Financial press releases

REVENUES[1] UP BY 17.8% AND EBITDA MARGIN AT 7.0%
TOTAL BACKLOG AT EURO 34.4 BILLION

Consolidated 1Q 2022 results[2]

• Revenues stand at euro 1,681 million up by over 17.8% compared to 1Q 2021, in line with forecasts and the expected development of the current backlog

• EBITDA[3] at euro 118 million (+17.2% vs euro 101 million as at March 31, 2021), EBITDA margin at 7.0% (vs 7.0% as at March 31, 2021) despite the ongoing increase in commodity prices

• Net Debt[4] at euro 940 million (euro 859 million as at December 31, 2021), consistent with 1Q production volumes

Operations

• Total backlog[5] at euro 34.4 billion, covering approximately 5.2 times 2021 revenues with 1Q order intake at euro 0.5 billion: backlog at euro 24.8 billion (euro 26.5 billion as at March 31, 2021), with 93 ships in backlog, and soft backlog at around euro 9.6 billion (euro 7.9 billion as at March 31, 2021)

• Group positioning in the specialized vessel segment strengthened with the order of six unmanned units for Ocean Infinity and one fishery for Deutsche-Fischfang Union, that will be used to process and stock the catch. It is worth noticing that a new order for two CSOV (Commissioning Service Operations Vessel) for Nordwind Offshore has been acquired in April 2022, the ships will perform support operations and maintenance in the offshore wind sector

• Successfully delivered 5 ships from 4 shipyards: one cruise vessel for Princess Cruises, one Offshore Patrol Vessel for the Qatari Ministry of Defence, one Multipurpose Offshore Patrol Vessel for the Italian Navy, one fishery unit for Nergård Havfiske and one SOV for TSS Marine

Sustainable strategy

• Decarbonization: MoU with RINA to develop new synergies in the field of alternative fuels, carbon capture and renewable energies

• Structural Health Monitoring and Road Asset Management: agreement with Almaviva and Leonardo to offer integrated and innovative digital solutions, applied to static and dynamic monitoring, and to the security of Italy’s critical transport infrastructure

• Smart Ports e Smart Cities: MoU with ENEA to develop new R&I programs on energy efficiency, renewable energy generation systems, production, transportation and distribution of hydrogen and fuel cells

• Sustainable finance:finalization of a “sustainability linked” guarantee line granted by BNP Paribas, related to the achievement of an efficient energy consumption management and a sustainable supply chain

• School4Life: a program developed throughout Italy by Fincantieri along with other companies and institutions against high school dropout

• Accommodation for Ukrainian refugees: VARD has offered the use of its facilities at Tulcea shipyard in Romania to accommodate up to 250 Ukrainian refugees

Rome, May 5, 2022– 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, 2022[6].

During the Board meeting Giuseppe Bono, Chief Executive Officer of Fincantieri, said: “The first quarter results, alike the full year, highlight a healthy company from a financial and economic standpoint, with a robust backlog that ensures a good visibility for the next few years. Such backlog will be developed in a time of exceptional complexity, affected by a relentless rise in commodity prices throughout a deeply concerning geopolitical crisis. The thorough risk management strategy the company always adopted, along with the incessant search for efficiencies mitigate such external impacts, leading to positive results also in the future.

Bono concluded: “I am stepping down after twenty years, having proudly led the Group to a global leadership position across the sectors in which it operates together with a truly unparalleled team. My heartfelt thanks goes to them, to Fincantieri’s entire workforce and to the thousands companies involved in the supply chain, for their commitment and dedication in pursuing and achieving our challenging targets. To my successors I wish the best of luck, as I fully understand the responsibilities they are about to embrace.”

ECONOMIC DATA

Revenue and income, at euro 1,681 million for the first quarter 2022, excluding pass-through activities at euro 3 million, up by 17.8% compared to the same quarter of 2021. The results are driven by the positive performance by every segment in which the Group operates. The Shipbuilding segment confirms the trends already shown in 2021, growing by 6.0% thanks to the high production volumes at the Group’s Italian shipyards. The contribution of Offshore and Specialized Vessels spiked by 98.7% reflecting the effective repositioning and diversification strategy implemented by the Group with the construction of specialized vessels to be deployed in offshore wind farms. The Equipment, Systems and Services segment recorded higher revenues (+31.4%) with the main contribution coming from the Infrastructure business area, including the acquisition of FINSO in the second half of 2021. Shipbuilding, after the eliminations, accounts for 71% of the Group’s revenues (78% in the same period of 2021), Offshore and Specialized Vessels for 10% (5% in the first quarter 2021), Equipment System and Services for 19% (17% in the same period of 2021).

EBITDA landed at euro 118 million (euro 101 million in the same period of 2021) with EBITDA margin at 7.0% in line with 1Q 2021, despite the rise in commodity prices occurred in the first months of 2022, largely due to the ongoing conflict between Russia and Ukraine. Such improvement is mainly attributable to the Shipbuilding segment (EBITDA margin at 8.3%) and reflects a greater profitability along with higher volumes led by the sizeable backlog obtained in the past years.

Shipbuilding

Shipbuilding revenues, as at March 31, 2022, stand at euro 1,330 million, up by 6.0% compared to 2021. Revenues for the period refer to the cruise ship business area for euro 903 million, in line with 1Q 2021 (euro 903 million), and to the naval business area for euro 427 million (euro 352 million at March 31, 2021), up by 21.4%. They respectively account for 48% and 23% of the Group’s revenues, highlighting a lower incidence of the cruise business area compared with the same period of 2021 (56% and 22%).

Cruise ship business area revenues trend reflects the full observation of production plans and consolidate the remarkable growth in production volumes already recorded in 2021. As for the Naval business area, the raise in production is mainly driven by the programs for the Qatari Ministry of Defence and for the Italian Navy. Furthermore, US shipyards are still committed to the development of the Foreign Military Sales program between United States and Saudi Arabia as well as the FFG-62 program.

The segment’s EBITDA, as of March 31, 2022, stands at euro 110 million, up by 12.4% compared to the same period of 2021 (euro 98 million), despite the ongoing surge in commodity prices. EBITDA margin at 8.3% (8.2% when considering total revenues), improved compared to 7.8% in 1Q 2021. The result confirms the Group’s capability to fully ensure the delivery schedule as well as the expenditure forecasts, also thanks to the initiatives put in place, able to face both the pandemic and the rise in commodity prices with no relevant impacts on the supply chain.

Offshore and Specialized Vessels

The diversification strategy adopted by the Group led the Offshore and Specialized Vessels segment to achieve a remarkable increase in revenues, euro 181 million (+98.7% compared with the same period of 2021), continuing the positive trend registered in 2021. It is worth noticing that construction activities for the three vessels for the Norwegian Coast Guard as well as for the other SOV (Service Operation Vessel), to be deployed in offshore wind farms, are continuing at full speed, with the delivery of the first SOV in March.

EBITDA for the segment, as of March 31, 2022, is positive at euro 6 million (positive at euro 1 million at March 31, 2021), with EBITDA margin at 3.2% (1.3% in the first quarter of 2021), thanks to the repositioning strategy towards more promising sectors embraced in 2019.

Equipment, Systems and Services

Revenues from Equipment, Systems and Services segment account for euro 359 million, up by 31.4% compared to the same period of 2021. The growth was achieved mostly through the development of the robust backlog relative to the Infrastructure business area driven by the contracts progresses of FINSO group (acquired in the second half of 2021) and the construction of the new MSC Cruise Terminal in Miami. The raise in revenues is also attributable to the positive performance of the Mechatronics business area.

The segment’s EBITDA, as of March 31, 2022, is equal to euro 13 million, in line with March 31, 2021, with an EBITDA margin at 3.6% (4.7% at March 31, 2021). The marginality reduction is mainly led by the surge in the costs of energy and gas and the general rise in commodity prices encountered in the period.

BALANCE SHEET INFORMATION

^(*) This figure does not include construction loans and it includes non-recurrent financial receivables (at euro 269 million)

Net fixed capital amounts to euro 2,407 million, broadly in line with the 2021 figure (euro 2,363 million as of December 31, 2021).  Net working capital reports a negative balance of euro 589 million (negative at euro 670 million as of December 31, 2021). The main changes regard the increase in Construction contracts and client advances (euro 766 million), attributable to the volumes carried out during the period partially financed through Construction loans (up by euro 426 million) and the decrease in Trade receivables (euro 145 million) following the cash-in of the final installment of the cruise ship delivered in January and partially compensated by the invoices for the progress of construction activities in the naval segment.

Construction loans, as of March 31, 2022, amount to euro 1,501 million, up by euro 426 million compared to December 31, 2021, of which euro 1,380 million related to the Parent Company and euro 121 million to VARD. The growth in Construction loans volumes is linked to the financing of the ships to be delivered in the coming months. Given the nature of Construction loans and particularly the fact that these types of loans are obtained and can be used exclusively to finance the contracts to which they refer to, management treats them in the same way as client advances and so classifies them as part of Net working capital.

The Consolidated net financial position records a net debt balance of euro 940 million (net debt of euro 859 million at December 31, 2021). The increase is largely due to the typical dynamics related to working capital in the cruise business with six deliveries in the remaining part of the year. The cash absorption for the construction of cruise ships has been only partially covered by the delivery of the first cruise unit in January 2022. Furthermore, it should be noted that the Net financial position is still affected by the strategy of the deferrals granted to clients (euro 292 million), introduced in order to safeguard the sizeable backlog as well as to strengthen the mutual relationships.

OTHER INDICATORS

^(*) The figures 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

DELIVERIES

BUSINESS OUTLOOK

The first months of 2022 have been characterized by the impacts of the conflict between Russia and Ukraine, in particular on the European market, leading to (i) a reduction in the commercial trades with Russia as a result of sanctions, (ii) an increase in energy and natural gas prices as well as other commodities whose supply chains are affected by the conflict (i.e. steel) and (iii) a greater attention for a potential positive effect across the Defence sector.

In this context, the Group implemented specific mitigation plans in order to ensure the availability of those commodities considered strategic for production activities. Excluding unpredictable side effects related to the ongoing conflict as well as the pandemic, Fincantieri expects to maintain production activities at full swing with a growth in revenues higher than pre-pandemic levels along with the consolidation of margins. Net financial position for 2022 is expected to be in line with the 2020 figures.

With regard to the Shipbuilding segment, in 2022 the Group expects to deliver 15 ships, 7 cruise ships (among which Discovery Princess, delivered in January from the Monfalcone shipyard) and 8 Naval vessels (of which the Offshore Patrol Vessel (OPV) “Musherib” to the Qatari Ministry of Defence, delivered in January, and the first Multipurpose Offshore Patrol Vessel “Paolo Thaon di Revel” for the Italian Navy delivered in March). It should also be noted that in the month of April the corvette “Damsah” was delivered to the Qatari Ministry of Defence. As for the Cruise industry, nearly 100% of cruise lines are foreseen to be operational by summer 2022.

Concerning the Offshore and Specialized Vessels segment, 8 units are to be delivered during this year, among which the trawler handed over to to Nergård in January and the Service Operation Vessel (SOV) for TSS Marine in March.

As for the Equipment, Systems and Services segment, the Group foresees a growth in revenues, mainly led by the consolidation of the companies acquired in 2021 and the development of the backlog, including the after sales services for the Defence segment, the increase in the business volume of cabin and public areas linked to the Group’s cruise ships, the development of the activities related to the Infrastructure business area (among which the construction for the Cruise Terminal in Miami), the Mechatronics as well as the Electronics, Systems and Software area.

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The Manager Responsible for Preparing Financial Reports, Felice Bonavolontà, declares, pursuant to paragraph 2 of article 154 bis of Italian Legislative Decree no. 58 dated February 24, 1998, that the information contained in this press release corresponds to the underlying documentary and accounting books and records.

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For the significant events occurring during the period and after the reporting period, please refer to the press releases available on the Company’s website (www.fincantieri.com).

This press release is available to the public at the Company’s registered office and on its website (www.fincantieri.com) under “Investor Relations – Price Sensitive Press Releases” and on the centralized storage of regulated information denominated eMarket STORAGE, available at the website www.emarketstorage.com.

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DISCLAIMER

Forecast data and information must be regarded as forward-looking statements and therefore, not being based on simple historical facts, contain, by their nature, an element of risk and uncertainty because they also depend on the occurrence of future events and developments outside the Company’s control. Actual results could therefore be materially different from those expressed in forward-looking statements. Forward-looking statements refer to the information available at the date of their publication; Fincantieri S.p.A. reserves the right to communicate any changes in its forward looking data and information within the time and in the manner required by law.

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The financial results for the first three months of 2022 will be presented to the financial community during a conference call scheduled for Friday May 6, 2022, at 9:00 CEST.

To take part in the conference call, it is necessary to choose one of the alternatives below:

Access the audio webcast through the following link.

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The slide presentation will be available before market open in the Investor Relations section of the website www.fincantieri.com.

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Fincantieri is one of the world’s largest shipbuilding groups, the only one active in all high-tech marine industry sectors. It is leader in the construction and transformation of cruise, naval and oil & gas and wind offshore vessels, as well as in the production of systems and component equipment, after-sales services and marine interiors solutions. Thanks to the expertise developed in the management of complex projects, the Group boasts first-class references in infrastructures, and is a reference player in digital and cybersecurity, electronics and advanced systems.

With over 230 years of history and more than 7,000 ships built, Fincantieri maintains its know-how, expertise and management centres in Italy, here employing 10,000 workers and creating around 90,000 jobs, which double worldwide thanks to a production network of 18 shipyards operating in four continents and with over 20,000 employees.

www.fincantieri.com

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ALTERNATIVE PERFORMANCE MEASURES

Fincantieri’s management reviews the performance of the Group and its business segments also using certain non-GAAP measures not defined under IFRS. In particular, EBITDA is used as the main earnings indicator, as it enables the Group’s underlying profitability to be assessed, by eliminating the impact of volatility associated with non-recurring items or extraordinary items outside the ordinary course of business; EBITDA configuration adopted by the Group might not be consistent with the configurations adopted by other companies.

As required by Consob Communication no. 0092543 of December 3, 2015, which implements the ESMA Guidelines on Alternative Performance Measures (document no. ESMA/2015/1415), the components of each of these measures are described below:

• EBITDA: this is equal to earnings before taxes, before finance income and costs, before income and expenses from investments and before depreciation, amortization and impairment, as reported in the financial statements, adjusted to exclude the following items:

  • provisions for costs and legal expenses associated with lawsuits brought by employees for asbestos-related damages;

  • charges connected to the impacts of COVID-19 outbreak;

  • costs relating to reorganization plans and non-recurring other personnel costs;

  • other expenses or income outside the ordinary course of business due to particularly significant non-recurring events.

• Net fixed capital: this reports the fixed assets used in the business and includes the following items: Intangible assets, Property, plant and equipment, Investments and Other non-current assets (including the fair value of derivatives classified in non-current Financial assets and non-current Financial liabilities) net of Employee benefits.

• Net working capital: this is equal to capital employed in ordinary operations which includes Inventories and advances, risks and charges, and Other current assets and liabilities (including Income tax assets, Income tax liabilities, Deferred tax assets and Deferred tax liabilities, as well as the fair value of derivatives classified in current Financial assets and current Financial liabilities).

• The Net financial position monitored by management includes:

  • Net current cash/(debt): cash and cash equivalents, held-for-trading securities, current financial receivables, current bank debt (excluding construction loans), current portion of long-term loans and credit facilities, other current financial liabilities;

  • Net non-current cash/(debt): non-current financial receivables, non-current bank debt, bonds, other non-current financial liabilities.

• Revenue and income excluding pass-through activities: Revenue and income excluding the portion relating to sale contracts with pass-through activities, whose value is exactly offset by the corresponding cost; pass-through activities are defined as contracts whose value is entirely invoiced by the Group to the final client, but whose construction activities are not managed directly by the Group.

For a more detailed description of the alternative performance measures, please refer to the specific note within the Fincantieri Group’s report on operations forming part of the Group Annual Report 2021.