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Cruise & Ferry newbuilding recovery slower than anticipated - STX Europe

Owners of cruise ships and ferries contemplate new orders, but they are held back by uncertainties regarding the global economy and problems related to funding of these projects, says STX Europe, which builds passenger tonnage at yards in France and Finland.

“The Cruise & Ferries business area had revenues of NOK 2 537 million in the fourth quarter, up from NOK 1 883 million in the corresponding period of 2010. The fourth quarter EBITDA was NOK -24 million. The full year EBITDA is NOK 137 million (2010: NOK -473 million), which is an improvement of NOK 610 million compared to last year,” the company said in a statement.

“The market for Cruise & Ferries in general is experiencing uncertainties both in relation to the global economic situation and a challenging climate for the funding of newbuildings. There is an increased activity among the cruise and ferry operators and reports show that the traditional cruise market is growing and that there are expectations for further development, especially within new markets,” the company continued.

However, trading conditions remain challenging: “The demand for further new buildings are expected to slowly improve but at a slower pace than previously anticipated due to the uncertainty in the global economy. The demand for more advanced and innovative technology is increasing especially in relation to fuel efficiency, safety and environmental friendliness. Market conditions, however, are expected to remain challenging.”

As a result, the business area will continue to focus on diversification into other market segments where the yards have considerable technological background, expertise and other potential competitive advantages. This includes vessels for naval operations, offshore related constructions and renewable energy/wind. The focus in ice-breaking/arctic tonnage remains a key strategic focus, predominantly in Finland.

“There is a strong focus to secure more orders and to improve its cost base and long term competitiveness. STX Europe is committed to remaining a world leading shipbuilder of cruise vessels, ferries and other specialized vessels at its yards in Finland and France.” The improvement in performance of the business area compared with 2010 is largely attributable to improved cost base and higher utilisation of the yards’ capacities in both STX France and STX Finland. The financial performance in the business area is still not satisfactory and measures are taken to further improve this.

The total order intake for the quarter was NOK 1 345 million. At the end of fourth quarter 2011, the Cruise & Ferries business area had an order backlog of NOK 16 290 million, compared with NOK 14 126 million at the end of 2010. The order backlog, including vessels in production, consisted of 14 vessels. All ongoing projects are currently proceeding according to plan. The business area has a strong focus to secure more orders and further strengthen their long term competitiveness.

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