Italian shipbuilding conglomerate Fincantieri posted a loss of EUR 96 million (USD 103 million) for the nine months ending September 30, 2015, against a profit of 42 million recorded in the corresponding period last year.
Fincantieri said in its results that the result would have been a loss of EUR 73 million, against EUR 67 million at 30 September 2014, without considering extraordinary and non-recurring items.
Revenues and income amounted to EUR 3,032 million in the first nine months of 2015, increasing by EUR 97 million compared to the same period of 2014. The variation is due to the increase in shipbuilding revenues, mainly in the cruise business, which accounted for 38% of the group’s total revenues for the period and to the reduction in offshore revenues, the company explained.
“The company’s performance of the first nine months of 2015 reflected complexity related to strong increase in volumes of engineering and production activities. This increase is a consequence of a relevant order book growth. However, group marginality has been affected by the prototypes acquired with really low margins during the crisis, in order to sustain the production activities. In addition to this the group experienced the effects of the persisting crisis in Oil&Gas market, caused by the unpredictable oil price decline, and the persisting issues of VARD in Brazil, also related to the political and economic situation of the country,” Giuseppe Bono, Fincantieri’s Chief Executive Officer, said.
Fincantieri’s Brazilian subsidiary Vard, a company building offshore support vessels for the international oil and gas industry, issued a profit warning for the third quarter and the full year 2015 in October, which fueled rumors of a capital increase.
According to Bono, the company is working on a business plan, which will be defined with the presentation of Annual Report 2015, aimed at identifying an adequate return to the shareholders.
The pillars of the Business plan will be organizational actions, aimed at improving operating efficiency and focus on the profitable after-sales market. Concerning Vard, the plan should accelerate synergies with Fincantieri and include permanent solutions for Vard’s Brazilian issues.
“In the meantime, we are still committed to define significant orders, such as those with Carnival announced in March 2015, that once finalized will contribute a relevant backlog and long term visibility on revenues,” Bono said.
In the first nine months of 2015, the group secured new orders totaling EUR 4.9 billion compared to EUR 4.2 billion in the corresponding period of 2014.
Of the total new orders 85% relates to the shipbuilding segment (73% at 30 September 2014), 6% to the Offshore segment (25% at 30 September 2014), and 10% to the Equipment, Systems and Services segment (4% at 30 September 2014). New orders secured by the parent company FINCANTIERI S.p.A. accounted for 86% of the total (62% at 30 September 2014).
The order backlog amounted to EUR 11.6 billion at 30 September 2015, against EUR 9.5 billion at the end of the first nine months of 2014, with the order delivery profile extending until 2025.
“The increase in backlog confirms the group’s ability to finalize contracts under negotiation, contract options and commercial opportunities and to transform them into backlog. The backlog represents about 2.6 years of work in relation to revenue generated in 2014,” the company said.
In a separate announcement, Fincatieri said that Andrea Mangoni tendered his resignation on Monday as Director of the Board and General Manager of Fincantieri.
Mangoni was an Executive Director of Fincantieri, as defined in the Corporate Governance Code for Italian listed companies and was not member of any Board Committee. The resignation from the group comes in less than a year after his appointment in February.