Fincantieri enjoys revenue increase

2024-03-15T18:51:16+00:00 March 15th, 2024|Finance|

Italian engineering conglomerate, Fincantieri has reported a 2.8% rise in revenues to €7,651 mill in 2023, compared to €7,440 mill for the previous year.

EBITDA was up 80% year-on-year at €397 mill, compared to €221 mill in 2022. EBIT was €162 mill, which was a strong recovery versus 2022 (negative €10 mill).

The Group’s net financial position was a negative €2,271 mill, which was a significant improvement of 10.3% versus 2022 (minus €2,531 mill).

Net cash flows were also positive, with €201 mill cash generation, compared to a negative €672 mill in 2022.

Group net income was a negative €53 mill, but a considerable recovery from 2022’s result (negative €324 mill); Adjusted net income, net of extraordinary and non-recurring items, was a negative €7 mill, considerably up when compared to a €108 mill net loss in the previous year.

Fincantieri also reported a total order backlog of €34.8 bill, which was about 4.5 times 2023 revenues.

The order intake was €6.6 bill, a growth figure of 23.9% versus 2022 (€5.3 bill), with a significant uplift seen in the offshore business last December.

Helping to reach these figures were a consolidation of the cruise business, a positive performance of the defence sector and a sharp increase in volumes and margins of the offshore segment

Last year, the Group delivered 26 ships from 12 shipyards and had an 85 ship backlog with strong visibility up to 2030.

Fincantieri also gave guidance figures for this year of­ revenues at around €8 bill, up by around 4.5% y-o-y with an EBITDA margin of around 6%, up by 1% versus 2023.

The net financial position/EBITDA is expected to improve, compared to the guidance provided at the Capital Markets Day in May of last year, to a value between 5.5x and 6.5x in 2024, accelerating the already expected deleveraging over the future business plan.

Pierroberto Folgiero, Fincantieri’s CEO and General Manager, commented: “In the first year of the new business plan, we built and delivered a significant increase in profitability: EBITDA grew by 80%, compared to 2022, reaching nearly €400 mill. The EBITDA margin jumped to 5.2% from 3%. Cash generation exceeded expectations, leading to an improving net financial position.

“These achievements were driven by our sound financial discipline, the solid business performance of shipbuilding, both defence and civil, as well as a strong rebound in the offshore and specialised vessels business. In particular, the latter marked an acceleration in new orders in December. 2023 order intake stood at €6.6 bill, compared to €5.3 bill in 2022.

“I would like to thank all the people at Fincantieri for these results; they have delivered 26 ships during the year, despite the challenging industrial scenario, while pursuing the strategic targets of the new industrial plan with professionalism and determination.

“In 2023, we also set promising strategic landmarks in LNG, methanol and hydrogen engines; in the proprietary data platforms for digital twin, simulation systems and predictive maintenance; in the first applications of artificial intelligence and remote control solutions, in the automation and digitalisation of shipyards, capturing the attention of Italians back to the heavy industry, and, in the new frontier of the underwater domain, where we aim to play a leading role in the industry and the country.

“Our 2024 guidance envisages revenues at approximately €8 bill, up by 4.5% and in line with business plan targets released in May, 2023, an EBITDA margin of about 6%, steadily increasing as per the plan, and a NFP accelerating the deleveraging path, compared to our initial targets,” he said.

During the year, Fincantieri signed a green construction loan for €415 mill with Intesa Sanpaolo to cover the financial needs for the construction of the first of the two dual-fuel cruise ships (LNG and MGO) for TUI Cruises.

As expected, in 2023, the shipbuilding business reported slightly lower revenues at €6,129 mill, including €4,014 mill related to cruise ships (€4,139 mill as of 31st December, 2022).

The cruise and defence businesses contributed 48% and 25% to the total revenues before consolidation adjustments, respectively.

Cruise segment revenues in 2023 were 3% lower than in the previous year, mainly as a result of the termination of Vard’s cruise business, partially offset by the positive effect related to the consolidation of production volumes of the Groups’ Italian shipyards.

Last year, Fincantieri signed a contract for the second extra-luxury cruise ship for Four Seasons Yachts, subject to financing as per market practice; won orders for two hydrogen-powered ships for MSC’s luxury brand Explora Journeys and a new hybrid-powered (diesel and LNG) ropax for the Region of Sicily.

As for the business outlook, last year, the cruise industry continued to consolidate its recovery path begun the previous year, with all key industry indicators reporting positive trends.

Cruise passengers are expected to reach 39 mill by 2027 and about 46 mill by 2030, with a 5.5% CAGR during the period 2023/2030, while the gap in the value proposition between cruises and land-based vacations will continue to shift further toward cruise with a recovery in orders led by the luxury segment, in line with the trend already experienced in the period 2022/2023.

These dynamics, in combination with the energy transition and increasingly technological products, which are expected to have an impact in all markets, including shipbuilding, ensure additional opportunities and rising new business models, the Group said..

Furthermore, the Group is committed to the following strategic initiatives in 2024:

  • Increasing operational efficiency and modernising shipyards, including implementing the onshore pre-fitting in Ancona and Riva Trigoso, pursuing production automation initiatives and introducing artificial intelligence to support processes.
  • Strengthening system integration capabilities and expertise in the naval sector.
  • Containing procurement costs of materials and services, as well as production costs, extending the processes identified in 2023 to the entire Group.
  • Following thoroughly the path set by the sustainability targets, along with the energy and digital transitions.