Fincantieri Highlights Strong Backlog and Positive Outlook
Fincantieri highlighted the shipbuilder’s ability to rebound and maintain its market position in reporting its financial results for the first nine months of the year. The results, as anticipated, were adversely impacted by the coronavirus-related restrictions, which resulted in reduced production hours, postponement of deliveries and payments, and extraordinary expenses resulting from the current environment.
“The mere numerical comparison with the same period last year should not be considered relevant, with 2020 being a truly unprecedented year,” said Giuseppe Bono, Fincantieri's Chief Executive Officer announcing the financial report for the nine months. “Moving past the results, I want to highlight our ability to look forward, securing stability, and work for the next years for our shareholders and stakeholders.”
Discussing the current business performance, they noted that the production continues to be affected by the implementation of new safety measures. However, they noted that by implementing a series of measures they have been able to keep the level of positive tests for COVID-19 under three percent.
Fincantieri reports that they have not experienced any order cancellations, but with the order intake reduced to under two billion euros, the company’s total backlog declined nearly five percent. The firm backlog is valued at just under 27 billion euros with a total of 88 vessels to be delivered by 2027. They have a further 10 billion euros earmarked as a soft backlog, meaning they have indications but have not yet completed the contracts.
In 2020, Fincantieri has delivered a total of 14 ships from nine different shipyards, including five cruise ships, two naval vessels, and three fishing crafts. This included the hundredth modern cruise ship delivered by the yard, the Enchanted Princess delivered to Princess Cruises in late October. While the company anticipates delivering one more cruise ship in calendar 2020, much of the work has been rescheduled due to the suspension of work in the spring. As a result, progress payments were also delayed contributing to the doubling of the company’s net debt versus the end of 2019.
The company reports that its strategy was designed to preserve the sizable order backlog as well as strengthen relationships with its customers. That contributed to the increase in debt levels, but they anticipate that they can work down the debt as they continue to deliver newbuilds.
These factors contributed to the nine-month financial results which included a 16 percent decline in revenues a shortfall in earnings (EBITDA) by more than a third versus budget. The profit margins were also reduced during the nine months. Fincantieri also recorded an extraordinary expense of 149 million euros that they related to the impact of COVID-19 on the operations.