Fincantieri ramps up production – lockdown affects results

2020-05-29T08:28:24+00:00 May 29th, 2020|Finance|

Shipbuilding and engineering group, Fincantieri has confirmed that production activities had gradually resumed from 20th April, 2020, following the easing of Italy’s lockdown.

The group said in its first quarter results presentation that prompt deployment of all necessary measures were taken to ensure the health and safety of employees and sub-contractors, due to the virus.

To safeguard the relationships with clients and to ensure the acquired backlog is addressed, the business strategy is now focused on re-assessing dates, to avoid any order cancellations in full collaboration with customers.

First quarter production volumes were reduced by 20%, due to the interruption of activities in all Italian shipyards and production plants starting from 16th March.

For 1Q20, revenues were €1,307 mill (1Q19- €1,368 mill) down by only 4.5%, despite the production reduction drop, which resulted in around €190 mill loss in revenues.

EBITDA at €72 mill (€92 mill for 1Q19), included the production drop in the Group’s Italian facilities. The lack of progress in shipbuilding projects, due to the suspension of activities, led to a shortfall in EBITDA of about €15 mill.

In addition to the EBITDA shortfall, due to the Italian sites production downtime, the effects of COVID-19 on the 1Q20 results, amounting to €23 mill, are accounted in the extraordinary expenses and are mainly attributable to a reduced operating leverage, as a consequence of the lower production volumes, and to expenses for ensuring personnel’s health and safety..

As of 31st March this year, the net debt was €444 mill (€736 mill at 31st December, 2019)

Total backlog was €31.9 bill, covering around 5.5 times 2019 revenues. The 1Q20 order intake was €0.3 bill with a backlog of €27.7 bill (€30.7 bill as at 31st March, 2019). This included 92 ships

Eight vessels were delivered in the quarter, including ‘Seven Seas Splendor’, ultra-luxury cruise ship for Regent brand owned by Norwegian Cruise Line Holding; ‘Scarlet Lady’, the first of a four cruise ships for Virgin Voyages; ‘Le Bellot’, expedition cruise vessel for Ponant and a vessel for the US Navy.

During the subsequent Board meeting, Giuseppe Bono, Fincantieri’s CEO, said: As the emergency started to unfold, our Group has distinguished itself for making every possible effort in order to safeguard our personnel and our sub-contractors. We were among the first to halt our activities and, again, among the first to safely resume them.

“Despite the last months’ deep uncertainty, the Group employees and those of the related industries showed strength and a strong sense of accountability and I feel the urge to thank them deeply.

“The Group focus in now on the safeguard of the backlog, essential not only to Fincantieri, but also to every small and mid-size company that contributes to make Fincantieri great in the world. At the end of April, we reached a milestone of ultimate importance for our country: we completed the load-bearing structure of the new bridge in Genoa in record time thus demonstrating our capability to succeed even in the large infrastructures sector.

“We achieved an exceptional result on our reference foreign military markets, exploiting our presence and strengthening the role of strategic partner with the related navies. Thanks to our acknowledged expertise in the naval defence sector, we are, one more time, involved in negotiations with the Italian navy and as well as other foreign navies.

“As an important asset for the country’s productive and occupational system, we, once again, make ourselves available to play a leading role in our economy,” he concluded.