Fincantieri hopes for cruise ship ordering rebound

2023-11-30T21:42:46+00:00 November 30th, 2023|Finance|

Italian cruise shipbuilder Fincantieri has reported nine month 2023 revenues of €5,383 mill, a rise of 1.3%, compared to the same period in 2022.

The increase was mainly driven by the revenue growth of the offshore and specialised vessels business, up by 28.2%, and of the equipment, systems and infrastructure business, an improvement of 35.3%.

These results more than offset the expected decrease in shipbuilding revenues, which ended the first nine months of 2023 with a 5.3% drop, compared to the same period last year.

Net of elimination, shipbuilding accounted for 74% (80% in the first nine months of 2022), offshore and specialised vessels 12% (10%) and equipment, systems and infrastructure 14% (10% in the first nine months of 2022) of total Group revenues.

The recovery margin continued in the third quarter, resulting in an EBITDA for the first nine months at €276 mill (€172 mill in the first nine months of 2022), with an EBITDA margin of 5.1% (3.2% as of 30th September, 2022 and 3% as of 31st December, 2022).

Last year was significantly impacted by inflation, a lower margin recorded by the infrastructure business, due to the review by the management and the write-down of work in progress to reflect the re-assessment of a client credit rating.

For the full year an EBITDA margin of 5% was also forecast.

Fincantieri’s order intake stands at €4 bill, up by 23%, compared to 30th September, 2022 (€3.3 bill), mainly supported by a strong contribution from the offshore wind sector, with a book to bill ratio above 1 in the third quarter.

However, the shipbuilding and engineering giant reported a net financial position of minus €2,705 mill (negative €2,531 mill at 31st December, in line with the production activity and capital expenditures over 2022).

Pierroberto Folgiero, Fincantieri CEO, commented: “The results achieved in the first nine months of 2023 prove a positive progression towards the operational, economic and financial targets of our 2023/2027 Business Plan.

“The production performance was particularly satisfactory: thanks to the expertise and the commitment of our people, we delivered 17 ships from 10 shipyards, even though they had been designed during Covid and built in a macro-economic environment marked by a steady rise in raw materials inflation and some challenges in labour supply.

“EBITDA up by 60% in absolute value demonstrates that the operating performance is also reflected in an improvement of marginality, which stands at 5.1%, in line with the guidance provided to the market.

“In the first nine months the order intake stands at €4 bill, up by 23%, compared to the same period of 2022, confirming the growth expectations outlined in the Business Plan even in the naval and offshore wind sectors, as well as in the cruise business.

“The Group is well on track with the delivery of the 2023/2027 Business Plan, thanks to the implementation of strategic initiatives to further pursue our leadership role in bringing innovation to the shipbuilding sector, progressing in the creation of green and increasingly technological ships, along with operational excellence in backlog execution, also through the modernisation of our shipyards,” he concluded.

Cruise revenues in the first nine months of this year decreased 4.6%, compared to the same period of 2022, reflecting the positive effect related to the consolidation of production volumes of the Groups’ Italian shipyards, as well as Vard’s backlog in the cruise sector..

The cruise industry had recorded passenger volumes above pre-covid levels during the summer, confirming the rebound of its long-term growth path.

This trend, in combination with the rising interest in green and increasingly technical products, is the key driver for the recovery of new cruise ships’ demand in a still volatile and high interest rates scenario, Fincantieri said.

In addition, this week saw the launch of the ‘Mein Schiff Relax’, the first of two newly designed dual-fuel ‘inTUItion’ class cruise ships (LNG and Marine Gas Oil) that Fincantieri is building for TUI Cruises, a joint venture between TUI and the Royal Caribbean Cruises group.

The launch took place at the Monfalcone shipyard just outside Venice.

At around 160,000 gt, the vessels will form the backbone of TUI Cruises’ future fleet.