Fincantieri S.p.A.

Good morning, ladies and gentlemen. This is the Coru School Conference Operator. Thank you and welcome for joining Fincantieri Half Year 2023 Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Folgiero, Chief Executive Officer and Managing Director. Please go ahead, sir.

Good morning. Good morning, everyone. Thank you for joining us and welcome to Fincantieri Half-Year Financial Results Conference Call. This set of results shows once again a solid top line with revenues up by 4.5% to 3.7 billion euro. This is line with expectations and with development of the background. EBITDA margin stands at 5% in line with 2023 target and improved when compared with first age 2022 results. 2.6%, and fiscally at 2022 results, 3%. 2022 was in fact impacted by the inflationary pressures, one-off items, and the lower marginality, especially in the infrastructure business. In the first half of 2023, we recorded a positive adjusted net income at 3 million euro before extraordinary or non-recurring Abestos-related litigation costs. Net loss ends up at 22 million. Order intake came in at 2.1 billion euro with a positive contribution from wind offshore. During this period, the U.S. Navy exercised the option for the fourth frigate while just a few days ago. We received confirmation regarding the construction of the third new generation submarine for the Italian Navy. We have now a total backlog of almost 33 million, securing 4.4 years of work when compared with 2022 revenues. Net financial position landed at Euro 2.8 billion in line with cruise delivery schedule with a total of four units expected for the second half. Now, just three for the rest of the year. Since just a week ago, we delivered the first of four luxury ships for the new MSC brand, Explorer Journeys, Explorer One. Giuseppe will give you further details on the main financial and operating performances of the period later on. Let's now move to slide seven for some business updates. Our operating performance has been consistently positive throughout the first six months of the year. Indeed, the group's shipyards are running at full speed with 11 vessels delivered from eight shipyards, highlighting the global reach of our operations with local capabilities. Offshore business area accounts for seven units delivered out of these 11. Eleven units were ordered, resulting in a total of 88 vessels in the period. Noteworthy mentioning that just last Friday, the order for the third near-future summoning became fully effective. We confirm our tireless effort to become a model of excellence in the sector, already well recognized at international level. During the first semester, Fincantieri has signed some agreements with Credit Agricole Eurofactor, IF Italia, SACE, FCT and Unicredit in order to promote awareness and improve the ESG profile of its Italian suppliers. As a result, suppliers with better ESG performance will be able to benefit from a better rating, accessing more advantageous financing terms. Brand Finance assigned a rating of AA to Fincantieri, now among the 50 strongest Italian brands. We also received the Top Employers Italy 2023 certification from the Top Employers Institute. All ratings are confirmed. Just a few comments on our order book. As you can see, we are loaded with deliveries for the medium to long term, hence our visibility over revenues is very, very high. As we speak, Cruise accounts for 24 vessels in portfolio. The construction of 31 defense units is expected up to 2029 and 33 further vessels in the fast-moving offshore business for a total of 88 ships in backlog. Backlog coverage stands at 3.0. Commercial opportunities are up and running in all businesses. Now I will hand over to Giuseppe, who will discuss our financial results. Please, Giuseppe.

Yes, good morning, and I continue starting from slide number 10. on order intake and total backlog. Well, the order intake, it's worth to note the very important increase in the offshore business, which recorded 84% more order intake with respect to last year, and this falls within the growth strategy in the wind offshore sector. We closed the first half of the year at over 0.1 billion euros in terms of all the acquisition and the shipbuilding business. We have one cruise ship and the fourth frigate for the Constellation program in the United States. As Pierroberto said before, the commercial pipeline is up and running across all businesses. It's worth to note with reference to what the CEO said before on the submarine, for the Italian Navy, we expect to sign the contract pretty soon as it has been approved by the Italian Parliament. And we also have on top of this another 700 million waters coming, roughly 700 million coming from the defense business in the very near future. Going to revenues on slide 11. Total revenues were up, as expected, by 4.5% compared to the first half of 2022. Shipbuilding is broadly in line with the same period of last year, with crews accounting for 49% of group revenues and defense for 24. Revenues in the offshore and specialized vessel business increased by roughly 28%, and this underlines positive trajectory in growth that reflects the effective repositioning of VARD towards the offshore wind sector. And it's a growth that we expect to continue as the order acquisition is flowing in very well. Equipment systems and infrastructure business recorded an increase of 45.8%. And this is mainly due to the infrastructure business as the project in Miami is going at full speed. Net of eliminations, shipbuilding accounts for 74% of group's revenues. Offshore and specialized vessels for 12%. And 14% is related to equipment systems and infrastructure. Moving on to EBDA. 185 million euros, and this is, of course, I would say, a substantial, solid improvement, to say the least, compared to the EBDA margin of the first six months of last year. Of course, the first six months of last year was affected by many one-offs. Still, our EBDA levels reflect high inflation costs and high pressure on raw materials and in the cost of labor. So we haven't seen yet, let me say, a weakening of the pressure. Shipbuilding closed at 6.1%. And this is an improvement with respect to the second half of last year to actually to the total of last year, 4.6, but lower than the first half. The first, the margin of these apples still affected by the impacts, as I said, occurred in the second half of last year. And this is largely due to the geopolitical context fueled by the Russian-Ukrainian conflict with the consequent further increase in raw materials prices and also affected by the inflation costs, notably in the U.S. labor market and supply chain. Offshore closed at 19 million euros of EBITDA with an EBITDA margin of 4%. That's 2.5 at June 30th, 2022. And this is broadly in line with the business plan targets, higher margin for offshore. And this is driven by the increase in demand in the offshore world. Bard as a company closed the first semester of 2023 at break even, which is a remarkable result compared to the history of ARD. Equipment systems and infrastructure, the EBDA is positive for 7 million. It was negative by 90 million as of the first half of last year. The margin is 1.2%. Of course, these EBDA levels are still negatively affected by the EBDA margin recorded in the infrastructure business, even though the electronics and mechatronics businesses registered a positive margin of respectively 1.8 and 7.3% in line with 2020. Moving on to the net results, we recorded a very small adjusted net profit at 3 million euros And that is before the unfortunate asbestos related extraordinary items, which came at 33 million euros for the first half of this year. So we have a net loss at minus 22 million euros. It was negative 234 at first half of last year. Net financial position and net working capital on slide 14. net debt at 2.8 billion. We have a net debt situation that is consistent with the progress of the production volumes, and as we're working full speed in the cruise business, as you know very well, networking capital absorption there is pretty high. It's worth to note that we delivered two cruise vessels in the month of July, the Explorer, well, we delivered one cruise vessel, sorry, in the month of July. We expect to deliver a cruise, a very big cruise vessel for revision cruise lines next week in our Marghera shipyard. Of course, these debt levels are still affected by a portion of the deferrals we granted to clients after COVID-19 pandemic, roughly 92 billion, million at this point in time. Networking capital is positive at almost 900 million. And the main changes are related to the increasing work in progress and client advances related to the production volumes of the period. And, you know, going to the current debt levels and the EBDA, when we look at the EBDA and net debt over EBDA ratio as of the end of 2022, which was in excess of 11 times. Right now, if we of course sum EBDA of the first half of 2023 plus the EBDA of the second half of 2022, and we do the net debt over EBDA ratio, we stand roughly in the low nine times ratio, which is a slight improvement, but this is the path on which we are walking and we'll keep walking on it. And now it's back to Pierroberto.