Fincantieri swings to first half loss but has no order cancellations

€790m impact from work suspension

In the first half of 2019, the shipbuilding giant had adjusted net income of €29m. Revenues in the first half this year were €2.37bn, down from $2.81bn in the first six months of 2019. The suspension of operations had a €790m impact.

Production activities gradually resumed since April 20 and, as of June 30, staffing in the group's Italian shipyards and production sites was at 90%.

Fincantieri had faced this 'dramatic time' with the 'utmost determination as so the company would emerge from it stronger than before,' CEO Giuseppe Bono said during the board's meeting in Rome Thursday.

'This approach has proven right and it has allowed us not only to avoid any order cancellation,' he continued, 'but, at the same time, to win noteworthy tenders. Our backlog has reached, once again, a new record. Today we can claim not only the world leadership in the construction of cruise ships, but also the one for the naval surface ships.'

€37.9bn backlog

The total backlog, including options, is 117 ships valued at €37.9bn, up from €32.7bn at Dec. 31, 2019. Of the 92 firm orders, cruise and expedition ships number eight in 2020, 2021 and 2022, nine in 2023, four in 2024 and nine beyond that.

During the first half, Fincantieri delivered 10 ships from seven yards, including three cruise vessels — Seven Seas Splendor, Scarlet Lady and Ponant's Le Bellot. Subsequently, in July, Le Jacques Cartier was handed over, capping Ponant's six Explorer-class newbuilds built by Vard in just two years.

Revenues at Fincantieri's shipbuilding segment decreased 17.5%, including a 13.1% decrease in the cruise ship business area. At June 30, cruise-related revenues accounted for 57% of the group’s revenues, compared to 56% the prior year.

Cruise deliveries to come

For the second half of the year, production volumes at the group’s Italian sites are expected to be in line with those before the COVID-19 outbreak. In the cruise area, the company will be delivering three ships whose dates were rescheduled due to the production downtime. Production activities at foreign shipyards were not interrupted, although there was a moderate production slowdown which is expected to be recovered in the coming months.

NCL extension/changes

Fincantieri referred to an extension for Norwegian Cruise Line along with 'further agreed changes' to four vessels in the orderbook, without giving detail. NCL has the new Leonardo class under development.

Fincantieri noted that over the last few weeks, the main cruise shipowners have 'unequivocally expressed their intention not to cancel any existing orders,' and will focus on new ships while shedding older, less efficient ones.

New tunnel thrusters

In May, Fincantieri announced it had completed development of an innovative family of tunnel thrusters specifically for the cruise market. These reduce noise and increase efficiency, reliability and environmental sustainability.

Looking to the future with confidence

Bono said the current backlog allows Fincantieri to look at the future with confidence thanks to a workload for the next six to seven years with the resulting financial performance expected to be in line with the previous business plan's targets.

Bono also thanked Alberto Maestrini for his 'great dedication and professionalism' as general manager over the past rour years and welcomed Fabio Gallia, the newly appointed GM, who has CEO and board experience from leading Italian companies.

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