Fincantieri — Investor Presentation 2016

Nov 11, 2016

November 11, 2016

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, Carlo Gainelli, declares that the accounting information contained herein correspond to document results, books and accounting records.

9M 2016 Key Messages

• Business plan targets confirmed: 9M 2016 results, with 5.7% EBITDA margin and positive net result at € 7 mln, mark a substantial improvement compared with 9M 2015 (EBITDA margin 0.2%) and are in line with the targets set out in the Business Plan 2016-2020
• Total backlog(1) at € 21.8 bln covering ~ 5.2 years of work if compared to 2015 revenues; backlog at € 19.0 bln (€ 11.6 bln in 9M 2015 and € 15.7 bln in FY 2015) with 106 ships in orderbook and soft backlog(2) at € 2.8 bln (€ 8.2 bln in 9M 2015 and € 3.0 bln in FY 2015)
• Successful implementation of VARD Business Plan: shut down of Vard Niterói yard and increase of the stake in Vard Promar to 95.15% in Brazil, along with the progress of the diversification strategy with the award of 6 expedition cruise vessels; yards in Romania well utilized and now hiring again
• Contract with the Qatari Ministry of Defense: a true commercial milestone. The contract value is close to € 4.0 bln and includes the supply of 7 naval vessels and support services for 15 years after delivery. It is the largest order in naval business acquired by Fincantieri over the last 30 years
• New supplementary labor agreement: approved by the trade unions and by the workers, entered into force in July 2016. The agreement, based on incentive tools linked to individual performance and overall Company results, represents a key step towards greater efficiency

9M 2016 main orders

Orders acquired in Q3

	Vessel		Client	Delivery
		1 ultra-luxury cruise ship ("Seven Seas Explorer" sister ship)	Regent Seven Seas Cruises (Norwegian Cruise Line Holdings)	2020
Shipbuilding		1 Littoral Combat Ship	US Navy	2020
		1 cruise ship (fifth "Royal Princess" class vessel)	Princess Cruises (Carnival Corporation)	2020
		7 new generation surface vessels (4 corvettes, 1 amphibious vessel, 2 Offshore Patrol Vessels)	Qatari Ministry of Defence	after 2020
Offshore (Vard)		1 Stern Trawler	Havfisk ASA	2018
		4 expedition cruise vessels	Ponant	2018 - 2019
		2 expedition cruise vessels	Hapag-Lloyd Cruises	2019
		20 Module Carrier Vessels(1)	Topaz Energy and Marine/ Kazmortransflot	2017 - 2018

(1) 15 ordered in Q2 2016 (for Topaz Energy and Marine), 5 ordered in Q3 2016 (2 for Topaz Energy and Marine and 3 for Kazmortransflot)

9M 2016 main deliveries (1/2)

Deliveries in Q3

	Vessel		Client	Shipyard
		Cruise ship "Viking Sea"	Viking Ocean Cruises	Ancona
		Cruise ship "Koningsdam" (prototype)	Holland America Line (Carnival Corporation)	Marghera
Shipbuilding		Cruise ship "Carnival Vista" (prototype)	Carnival Cruise Lines	Monfalcone
		Cruise ship "Seven Seas Explorer" (prototype)	Regent Seven Seas Cruises (Norwegian Cruise Line Holdings)	Sestri Ponente
		Submarine "Pietro Venuti"	Italian Navy	Muggiano

9M 2016 main deliveries (2/2)

Deliveries in Q3

		Vessel		Client	Shipyard
Shipbuilding		Littoral Combat Ship "USS Detroit" (LCS 7)	US Navy	Marinette
		FREMM "Alpino"	Italian Navy	Muggiano
			OSCV "Skandi Açu"	Techdof Brasil	Vard Søviknes
Offshore (Vard)		AHTS "Skandi Paraty"	DOF	Vard Niterói
			3 LPG carriers "Barbosa Lima Sobrinho", "Darcy Ribeiro" and "Lucio Costa" (1)	Transpetro	Vard Promar

(1) One delivered in Q1 2016, one in Q2 2016 and one in Q3 2016

Order intake and backlog – by segment

(1) 1 ATB (Articulated Tug Barge) - articulated unit consisting of a barge and a tug, thus being counted as two vessels in one unit

(2) Sum of backlog and soft backlog

(3) 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

Comments

• Consistent growth of backlog across all segments, notably in Shipbuilding
• Order intake
• − Shipbuilding: 12 units (2 cruise ships, 7 naval vessels for Qatar Emiri Naval Forces, 1 LCS and 2(1) vessels for petrol-chemical transportation)
• − Offshore: 27 units (4 expedition cruises for Ponant, 2 expedition cruise vessels for Hapag-Lloyd Cruises, 17 module carrier vessels for Topaz, 3 module carrier vessels for Kazmortransflot and 1 fishing vessel for Havfisk)
• − Equipment, Systems & Services: orders mainly related to Italian Navy's fleet renewal program
• Backlog and soft backlog
• − Total backlog(2) covers ~ 5.2 years of work if compared to 2015 revenues
• − Soft backlog(3) at € 2.8 bln

Backlog deployment – by segment and end market

(1) 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) Ships with length > 40 m

(3) Offshore business generally has shorter production times and, as a consequence, shorter backlog and quicker order turnaround than Cruise and Naval

Revenues – by segment and end market

• − Growth of volumes in cruise (13 units under construction vs. 11 in the same period of 2015)
• − Decrease in other activities primarily due to the lower contribution of repairs and conversions
• Offshore
• − Revenue decrease driven by the reduction of activities at VARD yards in Europe and in Brazil, where phasing out of Niterói yard has been completed and key resources were relocated to Promar
• − Negative effect of NOK/EUR exchange rate (€ 43 mln)
• Equipment, Systems and Services
• − Increase of volumes in after sales services for naval vessels, but also in sales of automation systems and other naval equipment

Comments • Shipbuilding

EBITDA(1) by segment

EBITDA and EBITDA margin Comments

(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) extraordinary wages guarantee fund – Cassa Integrazione Guadagni Straordinaria, (viii) expenses for corporate restructuring, (ix) accruals to provision and cost of legal services for asbestos claims, (x) other non recurring items

• Continuous improvement of operational and financial performance in all segments
• Shipbuilding
• − Gradual margin recovery with the delivery of highly complex prototypes
• − Positive performance of naval business unit, in particular on ships delivered in Q3 2016
• Offshore
• − De-risking of activities in Brazil in line with business plan: delivery of 4 vessels, shut down of Niterói yard and increase of the ownership stake in Vard Promar to 95.15%
• − Margins in Europe affected by order slowdown started in Q4 2014 pending the effects of the diversification strategy
• Equipment, Systems & Services
• − Continuing positive trend in all business areas

Net result

€ mln	9M 2015	9M 2016
A Net result before extraordinary and non recurring items(1)	(169)	30
Attributable to owners of the parent	(73)	35
B Extraordinary and non recurring items gross of tax effect	(34)	(29)
C Tax effect on extraordinary and non recurring items	8	6
A + B + C Net result	(195)	7

• Result before extraordinary and non recurring items reflects
• − Improvement of operating performance and margin
• − Lower finance expenses at € 52 mln (€ 109 mln in 9M 2015), which include unrealized foreign exchange gains for € 23 mln related to a Vard Promar loan in Brazil (loss of € 36 mln in 9M 2015)
• Extraordinary and non recurring items gross of tax effect at € 29 mln mainly related to asbestos claims (€ 19 mln) and costs for VARD restructuring measures (€ 9 mln), notably due to shut down of Niterói yard

Capital expenditures

Comments

• Tangible capex mainly aimed at
• − Supporting the development of production volumes, including a larger launching system for the production of cruise sections in Romania and new painting systems in Monfalcone to support the production of larger cruise ships
• − Improvement of safety and environmental conditions in all Italian production sites
• Intangible capex mainly related to the development of new technologies (€ 39 mln) mainly for cruise business and new IT systems, notably the new CAD/PLM tool

Net working capital(1)

Breakdown by main components Comments

€ mln	FY 2015	9M 2016	• Net working capital increased to € 322 mln, from € 251 mln in FY 2015
	405
Inventories and advances to suppliers		557	• Reduction of work in progress related to several deliveries over the period and
Work in progress net of advances from customers	1,876	1,445	the reclassification made by VARD of the vessel for the client Harkand, which has entered administration
			• Positive variation of other current assets
Trade receivables	560	424 61	and liabilities for € 257 mln mainly due to a reduction in the negative fair value
Other current assets and liabilities	(196)	(833)	of forex hedging derivatives, also as a result of the settlement of the hedges
Construction loans	(1,103)		related to the delivery payments cashed-in during the period
Trade payables		(1,227)	• Decrease of construction loans (down €
	(1,179)	(105)	270 mln), currently all related to VARD,
Provisions for risks &			mainly due to the repayment of both the
charges	(112)		loan drawn by Fincantieri for a cruise
			vessel delivered in Q2 and the loans
Net working capital	251	322	related to vessels delivered by VARD

(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

• mln, from € 251 mln in FY 2015
• Reduction of work in progress related to several deliveries over the period and the reclassification made by VARD of the vessel for the client Harkand, which has entered administration
• Positive variation of other current assets and liabilities for € 257 mln mainly due to a reduction in the negative fair value of forex hedging derivatives, also as a result of the settlement of the hedges related to the delivery payments cashed-in during the period
• Decrease of construction loans (down € 270 mln), currently all related to VARD, mainly due to the repayment of both the loan drawn by Fincantieri for a cruise vessel delivered in Q2 and the loans related to vessels delivered by VARD

Net financial position(1)

Breakdown by main components			Comments
€ mln – Net cash / (Net debt)	FY 2015	9M 2016	• Net debt at the end of 9M 2016 at € 625 mln, up from € 438 mln in FY 2015 ‒ Most of the Group's debt is related to the financing of current assets
Non-current financial receivables			associated with cruise ships construction and therefore consistent
Current financial receivables	113 53		with net working capital fluctuations ‒ Net fixed assets are financed by equity
Cash & cash equivalents	260	117 67 75	and other sources of long-term funding
Short term financial liabilities	(263)	(379)	‒ The change in net debt vs FY 2015 mainly reflects financial flows typical of the cruise business, which recorded
Long term financial liabilities	(601)	(505)	significant growth of volumes over the period, with a further prototype scheduled for delivery in the last quarter of 2016 and 3 units in the first three months of 2017
			• Net debt of the end of 9M 2016 is in line
Net financial position	(438)	(625)	with year-end business plan guidance

(1) Net financial position does not account for construction loans as they are not general purpose loans and can be a source of financing only in connection with ship contracts

Outlook

Guidance	• Guidance 2016 confirmed ‒ Revenue increase 4-6% vs. 2015 ‒ EBITDA margin approx. 5% ‒ Positive net result ‒ Net debt at approx. € 0.7-0.8 bln*	• Guidance 2018 confirmed ‒ Revenue increase 16-23% vs. 2016 ‒ EBITDA margin approx. 6-7% ‒ Net debt at approx. € 0.4-0.6 bln*	• Guidance 2020 confirmed ‒ Revenue increase 16-21% vs. 2018 ‒ EBITDA margin approx. 7-8% ‒ Net debt at approx. € 0.1-0.3 bln*
Shipbuilding	• Delivery of 1 prototype remaining for 2016 (4 ships already delivered) and focus on activities related to the delivery of 3 cruise ships in the first three months of 2017 • Continuing effort, on track with expectations, to develop significant production synergies with VARD through the utilization of Tulcea shipyard to support Italian facilities • Ongoing construction of the first unit of the Italian Navy's fleet renewal program and beginning of the design activities related to the Qatar order will lead to gradual increase in naval volumes going forward
Offshore	• OSV market continuously monitored, but no significant rebound in demand expected in the near term: working with clients on cost-effective solutions without compromising innovation, performance and quality • Continuous implementation of the diversification strategy and reorganization measures already started, including leads in aquaculture business, offshore wind and OPV markets
Equipment, Systems & Services	• in terms of revenues and margins	Expected confirmation of positive results achieved in 9M 2016 with the consolidation of the growth trend both

Investor Relations contacts

Investor Relations Team

Angelo Manca - VP Investor Relations +39 040 319 2457 angelo.manca@fincantieri.it

Tijana Obradovic +39 040 319 2409 tijana.obradovic@fincantieri.it

Silvia Ponso +39 040 319 2371 silvia.ponso@fincantieri.it

Alberta Michelazzi +39 040 319 2497 alberta.michelazzi@fincantieri.it

Institutional Investors

investor.relations@fincantieri.it

Individual Shareholders azionisti.individuali@fincantieri.it

www.fincantieri.com

Q&A

Appendix

9M 2016 results by segment

Shipbuilding

Offshore

Equipment, Systems and Services

Shipbuilding

Highlights

€ mln	FY 2015	9M 2015	9M 2016
Order intake	9,262	4,148	5,228
Order book	18,540	13,817	20,993
Backlog	14,067	9,437	17,054
Revenues	2,847	2,110	2,412
EBITDA	(23)	26	138
% on revenues	-0.8%	1.2%	5.7%
Capex	112	74	118
Ships delivered	9	7	10

Delivery of 1 prototype remaining for 2016 (4 ships already delivered) and focus on activities related to the delivery of 3 cruise ships in the first three months of 2017

Continuing effort, on track with expectations, to develop significant production synergies with VARD through the utilization of Tulcea shipyard to support Italian facilities

Ongoing construction of the first unit of the Italian Navy's fleet renewal program and beginning of the design activities related to the Qatar order will lead to gradual increase in naval volumes going forward

• 1 cruise ship for Princess Cruises

• 1 cruise ship for Regent Seven Seas Cruises (Norwegian Cruise Line Holdings)
• 7 naval vessels for Qatar
• Emiri Naval Forces
• 1 LCS unit for US Navy
• 1 ATB unit to be built in US

Comments

• Orders: order intake at € 5,228 mln taking backlog to € 17,054 mln
• Revenues: at € 2,412 mln, up 14.3%
• − Growth of volumes in cruise (13 units under construction vs. 11 in the same period of 2015)
• − Decrease in other activities primarily due to the lower contribution of repairs and conversions
• EBITDA at € 138 mln, margin at 5.7%
• − Gradual margin recovery with the delivery of highly complex prototypes
• − Positive performance of naval business unit, in particular on ships delivered in Q3 2016
• Capex: at € 118 mln

(1) 4 cruise ships (Viking Sea for Viking Ocean Cruises, Koningsdam for Holland America Line, Carnival Vista for Carnival Cruise Lines and Several Seas Explorer for Regent Seven Seas Cruises), 1 semisubmersible floating platform (Itarus for the Russian RosRAO), 1 submarine (Pietro Venuti for the Italian Navy, 1 LCS (LCS 7 "USS Detroit" for the US Navy) 1 FREMM (Alpino for Ithe talian Navy) and 2 vessels for petrol-chemical transportation

Offshore

€ mln	FY 2015	9M 2015	9M 2016
Order intake	402	299	1,084
Order book	2,729	2,975	2,778
Backlog	1,143	1,589	1,501
Revenues	1,199	847	723
EBITDA	(3)	(16)	37
% on revenues	-0.2%	(1.9)%	5.1%
Capex	31	24	19
Ships delivered	12	11	9

OSV market continuously monitored, but no significant rebound in demand expected in the near term: working with clients on cost-effective solutions without compromising innovation, performance and quality

Continuous implementation of the diversification strategy and reorganization measures already started, including leads in aquaculture business, offshore wind and OPV markets

Highlights Comments

• 4 expedition cruise vessels

• 2 expedition cruise vessels

• 17 module carrier vessels for

• 3 module carrier vessels for

• 1 Stern Trawler for Havfisk

Topaz Energy & Marine

for Ponant

for Hapag-Lloyd

Kazmortransflot

ASA

• Orders: order intake at € 1,084 mln taking backlog to € 1,501 mln
• Revenues: at € 723 mln, down 14.6%
• − Revenue decrease driven by the reduction of activities at VARD yards in Europe and in Brazil, where phasing out of Niterói yard has been completed and key resources were relocated to Promar
• − Negative effect of NOK/EUR exchange rate (€ 43 mln)
• EBITDA: at € 37 mln, with margin at 5.1%
• − De-risking of activities in Brazil in line with business plan: delivery of 4 vessels, shut down of Niterói yard and increase of the ownership stake in Vard Promar to 95.15%
• − Margins in Europe affected by order slowdown started in Q4 2014 pending the effects of the diversification strategy
• Capex: at € 19 mln

Equipment, Systems and Services

€ mln	FY 2015	9M 2015	9M 2016
Order intake	639	473	361
Order book	1,181	1,083	1,450
Backlog	732	634	908
Revenues	226	149	193
EBITDA	31	19	32
% on revenues	13.8%	12.5%	16.6%
Capex	5	4	2

Expected confirmation of positive results achieved in 9M 2016 with the consolidation of the growth trend both in terms of revenues and margins

Highlights Comments

• Orders: order intake at € 361 mln taking backlog at € 908 mln
• Revenues: up to € 193 mln
• − Increase of volumes in after sales services for naval vessels, but also in sales of automation systems and other naval equipment
• EBITDA: at € 32 mln with margin at 16.6%
• − Continuing positive trend in all business areas

Profit & Loss and Cash flow statement

Profit & Loss statement (€ mln)	FY 2015	9M 2015	9M 2016
Revenues	4,183	3,032	3,230
Materials, services and other costs	(3,337)	(2,368)	(2,403)
Personnel costs	(865)	(658)	(626)
Provisions(1)	(7)	-	(16)
EBITDA	(26)	6	185
Depreciation, amortization and impairment	(111)	(80)	(80)
EBIT	(137)	(74)	105
Finance income / (expense)(2)	(135)	(109)	(52)
Income / (expense) from investments	(3)	-	(5)
Income taxes(3)	23	14	(18)
Net result before extraordinary and non recurring items	(252)	(169)	30
Attributable to owners of the parent	(141)	(73)	35
Extraordinary and non recurring items(4)	(50)	(34)	(29)
Tax effect on extraordinary and non recurring items	13	8	6
Net result for the period	(289)	(195)	7
Attributable to owners of the parent	(175)	(96)	16
Cash flow statement (€ mln)	FY 2015	9M 2015	9M 2016
Beginning cash balance	552	552	260
Cash flow from operating activities	(287)	(406)	(20)
Cash flow from investing activities	(172)	(117)	(152)
Free cash flow	(459)	(523)	(172)
Cash flow from financing activities	167	149	(18)
Net cash flow for the period	(292)	(374)	(190)
Exchange rate differences on beginning cash balance	-	(8)	5
Ending cash balance	260	170	75

(1) The line "Provisions and impairment" has been modified in "Provisions" and includes provisions and reversal for risks and writedowns. It excludes impairment of Intangible assets and Property, plant and equipment, which is included in "Depreciation, amortization and impairment" (previously "Depreciation and amortization"). This change had no effect on the comparative information.

(2) Includes interest expense on construction loans for € 28 mln in 9M 2015 and € 27 mln in 9M 2016

(3) Excluding tax effect on extraordinary and non recurring items

Balance sheet

Balance sheet (€ mln)	FY 2015	9M 2015	9M 2016
Intangible assets	518	504	569
Property, plant and equipment	974	958	1,032
Investments	62	65	58
Other non-current assets and liabilities	(44)	(43)	(21)
Employee benefits	(57)	(57)	(61)
Net fixed assets	1,453	1,427	1,577
Inventories and advances	405	456	557
Construction contracts and advances from customers	1,876	1,726	1,445
Construction loans	(1,103)	(995)	(833)
Trade receivables	560	500	424
Trade payables	(1,179)	(975)	(1,227)
Provisions for risks and charges	(112)	(116)	(105)
Other current assets and liabilities	(196)	(165)	61
Net working capital	251	431	322
Net invested capital	1,704	1,881	1,899
Equity attributable to Group	1,137	1,223	1,108
Non-controlling interests in equity	129	152	166
Equity	1,266	1,375	1,274
Cash and cash equivalents	(260)	(170)	(75)
Current financial receivables	(53)	(58)	(67)
Non-current financial receivables	(113)	(97)	(117)
Short term financial liabilities	263	232	379
Long term financial liabilities	601	599	505
Net debt / (Net cash)	438	506	625
Sources of financing	1,704	1,881	1,899