTICS (NEW)
Sustainalytics positioned Fincantieri in the «Low Risk» range, and 6th out of 121 companies in the «Heavy Machinery and Trucks» category

UNIVERSUM
Fincantieri ranked as Italy’s Most Attractive Employer in the Manufacturing, Mechanical and Industrial Engineering sector according to Universum

HEALTH AND SAFETY
The Shipbuilder Council of America (SCA) awarded Fincantieri Marinette Marine with the “Excellence in Safety Award” and Fincantieri Bay Shipbuilding (Sturgeon Bay) with the “Improvement in Safety Award”

GREEN STAR 2021
Fincantieri was identified among the most sustainable Italian companies, receiving the "Green Star 2021" Seal by the German Institute of Quality (ITQF). Fincantieri won the first prize in the “Engineering, constructions and infrastructure” sector

Main deliveries & New orders

New orders across all segments amount to €3.3 bn

1. For reasons connected to the organizational responsibility of VARD yards split between Cruise and Offshore, Coral Geographer and Island Escape are included in the Offshore & Specialized Vessels deliveries
2. Ordered in Q4

Backlog deployment

Well-balanced visibility both in Cruise and Naval, 9 new orders in Offshore and Specialized Vessels

19

units delivered

15

units ordered

91

ships in backlog

24

ships in soft backlog

1. For reasons connected to the organizational responsibility of VARD yards split between Cruise and Offshore, Coral Geographer and Island Escape are included in the Offshore & Specialized Vessels deliveries
2. The Offshore & Specialized Vessels business generally has shorter production times and, as a consequence, shorter backlog and quicker order turnaround than Cruise and Naval

FINANCIAL RESULTS

Order intake and backlog

Positive order intake despite cruise contraction with a solid contribution of ESS. Sustained backlog and a hefty soft backlog

Sizeable order intake at €3.3 bn, thanks to the expansion of ESS, and despite the reduction in cruise

Soft backlog includes the agreement of Fincantieri as prime contractor for the supply of 6 frigates to the Indonesian Navy

Total backlog represents 5.3x 2021 revenues


1. Total backlog is the sum of backlog and soft backlog
2. Order intake/revenues ex pass-through
3. Soft backlog represents the value of existing contract options and letters of intent as well as contracts in advanced negotiation, none of which yet reflected in the order backlog

Revenues

Revenue up 28.3%, with positive contribution across all segments

Revenues excluding pass-through activities are up 28.3% YoY thanks to record-high production volumes in the FY 2021 (16.4 mln production hours)

 Shipbuilding up 27.1% YoY thanks to the programmed production ramp-up, with an increased contribution of Naval at 23.0% of total revenues

 Offshore & Specialized Vessels up 23.7% YoY

 Equipment, Systems & Services up 27.7% YoY mainly related to services and mechatronics business areas

87% of revenues from international clients


1. Breakdown calculated before eliminations

EBITDA

Record-high EBITDA with a remarkable increase in volumes and margins

EBITDA margin at 7.4% mainly thanks to the positive contribution from Shipbuilding, despite the impact from increased commodities’ prices

 Shipbuilding EBITDA is up €194 mln YoY with margin at 8.3%

 Offshore EBITDA is up €13 mln YoY thanks to the effective repositioning strategy in more promising sectors

 ESS EBITDA is down €25 mln YoY due to rawmaterials inflation and lower Infrastructure margins


1. EBITDA is a Non-GAAP Financial Measure. The Company defines EBITDA as profit/(loss) for the period before (i) income taxes, (ii) share of profit/(loss) from equity investments, (iii) income/expense from investments, (iv) finance costs, (v) finance income, (vi) depreciation and amortization (vii) expenses for corporate restructuring, (viii) accruals to provision and cost of legal services for asbestos claims, (ix) other non recurring items

EBITDA growth

Better operating margin thanks to higher production volumes and improved margins

 Shipbuilding: EBITDA improvement driven by higher production volumes and improved operating margin

 Offshore and Specialized Vessels: increased EBITDA thanks to higher operating margins

 ESS: negative effect due to lower margins

Net result

Back to profitability at €22 mln, thanks to the positive business operating performance, notwithstanding extraordinary items

Net result for 2021 at €22 mln, thanks to the revamp of productivity and improved margins, notwithstanding:

▪ €55 mln asbestos-related litigations
▪ €30 mln COVID-19 related costs


1. Net result before extraordinary and non-recurring items

Capex

Significant investments creating further efficiencies in engineering and production processes

▪ Capex up 10% vs FY 2020 to support shipyards upgrade and further efficiencies to address new production scenarios

▪ Investments breakdown as follows:
- Intangible activities for €48 mln
- Tangible activities for €310 mln

▪ Investments breakdown per category:
- Capacity increase for €163 mln
- Safety and maintenance for €92 mln
- Efficiency improvements for €52 mln
- IT, digitalization and advanced robotics for €31 mln

Net working capital and net financial position

Improved quality of NFP, better than guidance. Lower reliance on construction loans

Net financial position up €203 mln Y/Y thanks to an improved net working capital with lower reliance on construction loans

▪ Net financial position still impacted by the strategy of deferrals granted to clients (ca. €195 mln)

Adequate liquidity position thanks to 6 cruise ships delivered in 2H

Positive operating cash flow at €594 mln, after the repayment of €268 mln of construction loans, more than compensating Capex needs (€358 mln)

▪ No financial covenants


1. Construction loans are committed working capital financing facilities, treated as part of Net working capital, not in Net debt, as they are not general purpose loans and can be a source of financing only in connection with ship contracts

OUTLOOK

Focus on core business

Cruise full recovery expected in 2023, Naval benefiting from higher defence budget

▪ The big 3 cruise groups concluded 2021 with 65-80% of their capacity back in operation, with nearly 100% of CLIA oceangoing member lines are projected to be in operation by summer season 2022, with load factors approaching historical levels 1

Occupancy levels recorded by the main operators’ brands are slightly below 60%, showing higher load factor in the 4Q2021 and for core itineraries / ships

Booking trends for 2022 and 2023 are in line with 2019 levels, but at higher prices

Passenger volume is expected to recover and surpass 2019 levels by the end of 20231 with a target of 30 million pax, pre-Covid volumes

▪ Recovery of cruise demand with a growth rate of +5% per year (CAGR 2009-2019 in terms of cruise pax) foresees a target of almost 34 million pax in 2026 and 42 million in 2030. A resumption in orders would be possible from 2023-2024, taking into account construction lead-times and the availability of slots by shipyards1

▪ The cruise industry aims to reach net carbon neutrality by 2050; by 2027 CLIA member fleet will include 26 LNG-powered cruise ships and 174 cruise ships with shoreside power connectivity1

▪ Total global defence spending reached USD 2.06 trillion in 2021, showing a compound annual growth rate of 1.8% (CAGR 2013-2021), with defence budgets expected to accelerate in the upcoming years2

▪ In 2021, the defence budget allocated to navy procurement estimated at 6.4% of global budget2

▪ While the effects of the war in Ukraine on defence budget are yet to be determined, the conflict may accelerate the creation of a common EU Defence

▪ On 21 March 2022, the European Council has adopted the Strategic Compass, with the target to strengthen EU security and defence policy by 2030

EU major defence programs include the Permanent Structured Cooperation (PESCO) for a new class of modular and flexible military ships, the European Patrol Corvette (EPC)

1. CLIA - State of the Cruise Industry 2022 report
2. Jane’s - Global Defence Budget , February 2022

2022 Company outlook

MACRO ASSUMPTIONS
• Raising uncertainties due to geopolitical and macroeconomic tensions, whose impacts still hard to estimate
• Gradual ease of Covid 19 restrictions


EXPECTED FINANCIAL PERFORMANCE FOR 2022
Assuming no further relevant deterioration in the geopolitical and global health situation:
Long term growth and profitability ensured by a fully preserved and highly diversified backlog and by a positive contribution from all businesses
Sound revenues growth expected to increase, exceeding 2021 levels
Solid marginality despite the surge in commodities and energy prices
• Competitive positioning further improved by important Capex program up and running, accelerating production efficiencies and innovative solutions in technology
• FY2022 net debt in line with FY2020 levels
• Well-proven capacity to face unforeseen events thanks to wide-ranging business enhancement initiatives, already in place and embedded in the company culture


SEGMENTS OVERVIEW
Shipbuilding: hefty backlog with six cruise ships to be delivered from Italian yards, a luxury-niche unit from VARD Cruise, seven naval vessels from Italian shipyards and a commercial unit from US yards. Deliveries up to 2029
Offshore and Specialized Vessels: continues to expand thanks to the diversification strategy into new geographical and market areas, with eight deliveries in 2022
ESS: strong focus on backlog execution, consolidating our competitive advantage, to seize further opportunities in captive and non-captive businesses