Fincantieri board of directors approves 2014 preliminary results with backlog at euro 9.8 billion and revenues at euro 4.4 billion

The Board of Directors of FINCANTIERI S.p.A. ("Fincantieri" or the "Company"), chaired by Vincenzo Petrone, has approved the Preliminary consolidated financial statements at 31 December 20143, prepared in compliance with International Financial Reporting Standards (IAS/IFRS). During the Board meeting Giuseppe Bono, Fincantieri's Chief Executive Officer, said: "2014 was an important year for Fincantieri, characterized by an increase in order intake and backlog on a consolidated level and in revenues across all operating segments. In particular, the cruise business has significantly recovered, with the acquisition of 8 orders, among the 16 worldwide, and 9 units currently under construction, leading to a gradual recovery in volumes at the Italian facilities. The business diversification strategy, which identifies our Company, has allowed us to achieve an EBITDA margin of 6.8% despite the remarkably challenging market conditions affecting the Offshore segment in the second part of the year. In line with this strategy, we also have concluded several important cooperation agreements in all of our operating segments. Moreover, I would also like to highlight that 2014 marks the listing of Fincantieri as a further step within the growth strategy of the Group.” Group operational performance in 2014 During 2014 the Group secured new orders totaling euro 5.6 billion increased by 13% compared with 2013 (euro 4.9 billion at 31 December 2013) with a book-to-bill ratio (order intake/revenues) of 1.3 in line with previous year, thus confirming a growth trend for the Group notably in Shipbuilding. Of the total new orders, 78% relates to the Shipbuilding segment (61% at 31 December 2013), 20% to the Offshore segment (36% at 31 December 2013) and 4% to the Equipment, systems and services segment (4% at 31 December 2013). New orders secured by the Parent Company FINCANTIERI S.p.A. accounted for 70% of the total (55% at 31 December 2013). In the Shipbuilding segment, the trend in order intake increased by 46% compared with 2013 indicates a recovery in the cruise business area, with 8 new orders acquired from the beginning of the year. In the naval business the Littoral Combat Ship program for the U.S. Navy has continued (with the award of two more options to the subsidiary Marinette Marine Corporation) and demand has recovered for complex vessels for chemical/petroleum transportation in the Great Lakes area. In addition, the configuration for all vessels within the Italian Navy’s fleet renewal program has been defined and it is a premise for the upcoming finalization of related contracts. As for the Offshore segment, the very high value of orders won in the first half of the year has been followed by a rapid slowdown in the second half, triggered by crude oil price decline and related negative E&P spending expectations. The order backlog totaled euro 9.8 billion at 31 December 2014 (euro 8.1 billion in 2013), increasing by 21.6% compared to 2013, with the order delivery profile extending until 2019. The growth in backlog reflects the significant increase in orders over the last 18 months. The backlog represents more than 2 years of work in relation to the revenues generated in 2014. In addition, soft backlog, which represents the value of existing contract options and letters of intent as well as contracts under negotiation for the Italian Navy's fleet renewal program, none of which yet reflected in the order backlog, amounted to approximately euro 5,0 billion at 31 December 2014. Regarding the breakdown of backlog by operating segment, 76% relates to Shipbuilding (66% at 31 December 2013), 22% to Offshore (31% at 31 December 2013), and 3% to Equipment, systems and services (3% at 31 December 2013). Capital expenditure totaled euro 162 million in 2014, of which euro 38 million related to intangible assets (euro 22 million for the development of new technologies for cruise business) and euro 124 million to property, plant and equipment. The Parent Company accounted for 60% of the total capex. Capital expenditure represented 3.7% of the Group's revenues for 2014 compared with 6.7% in 2013. In 2014, capital expenditure mainly related to the completion of the Vard Promar shipyard in Brazil, - which had significantly impacted 2013 capital expenditure - to technological upgrades of Italian facilities, (aimed at increasing production efficiency through greater process automation and improving safety and environmental conditions within the production sites) and the development of higher technologies notably for the cruise business. With regards to the breakdown by operating segment, 61% of the total capital expenditure relates to Shipbuilding (53% at 31 December 2013), 29% to Offshore (43% at 31 December 2013), 3% to Equipment, systems and services (2% at 31 December 2013) and 7% to Other activities (2% at 31 December 2013). The number of employees at year end has increased from 20,389 in 2013 (of which 7,735 in Italy) to 21,689 in 2014 (of which 7,706 in Italy). This variation is mainly related to increased staff deployment in Group’s Brazilian shipyards. Preliminary financial results for 2014 Revenues and income amounted to euro 4,399 million in 2014, with an increase of euro 588 million (15.4%) on the same period of 2013 mainly due to higher volumes in cruise business and Offshore which more than compensated the decline in naval volumes due to the progressive completion of existing contracts, pending the start of the Italian Navy’s fleet renewal program. For the segment breakdown (excluding consolidation adjustments), 60.4% of revenues relates to the Shipbuilding segment, (61.7% at 31 December 2013), 35.3% to the Offshore segment, (34.1% at 31 December 2013) and 4.3% to the Equipment, systems and services segment (4.2% at 31 December 2013). During the period ended 31 December 2014, Group's revenues from foreign clients represented 82% of the total, compared with 76% in 2013. EBITDA came to euro 297 million, in line with the figure of euro 298 million recorded in 2013. The EBITDA margin was 6.8%, lower compared with 7.8% in 2013. In terms of contribution, the Shipbuilding and Equipment, systems and services segments posted an increase in profitability over the year, also thanks to the positive impact of Euro/USD exchange rate which only partially offset the Offshore segment’s decline in margins. In this regard, the Offshore segment's profitability in 2014 was affected by VARD's results, only partly offset, upon consolidation, by full utilization of the provision for risks on contracts recognized at the time of the Norwegian group's acquisition. EBIT amounted to euro 198 million in 2014 (compared with euro 209 million in 2013). In addition to the reduced marginality in Offshore, the variation reflects a higher impact of depreciation and amortization charges for assets entering service in 2014 (mainly at the new Promar shipyard in Brazil). Consequently, the EBIT margin in 2014 decreased compared with 2013 (4.5% in 2014 compared to 5.5% in 2013). Net financial charges4 reported a net expense of euro 60 million (euro 53 million at 31 December 2013). The change from last year includes an increase of euro 11 euro million due to the full recognition of financial charges related to the bond issued in November 2013 and a positive impact of euro 5 million of exchange surplus on the translation of foreign currency balances. Net finance income and costs include euro 26 million in interest expense on the VARD Group's construction loans (euro 24 million at 31 December 2013). It is also noted that income from investments has increased by euro 4 million compared with 2013. Income taxes reported a negative balance of euro 51 million in 2014 compared with euro 19 million in 2013, mainly due to the deferred tax assets recorded in 2013 and previously not recognized. Profit before extraordinary and non-recurring income and expenses amounted to euro 87 million at 31 December 2014, compared with euro 137 million at 31 December 2013, and represents 2.0% of Revenues and income (3.6% in 2013). The Group profit before extraordinary and non-recurring income and expenses amounted to euro 99 million (euro 109 million at 31 December 2013). Extraordinary and non-recurring income and expenses amounted to euro 44 million for 2014, and include costs for the "Extraordinary Wage Guarantee Fund" (euro 10 million), costs related to business reorganization plans (euro 9 million), provisions for costs and legal expenses associated with asbestos- related lawsuits (euro 21 million) and non-recurring expenses mainly related to the initial public offering (euro 4 million). At 31 December 2013, extraordinary and non-recurring income and expenses amounted to euro 80 million, including euro 21 million for the VARD Group’s acquisition-related costs. Tax effect of extraordinary and non-recurring income and expenses was a net positive euro 12 million at 31 December 2014 (euro 28 million at 31 December 2013). Profit for the period amounted to euro 55 million for 2014, decreasing from euro 85 million reported in 2013 for the reasons described above. The Group profit, at euro 67 million compared with euro 57 million at 31 December 2013 does not include losses on minorities interest.