Weaker Order Intake at Fincantieri

Italian shipbuilder Fincantieri posted a somewhat weaker first quarter results in 2015.

The group secured new orders totaling euro 85 million compared to euro 1.7 billion in the corresponding period of 2014.

Of the total new orders 53% relates to the shipbuilding segment (59% at 31 March 2014), 35% to the offshore segment (39% at 31 March 2014), and 29% to the equipment, systems and services segment (4% at 31 March 2014).

New orders secured by the parent company Fincantieri S.p.A. accounted for 22% of the total (41% at 31 March 2014).

“In the first quarter of 2015, despite a weak order intake, we have successfully developed intense commercial negotiations that have led to important industrial and commercial agreements. The most notable are the one with our historical partner Carnival, the one with the Italian Navy for the fleet renewal program, along with the continuation of FREMM and LCS programs through the confirmation of the expected units,“Giuseppe Bono, Fincantieri’s Chief Executive Officer, said.

The group signed a strategic memorandum of agreement with Carnival Corporation & plc, announced on 27 March 2015, for construction of five next-generation cruise ships, to be built over the period 2019-2022.

The agreement also includes options for additional ship builds in the coming years.

As for the offshore segment, the decline in oil prices commencing in the second half of 2014 has significantly altered the spending outlook for oil exploration & production companies, which have scaled back their investment plans and initiated cost-cutting programs.

“As a result, order intake in the first quarter of 2015 was very limited, amounting to euro 30 million compared with euro 662 million in the same period of 2014,” the company said.

The group’s order backlog amounted to euro 9 billion at 31 March 2015 (euro 8.8 billion at the end of the first three months of 2014), slightly increasing compared to the same period in 2014, with the order profile extending until 2019. The backlog represents about 2 years of work in relation to the revenues generated in 2014 most of which in the shipbuilding segment.

Fincantieri said that the group’s revenues significantly increased from last year mainly due to higher volumes in cruise business, with eleven units under construction at the Italian facilities, while marginality was mainly affected by reduced profitability of the offshore segment and by cruise ships under construction.

Speaking of the outlook, the group forecasts a sustained order intake for the rest of 2015, particularly in the shipbuilding segment, related to the formalization of contracts for naval vessels under the Italian Navy’s fleet renewal program and the continued FREMM and LCS programs, and the finalization of orders under the strategic memorandum of agreement with Carnival Corporation.