Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fincantieri SpA (FNCNF, Financial) successfully completed a EUR400 million Rights issue with 99.2% of new shares subscribed, demonstrating strong market confidence.
- The company reported a 15.6% year-on-year increase in EBITDA, with a margin improvement to 5.8%, reflecting a focus on profitability.
- Order intake reached EUR7.6 billion, significantly higher than the previous year, with a book-to-bill ratio of 2.1 times fiscal year 2023 revenues.
- The backlog reached an all-time high of EUR41.1 billion, providing strong visibility and stability for future revenues.
- Fincantieri SpA (FNCNF) confirmed its 2024 targets for revenues to increase to EUR8 billion and an EBITDA margin of around 6%, with an improved guidance for leverage.
Negative Points
- The net financial position remains negative at EUR2.42 billion, although it has improved compared to the previous year.
- The adjusted net result was negative for EUR10 million, impacted by increased depreciation, amortization, and extraordinary items.
- The company is still affected by deferrals granted to clients post-COVID-19, with EUR600 million in deferrals as of June.
- The leverage ratio is at 5.7 times EBITDA, although expectations are to improve this ratio by the end of 2024.
- The shipbuilding revenues were slightly lower year-over-year, although expected to accelerate in the second half of the year.
Q & A Highlights
Q: With the resumption of cruise orders, what is the current pricing scenario in the segment, and how does the lengthening of delivery timelines impact pricing?
A: Pierroberto Folgiero, CEO, explained that the cruise order intake is designed to maintain revenue continuity rather than increase production. The focus is on optimizing revenues to enhance margins and cash conversion. The current market conditions allow for long-term commitments, which provide certainty and optimize procurement activities.
Q: Can you provide an update on the Constellation program and the expected evolution of margins related to these programs?
A: The Constellation program is a long-term initiative with the U.S. Navy, aiming to accelerate productivity and production rates. The program is expected to be a long-term success, with the shipyard in Marinette playing a key role. The focus is on building a strong run rate and enhancing collaboration with the U.S. supply chain.
Q: What can we expect in terms of margins for the equipment systems and services division by year-end, and how will they evolve from 2025 onwards?
A: Giuseppe Dado, CFO, stated that the guidance for equipment systems and services is a 6% margin in 2024 and 7% in 2025. Remazel, on a stand-alone basis, targets an EBITDA margin of 15% for 2024 and 13% for 2025.
Q: Can you update us on the progress of digitalization efforts and how they might improve margins and synergies within the group?
A: The partnership with Accenture aims to develop a digital platform to enhance Fincantieri's product distinctiveness and shift towards a life cycle partner business model. The platform will be operational next year, focusing on increasing product differentiation and creating new revenue streams.
Q: What potential orders are in the pipeline for the Italian Navy in the next few quarters?
A: Fincantieri is close to securing orders for two extra FREMM EVO frigates and is involved in the DDX program for the new Destroyer ship. Internationally, the company is active in the Middle East, targeting significant acquisitions in the naval defense sector.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
