Fincantieri S p A : Kepler Cheuvreux - Italian Equity Digital Summit

Kepler Cheuvreux

Italian Equity Digital Summit

May 19, 2020

Safe Harbor Statement

This Presentation contains certain 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.

Declaration of the Manager responsible for preparing financial reports

Pursuant to art. 154-BIS, par. 2, of the Unified Financial Act of February 24, 1998, the executive in charge of preparing the corporate accounting documents at Fincantieri, Felice Bonavolontà, declares that the accounting information contained herein correspond to document results, books and accounting records.

2

Q1 2020 Key Messages

Protecting the safety of our people and ensuring backlog resiliency

"I wish to recall that Fincantieri is a spearhead of the Italian manufacturing sector and as such it proudly embraces the

commitment to developing the territories in which it is deeply rooted"

Operations

Production

volumes

Backlog

Strategic

relationships

(Giuseppe Bono, Chief Executive Officer)

• Production halted since March 16th to prevent further spreading of the COVID-19 virus
• Operations gradually resumed since April 20th in all Italian shipyards: safety measures promptly implemented to protect our people, including cutting-edge technology for contactless thermal scanning developed and implemented by a Group company
• Production volumes reduced by 20% compared to potential output, as a consequence of the suspension of operations in all Italian shipyards and production plants
• Production activities in VARD shipyards not suspended
• Ensuring backlog resiliency: (i) avoid cancellation of orders and (ii) negotiation of new delivery schedules with ship owners currently ongoing
• New delivery schedules also subject to recovery plan at full capacity of production activities
• Safeguarding Group's strategic relationships with its subcontractor network:
• • Almost 6,000 small & mid-sized companies only in Italy
• New delivery schedules also subject to subcontractors' effective availabilities

3

Q1 2020 Key Messages

Continuous strength despite «rough waters»

Business

update

Operations

Financials

• "FFG(X)" programme awarded to FMM: contract for the concept design and construction of the first-in-class guided missile frigate for the US Navy plus options for 9 units worth ~ $ 5.5 bln
• Completed the steel span of the Genoa bridge in record time: 1 year from the steel cutting ceremony - March 11, 2019
• VARD to design and build one Service Operation Vessel (SOV) for wind-farm maintenance operations within the renewable energy sector
• Obtained the B-rating within the CDP Climate Change Programme(5) and a score of 65/100 - first in the Mechanical
  Components & Equipment sector among global peers - within the Vigeo Eiris ranking for sustainability.
• Total backlog at € 31.9 bln - about 5.5x 2019 revenues :
• • backlog with 92 units at € 27.7 bln (€ 30.7 bln in Q1 2019),
  • soft backlog at € 4.2 bln (€ 3.6 bln in Q1 2019), and order intake at € 0.3 bln
• 8 units(4) delivered including 2 cruise ships ("Seven Seas Splendor" for Regent and "Scarlet Lady" for Virgin), one expedition cruise vessel ("Le Bellot" for Ponant), and one military vessel (LCS 19 for the US Navy)
• Revenues at € 1,307 mln (€ 1,368 mln in Q1 2019) with estimated loss of ~ € 190 mln
• Group EBITDA at € 72 mln (€ 92 mln in Q1 2019) and EBITDA margin at 5.5% (6.7% in Q1 2019): estimated loss of ~15 mln due to lack of progress in Shipbuilding orders
• Covid-19extraordinary costs at € 23 mln due to reduced operating leverage and PPE-related costs
• Net debt(3) at € 444 mln (€ 736 mln in FY 2019)

1. Sum of backlog and soft backlog
2. Soft backlog which 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
3. Excluding Construction loans

(4)	1 ultra-luxury cruise ship for Regent; 1 cruise ship for Virgin Voyages; 1 expedition cruise vessel for Ponant; 1 military vessel for the US Navy; 1 fishery for Finnmark Havsfiske; 1 fishery for Nergard Havfiske, 1 ferry for Boreal Sjø	4
(5)	Carbon Disclosure Project is a British organization whose goal is to improve the management of environmental risks. In 2019 fincantieri obtained the B rating on a scale ranging from D (minimum) to A (maximum)

Q1 2020 main orders

Segment	Vessel	Client	Number of ships	Expected Delivery
Offshore &	Fishery	Framherij	1	2022
Specialized
Fishery	Nergard Havfiske	1	2022
Vessels

Q1 2020 main deliveries

Segment		Vessel	Client	Shipyard
		Cruise ship "Seven Seas Splendor"	Regent Seven Seas Cruises	Ancona
		Cruise ship "Scarlet Lady"	Virgin Cruises	Genova
Shipbuilding		Littoral Combat Ship "St. Louis" (LCS 19)	US Navy	Marinette
		Expedition cruise vessel "Le Bellot"	Ponant	Vard Soviknes
		Fishery	Finnmark Havfiske	Vard Soviknes
Offshore &		Fishery	Nergard Havfiske	Vard Brattvaag
Specialized		OSCV	Island Offshore XII Ship	Vard Brevik
Vessels		Ferry unit	Boreal Sjø	Vard Brevik

5

Overview of Q1 2020 main deliveries

Seven Seas Splendor (Regent)

Scarlet Lady (Virgin Voyages)

Le Bellot (Ponant)

LCS 19 "St. Louis" (US Navy)

Ferry (Boreal Sjø)

6

Order intake and backlog

Breakdown by segment

Order intake		Total backlog(1)
€ mln		€ mln	6.3x	5.6x	5.5x
4.7x	0.2x		5.6x	4.9x	4.7x

6.455

39 168

6.31

2

	294
	157
	83116
(64)	(62)

Q1 2019

Q1 2020

34.342

	32.690	31.878
3.600
1.607	4.100	4.200
920	1.736	2.008
	888
		813

	Backlog	Backlog
28.974	30,742		Backlog
26.828	28,590	25.857	27,678

(759)		(862)	(1.000)
Q1 2019		FY 2019		Q1 2020

• Total backlog at € 31.8 bln, ~ 5.5 times 2019 revenues
• Order intake for the quarter € 0.3 bln

Shipbuilding Offshore & Specialized Vessels Equipment, Systems & Services Eliminations

Book-to-bill (Order intake/revenues)

Backlog /Revenues

Total backlog / revenues

Soft backlog(2)

1. Sum of backlog and soft backlog
2. 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

7

Backlog deployment

Breakdown by segment and end market

Shipbuilding

# ship deliveries

CruiseNaval(1)

Offshore & Specialized Vessels • 8 units delivered in 1Q 2020, 92

# ship deliveries

ships in backlog

• Cruise: 42 vessels

2020	4	4	8
2021		9	9

20221010

2023 6 6

2024 4 4

2020	1	5	6
2021		8	8

2022 8 8

2023 5 5

2024 5 5

				− Deliveries up to 2027
2020 3	6	9	− 9 units scheduled after 2024

• Naval: 36 vessels

2021	3		3		− Deliveries up to 2027
					− 5 units scheduled after 2024
2022	2	1	3	•	Offshore & Specialized Vessels(2):
					14 vessels
					− Deliveries up to 2024
2023	1	1			Negotiations	in	progress	with
					ship owners to arrange new
2024	1	1			delivery schedules. New delivery
		programs also subject to suppliers'

and subcontractors' effective

• Additional 9 units scheduled		• Additional 5 units scheduled
after 2024		after 2024
• 42 vessels in backlog		• 36 vessels in backlog

availabilities

• 14 vessels in backlog		Delivered in Q1 2020

New orders in Q1 2020

1. Ships with length > 40 m; Articulated Tug Barge (ATB) is an articulated unit consisting of a barge and a tug, thus being counted as two vessels in one unit
2. Offshore business generally has shorter production times and, as a consequence, shorter backlog and quicker order turnaround than Cruise and Naval

8

Revenues

Revenues breakdown by segment(1)

€ mln

1.385		1.368		1.307
170	11.3%	170	11.4%	205	14.0%
224	14.9%	203	13.6%	126	8.6%

1.113

73.9%

1.118

75.0%

1.133

77.4%

(122)

(124)

(157)

Q1 2019

Q1 2019

(2)

Q1 2020

Reported

Restated

Offshore & Specialized Vessels

Eliminations

Shipbuilding

Equipment, Systems & Services

Cruise

Naval

Other Shipbuilding

% of Total revenues

1. Breakdown calculated on total revenues before eliminations
2. Restated following the dismissal of small fishery and aquaculture support vessels business (VARD Aukra) and the aggregation of Vard Electro into the Shipbuilding segment (ex Offshore)

• Revenues down 4.5% YOY at € 1,307
• -20%production volumes YOY with estimated loss of ~ € 190 mln
• • Shipbuilding revenues up 1.3% vs Q1 2019 despite suspension of Italian operations
  • Offshore & Specialized Vessels revenues down 37.9% YOY due to scarcity of orders in the core market and negative effect of EUR/NOK conversion (~ € 8 mln)
  • Equipment, Systems & Services revenues up 20.6% vs Q1 2019, thanks also to the positive contribution of the reconstruction of the bridge over the Polcevera river

9

EBITDA

EBITDA(1) and EBITDA margin

• EBITDA at € 72 mln (€ 92 mln in

Q1 2019), EBITDA margin at 5.5%

€ mln

6.5%

6.7%

90		92
18	10.3%	18	10.3%
		1	0.4%
83	7.4%	82	7.3%
(2)	(0.9%)
	(9)
(9)
Q1 2019		Q1 2019
Reported		Restated(2)

5.5%

72

12 6.0%

1. 72 6.3%

2. (0.8%)
   (11)

Q1 2020

		(6.7% in Q1 2019)
	• Suspension of	activities	led to
		estimated shortfall in EBITDA of ~
		€ 15 mln
		− Shipbuilding	profitability	affected
		by the suspension of Italian
		production activities in March
		− Offshore and Specialized Vessels
		margin break-even, following the
		revision of costs at completion for
		several projects in 2019
	• Reduced margin of the Equipment,
		Systems & Services segment due
		to low-profitability but strategically-
		relevant projects
	• €23 mln Covid-related extraordinary
		costs

Shipbuilding		Offshore & Specialized Vessels		Equipment, Systems & Services		Eliminations
Other activities(2)	% Revenues	Group EBITDA Margin

1. 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 amortization (vii) expenses for corporate restructuring, (viii) accruals to provision and cost of legal services for asbestos claims, (ix) other non recurring items
2. Restated following the dismissal of small fishery and aquaculture support vessels business (VARD Aukra) and the aggregation of Vard Electro into the Shipbuilding segment (ex Offshore)

10

Net working capital and net debt(1)

Breakdown by main components

€ mln	FY 2019	1Q 2020

Inventories and advances to suppliers

828

• Net working capital changes due

to:

− Reduction of Work in Progress

Work in progress net of advances from customers

Trade receivables

Other current assets and liabilities

Construction loans

Trade payables

	831
1.415	467
677	978
125	194
(811)	(693)

(-948 mln vs FY19) related to

the cash-in of the final

payment for the cruise ships

delivered in the quarter

− Increase of trade receivables

(+301 mln vs FY 19) related to

the final installment of a cruise

ship to be delivered in 2020

− Decreased trade payables (-165

mln vs FY19)

Provisions for risks & charges

(2.270)

(89)

(2.105)

(89)

•	Construction loans at € 693 mln
	(€ 811 in FY 2019)
•	Net debt levels mirror Net

Net working capital	(125)	(417)
Net Debt	736	444

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

Working Capital changes

11

(Royal Caribbean: Corporate press release)

(F. Joussen, CEO of TUI Group)

Cruise Industry Outlook

Consequences of the crisis

Mitigants

Industry recovery…

• 2020: a challenging year for shipowners and shipbuilders
• Cruise operators have withdrawn their guidance as the industry backlash is yet hardly quantifiable
• Cruise operators are trying to weather the crisis and preserve going-concern
• 1. by improving their liquidity positions (applying for debt holiday schemes by ECA agencies)
  2. by securing additional funding instruments
• Diverging opinions about market recovery but a «measured comeback» starting from Q3 appears to be the base case scenario (also conditional to the easing of Government restrictions)1

«People want to travel. Europe must now gradually open up. Summer holidays are possible responsibly and with clear rules. We will reinvent the holiday in 2020»2

• Cruise operators have offered flexible cancellation policies but vouchers are popular (76% - UBS report3)

«The booked position for 2021 is within historical ranges when compared to same time last year with 2021 prices up mid single digits compared to 2020»4

• Ensuring passengers safety will be key to industry recovery:

	«If the cruise lines do a good job, a cruise ship could be among the safest places to be anywhere»5 (F. Del Rio, CEO of Norwegian Cruise Line)
…ensuring	• We are working with the main cruise operators to implement onboard cruise ships innovative technological
passenger safety	solutions, aimed at ensuring continuous sanitation of the vessels against bacteria and viruses

1. • Repeat cruisers (~55% of total cruise passengers) are more likely to go back on a cruise ship: the real challenge for cruise operators will be attracting new customers6
2. Company analysis based on cruise operators' press releases and recent updates
3. TUI Group. Investor Relations. (2020). TUI Group ready to resume travel activities [Press release]. Retrieved from: www.tuigroup.com/en-en/media/press-releases/2020/2020-05-13-h1-20
4. Business Insider. (2020) «Cruise ship bookings for 2021 are already on the rise despite multiple COVID-19 outbreak». Retrieved from: ww.businessinsider.com/cruise-ship-bookings-are-increasing-for-2021-despite-coronavirus-2020-4?IR=T
5. Royal Caribbean, Investor Relations. (2020). Royal Caribbean provides business update [Press release]. Retrieved from: www.rclinvestor.com/press-releases/release/?id=1470
6. Sloan, G. (2020). «Norwegian Cruise Line CEO shares his plan for a cruising comeback - and it isn't what you think». Retrieved from: thepointsguy.com/news/norwegian-cruise-ceo-frank-del-rio-future-of-cruising/

(6)	Company analysis based on cruise operators' press releases and recent updates	12

2020 Company Outlook

COVID-19

Safeguarding backlog

Efforts towards diversification

• Yet too early to assess the full brunt of the effect of the pandemic
• Full-yearresults likely to be impacted by:
• • Lower production volumes and related operating inefficiencies (e.g. reduced operating leverage, sub- optimal utilization rate of yards)
  • Extra costs related to:
  • • Ensuring the health and safety of our employees (e.g. PPE, thermo-scanning devices, etc.)
    • Managing late deliveries
• Negotiations in progress with ship owners to arrange new delivery schedules.
• New delivery plans will also take into account suppliers' and subcontractors' effective availabilities%
• Increased commitment to ensure new opportunities (e.g. in the electronic & software system), aimed at improving business diversification and market visibility in order to successfully weather sector-specificcyclical lows

Outlook

• FY2020 Guidance suspended

13

Investor Relations contacts

Giuseppe Dado - Chief Financial Officer

Investor Relations Team

Caterina Venier Romano [phone] [e-mail]

Valentina Fantigrossi [phone]

[e-mail]

Institutional Investors

[e-mail]

Individual Shareholders

[e-mail]

www.fincantieri.com

14

Q&A

15

Appendix

16

Financial overview - Shipbuilding

Revenues

€ mln

1	1	0
291	291	303
1,113	1,118	1,133
821	826	830
		Other Shipbuilding
Q1 2019	Q1 2019 -	Naval
Q1 2020
	Restated (1)	Cruise

EBITDA

€ mln

7.4%

7.3%

6.3%

83	82	72
Q1 2019	Q1 2019 -	Q1 2020	% of Revenues
	Restated	(1)

Capex

€ mln

					35
	30
		Q1 2019				Q1 2020

1. Restated following the aggregation of Vard Electro into the Shipbuilding segment (ex Offshore)
2. "Scarlet Lady" for Virgin, "Seven Seas Splendor" for Regent
3. "Le Bellot" for Ponant
4. LCS 19 for the US Navy
5. For Finnmark havfiske AS

• Revenues: € 1,133 mln (+1.3% vs Q1 2018)
• • In line with Q1 2019 results despite production suspension
• EBITDA: € 72 mln, with margin at 6.3%
• • Lower profitability due to diminished percentage of completion
• Capex: € 35 mln
• Orders: € 83 mln (€ 6,312 mln in Q1 2019)
• Backlog: € 25,857 mln (€ 28,974 mln in Q1 2019)
• Deliveries:
• • 2 Cruise ships(2)
  • 1 Expedition cruise vessel(3)
  • 1 Naval vessel(4)
  • 1 Fishery(5)

17

Financial overview - Offshore & Specialized Vessels

Revenues

€ mln

224	203	126
Q1 2019	Q1 2019 -	Q1 2020
	Restated (1)

EBITDA

€ mln

-0.9%		0.4%			-0.8%
							1
		-2										-1
	Q1	2019			Q1	2019 -			Q1	2020		% of Revenues
						Restated	(1)

Capex

€ mln

• Revenues: € 126 mln (-37.9% vs Q1 2019)
• • Reduced production volumes due to lack of orders in the core market and negative effect of EUR/NOK conversion
• EBITDA: € (1) mln, with margin at -0.8%
• • Margin break even thanks to successfully completed revision of costs at completion for several projects in 2019
• Capex: € 0 mln
• Orders: € 116 mln (€ 39 mln in Q1 2019)
• Backlog: € 813 mln (€ 920 mln in Q1 2019)
• Deliveries: 3 ships
• • 1 OSCV for Island Offshore XII Ship AS
  • 1 fishery for Nergard Havfiske AS
  • 1 ferry for Boreal Sjø AS

			1					0
		Q1	2019			Q1	2020

(1) Restated following the dismissal of small fishery and aquaculture support vessels business (VARD Aukra) and the aggregation of Vard Electro into the Shipbuilding segment (ex Offshore)

18

Financial overview - Equipment, Systems and Services

Revenues

€ mln

					205
170		170
	Q1 2019		Q1 2019 -		Q1 2020
			Restated

EBITDA

€ mln

10.3%	10.3%		6.0%
18		18
		12
	Q1 2019		Q1 2019 -			Q1 2020		% of Revenues
			Restated

Capex

€ mln

• Revenues: € 205 mln, up 20.6% vs Q1 2019
• • Thanks to the positive contribution of Fincantieri Infrastructure with the reconstruction of the bridge over the Polcevera river in Genoa
• EBITDA: € 12 mln with margin at 6.0%
• Capex: € 7 mln
• Orders: € 157 mln vs € 168 mln in Q1 2019
• Backlog: € 2,008 mln vs € 1,607 mln in Q1 2019

		6						7
	Q1 2019				Q1 2020

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