Fincantieri S.p.a. · MIL:FCT
Fincantieri — Borsa Italiana – Digital Italian Sustainability Week 2020
45 slides from Fincantieri's conference presentation, Jun 30, 2020
Slide 1: Borsa Italiana – Digital Italian Sustainability Week
Borsa Italiana – Digital Italian Sustainability Week FINCANTIERI June 30th - July 1st, 2020
Slide 2: Safe Harbor Statement
Safe Harbor Statement This Presentation contains certain forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes," "expects," "predicts," "intends," "projects," "pl
Slide 3: Table of Contents
Table of Contents Section 1 Description of the Group Section 2 Q1 2020 Key messages Section 3 Sustainability Section 4 Financial Overview Section 5 Balance Sheet and Capital Structure Appendix
Slide 4: Description of the Group
Section 1 Description of the Group
Slide 5: Fincantieri at a glance
Fincantieri at a glance We are an Italian Group with a global footprint € 5.8 bn FY19 revenues 47% of our employees are based in Italy and 82% of revenues Our come from international clients(1) figures € 31.8 bn Total backlog(2,3) 20 shipyards 4 Our continents global reach ~ 19,800 employees > 80,00
Slide 6: Products, clients and backlog
Products, clients and backlog Diversified product portfolio with a wide client base and strong backlog Main products Key clients Revenues 2019(1) Backlog(2) (4) (5) Cruise • All cruise ships: Luxury/Niche(3) Upper Premium €3,574 mln Premium Contemporary 55.6% Naval € 25,857 mln Shipbuilding
Slide 7: Markets and positioning
Markets and positioning Leadership in high-potential reference markets and solid track record End markets Market Trend Main Drivers Track record Cruise • World leader in the design and • Record order levels in 2019 construction of vessels for all • To be reviewed once the effects of segments of the
Slide 8: Focus: cruise client portfolio
Focus: cruise client portfolio Consolidated capability to acquire new clients and diversify product portfolio…. Today Luxury / Niche 2002 Upper Premium Premium Premium Contemporary Carnival brands Contemporary Norwegian Cruise Lines brands Royal Caribbean brands 8
Slide 9: Key competitive strengths
Key competitive strengths Consolidated leadership, high diversification and flexible global production network Consolidated leadership in diversified markets and High diversification in terms of end market, geography 1 2 sizeable backlog and client portfolio • Leader in cruise market and in naval se
Slide 10: Ownership and Group structure
Ownership and Group structure A listed company with strong reference shareholders Brief description of the Group structure Simplified ownership and Group structure • Fincantieri shares are listed on the Milan Stock Exchange Italian Ministry Italian Banking Treasury Shares since July 3, 2014 of Econo
Slide 11: Q1 2020 Key Messages
Section 2 Q1 2020 Key Messages
Slide 12: Q1 2020 Key Messages: Protecting the safety of our people
Q1 2020 Key Messages Protecting the safety of our people and ensuring backlog resiliency “I wish to recall that Fincantieri is a spearhead of the Italian manufacturing sector and as such it proudly embraces the commitment to developing the territories in which it is deeply rooted” (Giuseppe Bono, Ch
Slide 13: Q1 2020 Key Messages: Continuous strength despite rough waters
Q1 2020 Key Messages Continuous strength despite «rough waters» • “FFG(X)” programme awarded to FMM: contract for the concept design and construction of the first-in-class guided missile frigate for the US Navy plus options for 9 units worth ~ $ 5.5 bln Business • Completed the steel span of the Gen
Slide 14: Cruise industry outlook
Cruise industry outlook Consequences of the crisis • 2020: a challenging year for shipowners and shipbuilders • Cruise operators have withdrawn their guidance as the industry backlash is yet hardly quantifiable Mitigants • Cruise operators are trying to weather the crisis and preserve going-concern
Slide 15: 2020 Company outlook
2020 Company outlook COVID-19 • Yet too early to assess the full brunt of the effect of the pandemic • Full-year results likely to be impacted by: • Lower production volumes and related operating inefficiencies (e.g. reduced operating leverage, sub-optimal utilization rate of yards) • Extra costs re
Slide 16: Sustainability
Section 3 Sustainability
Slide 17: Sustainability in Fincantieri: a long term commitment
Sustainability in Fincantieri Cruising to Sustainability: a long term commitment that is driving our business Our attention to sustainability is rooted at the very core of our business – however, in the last 4 years we formalized our commitment with a fast-paced governance evolution 2016 • Fincantie
Slide 18: Our dedication is testified by our internal codes and policies
Sustainability in Fincantieri Our dedication is testified by our internal codes and policies 18
Slide 19: Corporate social responsibility supported by strong governance
Sustainability in Fincantieri Our corporate social responsibility is supported by a strong governance structure Board of Directors Sustainability Committee • Established by the Board of Directors in 2016 • Composed of 4 independent members • Key responsibilities: − Thorough investigation of issues r
Slide 20: Key objectives and tools for sustainability management
Sustainability in Fincantieri Our key objectives and tools for sustainability management a Materiality matrix & Focus on Charter of Sustainability material topics Commitments b Be prepared Sustainability in risk mapping c Plan ahead Sustainability Plan d Report Sustainability Report 20
Slide 21: We focus on material topics
Sustainability in Fincantieri We focus on material topics to develop sustainability strategy a PROCESS FOR Charter of Sustainability Commitments STAKEHOLDER ENGAGEMENT ON MATERIAL TOPICS Our idea of sustainable and responsible development goes through: Materiality matrix • A more widespread dissemin
Slide 22: Be prepared: ERM framework incorporates sustainability risks
Sustainability in Fincantieri Be prepared: we broadened our ERM framework to incorporate sustainability risks b The Fincantieri Risk Universe has been defined as part of the “ERM project” which provided the The Company with an Enterprise level process for detecting, evaluating and monitoring the mai
Slide 23: Sustainability risks in our ERM framework
Sustainability in Fincantieri 10 Sustainability risks were included in our Enterprise Risk Management framework b We identified 10 key sustainability risks across 5 major categories and fully integrated them into our Enterprise Risk Management Governance Human resources responsibility Rating agencie
Slide 24: Plan ahead: first Group Sustainability Plan
Sustainability in Fincantieri Plan ahead: in 2018 the BoD approved the first Group Sustainability Plan c 32 Objectives Governance Economic Responsibility 24 Commitments Human Resources Social Responsibility Responsibility 17 Material topics Product Environmental 4 Pillars of the Business Plan Respon
Slide 25: Plan topics mirror the Group Business Plan
Sustainability in Fincantieri The Plan topics mirror the structure of the Group Business Plan 2018-2022 c SUSTAINABILITY PLAN 7. Protection of employment and industrial relationships 8. Training and education 9. Diversity and equal opportunity 1. Governance and 10. Company welfare business integrity
Slide 26: 2019 Sustainability Report: Key data
Sustainability in Fincantieri 2019 Sustainability Report: Key data d Social Responsibility KPIs Environmental Responsibility KPIs Target Diversity and equal opportunity Energy 100% electricity from 13.0 % women employed 40% electric energy from renewables renewable sources (50% in Italy) purchased i
Slide 27: Financial overview
Section 4 Financial overview
Slide 28: Backlog ramp-up and conversion of soft backlog into backlog
Backlog ramp-up and conversion of soft backlog into backlog Order intake Total backlog(1) € mln 5.4x 5.2x 6.2x 5.6x € mln 1.5x 1.7x 1.6x 1.5x 4.1x 4.4x 4.7x 4.9x 33,824 32,690 8,300 4,100 8,554 8,617 8,692 26,153 24,031 4,100 6,505 5,800 8,300 28,590 25,524 22,053 5,800 18,231 4,100 3,000 FY 2016 FY
Slide 29: Order intake and backlog
Order intake and backlog Breakdown by segment Order intake Total backlog(1) € mln € mln 6.3x 5.6x 5.5x 4.7x 0.2x 5.6x 4.9x 4.7x 34,342 6,455 32,690 31,878 168 3,600 39 1,607 4,100 920 4,200 1,736 888 2,008 813 • Total backlog at € 31.8 bln, ~ 5.5 times 2019 revenues • Order intake for the quarter €
Slide 30: Backlog deployment
Backlog deployment Breakdown by segment and end market Shipbuilding Offshore & Specialized Vessels • 8 units delivered in 1Q 2020, 92 # ship deliveries # ship deliveries ships in backlog Cruise Naval(1) • Cruise: 42 vessels − Deliveries up to 2027 2020 4 4 8 2020 1 5 6 2020 3 6 9 − 9 units scheduled
Slide 31: 1Q 2020 Revenues
1Q 2020 Revenues Revenues breakdown by segment(1) € mln • Revenues down 4.5% YOY at € 1,307 • -20% production volumes YOY 1,385 1,368 1,307 with estimated loss of ~ € 190 170 11.3% 170 11.4% 14.0% 205 mln 224 14.9% 203 13.6% 126 8.6% − Shipbuilding revenues up 1.3% vs Q1 2019 despite suspension of I
Slide 32: 1Q 2020 EBITDA
1Q 2020 EBITDA EBITDA(1) and EBITDA margin • EBITDA at € 72 mln (€ 92 mln in € mln Q1 2019), EBITDA margin at 5.5% (6.7% in Q1 2019) • Suspension of activities led to 6.5% 6.7% 5.5% estimated shortfall in EBITDA of ~ € 15 mln − Shipbuilding profitability affected 90 92 by the suspension of Italian p
Slide 33: Balance Sheet and Capital Structure
Section 5 Balance Sheet and Capital Structure
Slide 34: Working capital dynamics
Working capital dynamics Indicative payment terms Illustrative phases of the shipbuilding process(1) Impact on net working capital Signing A First Cut B Launch C Delivery D Design / Project Hull Assembly and Outfitting and Development Pre-Outfitting Sea Trials • Increases during construction Cruise
Slide 35: Historical evolution of Net Working Capital and Net Financial Position
Historical evolution of Net Working Capital and Net Financial Position Net Working Capital(1) Net Financial Position(2) € mln 265 (120) 44 (125) (615) (314) (494) (736) 3,045 2,660 2,376 2,393 757 432 475 368 (678) (624) (632) (811) (453) (482) (485) (399) (1,433) (1,889) (1,984) (264) (2,359) (530)
Slide 36: Net working capital and net debt
Net working capital and net debt(1) Breakdown by main components € mln FY 2019 1Q 2020 Inventories and advances to • Net working capital changes due suppliers to: 828 − Reduction of Work in Progress Work in progress net of advances from customers 831 (-948 mln vs FY19) related to the cash-in of the
Slide 37: Appendix
Appendix FINCANTIERI | el
Slide 38: VARD: New organizational structure and segment review
VARD New organizational structure and segment review • Following the delisting of VARD, in December 2018, Offshore & Specialized Vessels Shipbuilding the full organizational integration with the Parent Company was launched, both for expedition cruise shipbuilding projects and the related shipyards,
Slide 39: Deep-dive: Vard
Deep – dive: Vard Ongoing integration and alignment to Group best practices What we did What we are working on Vard full integration process: Delisting of the subsidiary in December 2018 Change in management Additional efforts to align industrial management Operational reorganization of bo
Slide 40: Q1 2020 main orders and deliveries
Q1 2020 main orders Segment Vessel Client Number of ships Expected Delivery Offshore & Fishery Framherij 1 2022 Specialized Vessels Fishery Nergard Havfiske 1 2022 Q1 2020 main deliveries Segment Vessel Client Shipyard Cruise ship “Seven Seas Splendor” Regent Seven Seas Cruises Ancona Cruise ship “S
Slide 41: Overview of financial performance indicators
Overview of financial performance indicators(1) € mln FY 2016 FY 2017 FY 2018(2) FY 2019 Order intake 6,505 8,554 8,617 8,692 Total backlog 24,031 26,153 33,824 32,690 Of which backlog 18,231 22,053 25,524 28,590 Of which soft backlog 5,800 4,100 8,300 4,100 Revenues 4,429 5,020 5,416 5,849 EBITDA 2
Slide 42: Financial performance: Revenues
Financial performance: Revenues Revenues(1) € mln 5,849 5,474 5,416 899 5,020 651 651 558 440 4,429 681 623 11 676 18 18 495 22 960 1,503 1,434 1,434 12 1,212 5,088 1,156 4,678 4,678 4,267 3,574 3,246 3,033 3,226 3,226 2,078 (272) (481) (536) (536) (578) FY 2016 FY 2017 FY 2018 Reported FY 2018 Rest
Slide 43: Financial performance: EBITDA
Financial performance: EBITDA EBITDA / margin(2) € mln 6.0% 6.8% 7.6% 7.8% 5.5% 414 421 320 341 11.2% 73 11.2% 73 10.0% 90 267 11.5% 64 41 12.5% 62 6.1% 5.3% 51 8.5% 395 8.5% 395 7.4% 375 6.3% 5.7% 270 185 -2.9% (20) -2.1% (13) -24.2% (31) (34) (34) (34) (107) (38) FY 2016 FY 2017 FY 2018 Reported F
Slide 44: Financial performance: EBIT and Net result
Financial performance: EBIT and Net result EBIT / margin Net result before extraordinary and non recurring items(1) € mln € mln 91 114 3.5% 4.4% 5.1% 2.6% 60 95 117 66 (6) (4) (3) (64) (7) (71) FY 2016 FY 2017 FY 2018 FY 2019 285 of which Group of which minority interests 221 157 153 Net result € ml
Slide 45: Capex: historical trend
Capex: historical trend Capex evolution Capex by segment € mln € mln 3.8% 5.1% 3.2% 2.9% 279 279 21 224 61 224 30 20 6 8 80 163 161 31 163 161 27 13 55 37 18 9 7 6 218 222 165 144 108 124 120 124 FY 2016 FY 2017 FY 2018 FY 2019 FY 2016 FY 2017 FY 2018 FY 2019 Property, plant and equipment Intangible
Fincantieri — Borsa Italiana – Digital Italian Sustainability Week 2020 on 6ix