Shipbuilding giant Fincantieri yesterday reported its results for the first nine months of 2019 and, although numbers for the group were good, losses from its Norwegian headquartered subsidiary Vard had a negative impact. Fincantieri is taking measures to correct this that include closing two of Vard’s Norwegian shipyards.
Highlights from the group results included:
- Revenues increased by 9.7% at EUR 4,254 million (EUR 3,878 million in the equivalent 2018 period)
- EBITDA for the period were EUR 287 million (EUR 281 in the 2018 period),though EBITDA margin at 6.7% was down on 7.3% in the equivalent 2018 period) The EBITDA result, says Fincantieri, includes the positive performance of the shipbuilding segment (up 30.2% compared to the 2018 period “despite the negative impact of Vard cruise projects and was affected by the negative margin of the Offshore and Specialized Vessels segment.”
“Positive operating performance at group level, is improving in all areas, but limited by the negative results of Vard, which is undergoing a reorganization process aiming at improving its management trend,” says Fincantieri.
REORGANIZATION OF VARD A GROUP PRIORITY
Giuseppe Bono, Fincantieri’s Chief Executive Officer, commented: “Unfortunately, the group results are impacted by the negative contribution of Vard, which suffers from the persisting effect of the deep crisis of its reference market of the Oil & Gas sector, and from the costs occurred following its entrance into the cruise shipbuilding market. The reorganization of Vard is a priority for the entire group and we have dedicated to this initiative some of our best Italian employees.”
Fincantieri say that following the delisting of Vard from the Singapore Stock Exchange in December 2018, the process of full integration within the Fincantieri group and alignment with its best practices continued. A change in management followed, together with the launch of a reorganization process.
“In particular, a review of the industrial management systems and of the economic planning of both Cruise and Offshore and Specialized Vessels projects was launched. Such initiatives, supported by the Italian personnel of the Group, led on the one hand to the recovery of the production delays, which would have impeded the on-time delivery of the units, and to the review, on the other hand, of the estimated costs at completion which were included within the results as of September, 30 2019, including the higher costs occurred to recover the delays on the ships in delivery. Further analysis on the industrial management systems and on the economic planning of projects are still ongoing.
“With regards to the initiatives already completed, the exit from the business of small fishery and aquaculture support vessels (which impacted negatively the EBITDA of the first nine months of 2019 by EUR 19 million) and the dismissal of Aukra shipyard were approved. Also with reference to the review of the production footprint, the dismissal of Brevik, a second Norwegian shipyard was authorized. Moreover, the conversion of the Romanian Tulcea shipyard, which is now working at full capacity on cruise shipbuilding is in its final stages of completion.”
Read the full Fincantieri results release HERE