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- 2. 2 This Presentation containscertain forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes," "expects," "predicts," "intends," "projects," "plans," "estimates," "aims," "foresees," "anticipates," "targets," and similar expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources, are solely opinions and forecasts reflecting current views with respect to future events and plans, estimates, projections and expectations which are uncertain and subject to risks. Market data used in this Presentation not attributed to a specific source are estimates of the Company and have not been independently verified. These statements are based on certain assumptions that, although reasonable at this time, may prove to be erroneous. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. If certain risks and uncertainties materialize, or if certain underlying assumptions prove incorrect, Fincantieri may not be able to achieve its financial targets and strategic objectives. A multitude of factors which are in some cases beyond the Company’s control can cause actual events to differ significantly from any anticipated development. Forward-looking statements contained in this Presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. No one undertakes any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Market data used in this Presentation not attributed to a specific source are estimates of the Company and have not been independently verified. Forward-looking statements speak only as of the date of this Presentation and are subject to change without notice. No representations or warranties, express or implied, are given as to the achievement or reasonableness of, and no reliance should be placed on, any forward-looking statements, including (but not limited to) any projections, estimates, forecasts or targets contained herein. Fincantieri does not undertake to provide any additional information or to remedy any omissions in or from this Presentation. Fincantieri does not intend, and does not assume any obligation, to update industry information or forward-looking statements set forth in this Presentation. This presentation does not constitute a recommendation regarding the securities of the Company. Safe Harbor Statement The executive in charge of preparing the corporate accounting documents at Fincantieri, Carlo Gainelli, declares that the accounting information contained herein correspond to document results, books and accounting records. Declaration of the Manager responsible for preparing financial reports
- 3. Table of Contents Section1 Fincantieri at a Glance Section 2 Historical Financial Performance Section 3 Business Overview and Market Dynamics Carnival Vista Carnival Cruise Lines “ECO Notation” by Lloyd‘s Register for exceeding environmental standards
- 4. Section 1 Fincantieri ata Glance FREMM “Alpino” Italian Navy Best in class in terms of endurance
- 5. Italy 41% RoW 59% Employees by location Fincantieriat a glance € 4,429 mln revenues 20 shipyards 4 continents ~ 19,200 employees ~ 80,000 subcontractors ~ € 25.5 bln total backlog(2,3) • € 20.4 bln backlog • € 5.1 bln soft backlog #1 Western designer & shipbuilder(1) with 230 years of history & >7,000 ships built Operating subsidiary Representative / Sales office Corporate/BU headquarters Joint Venture Shipyard Vietnam • 1 shipyard USA • 3 shipyards Brazil • 1 shipyard Norway • 5 shipyards Italy • 8 shipyards Romania • 2 shipyards UAE • 1 Joint Venture Revenues by geography Italy 16% RoW 84% 5 China • 1 Joint Venture € 4.4 bln ~19,200 Note: all figures reported at December 31, 2016, except for backlog and soft backlog which are referred to 1H 2017 (at June 30, 2017) (1) By revenues, excluding naval contractors in the captive military segment. Based on Fincantieri estimates of shipbuilders’ revenues in 2015 (2) At June 30, 2017 (3) Sum of backlog and soft backlog; soft backlog represents the value of existing contract options and letters of intent as well as contracts in advanced negotiation, none of which yet reflected in the order backlog
- 6. Revenues & margins improvementand de-risking of operations based on: • Record of total backlog • All time high backlog and soft backlog • Synergies across the group • De-risking of backlog • Price improvements in cruise and development of new markets (China) • Higher contribution of naval • Improved & more flexible cost base • Insourcing of high value added activities Source: Company information Revenues € bln Creation of a solid business platform 2002 2008 / 2009 4.2 2014 / 2015 • Organic: −Expansion of cruise and naval client base −3 new BUs (Mega-Yachts, Repair & Conversion, Marine Systems) • M&A: −Acquisition of Manitowoc Marine in USA (naval) −JV in UAE Strategic actions • Organic: −Agreement with Unions for optimization of Italian capacity −2 new BUs (Oil & Gas, After Sales) • M&A: −Acquisition of VARD (offshore vessels) • Global reduction of new orders • Strong decline of market prices • Shutdown/ reorganization of several yards worldwide • Commodity prices increase • € / US$ rate depreciation • End of state aids • Italian Navy orders reduction Market environment New management team Financial crisis 2.2 + 92% (2002-2015) Optimization of operations & globalization • Domestic player with 1 main client per business (Carnival in cruise & Italian Navy in naval) Key historical events Before Market environment Strategic actions IPO and Business Plan New growth cycle 6 2020 "Amerigo Vespucci” (1931) “Crown Princess” (1990) “Serene” (2011) “USS Fort Worth” (2010) “U212” (2003) “Emerald Princess” (2007) “Skandi Hugen” (2013)
- 7. Shipbuilding Business units, productsand positioning 7 Offshore Cruise Naval • All cruise ships (from contemporary to luxury) Equipment Systems & Services • All surface vessels (also stealth) • Support & Special vessels • Submarines End markets Main products Positioning Revenues 2016 • OSV • Drilling units • Fisheries/ aquaculture • Offshore wind • OPV • Expedition cruise • Special vessels • High tech ferries • Large mega-yachts • Marine systems, components & turnkey solutions • Ship interiors • Naval services • Ship repairs & conversions • Leading player in high-end OSVs • #1 worldwide (~45% market share(1)) • Leader: −#1 in Italy(2) −Key supplier for US Navy & Coast Guard(3) −Key supplier for Qatar Emiri Naval Forces • Leading player: −High tech ferries −Large mega-yachts • Leading player worldwide (1) By oceangoing cruise ships > 10,000 gross tons ordered in the 2004 – June 2017 period (including VARD). Source: Fincantieri analysis based on IHS Lloyd’s Fairplay – Shippax data and Company press releases (2) For all the large ships and excluding minesweepers and small ships below 45 m in length (3) For medium size ships, e.g. patrol vessels and corvettes (4) Breakdown calculated based on revenues gross of consolidation effects (5) At June 30, 2017 (4) Other € 960 mln (20.4% on total) € 2,078 mln (44.2% on total) € 1,156 mln (24.6% on total) € 12 mln (0.3% on total) € 495 mln (10.5% on total) € 1,403 mln (36 ships) € 18,512 mln (22 ships) € 1,288 mln Backlog(5)
- 8. • LCS Freedom:world’s fastest steel frigate • Aircraft Carrier Cavour: world’s most powerful non-nuclear propulsion system • More than 20 prototypes developed over the last fifteen years Track record, clients and technological leadership 8 Ship deliveries • 1990 – 2001 • 2002 – 2016 23 52 Ship deliveries • 1990 – 2001 • 2002 – 2016 51(1) 58(1) Ship deliveries • 1990 – 2001 • 2002 – 2016 72(2) 292(2) (3) United Arab Emirates Navy Indian Navy Qatar Emiri Naval Forces Track record Shipbuilding Offshore Equipment Systems & Services Clients Technological leadership • Normand Maximus: largest offshore vessel ever built in Norway • Skandi Africa: “Ship of the Year 2015”(4) • AMC Connector: world’s largest cable layer(5) • Far Samson: most powerful offshore vessel(6) • Strong revenue growth to € 495 mln in 2016 • Twofold increase in activity • Steady, low risk business • Acquired VARD in 2013 • Start-up in 2005 Italian Navy and Coast Guard US Navy United Arab Emirates Navy Qatar Emiri Naval Forces • Innovative and technologically advanced products in terms of performances, lifecycle cost reduction and environmental standard • Full product lifecycle management with unique capacity to support vessels’ maintenance and repair all over the world • Carnival Vista: “ECO Notation” by Lloyd‘s Register for exceeding environmental standards • Royal Princess: 1st cruise ship fully compliant with new regulations • Costa Luminosa & Costa Pacifica: Guinness World Record for joint-christening of 2 ships Italian Navy and Coast Guard US Navy Algerian Navy Cruise Naval (1) Includes other products delivered by Naval business unit. Includes US subsidiaries pre Fincantieri acquisition, excluding 174 RB-M delivered since 2002, of which 28 in 2014 and 3 in 2015 (2) Includes other products delivered by Offshore business unit. Includes VARD and predecessor companies (3) Parent company of several brands: Carnival Cruise Lines, Costa Crociere, Cunard, Holland America Line, P&O Cruises, Princess Cruise Lines and Seabourn Cruise Lines (4) Award instituted by the major Nordic shipping magazine Skipsrevyen (5) In terms of loading capacity (2011) (6) In terms of bollard pull at the date of construction (423 tons) 1 2 3
- 9. Total backlog(1,2) € mln Orderintake • Total backlog(1,2) at December 31, 2016 represents 5.4 years of work in relation to revenue generated in 2016 – Group’s ability to finalize contracts under negotiation, contract options and commercial opportunities and to transform them into backlog (1) Breakdown calculated based on total backlog (after eliminations) (2) Sum of backlog and soft backlog (3) For comparison purposes, 2015 figures are restated following the redefinition of operating segments. Following the operational reorganization carried out in November 2016, the repair & conversion services, cabins & public areas business, as well as integrated systems business, all previously included in the Shipbuilding segment, have been relocated to the Equipment, Systems & Services segment starting from FY 2016 results. (4) Soft backlog represents the value of existing contract options and letters of intent as well as contracts in advanced negotiation, none of which yet reflected in the order backlog € mln 9 Recent commercial track record: substantial increase in order intake starting from 2014 6,100 18,785 1,816 2,671 474 1,641 (135) (866) 8,255 22,231 1.0x 1.7x 1 Book to Bill (Order Intake / Revenues) Shipbuilding Offshore Eliminations Equipment, Systems & Services FY 2011 - 2013 FY 2014 - 2016 (3) 7,465 14,067 16,372 2,124 1,143 1,361 300 934 1,155 (75) (423) (657) 5,000 3,000 5,800 14,814 18,721 24,031 FY 2014 FY 2015 FY 2016 2.2x 3.8x 3.4x 4.5x 4.1x 5.4x (3) Shipbuilding Offshore Eliminations Equipment, Systems & Services Backlog / revenues Total backlog / revenues Soft backlog(4) Backlog 9,814 76% 22% 3% Backlog 15,721 89% 7% 5% Backlog 18,231 8% 6% 90%
- 10. Source: Company information2017 (1) As of June 30, 2017 (2) Including MOA signed in Q1 2017 for 1 ship for Princess Cruises (3) Through Manitowoc Marine Group (now Fincantieri Marine Group) (4) DOF includes: DOF includes: DOF, DOF Subsea, Norskan Offshore, DOF Deepwater, Techdof Brasil and Dofcon Navegação (5) Through VARD 2002 Today(1) Offshore • Over 20 years(4) • Over 20 years(5) • Over 10 years(5) Cruise • Over 25 years Italian Navy US Navy Naval US Coast Guard • Over 50 years • Over 20 years(3) • Over 30 years(3) Armed Forces of Malta Italian Navy Turkish Coast Guard U.A.E. Navy US Navy Algerian Navy US Coast Guard Italian Navy Vessels in order portfolio(1) Vessels delivered since 1990 • Over 10 years(5) Long standing relationships Retention & diversification of client base US Coast Guard US Navy Peruvian Navy Iraqi Navy Kenya Navy Indian Navy Clients diversification 2 Qatar Emiri Naval Forces Bangladesh Coast Guard Italian Coast Guard Italian Coast Guard (4) New clients U.A.E. Navy Kenya Navy Qatar Emiri Naval Forces Bangladesh Coast Guard 57 2 59 63 10 73 36 13 49 (2) 10
- 11. • Best-in-class know-howand leadership in high-end vessels • Strong commitment to R&D • Innovation across full product offering Technological leadership D • Ability to coordinate a broad network of specialized suppliers (more than 3,000 just in Italy) • Integrated production model • Proven track record of on-time deliveries Superior system integrator capabilities C • Global engineering and production network with 20 shipyards • State-of-the-art facilities • Flexible capacity Global and flexible production network A • Highly customized products • Flexible utilization of resources globally • Tailored project set-up to meet client needs High flexibility B Technological leadership: unique technological and operational excellence 3 11
- 12. VARD Outfitting Design Design Hull production Design Hull Productionand Outfitting 1 2 3 Project development Hull assembly & pre-outfitting Outfitting and sea trials Hull Production and Outfitting 1 3 2 Norway Romania Flexible engineering / production network Global presence to exploit local opportunities Employees by location(2) Operating subsidiary Representative/Sales office Corporate/BU headquarters Joint Venture Shipyard Vietnam • 1 shipyard USA • 3 shipyards Brazil • 1 shipyard Norway • 5 shipyards Italy • 8 shipyards Romania • 2 shipyards UAE • 1 Joint Venture Global and flexible production network Supply chain A VARD Design Outfitting Hull production Source: Company information (1) Excluding one shipyard through the joint venture in UAE with Al Fattan Shipyard Industry Est and Melara Middle East FZCO (2) As of December 2016 1 3 2 1 2 3 Italy 41% RoW 59% 3 1 2 China • 1 Joint Venture Continents: 4 Shipyards: 20(1) • ~ 19,200 employees (whom more than 7,900 in Italy) 12
- 13. Shipyard dream Owner’s concept Ownerinputs Basic design Functional design Coordination and shop drawings Guidelines e.g.: • # of cabins / passengers • Speed • Operative profile • … • General arrangement plan • Mid-ship section • Ship specification • … • Keel design • Static / Dynamic calculations • Plants design • Structure dimensioning • Technical specifications for supply • … • Hull construction drawings • Installation plans • … • Due date defined since order • Any delay would significantly penalize the shipbuilder (e.g. penalties, reputation) DESIGN OF A CRUISE SHIP High flexibility B Source: Fincantieri analysis 13
- 14. Hull assembly &Pre-outfitting Outfitting & Sea Trials Engineering: responsible of overall project “Prime / General contractor” role with: • Direct development of design & engineering (starting from ship configuration in close cooperation with shipowner, ensuring high flexibility also during construction) • Project management of whole construction (sole interface & coordinator of all parties involved interacting with suppliers for engineering and production) • Hull construction + integration of parts & components provided by suppliers (active management of make-or- buy strategies) • Responsibility of project performance and results Launch Delivery First Cut 3-4 months 10-12 months 10-17 months 8-12 months Contract Project Management Outfitting: integration & coordination in Group shipyards of a large number of suppliers with dynamic management of any modification Hull: direct construction in Group shipyards Shipyard dream Owner’s concept Furniture/ Restaurants Pools/ SPA Catering Entertainment/ Theaters Automation Air cond./ Propulsion Payload Platform Design / Project development Pre-contractual phase Example of a cruise ship Superior system integrator capabilities C Source: Company information 14
- 15. • F.A. Gauthier:1st dual fuel (LNG-gasoil) ferry in North America • Glutra: 1st LNG ferry ever built, delivered by VARD in 2000 • Serene: winner of “World Superyacht Award 2012” (134 m length) • Normand Maximus: largest offshore vessel ever built in Norway • Skandi Africa: "Ship of the Year 2015"(1) • AMC Connector: world’s largest cable layer(2) • Far Samson: most powerful offshore vessel(3) • LCS Freedom: world’s fastest steel frigate • Aircraft Carrier Cavour: world’s most powerful non-nuclear propulsion system • More than 20 prototypes developed over the last fifteen years • Carnival Vista: “ECO Notation” by Lloyd's Register for exceeding environmental regulatory standards • Royal Princess: 1st cruise ship fully compliant with new regulations • Costa Luminosa & Costa Pacifica: Guinness World Record for joint- christening of 2 cruise ships Cruise Ferries Naval Offshore Source: Company information (1) Award instituted by the major Nordic shipping magazine Skipsrevyen (2) In terms of loading capacity (2011) (3) In terms of bollard pull at the date of construction (423 tonnes) (2009) Mega- Yachts Example of innovative projects delivered / ongoing Main achievements • Strong technological know-how and design skills: ~ 90 prototypes in just over 10 years • R&D: ‒ ~90 projects ongoing ‒ 2016 expenditure € 96 mln ‒ Best-in-class R&D center (CETENA) in charge of developing new marine technologies across business units and for third parties Technological leadership D 15
- 16. Section 2 Historical Financial Performance SkandiAfrica DOF Ship of the Year 2015
- 17. Fincantieri Group historicalfinancial results: leaving behind the sector crisis 17 • Global financial crisis heavily impacted cruise ships orders in 2009- 2011 Headwinds in 2009-2015 • Oil price slump starting in Q3 2014 caused a scaling back of E&P investments plans and cost-cutting • Critical Brazilian economic and political situation Implications & impact • In order to preserve industrial capabilities Fincantieri decided to take on complex cruise ship prototype orders at challenging prices during 2012-2013 • Such prototypes were built mainly in 2015 and delivered in 2016 • Operational issues surfaced in 2015 and were fully reflected in FY 2015 results • Significant order slowdown in Oil&Gas equipment industry starting in 2015 with consequent reduction of activities at some shipyards • Vard Brazilian operations were a drag • The full impact of the crisis was felt in 2015 • The strategy of preserving the Group’s assets and capabilities proved correct and allowed Fincantieri to get out of the crisis period strengthened • New Business Plan announced on March 31, 2016(1) • 2016 results highlight a strong recovery of Group operating and financial performance marking a turning point(2): ‒ EBITDA € 267 mln (vs € -26 mln in 2015) ‒ EBITDA margin 6% (vs target ~5%) ‒ Net debt € 615 mln (vs target € ~0.7-0.8 bln) ‒ Net result up more than € 300 mln • 2018 – 2020 guidance fully confirmed: ‒ In 2018, revenue growth of 16-23% vs 2016, EBITDA margin at approx. 6-7% and net debt at approx. € 0.4-0.6 bln ‒ In 2020 revenue growth of 16-21% vs 2018, EBITDA margin at approx. 7-8% and net debt at approx. € 0.1-0.3 bln Countermeasures & recovery Shipbuilding Offshore (1) See Fincantieri Business Plan 2016-2020 presentation and Vard FY 2015 Results & Business Plan presentation (2) See Fincantieri FY 2016 Results presentation and Vard Q4 2016 Results presentation
- 18. Overview of financialperformance indicators(1) € mln FY 2012 FY 2013(2) FY 2014 FY 2015 FY 2016 Order intake 1,394 4,998 5,639 10,087 6,505 Total backlog 4,735 13,068 14,814 18,721 24,031 Of which backlog 4,735 8,068 9,814 15,721 18,231 Of which soft backlog - 5,000 5,000 3,000 5,800 Revenues 2,381 3,811 4,399 4,183 4,429 EBITDA 147 298 297 (26) 267 As a % of revenues 6.2% 7.8% 6.8% -0.6% 6.0% EBIT 87 209 198 (137) 157 As a % of revenues 3.7% 5.5% 4.5% -3.3% 3.5% Net result before extr. and non recurring items(3) 44 137 87 (252) 60 Attributable to owners of the parent 44 109 99 (141) 66 Net result for the period 15 85 55 (289) 14 Attributable to owners of the parent 15 57 67 (175) 25 Net fixed assets 595 1,432 1,417 1,453 1,590 Net working capital(4) (97) (67) 69 251 265 Of which construction loans - (563) (847) (1,103) (678) Equity 957 1,210 1,530 1,266 1,241 Net financial position Net cash/ (Net debt) 459 (155) 44 (438) (615) Employees 10,240 20,389 21,689 20,019 19,181 (1) With the aim to provide a meaningful index to measure the Group financial results, the Group adopts an EBITDA definition which normalizes the trend of results over time, and increases the level of comparability of the same results by excluding the impact of non recurring and extraordinary operating items; for the same reason, the Group also monitors Net Income before non recurring and extraordinary items (both operating and financials) (2) 2013 figures consolidate VARD starting from January 23, 2013 (3) Excluding extraordinary and Non Recurring Items net of tax effect (4) Construction loans are accounted for in Net working capital, not Net financial position, as they are not general purpose loans and can be a source of financing only in connection with ship contracts 18 VARD
- 19. (4) For comparisonpurposes, 2015 figures are restated following the redefinition of operating segments. Following the operational reorganization carried out in November 2016, the repair & conversion services, cabins & public areas business, as well as integrated systems business, all previously included in the Shipbuilding segment, have been relocated to the Equipment, Systems & Services segment starting from FY 2016 results. (1) Breakdown calculated gross of consolidation effects (2) EBITDA is a Non-GAAP Financial Measure. The Company defines EBITDA as profit/(loss) for the period before (i) income taxes, (ii) share of profit/(loss) from equity investments, (iii) income/expense from investments, (iv) finance costs, (v) finance income, (vi) depreciation and amortisation, (vii) extraordinary wages guarantee fund – Cassa Integrazione Guadagni Straordinaria, (viii) accruals to provision for corporate restructuring, (ix) accruals to provision for asbestos claims, (x) other non recurring items. EBITDA breakdown are referred only to operating segments (3) Including the release of orders risk fund referred to the provisions accrued at VARD business combination for expected losses on construction contracts in Brazil (€ 53 mln released in 2013 and € 35 mln in 2014) Revenues(1) and EBITDA(1,2) by segment € mln FY 2012 FY 2013(3) FY 2014 FY 2015(4) FY 2016 Revenues 2,292 2,394 2,704 2,652 3,246 Cruise 1,062 1,075 1,439 1,573 2,078 Naval 1,052 1,126 1,059 1,056 1,156 Other 178 193 206 23 12 EBITDA 157 155 195 (34) 185 EBITDA margin 6.8% 6.5% 7.2% -1.3% 5.7% Revenues - 1,321 1,580 1,199 960 EBITDA - 155(3) 108(3) (3) 51 EBITDA margin - 11.8% 6.8% -0.2% 5.3% 1 Revenues 166 163 192 498 495 EBITDA 15 14 21 42 62 EBITDA margin 9.3% 8.5% 11.1% 8.4% 12.5% Revenues (76) (67) (77) (166) (272) EBITDA (25) (26) (27) (31) (31) Revenues 2,381 3,811 4,399 4,183 4,429 EBITDA 147 298 297 (26) 267 EBITDA margin 6.2% 7.8% 6.8% -0.6% 6.0% Shipbuilding Offshore Equipment, Systems & Services Consolidations / other activities Total 19 VARD
- 20. VARD Capex • 2014, 2015and 2016 Capex mainly related to: ‒ Property, plant and equipment - aimed at supporting the development of production volumes and improving safety conditions and compliance with environmental regulations within the production sites ‒ Intangible assets – mainly related to the development of new technologies for cruise business and IT systems • 2013 Capex mainly related to completion of multi-year programs to increase production capacity of the shipyards in Brazil and the United States € mln Capex evolution Property, plant and equipment Intangible assets % of Revenues Capex by segment Shipbuilding Offshore Other activities (1) In addition, acquisition of VARD = €169 mln (reported net of cash acquired; total cost = €498 mln) (2) For comparison purposes, 2015 figures are restated following the redefinition of operating segments. Following the operational reorganization carried out in November 2016, the repair & conversion services, cabins & public areas business, as well as integrated systems business, all previously included in the Shipbuilding segment, have been relocated to the Equipment, Systems & Services segment starting from FY 2016 results. Equipment, Systems & Services 20 86 218 124 122 144 3 37 38 39 80 89 255 162 161 224 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 6.7% 3.7% 3.8% € mln 98 107 165 47 31 31 5 10 8 12 13 20 162 161 224 FY 2014 FY 2015 FY 2016 3.7% 5.1% (1) (2)
- 21. Indicative payment termsImpact on net working capital • Increases during construction • Impact on net debt • 20% during construction • 80% on delivery 3%-5% • Neutral profile • Increases during construction • VARD generally uses construction loans (guaranteed by the ship as collateral) Duration (months) 8-12 10-12 10-17 50%-55% 40%-45% POC(2) 3%-5% Duration (months) 65%-75% 20%-30% 3%-5% Duration (months) 35%-40% 55%-60% Cruise • According to % of completion Naval(3) • 20% during construction • 80% on delivery Offshore(3) POC(2) POC(2) (1) Phases and durations may be subject to changes depending on circumstances, regions and vessels specificity, production geographical area and type of construction (2) Percentage of Completion (3) Illustrative for frigates and support vessels Working capital dynamics Outfitting and Sea Trials Hull Assembly and Pre-Outfitting Signing A First Cut B Launch C Delivery D Design / Project Development Main phases of the shipbuilding process(1) 6-10 6-15 23-30 6-15 3-6 5-26 21
- 22. Net working capital Networking capital(1) Trade receivables Construction loans Work in progress net of advances from customers Provisions for risks & charges € mln Trade payables Inventories and advances Other current assets and liabilities (1) Construction loans are committed working capital financing facilities, treated as part of Net working capital, not in Net financial position, as they are not general purpose loans and can be a source of financing only in connection with ship contracts Breakdown by main components 22 116 57 (18) (196) 59 268 344 610 560 1,123 (56) 757 1,112 1,876 604 273 400 388 405 590 (563) (847) (1,103) (678) (597) (911) (1,047) (1,179) (1,307) (101) (151) (129) (112) (126) (67) 69 265 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 251 VARD
- 23. 692 385 552 260 220 45 52 82 53 33 17 41 90 113 115 (149) (70) (80) (263) (453) (146) (563)(600) (601) (530) 459 (155) 44 (438) (615) FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Net financial position Net financial position(1) Non-current financial receivables Short term financial liabilities Current financial receivables Cash & cash equivalents € mln – Net cash / (Net debt) Long term financial liabilities (1) Net financial position does not account for construction loans as they are not general purpose loans and can be a source of financing only in connection with ship contracts (2) Issuer FINCANTIERI S.p.A., Value € 300 mln, Annual coupon 3.75%, due November 2018 Breakdown by main components 23 VARD Inaugural bond issuance € 296 mln(2)
- 24. Profit & Lossand Cash flow statement Profit & Loss statement (€ mln) FY 2012 FY 2013(1) FY 2014 FY 2015 FY 2016 Revenues 2,381 3,811 4,399 4,183 4,429 Materials, services and other costs (1,727) (2,745) (3,234) (3,337) (3,291) Personnel costs (507) (752) (843) (865) (846) Provisions - (16) (25) (7) (25) EBITDA 147 298 297 (26) 267 Depreciation, amortization and impairment (60) (89) (99) (111) (110) EBIT 87 209 198 (137) 157 Finance income / (expense)(2) (12) (55) (66) (135) (66) Income / (expense) from investments 1 2 6 (3) (10) Income taxes(3) (32) (19) (51) 23 (21) Net result before extraordinary and non recurring items 44 137 87 (252) 60 Attributable to owners of the parent 44 109 99 (141) 66 Extraordinary and non recurring items(4) (41) (80) (44) (50) (59) Tax effect on extraordinary and non recurring items 12 28 12 13 13 Net result for the year 15 85 55 (289) 14 Attributable to owners of the parent 15 57 67 (175) 25 Cash flow statement (€ mln) FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Beginning cash balance 387(5) 692 385 552 260 Cash flow from operating activities 375 (95) 33 (287) 73 Cash flow from investing activities (83) (424) (157) (172) (237) Free cash flow 292 (519) (124) (459) (164) Cash flow from financing activities 13 255 303 167 115 Net cash flow for the period 305 (264) 179 (292) (49) Exchange rate differences on beginning cash balance - (43) (12) - 9 Ending cash balance 692 385 552 260 220 (1) 2013 figures consolidate VARD starting from January 23, 2013 (2) Includes interest expense on VARD construction loans for € 24 mln in 2013, €26 mln in 2014, € 36 mln in 2015 and € 34 mln in 2016 (3) Excluding tax effect on extraordinary and non recurring items (4) Extraordinary and non recurring items gross of tax effect (5) Excluding financial assets held for sale amounting to € 45 mln 24 VARD
- 25. Net result beforeextraordinary and non recurring items(1) A A B + C C + (1) Extraordinary and non recurring items net of tax effect (2) 2013 figures consolidate VARD starting from January 23, 2013 (3) Of which € 1 mln related to the acquisition of VARD in 2012 and € 13 mln in 2013 (4) Related to the acquisition of VARD (5) Mainly IPO related costs (6) Extraordinary charges related to a provision for an ongoing litigation with a Mega Yacht owner B • Extraordinary wages - costs related to CIGS (Cassa Integrazione Guadagni) for employees in temporary layoff • Restructuring costs - extraordinary costs, such as severance, related to workforce reduction under the Reorganization Plan in Italy • Asbestos claims - provisions or costs for asbestos related to claims by employees • Other non recurring items - in 2013 VARD acquisition costs, in 2014 IPO related costs and in 2016 extraordinary charges related to a provision for an ongoing litigation with a Mega Yacht owner • Non recurring financial costs - mainly financial expenses related in 2013 to VARD acquisition 25 € mln FY 2012 FY 2013(2) FY 2014 FY 2015 FY 2016 Net result before extraordinary and non recurring items(1) 44 137 87 (252) 60 Attributable to owners of the parent 44 109 99 (141) 66 Extraordinary and non recurring items gross of tax effect (41) (80) (44) (50) (59) ̶ Of which extraordinary wages (19) (15) (10) (3) (1) ̶ Of which restructuring and other non-recurring personnel costs (8) (11) (9) (17) (12) ̶ Of which asbestos claims (8) (24) (21) (30) (27) ̶ Of which other non recurring items (9)(3) (22)(3) (4)(5) - (19)(6) ̶ Of which non recurring financial (costs) / income 3 (8)(4) - - - Tax effect on extraordinary and non recurring items 12 28 12 13 13 Net result 15 85 55 (289) 14 Attributable to owners of the parent 15 57 67 (175) 25 VARD
- 26. Balance sheet Balance sheet(€ mln) FY 2012 FY 2013(1) FY 2014 FY 2015 FY 2016 Intangible assets 104 539 508 518 595 Property, plant and equipment 585 897 959 974 1,064 Investments 17 70 60 62 58 Other non-current assets and liabilities (40) (14) (48) (44) (69) Employee benefits (71) (60) (62) (57) (58) Net fixed assets 595 1,432 1,417 1,453 1,590 Inventories and advances 273 400 388 405 590 Construction contracts and advances from customers (56) 757 1,112 1,876 604 Construction loans - (563) (847) (1,103) (678) Trade receivables 268 344 610 560 1,123 Trade payables (597) (911) (1,047) (1,179) (1,307) Provisions for risks and charges (101) (151) (129) (112) (126) Other current assets and liabilities 116 57 (18) (196) 59 Net working capital (97) (67) 69 251 265 Assets held for sale including related liabilities - - - - 1 Net invested capital 498 1,365 1,486 1,704 1,856 Equity attributable to Group 940 968 1,310 1,137 1,086 Non-controlling interests in equity 17 242 220 129 155 Equity 957 1,210 1,530 1,266 1,241 Cash and cash equivalents (692) (385) (552) (260) (220) Current financial receivables (45) (52) (82) (53) (33) Non-current financial receivables (17) (41) (90) (113) (115) Short term financial liabilities 149 70 80 263 453 Long term financial liabilities 146 563 600 601 530 Net debt / (Net cash) (459) 155 (44) 438 615 Sources of financing 498 1,365 1,486 1,704 1,856 26 VARD (1) 2013 figures consolidate VARD starting from January 23, 2013
- 27. Section 3 Business Overviewand Market Dynamics Variable Pitch Propeller Horizon class frigates Italian Navy
- 28. Business Overview andMarket Dynamics Shipbuilding Offshore Equipment, Systems and Services 1.1 Cruise ships 1.2 Naval vessels 1.3 Other shipbuilding – Mega Yachts 1 2 3 1.4 Other shipbuilding – Ferries 28
- 29. Target Market /Positioning • Worldwide cruise ships market • Global leader with presence in all cruise market segments and the most diversified client portfolio • Main supplier of “Carnival Corporation & plc”, leading ship owner in the cruise sector • Well established technological and project management capabilities Products Shipyards Italy: • Monfalcone • Marghera • Cruise ships (10 – 60,000 Gross Tonnage and up to 750 passengers) expressly designed for exclusive cruises operated on less popular routes (e.g. high cultural / environmental value) • Largest cruise ships (over 130,000 Gross Tonnage and over 3,600 passengers) for mainstream cruises with standard routes and on board features representing the destination itself • Cruise ships (40 – 90,000 Gross Tonnage and 750 – 1,500 passengers) dedicated to destination-oriented cruises with upscale on board service on route / destinations out of reach for premium / contemporary ships • Large cruise ships (90 – 150,000 Gross Tonnage and 1,500 – 3,600 passengers) dedicated to a wide range of cruise routes with higher on board standards and services than contemporary ships (1) Terminology used in the cruise sector to indicate cruises with niche characteristics (e.g. arctic destinations, coastal routes, regional routes) Premium Client Portfolio Luxury / Niche Upper premium Contemporary Upper Premium Shipbuilding – Cruise 1.1 Romania: • Tulcea Luxury / Niche(1) Premium Contemporary both Fincantieri and Vard client Vard client • Sestri Ponente • Ancona 29
- 30. Operators Shipbuilding – Cruise:selected cruise operators overview Multibrand Monobrand Segment Source: Annual reports, company information, GP Wild, specialized press, Fincantieri analysis (1) TUI Cruises is a 50% joint venture between TUI AG and Royal Caribbean Cruises Ltd (2) SkySea Cruise Line is a 35% joint venture between Royal Caribbean Cruises and Ctrip (3) 49% RCL; 51% Springwater Capital Contemporary Upper Premium Premium Carnival Royal Caribbean Norwegian Cruise Line Holding MSC Ponant Genting Hong Kong Silversea Cruises TUI AG Viking Cruises Virgin Voyages (1) Luxury / Niche New entrants Fincantieri & VARD clients (3) (2) 30 (1)
- 31. Shipbuilding – Cruise:steady long-term passenger growth Dynamics of cruise market Dynamics of global tourism and cruise passengers mln % cruise guests/ tourists 1.1% 1.4% 1.6% 2.0% 2.7% CAGR ’08-’16 ’16-’20 Total tourists Cruise tourists +3.6% +2.4% +6.3% +5.5% • The cruise industry has proven to be remarkably resilient, having continued to grow throughout the 2008-2010 economic crisis • Cruise tourists on total tourists at only 2% and growing • Cruise penetration (cruise passengers on national population) is still very low: at a mere 5.3%, Australia has the highest penetration in the world • In view of the positive market outlook of the leisure industry and of the increasing penetration of the cruise sector, the latter is expected to significantly grow in the future, in particular thanks to the development of some emerging markets: China and Australia 5.6 9.7 13.4 24.7 30.6 49.0 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '20 '30 1,360 1,800 Key source market penetration rate development Source:Total Tourists: World Tourism Organization, UNWTO – Tourism Highlights, 2016 Edition & Total cruise Tourist: Fincantieri estimates; China National Tourism Administration; CLIA Australia High potential of emerging markets (e.g. China) with penetration rate < 1% 530 678 809 1,235 2.3% 31 USA Australia UK&Ireland Canada Germany Italy Scandinavia Spain China 2012 2013 2014 2015 2016
- 32. Shipbuilding – Cruise:China and Australia high potential markets 32 China Australia • According to CLIA, in 2016 China moved up to become the second largest source market for cruising, with 2.1 mln passengers, edging out Germany • Chinese Ministry of Transport forecast 4.5 mln of cruise passengers in 2020 and 8-10 mln in 2030 • Fincantieri and China State Shipbuilding Corporation have established a JV aimed at developing and supporting the growth of the Chinese cruise industry − First mover advantage in a high potential market − Intellectual property protection guarantee − No execution risks − Growing stream of revenues in the future CAGR +21% 2.1 4.5 2016 2020 • In 2015 overcame the target of 1 mln(2) cruise passengers previously foreseen for 2020, while in 2016 reached 1.28 mln continuing a twelve-year run of strong double digit growth • The highest market penetration rate in the world, with the equivalent of 5.3 per cent of Australians taking an ocean cruise in 2016 • Expansion of product offering (cruise lines establishing presence and introducing more itineraries and ships) • New target is for 2 mln passengers by 2020 (CAGR 2016-2020: 11,8%). (1) Source: CLIA - Asia Cruise Trends 2016 (2) Source: CLIA Australia
- 33. Shipbuilding – Cruise:from buyer’s market to builder’s market Cruise ship orders # of ships • After a long period of high and constant level of orders characterized by a substantial balance between demand and production capacity of European yards, in 2008 the economic crisis caused a sudden and severe demand drop • Due to the investment programs’ cuts and the complete freeze of the credit market, in 2008- 2009 only 4 ships were ordered causing progressive workload reduction • 2010-2013 was still a very challenging period characterized by: - ship-owners reluctance to order which caused shipbuilders to accept orders at challenging prices - introduction of new safety regulations, which make obsolete the previously developed projects, forcing shipyards to offer several prototypes, with substantial technological breakthrough and operational complexity 2014 - today: from «Buyer’s Market» to «Builder’s Market» • Recovery in demand for cruises and increase of cruise prices in the "traditional" market in relation to the improvement of the US and European economic situation • Opening of new cruise markets (e.g. China and Australia): major players decided to invest heavily in these markets, to get first mover advantages • Replacement of vessels built in the years 1990-2000, now obsolete and less attractive for the final customers • Entry of new cruise operators with strategic and innovative approaches, aiming to differentiate from competitors, delivering a new type of cruise experience to specific target customers • Production capacity already filled through 2020: no slots available before 2023/2024 • For the shipyards, balanced ratio of prototypes vs sister ships Cruise ships demand Fincantieri Other shipbuilders 6 6 3 8 2 1 2 3 2 6 8 9 8 6 6 8 8 1 5 5 4 3 8 10 17 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 12 12 11 1 3 6 8 7 9 19 16 16 25 33
- 34. 0 30000 60000 90000 120000 150000 180000 210000 240000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Shipbuilding – Cruise:market clustering trends Size (GRT) Source: Fincantieri analysis; New Orders 2012 – 31.12.2016 Trend by ship type • Clustering of ship sizes towards: – Large ships (>130,000 GRT) for premium and contemporary segments, focused on broadening of board entertainment – Medium-small size ships (<70,000 GRT) for luxury, niche and upper premium segments • Evolution of service to clients: – Higher passenger expectations for on board entertainment – Enrichment of “wow” features ("ship as a destination") – New premium with fee services (e.g. food, SPA and wellness) • Higher technological complexity due to: – New safety rules (Safe Return to Port) – New strict environmental rules 40 – 70,000 GRT for the luxury & upper premium ships Market clustering trends Description 34 <40,000 GRT ships for the niche/expedition segment Main market focused on 130,000 - 180,000 GRT ships demand From January 2012 to June 2017 Fincantieri & VARD acquired 20 out of a total of 28 orders for luxury, upper premium and niche segments
- 35. Shipbuilding – Cruise:competitive positioning • Luxury / Niche • Upper premium • Premium • Contemporary Product offering 4 +3(2) # of dedicated shipyards Ships in orderbook(3) 31(4) Source: company information, Fincantieri analysis (1) Cruise ships over 10,000 of gross tonnage; New orders Jan 2004 – June 2017, including MOA, LOI, excluding options. Market share on a long period since this measure changes significantly year-on-year subject to deliveries and new orders (2) 3 VARD shipyards not dedicated to cruise built but also used for building of cruise sections for Fincantieri and hulls for expedition cruise vessels (Tulcea) as well as outfitting of expedition cruise vessels (Langsten, Søviknes) (3) At June 30, 2017; including MOA and LOI, excluding options (4) Includes 6 vessels in VARD orderbook • Premium • Contemporary 1 11 + 2 Competitors overview • Premium • Contemporary 1 8 2 newbuilding + 2 repair & outfit • Contemporary • Luxury / Niche 6 Cruise shipbuilding segment is strongly dominated by European players with occasional presence of other shipbuilders (e.g. Mitsubishi acquired orders for 2 cruise ships for Aida brand in 2010 and booked significant losses) Fincantieri is the world leader with a solid track record of 78 delivered cruise ships since 1990 (at June 30, 2017) Flexible operations Widest product portfolio • Premium • Contemporary 1 11 Market share(1) Number of ships, new orders Jan 2004 – June 2017 Tot. # ships = 163 Fincantieri & VARD 73 STX France 23 Meyer Werft 35 Meyer Turku 16 MV Werften 6 Other 11 35
- 36. Target Market /Positioning Products Shipyards Client Portfolio (1) Air independent propulsion (2) For all the large ships and excluding minesweepers and small ships below 45 m in length (3) Focused on the construction of offshore support and other specialized ships • Air operations, air power projection and dual use operations for disaster relief • Fast vessel for coastal defense, sea patrol, search and rescue • Other ships defense in multi threats environments • Littoral missions, sea patrol, search and rescue, anti pollution and fishery control • Multi-mission vessels with anti-surface and anti-submarine warfare • AIP(1) unit for surveillance and open sea operations • Sole supplier of the Italian Navy(2) and one of the major mid- sized vessel suppliers of US Navy and US Coast • Pursuing opportunities in foreign accessible markets • Signed ~ € 4.0 bln program with Qatar Emiri Naval Forces Italy • Riva Trigoso - Muggiano USA • Marinette • Green Bay • Sturgeon Bay(3) TURKISH COAST GUARD ALGERIA NAVY UAE NAVY IRAQI NAVY INDIAN NAVY Shipbuilding – Naval 1.2 QATAR EMIRI NAVAL FORCES BANGLADESH COAST GUARD KENYA NAVY ARMED FORCES OF MALTA ITALIAN NAVY ITALIAN COAST GUARD US COAST GUARD US NAVY PERUVIAN NAVY Submarines Frigates Destroyers Patrol vessels Aircraft carriers Corvettes 36
- 37. Shipbuilding – Naval:market opportunities Description Estimated defense spending for naval vessels (foreign markets accessible to Fincantieri(1)) Spending by country (foreign markets accessible to Fincantieri) 1.7 4.6 7.3 9.2 10.0 2017 2018 2019 2020 2021 € bln Euro in %, period 2017-2021 India 18% Saudi Arabia 16% Vietnam 7% Turkey 6% Canada 5% Indonesia 3% Romania 3% USA 3% Algeria 2% Mexico 2% Others 35% Fincantieri’s accessible markets • Countries with naval shipbuilding capabilities where the Group already operates − Italy: Italian Navy’s fleet renewal program and other programs (e.g. FREMM) − US: LCS program • Countries with no strong local shipbuilder or with no significant naval technologies − Cumulated spending programs amount to € 32.7 bln over 2017-2021 − 65% of estimated 2017-2021 spending for naval vessels is related to a group of 10 countries Source: IHS Jane’s – March 2017, Fincantieri analysis Source: IHS Jane’s – March 2017, Fincantieri analysis (1) Excluding submarines, minehunters and programs of self-sufficient / non accessible countries 37
- 38. Shipbuilding – Naval:key programs of the Italian Navy Source: Company information Other programs • FREMM program – Program launched in 2005 sponsored jointly by the French and Italian governments to design and build the European Multipurpose Frigate – DCNS manufactures for the French government, while Fincantieri manufactures for the Italian government and the two companies cooperate on the design – The program provides for the construction of ten vessels for the Italian Navy and is completed with the acquisition in 2015 of the orders for the last two vessels, to be delivered after 2020 • U212A submarines – Program launched in the nineties as part of an Italian-German governmental cooperation that has led to the construction of four U212A submarines with similar features for the Italian Navy (in two batches) and four for the German Navy – Fincantieri delivered in July 2016 the third submarine to the Italian Navy and the fourth in May 2017 Fleet renewal program • Multi-year program known as the "Defence Act“ that will employ a total funding of € 5.4 bln • Orders for a total of 9 new generation multi-purpose vessels already placed with the consortium consisting of Fincantieri, agent, and Finmeccanica, principal, for € 5.4 bln (Fincantieri share ~ € 3.6 bln) – 7 multi-purpose offshore patrol vessels (PPA - Pattugliatore Polivalente d’Altura) with 3 more in option, scheduled for delivery in 2021, 2022, 2023, 2024 (two units), 2025 and 2026 – 1 Logistic Support Ship (LSS), scheduled for delivery in 2019 – 1 multi-purpose amphibious unit (LHD - Landing Helicopter Dock), scheduled for delivery in 2022 • In addition, Fincantieri will provide support over the lifecycle of the vessels, through the supply of logistic services during the construction and of ISS or In Service Support, during post-delivery operations, as well as components and naval machinery • The fleet renewal is the first significant shipbuilding program since 2006 and will have potential for export to other accessible markets TO COME 38
- 39. LCS27 Shipbuilding – Naval:key programs of the US Navy Source: AMI International, “Navy Force Structure and Shipbuilding Plans: Backgound and Issues for Congress” November 2013 (1) Program for a total of 52 ships entails the construction of equal number of units of the Independence class built by Austal USA (2) LCS1, LCS3, LCS5 and LCS7 already delivered Orders of "Freedom" class built by Fincantieri LCS7 2011 2010 LCS9 2012 LCS11 2013 LCS13 LCS15 2015 LCS21 LCS23 2014 LCS17 LCS19 USS Freedom (LCS 1) Delivered: 2008 USS Forth Worth (LCS 3) Delivered: 2012 LCS25 2016 Description LCS program(2) • In 2009, Fincantieri together with Lockheed Martin Corporation (as minority investor) acquired for ~ USD 120 mln the marine business unit of the Manitowoc Company, Inc. (renamed Fincantieri Marine Group) – ~ USD 100 mln invested for the facility upgrade making the acquired shipyard among the best ones in the USA for the construction of mid-sized vessels – Recognized contribution to the enhancement of local know how and authorization by DSS to operate the yard with company’s own staff • In 2010 Fincantieri was awarded with the contract for the construction of up to 10 units of Freedom class of the Littoral Combat Ship program(1) – First multi-purposes vessels : vessels capable of serving three missions with interchangeable modules within one day – Highly technological and efficient vessels allowing substantial operating costs reduction matching the declared effort of the US Navy to increase efficiency of the fleet • In 2015 Fincantieri was awarded an option for an additional unit (LCS 25), subsequently financed in 2016 • The Navy maintains the requirement of 52 ships. The LCS program foresees 4 units to be financed in 2017-2018 and then will evolve towards an enhanced configuration, named Fast Frigate, to be procured from 2019 to 2025 in order to complete the program 2017- 2018 LCS29 LCS/FF31 From 2019 LCS/FF51 … USS Milwaukee (LCS 5) Delivered: 2015 USS Detroit (LCS 7) Delivered: 2016 LCS5 39
- 40. • In June2016 Fincantieri and the Qatari Ministry of Defence have signed a contract for the construction of seven new generation units (surface vessels) included in the national naval acquisition programme of the Qatar Emiri Naval Forces: − Four corvettes of over 100 meters in length − One amphibious vessel (LPD - Landing Platform Dock) − Two patrol vessels (OPV - Offshore Patrol Vessel) − Support services in Qatar for further 15 years after the delivery of the vessels • All the units will be entirely built in Fincantieri Italian shipyards starting from 2018 • Value for Fincantieri close to € 4.0 bln Shipbuilding – Naval: contract with Qatari Ministry of Defence • This large program falls within the company’s strategy to expand into new naval markets, leveraging well-proven expertise with new potential clients • It is the largest order for a foreign Navy acquired by Fincantieri over the last 30 years 40
- 41. Shipbuilding – Naval:competitive positioning 41 85.1 77.9 70.6 56.8 33.2 23.0 16.0 12.3 11.8 General Dynamics Russia Shipbuilding Industry Huntington Ingalls BAE Systems Chinese Shipbuilding Industry DCNS Fincantieri/ Orizzonte Mazagon Dock Ltd SEPI (Navantia) Source:2017 IHJ Military Ships Forecast Market - End year report 2016 (1) Does not include the LCS program which is attributed to Lockheed Martin as a prime contractor Top suppliers based on work projected in 2016-2025 $ Bln • Despite strong European national players bidding in the export market, Fincantieri is among the world leaders in Naval shipbuilding • Global market value of naval programs to be developed in 2016-2025 is $ 386.8 bln • Considering the value of the finalized or assigned contracts that will be developed in the period 2016-2025 Fincantieri is ranking 7th in the world • Deducting the nuclear component, Fincantieri rises to 5th position, qualifying as the 1st European military shipbuilder, behind the major world powers: United States, Russia and China(1) Excluding nuclear-powered vessels Fincantieri is the 5° player worldwide (after USA, Russia and China) and the 1° in Europe (1)
- 42. Concept Target Market /Positioning Products Shipyards Commercial strategy • Worldwide mega yachts market (> 80 m) • One of the key(1) players in the construction of luxury vessels of over 100 meters in length • First Fincantieri mega yacht (Serene, 134 m) delivered in 2011 and awarded with “World Superyacht Award 2012” • In December 2014 Fincantieri delivered “Victory” (140m), the largest yacht ever built in Italy and one of the ten largest motor yacht in the world Xvintage (99 m) • Large luxury customized mega yachts resulting from a special synergy of advanced technical, design and construction capabilities of the Group • Clients: Ultra High Net Worth Individuals on worldwide basis • Minority stake in Camper & Nicholsons, the world leading authority in all luxury yachting activities, notably brokerage • Riva Trigoso - Muggiano (1) Source: The Superyacht Report, ShowBoats International (2014) Fortissimo (145 m) WORLD SUPERYACHT AWARD 2012 Other Shipbuilding – Mega-Yachts 1.3 Victory (140 m) Ottantacinque (85 m) Mars (92 m) Serene (134 m) 42
- 43. Target Market /Positioning Products Client Portfolio • Large ferries (length > 150 m) dedicated to the European market (Mediterranean Sea, Baltic Sea and North Sea) • Innovative ferries adopting the most advanced solutions in terms of energy saving and low environmental impact • Mixed diesel and LNG (Liquefied Natural Gas) propulsion • Ferries with high comfort level for the transportation of passengers Cruise Ferries Dual Fuel Ferries • Vessels built for freight vehicle transport along with passenger accommodation Other Shipbuilding – Ferries 1.4 Shipyards • Castellammare di Stabia • Ancona Ro-pax 43
- 44. Target Market /Positioning Products Client Portfolio Shipyards • Among global leaders in high-end OSVs, supplier of complex vessels • Heads of Agreement with Rosneft (Russia) for the formation of a JV in focused on design and engineering of a new type of vessel • Diversification in expedition cruise, aquaculture, offshore wind and offshore patrol vessels segments USA(2) • Sturgeon Bay Norway • Aukra • Brattvaag • Brevik • Langsten • Søviknes Romania • Braila • Tulcea Brazil • Promar Italy(2) • Palermo • Ancona Vietnam • Vũng Tàu (1) AHTS = Anchor Handling Tug Supply, PSV = Platform Supply Vessels, OSCV = Offshore Subsea Construction Vessels (2) For reasons connected with the organization of production and the proximity of market/customers the Group’s Italian (Palermo e Ancona) and US (Sturgeon Bay) yards offer offshore products Offshore 2 • Mid/deep water drilling rigs • Heavy lift, icebreakers, research vessels, LPG OSV(1) • Highly complex vessels performing subsea operations and maintenance OSCV • Anchoring and moving drilling and offshore production units AHTS • Deep/ultra deep water drilling units Drillships Others Drilling units • Transporting cargo/people to/from offshore rigs and platforms • Fisheries and other vessels for aquaculture sector • Wind Service Operation Vessels for offshore wind farms • Offshore Patrol Vessels Special vessels Aquaculture Offshore wind • Small sized expedition cruise vessels OPV Expedition cruise Semi-subs PSV also production of luxury-niche cruise vessels also production of cruise sections for Fincantieri Expedition / luxury-niche cruise clients 44
- 45. Offshore: market overview 250265 325 355 365 320 260 258 270 295 330 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 USD bln E&P Capex Aquaculture: growth of aquaculture vs traditional fishing Description Sources: Instok June 2016 (2017-2020) Source: Marine Harvest “Salmon Farming Industry Handbook 2016“ Offshore wind: growth of installed capacity in Europe Source: EWEA - Wind energy scenarios for 2020 (High Scenario) Aquaculture Traditional fishing +5% CAGR +1% GW 7.9 27.9 2014 2020 CAGR +23% Offshore Oil&Gas: forecast (2017-2020) • Negative outlook for PSV and AHTS demand due to oversupply following oil price fall and significant postponements of drilling projects • Opportunities in OSCV sub-segment, notably in Middle East region • Expected recovery in demand starting from 2018 New business opportunities • Offshore wind: expected installed capacity in 2020 at 27.9 GW (2014-2020 CAGR at 23%): emerging opportunities for Wind Service Operation Vessels (SOV) • Aquaculture: sustained market growth with increasing complexity related to higher technological and industrial contents • Niche/Expedition cruise: strong market growth (e.g. recent VARD contracts from PONANT and Hapag Lloyd Cruises) • Offshore Patrol Vessels: positive outlook, Vard Marine leading provider of innovative and cost effective OPV designs 45
- 46. Steam turbines Target Market/ Positioning Products / Services Client Portfolio Plants / Subsidiaries • One of the reference players in the design, construction and service of marine systems, components and turnkey solution in cruise, offshore and naval sectors • One of the reference providers of after sales services (mainly naval vessels) and repairs & conversions • Worldwide major player in ship interiors segment • Retractable/fixed stabilization systems, propellers, thrusters, engines • Energy generation and naval application • Riva Trigoso – Muggiano • Palermo • Trieste • Seastema S.p.A. • Isotta Fraschini Motori S.p.A. • Delfi S.r.l. • FMSNA Inc. • Marine Interiors • Fincantieri SI • Sturgeon Bay Equipment, Systems and Services 3 • Design, refitting and delivery of turnkey cabins and public areas Stabilization, propulsion, positioning and generation syst. • Life Cycle Management (ILS & ISS) and Conversions & Modernization • Life Cycle Management (ILS & ISS) Systems & Components Services Automation systems • Platform automation, navigation and dynamic positioning systems • Integrated electric and electronic packages Electric & Electronic Systems Naval services • Repairs, conversions & refitting Ship repairs & conversions Interiors Italian Navy Qatar Emiri Naval Forces Bangladesh Coast Guard UAE Navy US Navy Italian Navy Qatar Emiri Naval Forces Bangladesh Coast Guard Armed Forces of Malta 46
- 47. Equipment, Systems &Services: Systems & Mechanical Components Steam turbines Systems for stabilization, propulsion, dynamic positioning and generation(1) Turbines 30 – 50 MW Stabilization systems Propulsion systems and shaft lines Diesel engines Positioning systems Turbines < 30 MW Platform automation systems Dynamic positioning systems Navigation systems Automation systems(2) (1) Generation systems through Isotta Fraschini Motori (2) Automation systems through Seastema (3) Engineering companies active in the construction of small power plants (4) EPC contractors in Oil & Gas sector that provide turnkey complex projects Segments Products Shipbuilders Industrials(3) EPC contr.(4) Navies N.a. N.a. N.a. Current Client focus Key clients Key applications • Power plants ‒ Refineries, paper mills, incinerators • Renewable energies plants (biomass) • New ships ‒ Cruise ships ‒ Ferries ‒ Naval vessels ‒ Mega-Yachts (> 60 m) ‒ Offshore vessels • Repair, transformation and after sales services ‒ Maintenance ‒ Substitution of obsolete parts ‒ Spare parts 47 US Navy Italian Navy
- 48. Interiors - MarineInteriors Electric & Electronic Systems - Fincantieri SI • Fincantieri SI handles the entire integrated electric and electronic package, offering to its customers a turnkey product spanning the most sophisticated propulsion systems and the on- board electrical auxiliaries • In this business Fincantieri SI provides project management, project engineering, construction and commissioning, supply of key hardware and software components and life-cycle services • Products and services are aimed at the marine sector (e.g. cruise ships, naval vessels, yachts, offshore vessels and platforms) and at other industrial markets, such as steel, oil and gas and power generation • Marine Interiors is today the world leader in cabin and wet unit construction for cruise ships • The company has been established in July, 2014 to enrich Fincantieri Group overall product portfolio, integrating cabin design and production into its design and construction flow • The event marks a major meeting of knowledge as Marine Interiors combines the 20 years experience of the former Santarossa (acquired on May, 5th 2015) in cabins construction and refurbishment with Fincantieri world leading experience in ship construction and refurbishment and solid financial background • From 2016 has entered in the public rooms business through the incorporation of the internal Fincantieri team, setting Marine Interiors as a worldwide major player in the naval interior segment Equipment, Systems & Services: interiors and electric & electronic systems 48
- 49. • Documentation updates •Archives • Follow-on training • Spare replenishment ILS • Engineering activities – Logistic engineering – Bill of materials & configuration – Manuals & technical specifications • Training (Fincantieri Training Academy) – Base & board operations – Computer-based • Spare parts provisioning – On board – Ashore/base Equipment, Systems & Services: Naval services Tender request Contract signing First sea going Delivery End of Warranty De-Commissioning First cut Integrated Logistic Support In Service Support ISS • Maintenance & repair – Preventive – Predictive – Corrective • Change & obsolescence management Life Cycle Management services Product Lifecycle Management De-commis sioning Vessel in service Commis sioning Contract definition Engineering Construction ISS 49
- 50. Equipment, Systems &Services: Ship repairs & conversions Conversion Ordinary repair services Extraordinary services Segments Key clients Main projects • Repair and conversion of cruise ships, mega- yachts, offshore units, other commercial vessels and naval vessels leveraging on presence in strategic geographical areas (e.g. Mediterranean Sea and North America) • One of the key players in the Mediterranean Sea area and the main operator for ship repairs and conversions in the Great Lakes area of the US 50 • Ordinary maintenance and interventions required by international classification registers (e.g. dry docking and special surveys) • Damage repair and upgrading of ship standards in order to adapt ships pursuant to new regulations • Structural changes of ships modifying their final use (conversion), upgrading of ship machineries and technologies and increase in the ship payload • MSC Rinascimento (Cruise): lenghthening by 24m of 4 Lirica class cruise ships • Al Said (Mega-Yachts): extensive refitting and repair of machinery, propulsion system, power generation and HVAC • Scarabeo 8 (Offshore): all phases, from hull construction to outfitting starting from bare deck Target market & positioning Italian Navy Bangladesh Coast Guard Armed Forces of Malta