Debt-ridden Italian shipbuilder Fincantieri racked up massive losses due partly to rising shipbuilding costs caused by the war in Ukraine.
The Trieste-based shipbuilder revealed a net loss of €234m ($237m) in the first six months of the year due also to extraordinary and non-recurring expenses. The figure reverses the €7m profit from the same period of last year.
The financial results provide a baptism-of-fire for incoming chief executive Pierroberto Folgiero, who took the reins in May from his longstanding predecessor Giuseppe Bono.
Folgiero said the shipbuilder would focus on its core business to reap the benefits of the expected growth in defence spending and the anticipated recovery of the cruise market.
He attributed the losses to higher raw material prices and write-offs of financial assets.
The company also suffered a goodwill impairment for the Norwegian subsidiary Vard as well as its US subsidiary Fincantieri Marine Group.
But the extent of the losses caught investors by surprise.
The share price of the Milan-listed shipbuilder slumped more than 10% overnight before partially recovering to close 7% down at 52 cents.
Analysts expressed worries over the shipbuilder’s high debt and the possibility that the company may seek to raise capital, according to Italian media sources.
Fincantieri, controlled by Italian state lender Cassa Depositi e Prestiti (CDP), reported net financial debt of €3.3bn at the end of June, up from €2.2bn at the end of last year.
“The debt increase is mainly due to the working capital dynamics in the cruise business,” including payment extensions granted to clients due to the pandemic,” the shipbuilder said
Revenue increased 16% to €3.51bn in the first half year, in line with expectations.
Ebitda dropped to €90m from €219m after the re-assessment of a customer’s credit rating for an unnamed ship.
The delayed vessel was expected to be delivered in July but will not be delivered until the fourth quarter, resulting in a writedown of work in progress, the shipbuilder said.
The company expects its financial position to improve in the second half of the year when it will deliver five cruise ships, including one this month.
“New digital and green solutions will strengthen even more Fincantieri leadership within the international shipbuilding industry,” Folgiero added.
