Fincantieri, the listed Italian company that is the world’s largest cruise ship builder, said its net debt doubled and operating profit shrank significantly in the first nine months of the year.
Net debt amounted to €1.43 billion at the end of September, about twice the level of €736 million on 31 December 2019. Revenues decreased to €3.54 billion in the first nine months of this year from €4.22 billion in the same period a year earlier, while EBITDA contracted to €200 million from €306 million.
The company said the increase in debt was consistent with the working capital cycle typical of the cruise shipbuilding business, intensified by the rescheduling of two deliveries in quarter four, and by the partial cash-in of expected trade receivables.
“The deferrals granted to the clients fall within the Group’s strategy to preserve the sizable backlog, as well as to further strengthen the relationship with ship owners, now committed to improve the efficiency of their fleets also through new ships, fully compliant with the demanding environmental, health and safety standards in force,” it said in a statement.
The increase in funding requirements was only partially offset by the lower production volumes led by the Italian operations downtime.
Covid-19 related expenses of €149 millio, are accounted as extraordinary expenses and are mainly attributable to a lower operating leverage led by the downturn of production volumes during operations downtime and gradual ramp up, as well as to expenses for ensuring staff health and safety
On 30 September, the group had an order backlog, including soft backlog such as options, of €36.8 billion, which is almost 6.3 times its 2019 revenues. New orders amounted to €1.9 billion.
Fincantieri said that in the medium-long run, it will be involved in developing the considerable workload acquired while converting the remarkable soft backlog into confirmed orders. “Backlog preservation, pursued through a consolidated relationship with its clients, and the Group’s ability to meet the challenges of global markets through its diversification strategy, both suggest that the Group will resume the growth, profitability and margins embedded in the current backlog,” it concluded.
