Fincantieri S.p.a. · MIL:FCT
Fincantieri — Goldman Sachs Twelfth Annual Industrial Conference 2020
34 slides from Fincantieri's conference presentation, Nov 30, 2020
Slide 1: Goldman Sachs: Twelfth Annual Industrial Conference
GOLDMAN SACHS: TWELFTH ANNUAL I NDUSTRIAL CONFERENCE 30th November 2020 www.fincantieri.com
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 SECTION 2 SECTION 3 SECTION 4 BALANCE SHEET AND DESCRIPTION FINANCIAL C A P I TA L S T R AT E G Y OF THE GROUP OVERVIEW STRUCTURE & OUTLOOK 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 48% of our employees are based in Italy and 82% of revenues come from international clients • € 5.8 bn Revenues in FY2019, OUR 82% of which come from FIGURES international clients • € 36.8 bn Total Backlog(1) • 18 shipyards in 4
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) €3,574 mln Upper Premium Premium 55.6% Contemporary Naval € 25,335 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 construction of • Record order levels in 2019 • To be reviewed once the effects of COVID-19 vessels for all segment
Slide 8: Focus: cruise client portfolio
Focus: cruise client portfolio Consolidated capability to acquire new clients and diversify product portfolio Today Luxury / Niche 2002 Premium Upper Premium Contemporary Premium Carnival brands Norwegian Cruise Lines brands Contemporary Royal Caribbean brands 8
Slide 9: Key competitive strengths
Key competitive strengths Consolidated leadership, high diversification and flexible global production network 1. 2. Consolidated leadership in diversified High diversification in terms of end markets and sizeable backlog market, geography and client portfolio • Leader in cruise market and in naval
Slide 10: Ownership and Group structure
Ownership and Group structure A listed company with strong reference shareholders Simplified ownership and Group structure Italian Ministry Italian Banking Treasury Shares of Economy and Finance Foundations • Fincantieri shares are listed on the Milan Stock Exchange since July 3, 2014 82.77% 15.93%
Slide 11: Financial Overview
SECTION 2 FINANCIAL OVERVIEW
Slide 12: 9M 2020 executive summary
9M 2020 executive summary 100th cruise ship successfully delivered, revenues at €3.5 bn, and backlog fully preserved No orders cancelled. Production programs have been rescheduled following the pandemic outbreak «No Sail Order» lifted by the CDC – no mandatory downtime for cruise operations in I
Slide 13: Business update
Business update Continuing focus on strategic development FMM is prime contractor for the first-in-class guided missile frigate and 9 additional options for the US Navy’s FFG(X)(1). FMM was also awarded a contract for the design and engineering of the future Large Unmanned Surface Vessel (LUSV) SH
Slide 14: Backlog deployment
Backlog deployment Balanced visibility in Cruise and Naval with deliveries stretching up to 2027 Shipbuilding Offshore & Specialized Vessels # ship deliveries # ship deliveries CRUISE 2020 6 2 8 NAVAL 2020 2 3 5 2020 6 2 8 2021 8 2021 8 2021 4 2022 7 2022 8 2022 3 4 2023 10 2023 5 2023 1 2024 4 2024
Slide 15: 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 € mln 1.5x 1.7x 1.6x 1.5x 5.4x 5.2x 6.2x 5.6x 4.1x 4.4x 4.7x 4.9x 8,554 8,617 8,692 33,824 32,690 8,300 4,100 6,505 26,153 24,031 4,100 5,800 8,300 28,590 25,524 5,800 22,053 4,100 18,231 3,000 FY 2016 FY
Slide 16: 9M 2020 Order intake and backlog
9M 2020 Order intake and backlog Backlog fully preserved and Offshore order intake gaining momentum Order intake breakdown by segment Total backlog breakdown by segment(1) € mln 1.6x 0.5x € mln 5.9x 5.6x 6.3x Order intake at €1.9 bn 5.2x 4.9x 4.6x 6,811 Shipbuilding down YoY after past 424 36,838
Slide 17: 9M 2020 Revenues
9M 2020 Revenues Production volumes down 19% versus pre COVID-19 estimates due to downtime of operations Revenues breakdown by segment(1) Severe effect of the production downtime and € mln 4,254 4,217 gradual resumption of operations. Whilst 582 582 3,534 revenues have decreased 16.2% YoY, real 392
Slide 18: 9M 2020 EBITDA
9M 2020 EBITDA Lost EBITDA contribution of €71 mln as effect of production rescheduling. Breakeven of VARD Offshore EBITDA breakdown by segment(1,2) € mln 6.7% 7.3% 5.0% 5.7% Shortfall in EBITDA of €71 mln (only €6 mln in 3Q) following rescheduling of 287 306 production programs, with major impact 5
Slide 19: Balance Sheet and Capital Structure
SECTION 3 BALANCE SHEET AND CAPITAL STRUCTURE
Slide 20: 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 Outfitting and Development and Pre-Outfitting Sea Trials Duration • Increases during constructio
Slide 21: 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 € mln 265 (120) 44 (125) (615) (314) (494) (736) 3,045 2,376 2,393 2,660 757 368 432 475 (678) (624) (632) (811) (453) (482) (485) (399) (1,433) (1,889) (1,984) (264) (2,359)
Slide 22: 9M 2020 Net Working Capital and Net Financial Position
9M 2020 Net Working Capital and Net Financial Position Impact from slowdown in production schedule with cash-ins skewed towards 4Q Net Working Capital breakdown by segment Net Financial Position(1) € mln € mln 905 828 1,378 Main drivers: 1,415 Cruise-specific financial 1,053 677 dynamics 125 119 (
Slide 23: Strategy & Outlook
SECTION 4 m STRATEGY & OUTLOOK FINCANTIERI The sea ahead
Slide 24: Focus on Cruise
Focus on Cruise Enhanced health & safety protocols on board could reshape global cruise industry with an eye to sustainability EU operations: temporary suspension as new travel restrictions are being reintroduced amid second wave of COVID-19 U P D AT E O N US operations: CDC lifted the no-sail o
Slide 25: Company outlook
Company outlook Solid backlog ensures future visibility despite volatile macroeconomic environment PRODUCTION All production workers safely back to shipyards, though operations are still impacted by health & safety protocols VOLUMES 4Q production volumes are expected to be back at pre COVID-19
Slide 26: Appendix
APPENDIX FINCANTIERI The sea ahead
Slide 27: VARD
VARD New organizational structure and segment review • Following the delisting of VARD, in December 2018, the full organizational Norway: Norway: integration with the Parent Company was launched, both for expedition cruise • VARD Brattvaag • VARD Langsten shipbuilding projects and the related shipya
Slide 28: 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: Additional efforts to align industrial management and economic planning of projects to the Group best practices Delisting of the subsidiary in December 20
Slide 29: 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 30: Financial performance: Historical revenues
Financial performance: Historical revenues Revenues breakdown by segment(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 1,503 1,434 1,434 960 1,212 12 1,156 5,088 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 20
Slide 31: Financial performance: EBITDA
Financial performance: EBITDA EBITDA breakdown by segment(1)/margin(2) € mln 6.0% 6.8% 7.6% 7.8% 5.5% 414 421 320 11.2% 73 73 90 341 11.2% 10.0% 267 11.5% 64 41 12.5% 62 6.1% 5.3% 51 8.5% 395 8.5% 395 7.4% 375 6.3% 270 5.7% 185 (31) (34) -2.9% (20) -2.1% (13) -24.2% (34) (34) (107) (38) FY 2016 FY 2
Slide 32: Financial performance: historical EBIT and Net result
Financial performance: historical EBIT and Net result EBIT / margin Net result before extraordinary and non recurring items(1) € mln € mln 91 114 60 117 66 95 (6) (4) (3) (64) (7) 3.5% 4.4% 5.1% 2.6% (71) FY 2016 FY 2017 FY 2018 FY 2019 of which Group of which minority interests Net result € mln 285
Slide 33: Capex: historical trend
Capex: historical trend Capex evolution Capex by segment € mln € mln 3.8% 5.1% 3.2% 2.9% 279 279 21 61 224 30 224 20 6 8 31 163 161 80 163 161 27 13 37 18 55 9 6 7 222 218 165 144 120 124 124 108 FY 2016 FY 2017 FY 2018 FY 2019 FY 2016 FY 2017 FY 2018 FY 2019 Property, plant and equipment Intangible
Slide 34: 9M 2020 Capex
9M 2020 Capex Capital expenditures broadly in line with 2019 Capex by segment € mln 4.1% 4.9% 174 172 13 Capex broadly in line with 9M 2019: 19 % of Revenues 20 21 3 Improving efficiency at Italian yards 2 Other activities Adjusting VARD Tulcea and VARD Equipment, Systems & Services Braila p
Fincantieri — Goldman Sachs Twelfth Annual Industrial Conference 2020 on 6ix