Fincantieri: BoD approves 1Q2020 results
Total backlog at 31.9 billion -ATTACHMENT
Primary objectives: employees safety and backlog safeguard
The Board of Directors of Fincantieri SpA, chaired by Giampiero Massolo, has examined and approved the interim financial information at March 31, 2020.
Production activities gradually resumed since April 20, 2020 and prompt deployment of all necessary measures to ensure the health and safety of our employees and those of our subcontractors
To safeguard the relationships with strategic clients and to ensure the acquired backlog, the business strategy is now focused on reassessing dates, to avoid any cancellations of acquired orders, in full collaboration with clients
Q1 production volumes recorded a 20% reduction due to the interruption of production activities in all Italian shipyards and production plants starting as of March 16, 2020.
Consolidated Q1 2020 results
Revenues at euro 1,307 million (euro 1,368 million at March 31, 2019) down by only 4.5% compared to Q1 2019, despite the reduction of production time of 20% due to the suspension of operations in the Group’s Italian shipyards and production plants, resulting in approximately euro 190 million loss in revenues
EBITDA at euro 72 million (euro 92 million at March 31, 2019) including the reduction in production volumes in the Group’s Italian sites, EBITDA margin 5.5% (6.7% at March 31, 2019). The lack of progress in shipbuilding projects, due to the suspension of activities, led to a shortfall in EBITDA of approx. euro 15 million
In addition to EBITDA shortfall due to the Italian sites production downtime, the effects of COVID-19 on Q1 2020 results, amounting to euro 23 million, 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 health and safety
Total backlog at euro 31.9 billion, covering approximately 5.5 times 2019 revenues, with Q1 order intake at euro 0.3 billion: backlog at euro 27.7 billion (euro 30.7 billion at March 31, 2019) with 92 ships in backlog; soft backlog at approximately euro 4.2 billion (approximately euro 3.6 billion at March 31, 2019)
8 vessels successfully delivered in the quarter, among which “Seven Seas Splendor”, ultra-luxury cruise ship for Regent, brand owned by Norwegian Cruise Line Holding Ltd, “Scarlet Lady”, the first of a four cruise ships for the Shipowner Virgin Voyages; “Le Bellot”, expedition cruise vessel for Ponant and a naval vessel for the US Navy.
Other key events
Outstanding result for Fincantieri Marinette Marine chosen as prime contractor by the US Navy within the “FFG(X)” program: the company was awarded a nearly 800 million dollars contract for the concept design and construction of the first-in-class guided missile. The contract envisages the option for further 9 units, with a cumulative value of 5.5 billion dollar.
Completed the load-bearing structure of the new bridge in Genoa in record time: all the 19 steel spans had been raised by the end of April 2020 demonstrating the Group’s capability to deal with highly complex non-naval infrastructure projects even in emergency situations
VARD enters the promising renewable energy sector: the experience gained in the design and construction of specialized vessels enabled, after the end of Q1 2020, the acquisition of an order for one Service Operation Vessel (SOV) conceived to perform maintenance operations at offshore wind farms, reaffirming the diversification strategy envisaged by Fincantieri for its subsidiary
Acknowledgment of Group efforts towards sustainability: the Group’s commitment to fight climate change was rated B by the Carbon Disclosure Project. The Group positioned itself in the top cluster of Vigeo Eiris chart, gaining the highest placement among its reference peers.
During the Board meeting Giuseppe Bono, Fincantieri’s Chief Executive Officer, 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 subcontractors. 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. I wish to recall that Fincantieri is a spearhead of the Italian manufacturing sector and as such it proudly embraces the commitment to developing the territories in which it is deeply rooted. 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".
Bono concluded: “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".
Safe Harbour Statement
The information contained in this document incorporates the assessments, based on the data currently available, of the possible impacts of the COVID-19 outbreak on the Group's operations. The valuation is the result of a preliminary analysis of the potential effects of the pandemic on the operating segments in which the Group operates. It should be noted, however, that the repercussions of COVID-19 at a macroeconomic scale are not yet clearly appraisable and it is not excluded that critical issues, not foreseen or foreseeable to date, may arise in the future.
It should be remembered that the forward-looking information have, by their nature, an intrinsic characteristic of risk and uncertainty, since they also depend on external factors and / or on future events that are beyond the control of the Company.
The negative economic effects resulting from the impacts of the spread of COVID-19 are not included in the Group's operating results, but in the extraordinary expenses. As of March 31, 2020 the amount of these charges, based on the estimates made to date, is equal to approximately € 23 million and mainly refers to a reduce operating leverage, as a consequence of the lower production volumes, and to expenses for ensuring personnel’ health and safety.
Production volumes for the quarter were affected by the interruption, as of March 16, 2020, of the activities of the Group's Italian shipyards and production plants, in compliance with the instructions of the government authorities. Group's Italian activities showed a reduction of approximately 20% in terms of days worked in the quarter 2020 vs. the same period 2019 and of actual production volumes compared to those budgeted. From March 16 to March 29, production activities were suspended through the anticipation of the collective holidays with respect to their regular use in the summer period.
Production activities in VARD shipyards (Norway, Romania and Vietnam) were not suspended also because no suspension of production activities was ordered by the local authorities. As defense-related activities are considered "essential business" and as for explicit request of the US Navy, the American subsidiary FMG keeps on regularly run its production activities in all its American shipyards.
In order to ensure the acquired backlog and with a view to accommodate its customers’ needs, Fincantieri is valuing, in full collaboration with the shipowners, the revision of the delivery dates of the units in portfolio and the consequent delays of the installments for units about to be delivered and for those under construction. The review of delivery dates will also be influenced by the subcontractors and by the recovery plan at full capacity of production activities.
The integral version of the report (ten pages, with tables) is attached to this AVIONEWS.
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