Fincantieri’s Performance Bounces Back in Q1
Italian shipbuilding major Fincantieri has marked a turning point in the first quarter of 2016, returning to the black from losses that were pressuring the shipbuilder’s results from the second half of 2015.
Profit before extraordinary and non-recurring income and expenses was EUR 5 million (USD 5.7 million), improving from a net loss of EUR 21 million in the first quarter of 2015. EBITDA was EUR 51 million against EUR 59 million in the corresponding quarter of 2015, with an EBITDA margin of 4.9% compared to 5.3% in Q1 2015.
“Today we are presenting a solid set of quarterly results that mark a turning point from the second half of 2015, with which Fincantieri left behind the industry’s longest period of crisis, showing a clear recovery in operating and economic performance,” said Giuseppe Bono, Fincantieri’s Chief Executive Officer.
Profit for the period was EUR 0.3 million against a net loss of EUR 27 million at 31 March 2015.
During the first three months of 2016, the group was awarded EUR 713 million in new orders, compared to EUR 85 million in the corresponding period of 2015, with a book-to-bill ratio (order intake/revenue) of 0.7 (0.1 at 31 March 2015).
The shipbuilding segment accounted for 90% of the quarter’s order intake before consolidation adjustments (53% in the first quarter of 2015), the offshore segment for 10% (35% in the first quarter of 2015) and the equipment, systems and services segment for 28% (29% in the first quarter of 2015).
“We have managed and developed our business with determination in the first few months of 2016, finalizing major agreements, including those with Carnival Corporation and Norwegian Cruise Line Holdings for the Regent Seven Seas Cruises brand. The backlog at 31 March demonstrates the group’s ability to continuously transform into firm contracts the major commercial negotiations that a year ago, being still in progress, were included in the soft backlog. The total backlog remains at record levels, having exceeded EUR 19 billion at the end of the first quarter,” Bono added.
“The important operational and economic objectives achieved in the first few months of 2016 allow us to confirm the Business Plan’s targets in terms of revenue growth, increased profitability, cash generation and shareholder remuneration.”
Since the beginning of the year, Fincantieri delivered three cruise ships, including two prototypes, namely the Koningsdam for Holland America Line and the Carnival Vista for Carnival Cruise Lines, which were delivered in the same week at two different yards. Several naval and offshore vessels were also delivered during the quarter. Overall, the deliveries in the first four months of 2016 generated cash inflows totaling some EUR 1.9 billion.
For the remainder of 2016, the group confirmed the guidance for 2016 outlined in the Business Plan 2016-2020, i.e. revenue growth of 4-6%, an EBITDA margin of around 5% and a positive net result.
As for the shipbuilding segment, the solid results for the first quarter of 2016 support the company’s expectation of margins recovery in the remainder of the year from the levels seen in the final quarters of 2015.
As for the offshore segment, 2016 is still characterized by a widespread and protracted market crisis entailing problems for all industry players, with a significant number of OSV owners embarking on restructuring processes with a consequent rise in counterparty risk. To confront this market situation, the subsidiary VARD is carrying on the actions to diversify and reorganize itself and is now working with clients and financial institutions to secure the current order book, Fincantieri said.
Finally, the company’s equipment, systems and services segment is expected not only to see further growth in volumes in 2016, but also to confirm the positive margins recorded in the previous year.