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Profit up at Fincantieri as talks wage on about STX France

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Giuseppe Bono - Negotiations still under way with the French government to define a satisfactory governance structure for STX France
Fincantieri chalked up a stronger first half profit on slightly higher revenues as talks continue with the French government about the terms for taking a majority stake in STX France.

Profit rose to €11m from €5m in the first half of 2016 on 1.3% higher revenues of nearly €2.3bn. EBITDA margin—the ratio between earnings before interest, taxation, depreciation and amoritization and revenues—rose to 6.3% from 5%, or a 20% improvement from early 2016.

The profit grew despite lower unrealized exchange gains of €18m on translating a loan held by Vard Promar from US dollars into Brazilian reals, and a greater impact from claims under asbestos-related lawsuits of approximately €7m.

As of June 30, Fincantieri's total order backlog was valued at €25.5bn, covering approximately 5.8 years of work, with 102 ships in the orderbook, up from the €21.8m total backlog in the first half of 2016. Order intake was nearly €4.4bn, compared to more than €5.8bn at June 30, 2016.

Orders and agreements signed in the first months of the year numbered 12 cruise ships, including options, while Fincantieri delivered five ships, including Viking Sky, Majestic Princess and Silver Muse, as well as two navy ships and a submarine.

'Negotiations are still under way with the French government to define a satisfactory governance structure for STX France and we are confident that their closing will address the condition, non-renounceable for us, that the combination of the two companies be a value-adding proposition,' Fincantieri ceo Giuseppe Bono said.

The talks follow the signing of a purchase agreement to acquire 66.6% of the share capital of STX France from STX Europe for €79.5m, to be paid through available financial resources. Subsequently, the Macron administration decided to renegotiate the deal, and MSC Cruises said it would consider a possible small stake.

During the first half of the year Fincantieri hired more than 300 workers at its Italian shipyards, for a total of 1,200 new hires in the pat three years.

The company continues to forge collaborations with major suppliers to foster a dedicated supply network that can innovate and create value.

Revenues are expected to increase in the second half thanks to the construction ramp-up of higher value-added ships, orders that were acquired after the financial crisis, and the military programs acquired in recent years.

Bono reported Fincantieri's shareholder return of 34.6% outpaced the 9.1% of Italy's main stock index, the FTSE MIB.