Fincantieri: Vard Shipyard is Losing Money

Italian shipbuilder Fincantieri has posted higher earnings in the first nine months, but said the result was hit by losses at its Vard unit. Revenues increased by 9.7% at euro 4,254 million (euro 3,878 million at 30 September 2018).

Fincantieri reported a positive performance of the Shipbuilding segment (+30.2% compared to 30 September 2018 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, improving in all areas, but limited by the negative results of Vard, which is undergoing a reorganization process aiming at improving its management trend.

Giuseppe Bono, Fincantieri's Chief Executive Officer, said: "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, 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 dedicated to this initiative some of our best Italian employees."

Group EBITDA at September 30, 2019 was euro 287 million (+2.1% compared to September 30, 2018) with an EBITDA margin of 6.7%, including the positive performance of the Shipbuilding segment (+30.2% if compared to September 30, 2018 despite the negative impact of the Vard Cruise projects) and is impacted by the negative margin in the Offshore and Specialized Vessels segment.

With reference to the subsidiary VARD, following the delisting completed in December 2018, the process of full integration within the Fincantieri Group and alignment to the best practices continued. A change in management followed, together with the launch of a reorganization process.

 The Group performance is confirmed to be positive from an operational standpoint thanks to the favorable trends of the cruise and naval shipbuilding across all geographies, although limited by the negative results of VARD in cruise and offshore projects.

With reference to the subsidiary Vard, the commitment of the Group to align the industrial management systems and the economic planning of the projects to the Group best practices continues, as reported in the “Economic data” section.

Any potential additional adjustment on the estimated costs at completion for longer term projects that may arise from this process will be included in the full year 2019 results. The reorganization plan for the subsidiary Vard is expected to be presented together with the approval of the full year Group results.