Fincantieri expects to return to growth trajectory in 2021

The gradual resumption of cruise operations is expected to significantly ramp up ship production this year and curb the negative impact of the coronavirus pandemic on the sector, according to Italian shipbuilder Fincantieri.

Last week, the shipbuilder released its financial results for the first quarter of this year showing improved figures.

In Q1 2020, revenues and income, at EUR 1,426 million, excluding pass-through activities, increased by 9.1%, compared to the same quarter of 2020.

Q1 production volumes exceeded those reported in the first quarter last year, fully recovering the shortfall caused by the suspension of production activities at the group’s Italian shipyards and production sites, owing to the COVID-19 outbreak.

Cruise ship business area revenues confirm the path already set in the fourth quarter 2020, with production back in full swing in all the group’s shipyards. 2021 production schedule for the Italian shipyards envisages the delivery of five units, of which one, Viking Venus, already delivered on April 15, three units to be delivered in Q3 and one unit in Q4.

The results are said to be in line with expectations, marking a step forward towards 2021 targets, with revenues expected to increase considerably in the remaining part of the year as a consequence of the ramp-up needed for the development of the hefty workload and to meet the delivery schedule.

As explained, the higher revenues and volumes achieved are driven by the full resumption of production activities in all the group’s shipyards and production sites.

Group EBITDA, at EUR 101 million, recovered well beyond the margin lost in the first quarter of 2020 due to the lack of progress on naval projects during the suspension of activities; EBITDA margin, excluding pass-through activities, stands at 7.0%. The improved marginality confirms the performance of the fourth quarter 2020 (6.9%) and it is in line with the guidance for 2021, according to the shipbuilder.

Net financial position reports a net debt balance at EUR 1,617 (EUR 1,062 million in net debt on December 31, 2020). The change, in line with forecasts, is consistent with the developed production volumes and with delivery schedule, which envisages seven cruise ships to be delivered in the remaining part of the year. The shipbuilder noted that the net financial position is affected by the strategy of the deferrals granted to the clients, in order to preserve the sizeable backlog as well as to strengthen the relationships with them.

Expectations for 2021

In view of the completion of the ongoing vaccination campaign, Fincantieri expects to keep production in full swing, as in the second half of 2020, allowing the group to go back to pre-pandemic growth levels.

Despite the crisis triggered by the COVID-19 outbreak, the group is going back to its growth path, thanks to a sizeable and diversified backlog, that it has been able to fully preserve — in particular in the cruise business area.

Q1 2021 performance allows to confirm the 2021 guidance, with revenues up by 25-30% when compared to the 2020 (excluding pass-through activities) and EBITDA margin levels close to 7%.

Net financial position is expected to increase during the first half of 2021, consistently with the cruise shipbuilding business specific financial dynamics and with the reassessed delivery schedule, which includes seven cruise units, of which four are scheduled for the second half of the year. Consistently with the deliveries timeline, the net financial position will tend to settle, at the end of 2021, to a value in line with the 2020 one, including the full CapEx plan scheduled for the year.

“The results of the first quarter picture a healthy group able, as expected, to confirm the guidance, with growing revenues and increased margins. Alongside such an encouraging performance, together with an overall slight economic recovery and also by virtue of the progress made in dealing with the pandemic, we welcome both the cautious resumption of cruise activities in Europe and the one that will shortly follow in the United States,” Giuseppe Bono, Chief Executive Officer of Fincantieri, said.

“It should as well be noted how the cruise booking trend for 2022 is in line with and, in some cases, even better than the pre-pandemic levels.”