'The results of the first quarter 2019 strengthen our role as a leader, capable of quickly transforming the soft backlog into firm orders,' Fincantieri CEO Giuseppe Bono said during the group’s board meeting Thursday in Rome.
This gives Fincantieri a key role in Italy's economy, Bono said, with the orders for 11 cruise ships signed in these months translating into almost €27bn generated to the benefit of the territories where Fincantieri has operations.
Total backlog €34.3bn
Total backlog reached €34.3bn, covering approximately 6.3 times the 2018 revenues, Fincantieri GM Alberto Maestrini said during Friday's earnings call. He called this an 'extraordinary' result with €30.7bn (up from €21.8bn at March-end 2018) with 104 ships in the orderbook and a soft backlog of approximately €3.6bn (up from €5.9 billion at March-end 2018).
Revenue grew almost 13% to €1.4bn, up from €1.2bn in Q1 2018, and EBITDA was €90m, up from €89m. The EBITDA margin was 6.5%, compared to 7.3% a year ago.
Speaking about the cruise orders, Maestrini listed Oceania Cruises (two ships with expected delivery in 2022-2025), Regent Seven Seas Cruises (one ship for 2023), Viking Cruises (two ships in 2024-2025), MSC Cruises (four ships in 2023-2026) and Princess Cruises (two between 2023-2025), while Coral Expeditions ordered a vessel for 2020 delivery.
Of the 104 ships ordered, 50 are cruise vessels to be delivered up to 2027. Among the 13 units scheduled after 2023, seven were acquired in the recent quarter. Regarding the 2019-2023 period, Fincantieri is scheduled to deliver, respectively, eight, eight, nine, seven and seven ships per year. The orders acquired in Q1 add to 2022 deliveries (one of the seven ships) and 2023 (three of the seven ships).
Fincantieri group is handing over eight ships in 2019, with Costa Venezia and Viking Jupiter already delivered, to be followed by Sky Princess and Carnival Panorama in October. Vard has already delivered Le Boungainville to Ponant and Hanseatic Nature to Hapag-Lloyd Cruises, both in April. Ponant's Le Dumont d’Urville and Hapag-Lloyd's Hanseatic Inspiration are to come.
The soft backlog (options) amounts to 10 ships, including cruise and naval vessels.
The results in shipbuilding, offshore & specialized vessels and equipment systems & services include higher volumes for the production of cabins and public areas for cruise ships, and losses in the offshore & specialized vessels segment. The group has a new strategy to improve efficiency for higher productinon rates.
Change in Vard production model
Maestrini and Fincantieri CFO Giuseppe Dado also highlighted a significant change in the Vard production model.
With the acquisition of Vard, Fincantieri implemented a model where the Romanian shipyards are devoted to hull construction while the outfitting follows in the Norwegian yards. Although this model has significant benefit in the production timeline, there were sub-optimal cost benefits, they said.
Romanian yards to gear up for full cruise shipbuilding
As part of a wider plan where all the cruise business comes under Fincantieri’s merchant ship division, including the related activities of Vard, they unveiled that Vard yards will focus on offshore and special projects while the facilities in Romania are being enhanced to carry out the full building of cruise ships.
Sestri-Ponente to handle largest cruise newbuilds
At the same time, Fincantieri is working to increase the capabilities of its Italian shipyards. Among the main projects, the group and local institutions are finalizing a plan to improve Genoa-Sestri Ponente shipyard to build the largest cruise ships requested by the market.
'We hope to start with activities at the shipyard by September' as part of a multi-year, multimillion-euro upgrade project, Bono said this morning at a Genoa news conference.
Speaking about Fincantieri’s current and future growth plans, Bono cited strategic initiatives in the naval business area and in the development of an in-house center of excellence for engineering and information technology services.
Engineering diversification efforts continue. Bono cited the cooperation agreement recently signed with ENI and CDP and Terna.
Diversification also involves infrastructure, including a production plant inaugurated in the recent quarter and a steel-cutting ceremony for the new bridge to replace the collapsed Morandi viaduct in Genoa.
In sum, Fincantieri faces a challenging year with many projects, which Bono said will allow the group to show its 'excellent production and system integration capabilities.'
On a side note, Fincantieri's board is now split equally between men and women, a diversity that's beyond the regulatory requirements.