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MILAN (Reuters) – Italian shipbuilder Fincantieri expects to increase sales in its naval business in the coming years as countries spend more on defence following Russia’s invasion of Ukraine, its new chief executive said.
Pierroberto Folgiero, who replaced long-serving CEO Giuseppe Bono in May, said Fincantieri stood to benefit from a number of security concerns.
“It is not just about defence but also trade security, monitoring of (underwater) energy infrastructure and migration issues, so we perceive encouraging signs of growing demand,” Folgiero told Reuters in a telephone interview.
Fincantieri unveiled earlier on Friday its new five-year industrial plan, which foresees the group returning to net profit in 2025.
Fincantieri, which is 70%-owned by Italian state-backed lender Cassa Depositi e Prestiti (CDP), makes a broad range of military vessels, including aircraft carriers, destroyers and submarines.
However, it is the company’s cruise business which contributes the bulk of revenues in its core shipbuilding unit.
The cruise business was hard hit by the COVID-19 pandemic, which halted new orders and forced the shipbuilder to extend delivery times.
However, in the last quarter Fincantieri saw the first signs of a resumption in cruise order intake. Folgiero said that part of the business was operating at full capacity and he wants to work on improving margins rather than chasing volume growth.
Folgiero also expects an increase in the demand for support vessels for the offshore wind sector, such as the cable-laying vessels built by Fincantieri’s unit Vard, as the energy transition drives demand for wind farms.
The smaller infrastructure business, which is a drag on group profitability, is not considered strategic.
“There are no synergies,” said Folgiero, adding that the priority for the infrastructure business was to overhaul it.
He said he saw no need for a capital increase to reduce high debt, which was at 3 billion euros ($3.2 billion) at the end of September. He said that better profitability and financial discipline should lead to a gradual deleveraging.
Fincantieri is also aiming to strengthen its collaboration with Italian defence group Leonardo at commercial level and to deepen their partnership in the joint venture Orizzonte Sistemi Navali.
Asked whether the group is still interested in Leonardo’s Oto Melara weapon business, put on the block last year, Folgiero said that Fincantieri “always looks at all strategic options”.
($1 = 0.9393 euros)
