Fincantieri S.p.A. · MIL:FCT
Fincantieri — Q1 2023 Earnings Presentation
69 slides from Fincantieri's earnings presentation, May 10, 2023
Slide 1: 1Q 2023 Results & 2023-2027 Strategic Plan
1Q 2023 Results & 2023-2027 Strategic Plan May 10, 2023 www.fincantieri.com
Slide 2: Speakers
1Q 2023 Results & 2023-2027 Strategic Plan Speakers Pierroberto Folgiero Claudio Cisilino Bent Erik Nedrevold Giuseppe Dado Chief Executive Officer Executive VP Operations, Project Manager VARD Electro Chief Financial Officer Corporate Strategy and Innovation
Slide 3: Agenda
1Q 2023 Results & 2023-2027 Strategic Plan Agenda 1. 1Q 2023 Results Highlights Pierroberto Folgiero Financials Giuseppe Dado 2. 2023-2027 Strategic Plan Markets and Strategic Pillars Pierroberto Folgiero Strategy Deployment Claudio Cisilino Case Study: Ocean Infinity Bent Erik Nedrevold Financials
Slide 4: 1Q 2023 Financial & Operating Highlights
Highlights 1Q 2023 Financial & Operating Highlights Net Financial (€ mln) Revenues EBITDA Order Intake Position 909 2,922 1,764 2,531 1,681 118 513 87 Q1 2022 Q1 2023 Q1 2022 Q1 2023 Q1 2022 Q1 2023 FY 2022 Q1 2023 Revenues at € 1,764 mln, up by 4.9%, in line with expectations EBITDA at € 87 mln and
Slide 5: Agenda
1Q 2023 Results & 2023-2027 Strategic Plan Agenda 1. 1Q 2023 Results Highlights Pierroberto Folgiero Financials Giuseppe Dado 2. 2023-2027 Strategic Plan Markets and Strategic Pillars Pierroberto Folgiero Strategy Deployment Claudio Cisilino Case Study: Ocean Infinity Bent Erik Nedrevold Financials
Slide 6: Segment Restatement
Financials Segment Restatement Offshore & Equipment, Systems Shipbuilding Specialized Vessels & Services Cruise Naval • Offshore Wind • After Sales Services - Service Operation Vessel (SOV) • Ship Repairs and Conversion • Oil & Gas offshore • Complete Accommodation All cruise ships: • Surface Vessel
Slide 7: 1Q 2023 Order Intake & Total Backlog
Financials 1Q 2023 Order Intake & Total Backlog Order Intake breakdown by segments Total backlog breakdown by segment1 (€ mln) (€ mln) § Order intake at € 0.9 bn, with 0.3x 0.5x 4.6x 4.6x strong contribution from Offshore § Orders for four new CSOV for new 34,398 33,987 client Edda Wind and one SOV
Slide 8: 1Q 2023 Revenues & EBITDA
Financials 1Q 2023 Revenues & EBITDA Revenues breakdown by segment1 EBITDA breakdown by segment (€ mln) (€ mln) Revenues up 4.9% at € 1,764 mln and 7.0% 4.9% EBITDA at € 87 mln +4.9% 1,764 § Cruise accounting for 48.6% and 1,681 Naval for 25.4% of total revenues 265 118 203 2.0% 4 181 238 6 § Offsho
Slide 9: 1Q 2023 Net Financial Position & Net Working Capital
Financials 1Q 2023 Net Financial Position & Net Working Capital Net Working Capital1 breakdown by component Net Financial Position2 (€ mln) (€ mln) • Net financial position at € 2,922 895 mln, in line with production 864 schedule for the quarter 1,992 1,669 • Two cruise ships already delivered in Ap
Slide 10: Agenda
1Q 2023 Results & 2023-2027 Strategic Plan Agenda 1. 1Q 2023 Results Highlights Pierroberto Folgiero Financials Giuseppe Dado 2. 2023-2027 Strategic Plan Markets and Strategic Pillars Pierroberto Folgiero Strategy Deployment Claudio Cisilino Case Study: Ocean Infinity Bent Erik Nedrevold Financials
Slide 11: Italian Group with a global footprint
Markets and Strategic Pillars Shipyards Italian Group with a global Norway footprint • Leading player in shipbuilding with a strong competitive positioning thanks to Romania technology, innovation and best-in-class execution USA • Growth led by organic diversification, global production capacity and
Slide 12: Leading shipbuilders with a life-cycle service vision
Markets and Strategic Pillars We are leading shipbuilders with a vision to provide a comprehensive service proposition of the life-cycle of green and digital ships Shipbuilding Infrastructure Infrastructure capabilities in Cruise Defence Offshore sectors adjacent to shipbuilding >40% global market s
Slide 13: Leading global positions across all business segments
Markets and Strategic Pillars Leading global positions across all business segments Underpinned by total backlog at € 34 bn, including soft backlog of € 11.3 bn in Q1 2023 Offshore & Equipment, Systems Shipbuilding Specialized Vessels & Services • Offshore Wind Electronics, systems & Cruise Marine I
Slide 14: Unique competitive strengths to meet customer needs
Markets and Strategic Pillars Fincantieri has unique competitive strengths to meet customer needs Consolidated leadership, flexible global production network and vertical integration • Scale and cross-fertilization of competencies • Capability to address geopolitical demand enabling the digital and
Slide 15: Opportunities driven by market macro-trends
Markets and Strategic Pillars Ready to exploit opportunities driven by market macro-trends Current business outlook underpins potential to accelerate growth and global market share Cruise market rebounding Military market in a Offshore market driven by Growth and volatility in Sector with strong pus
Slide 16: Cruise: passenger rate to grow ~6% annually until 2030
Markets and Strategic Pillars Cruise: passenger rate to grow ~ 6% annually until 2030, with new ships needed from 2023 - 2024 Cruise Market Passengers 50 § With a substantial resumption in cruise activities, cruise passengers in 2022 CAGR 2023-30 amounted to 20 million1 40 5.6% • 38 mln passengers b
Slide 17: Defence: foreign accessible market opportunities 2023-2027
Markets and Strategic Pillars Defence: foreign accessible markets opportunities for € 20 bn in 2023 - 2027 Global defence budget • Geopolitical context and foreign policy impact industrial defense sector Programs 2023-2027 and demand for larger fleets with more advanced technological requirements €
Slide 18: Naval: supporting Italian Navy fleet renewal and expansion
Markets and Strategic Pillars Naval: supporting the Italian Navy fleet renewal and expansion Italian Navy • Fincantieri is the strategic partner of the Italian Navy with more than 50 deliveries since 1990 and the reference player for the design and construction of naval vessels, including submarines
Slide 19: Offshore & Specialized Vessels: expansion in offshore wind
Markets and Strategic Pillars Offshore & Specialized Vessels: expansion in offshore wind with significant attention to renewable energies Wind Offshore Offshore GW wind: total capacity by 2030 • Offshore wind farms: total installed capacity expected to rise from 59.2 GW to c. 269 183.0 269.4 GW by 2
Slide 20: Future vessel requirements in 2030-2040-2050
Markets and Strategic Pillars Future vessel requirements in 2030-2040-2050 Customer needs undergoing a complete transformation for a full service proposition Sensor & data analytics Navigation All vessel equipment will be monitored, optimized & Navigation will become fully autonomous & directly main
Slide 21: Capitalizing upon additional competitive advantages
Markets and Strategic Pillars Capitalizing upon additional competitive advantages With an ambition to create long term customer value as a life cycle partner Distinctiveness is Focused on Deep roots in the name of the game increasing efficiency the industry and productivity translating into • Global
Slide 22: New strategy deployed in key projects aggregated in 5 pillars
Markets and Strategic Pillars Our new strategy deployed in a set of key projects aggregated in 5 pillars Aimed at strengthening existing global leadership and preparing the Group for extending its leadership in the long term Focus on Core Business Life-Cycle Management System Integration Financial D
Slide 23: Focused on core business: Cruise, Naval and Offshore
Markets and Strategic Pillars Focused on core business: Cruise, Naval and Offshore Actions Group Revenues EBITDA Margins • Maintain leadership in cruise • Cruise division contribution • Margins in Cruise expected to • Execute backlog consistent across the plan horizon remain stable throughout the Cr
Slide 24: Cross-fertilization of expertise accelerated by green and digital transition
Markets and Strategic Pillars Cross-fertilization of expertise, top-notch competences and best-practices throughout the core business, accelerated by green and digital transition. Green Cruise Naval Offshore Digital • Defining clear targets to reach net-zero emissions by 2035, including the first ne
Slide 25: Repositioning of ESS unit to support green and digital journey
Markets and Strategic Pillars Supported by repositioning of ESS unit to support green and digital journey ESS reorganised as enabler for comprehensive life-cycle service offering Area of Activities Group Companies Delivering • Propulsion and electrical grid • Fincantieri NexTech – Electrical, electr
Slide 26: Technological leadership in electronic and digital systems
Markets and Strategic Pillars Technological leadership in complex electronic and digital systems to enhance Fincantieri offering Platform Automation & Integration Cybersecurity Maritime Platform system automation and Ship design in security by design optimized integration with key mission Cyber solu
Slide 27: ESG & Sustainability integrated in the Strategic Plan
Markets and Strategic Pillars ESG & Sustainability fully integrated in the Strategic Plan 2023-2027 Group Sustainability Plan based on 3 pillars and 15 material topics Top Managers variable compensation linked to ESG KPIs and ESG ratings 27
Slide 28: Actions to refocus and de-risk the Infrastructure business unit
Markets and Strategic Pillars Decisive actions to refocus and de-risk the Infrastructure business unit Fully committed to reduce riskiness and restore profitability to foster strategic optionality • Structural steel components Infrastructure Activities • Maritime works • Technical buildings and faci
Slide 29: Revenues at c. €10 bn in 2027, driven by naval and offshore
Markets and Strategic Pillars Revenues at c. € 10 bn in 2027, mainly driven by growth in naval and offshore Higher margins leading to net profit from 2025 and significant deleveraging FY 20191 FY 2022 FY 2023 FY 2024 FY 2025 FY 2027 Revenues 5.8 bn 7.4 bn ~ 7.6 bn ~ 8.0 bn ~ 8.8 bn ~ 9.8 bn EBITDA M
Slide 30: Agenda
1Q 2023 Results & 2023-2027 Strategic Plan Agenda 1. 1Q 2023 Results Highlights Pierroberto Folgiero Financials Giuseppe Dado 2. 2023-2027 Strategic Plan Markets and Strategic Pillars Pierroberto Folgiero Strategy Deployment Claudio Cisilino Case Study: Ocean Infinity Bent Erik Nedrevold Financials
Slide 31: 5 strategic pillars to support delivery of 2023-2027 targets
Strategy Deployment 5 strategic pillars to support delivery of 2023-2027 targets Positioning Fincantieri for long term opportunities Successfully delivering 2023-2027 Targets Focus on Core Business Financial Discipline Industrial Sustainability Life-Cycle Management System Integration Laying the fou
Slide 32: 10 strategic projects underpinning the 5 pillars
Strategy Deployment 10 strategic projects underpinning the 5 strategic pillars 10 Working Teams fully committed to successfully reaching milestones and targets Successfully delivering 2023-2027 targets Laying the foundation for the next industrial cycle Targets Focus on Core Financial Discipline Ind
Slide 33: Pillar Initiatives: Key Initiatives
Strategy Deployment Pillar 1 Initiatives Key Initiatives • Speeding up new technologies adoption and maximize efficiency to bolster productivity: 1. Operations Excellence • Industrial efficiency through automation of low value-added activities • Digitalization of shipyards adopting of state-of-the-a
Slide 34: Digitalization of Shipyards: the Shipyard of the Future
Strategy Deployment Pillar 1 - Digitalization of Shipyards: the Shipyard of the Future 2.Design 3.Digital Manufacturing 4.Hull Digitalized Detail Design with full Control tower for digitally aided High efficiency, high quality and E2E integration from Functional operations. New robots, Artificial st
Slide 35: Digitalization of Shipyards is a key priority
Strategy Deployment Pillar 1 - Digitalization of Shipyards is a key priority Example of ongoing initiatives to improve productivity and efficiency Initiative: Initiative: Initiative: Cooperative Welding robot Hololens Unmanned vehicles Welding robot vehicle consisting of an Augmented reality systems
Slide 36: Pillar 2 – Key Initiatives
Strategy Deployment Pillar 2 – Key Initiatives Turning every stone to mitigate risks via close attention to costs management and optimization of Cash Flows • Optimize purchasing expenditure, secure supply chain and reduce risks • Sharing of best practices on should cost and design to value tools bet
Slide 37: Pillar 3 – Key Initiatives
Strategy Deployment Pillar 3 – Key Initiatives • Defining a clear roadmap of product development in order to achieve the net-zero emissions target in all business segments: • Enable and integrate onboard new technologies and new fuels 7. Green transitioning towards net-zero • Implement partnership w
Slide 38: Road Map to Net Zero for a large cruise vessel
Strategy Deployment Pillar 3 – Road Map to Net Zero for a large cruise vessel 2022 2024 2025 2026 2027 2030 2035 First local First LNG Minimal First LNG zero emissions vessel zero emissions in Net zero with Milestone High High small vessel emissions in port with dual vessel with new fuels, efficienc
Slide 39: Fincantieri pioneering on industrial sustainability
Strategy Deployment Pillar 3 – Fincantieri pioneering on industrial sustainability Discussions with leading cruise operators are ongoing with significant progress and agreement on the way forward Le Commandant Charcot Viking Neptune Prima Plus Class Ponant Viking Ocean Cruises Norwegian Cruise Line
Slide 40: Key technologies needed and identified
Strategy Deployment Pillar 3 – Key technologies needed and identified Net-Zero achievement needs internal and external technologies which have been identified and are available Cruise Naval Offshore Internal Technologies Make Buy External Technologies Thruster shutter 1 10 Internal Combusion Engine
Slide 41: Pillar 3 – Key ESG Targets
Strategy Deployment Pillar 3 – Key ESG Targets Top Managers variable compensation linked to ESG KPIs and ESG ratings Objectives Target 2023-2027 • Net Zero cruise vessels by 2035, -40%1 CO2 emissions by 2030, -30%1 by 2025, Innovative and • Scope 1 and 2 GHG emissions: -20% by 2030, -8% by 2027, -4%
Slide 42: Pursuing a new business model
Strategy Deployment Pillar 4 – Pursuing a new business model Long term opportunity by transitioning from Capex to Opex, with a full service offering that maximizes operating efficiency throughout the lifecycle of the ship 9. Cruise digital offering Advanced Analytics ANCILLARY • Pushing the boundari
Slide 43: Already developed capabilities within our ecosystem
Strategy Deployment Pillar 4 – Already developed capabilities within our ecosystem Possible cross-fertilization between different businesses Automation Data Science Data Platform Fincantieri Application software Capabilities Cyber Security development Life cycle management Energy management • Fincan
Slide 44: A new digital service business positioning for Navies
Strategy Deployment Pillar 4 – A new digital service business positioning for Navies Offering an integrated fleet digital support solution with a complete service proposition throughout the ship’s life cycle Digitally-enabled Digital asset management Training & Simulation Cybersecurity engineering s
Slide 45: Naval integration capabilities to be enhanced
Strategy Deployment Pillar 5 – Naval integration capabilities to be enhanced Enhance status as prime contractor in all defense programs by reinforcing combat system capabilities Status Quo • Fincantieri is already prime contractor on some A naval vessel and main system components programs, for examp
Slide 46: Agenda
1Q 2023 Results & 2023-2027 Strategic Plan Agenda 1. 1Q 2023 Results Highlights Pierroberto Folgiero Financials Giuseppe Dado 2. 2023-2027 Strategic Plan Markets and Strategic Pillars Pierroberto Folgiero Strategy Deployment Claudio Cisilino Case Study: Ocean Infinity Bent Erik Nedrevold Financials
Slide 47: Video VARD
Video VARD
Slide 48: SeaQ Remote Vessel Operation
® SeaQ Remote Vessel Operation The Armada Series
Slide 49: The Project
Case Study: Ocean Infinity The Project • Part of the Armada series for Ocean Infinity • 14 Vessels in total, built in Vietnam, commissioned in Norway • Top-side and remote solution finalized in Norway • Two types of design, 78m vessel and 86m vessel • Flexible deck layout for multi use of vessel • B
Slide 50: Green Transition
Case Study: Ocean Infinity Green Transition • Optimized hull design • Efficient MGO usage • Battery hybrid • Fuel ready (Ammonia) notation • Fuel-cell prepared • Hybrid electric propulsion system 50
Slide 51: Digitalization
Case Study: Ocean Infinity Digitalization The digital strategy of Fincantieri is moving to reality by this project. Remote Support TODAY Lean crewing Greener & Safer Navigation Operations Safety Situational awareness AUTOMATED ROBOTICS Periodically Unmanned Bridge Automated Operations Autonomous THE
Slide 52: SeaQ Remote Control Center
Case Study: Ocean Infinity SeaQ Remote Control Center 52
Slide 53: Working together to deliver the vision
Case Study: Ocean Infinity Working together to deliver the vision To be the world’s leading provider of sustainable systems, by driving Fincantieri’s excellence in integration. Cross fertilization increasing the footprint of the involved parties 53
Slide 54: Plan moving forward
Case Study: Ocean Infinity Plan moving forward Delivery Fleet Autonomous Remote Remote 1st Vessel Navigation Operations Operations Operations Remote Potential on board Engineering Engineering crew reduction 2023 2024 2025 2026 2027 • Achieving fully autonomous operations requires a stepwise approach
Slide 55: We are what we do
We are what we do We explore We take action We become experts 55
Slide 56: Agenda
1Q 2023 Results & 2023-2027 Strategic Plan Agenda 1. 1Q 2023 Results Highlights Pierroberto Folgiero Financials Giuseppe Dado 2. 2023-2027 Strategic Plan Markets and Strategic Pillars Pierroberto Folgiero Strategy Deployment Claudio Cisilino Case Study: Ocean Infinity Bent Erik Nedrevold Financials
Slide 57: Key Assumptions for the Business Plan – Top Line
Financials & Guidance Key Assumptions for the Business Plan – Top Line Healthy Market Prospects Strategic Focus on Growth and High Quality Backlog and Across all Sectors Profitability Visibility on Revenues € 34 bn at Q1 2023 Order intake resumption driven Total backlog including Maintain global lea
Slide 58: Key Assumptions for the Business Plan – Margins & Leverage
Financials & Guidance Key Assumptions for the Business Plan – Margins & Leverage De-risking and Financial Discipline Key Cost Item and Financial Management Mitigation of Risk Profile Key Cost Items • Reviewing the core business portfolio and structural assessment of • Steel and Energy: future costs
Slide 59: Solid Order Book with Strong Visibility up to 2029
Financials & Guidance Solid Order Book with Strong Visibility up to 2029 with 89 ships in portfolio Consolidated backlog of € 22.7 bn at Q1 2023 equating to 3.0x 2022 Revenues Soft Backlog of € 11.3 bn equating to further 1.5x 2022 Revenues Shipbuilding – Cruise Segment Shipbuilding – Naval Segment
Slide 60: Shipbuilding Segment Evolution
Financials & Guidance Shipbuilding Segment Evolution Solid Revenue growth, particularly in Naval segment, coupled with a gradual increase in profitability Historical Trends Targets Revenues, € bn Cruise Naval • Cruise order intake rebounded in 2022as per improved sector outlook • Record revenues in
Slide 61: Offshore Segment Evolution
Financials & Guidance Offshore Segment Evolution Significant Revenue and margin upside from the successful VARD turnaround and opportunities from renewables sector Historical Trends Targets Revenues, € bn • Resumption in Order Intake from 2019 from successful offering for renewables sector • Revenue
Slide 62: Equipment, Systems & Services Segments Evolution
Financials & Guidance Equipment, Systems & Services Segments Evolution Revenue growth driven by delivery of Infrastructure backlog, margins to gradually return to historical levels Historical Trends Targets Mechanical components and Electronics Infrastructure Revenues, € bn • Mechanical components a
Slide 63: Consolidated Financials: Income Statement
Financials & Guidance Consolidated Financials Income Statement Gradual improvement in Revenues and EBITDA margins underpinned by solid assumptions Historical Trends Targets Consolidated Revenues, € bn • Revenues grew 8.4% CAGR from 2019 to 2022, despite Covid- 19 • Average EBITDA margin of 6.3% from
Slide 64: Cash Flows & Balance Sheet
Financials & Guidance Consolidated Financials Cash Flows & Balance Sheet Financial discipline aimed at maximising cash flows and reducing financial leverage to 2.5-3.5x by 2027 Historical Trends Targets CAPEX/D&A, € mln • NWC quickly recovered from Covid-19 impact reaching 7-8% of Revenues in 2021 a
Slide 65: Group Targets 2023-2027
Financials & Guidance Group Targets 2023-2027 2023 2024 2025 2027 Revenues ~ 7.6 bn ~ 8.0 bn ~ 8.8 bn ~ 9.8 bn Strong Revenues thanks to backlog and robust order intake to 2027 streamlining Fincantieri’s undisputed market leadership position EBITDA Margins ~ 5% ~ 6% ~ 7% ~ 8% Margin factor in inflat
Slide 66: Agenda
1Q 2023 Results & 2023-2027 Strategic Plan Agenda 1. 1Q 2023 Results Highlights Pierroberto Folgiero Financials Giuseppe Dado 2. 2023-2027 Strategic Plan Markets and Strategic Pillars Pierroberto Folgiero Strategy Deployment Claudio Cisilino Case Study: Ocean Infinity Bent Erik Nedrevold Financials
Slide 67: Concluding Remarks: Strategic Plan addresses competitive leadership
Concluding Remarks Concluding Remarks 2023-2027 Strategic Plan addresses current and long term competitive leadership • Focus on our core Cruise, Defence and Offshore vessel businesses in terms of growth, investment and execution • Strengthen our distinctive qualities based on cross-fertilization an
Slide 68: Q&A
Q&A
Slide 69: 1Q 2023 Results & 2023-2027 Strategic Plan
1Q 2023 Results & 2023-2027 Strategic Plan