Fincantieri — Investor Presentation 2020

Nov 13, 2020

9M 2020 Results

November 13th, 2020

www.fincantieri.com

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.

Agenda

S U M M A R Y & B U S I N E S S U P D AT E

F I N A N C I A L R E S U LT S

O U T L O O K

A P P E N D I X

SUMMARY & BUSINESS UPDATE

E-MARKET
SDIR

Executive summary

PRESERVING BACKLOG AND PROTECTING OUR PEOPLE

100th cruise ship successfully delivered, revenues at €3.5 bn, and backlog fully preserved

	No orders	cancelled. Production programs	have been rescheduled	following the pandemic	outbreak
---	-----------	--------------------------------	-----------------------------	---------------------------	----------

• «No Sail Order» lifted by the CDC no mandatory downtime for cruise operations in Italy
• 2 cruise ships and 1 expedition cruise vessel successfully delivered amid the pandemic. New orders: 1 FFG(X), 2 stern trawlers, 1 SOV for wind offshore maintenance
• Measures¹ for prevention and mitigation of transmission risk on the workplace have proven effective: tested positive are only ≃3%, and 91%² of surveyed employees are satisfied with the Company's response to COVID-19. Production completely resumed, despite substiantially impacted by health & safety protocols
• VARD Offshore maintains break even. Encouraging order intake
• Sound funding capacity, with liquidity and credit lines to support current and M-T developments (€1.15 bn loan granted by a pool of banks and guaranteed by SACE)
• Q3 2020 revenues (€1,165 mln), EBITDA (€81 mln) and EBITDA margin (7.0%) show recovery in production activities, broadly in line with pre COVID-19 performance

• Total backlog⁵ at €36.8 bn (€32.2 bn in 9M 2019) with record-high soft backlog (mainly due to Naval business)
• Costa Firenze scheduled for delivery in 4Q as per new delivery schedule
• 4Q production volumes are expected to be in line with pre COVID-19 levels
• Continuing commitment on enhancing business diversification through new opportunities in naval, electronics & cyber security, infrastructures
• Keeping up with the sustainability shift: 2 new cutting-edge fishery units,1 SOV for VARD and 1 experimental fuel cell-powered vessel (Zeus)
• Marine Interiors will supply ≃2,800 cabins for the first Chinese cruise ship to be built by SWS; JV CSSC will grant the license of the ship platform to SWS, along with further technical services⁶
• Multi-year agreement⁷ signed by Fincantieri Next Tech (former INSIS), Autostrade Tech and IBM for an innovative system for the monitoring and safety on the ASPI network
• (1) Including: thermal scanners, staggered entry time, remote working, PPE

ENSURING VISIBILITY DESPITE VOLATILE MACRO-ECONOMIC ENVIRONMENT

9M RESULTS STILL IMPACTED BY COVID-19

• (2) Survey conducted on June 30, 2020
• (3) Restated following the disposal of small fishery and aquaculture support vessels business and the closure of the Aukra yard, as well as the reallocation of VARD Electro from Offshore to Shipbuilding (4) Excluding Construction loans
• (5) Sum of backlog and soft backlog. 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
• (6) SWS is a CSSC subsidiary, while JV CSSC is the joint venture between Fincantieri China and CSSC Cruise Technology Development Co. Ltd (CCTD)
• (7) For the implementation, sale, and joint maintenance

Business update Continuing focus on strategic development

	S H I P B U I L D I N G	FFG(X)1  FMM is prime contractor for the first-in-class guided missile frigate and 9 additional options for the US Navy's FMM was also awarded a contract for the design and engineering of the future Large Unmanned Surface Vessel (LUSV)
		ICGEB2  Fincantieri, in close cooperation with , has developed a cutting-edge system for air sanitation ("Safe Air") to significantly improve air quality on board. The system will be first installed on the MSC Seashore, to be delivered in 2021
	O & F F S H O R E S P E C I A L I Z E D V E S S E L S	 VARD will design and build a second cutting-edge stern trawler for Luntos, to be delivered in 2022. This new order confirms the effectiveness of the restructuring plan and diversification strategy implemented to restore VARD back to profitability
	I N F R A S T R U C T U R E S	 The opening ceremony of the Genoa bridge was held on August 3: the structure was completed in one year from the steel cutting ceremony, with the last steel span raised on April 28
		 The partnership agreement between Bologna Stadio and Fincantieri Infrastructure for restyiling the Dall'Ara Stadium and Antistadium was declared "matter of public interest" by the Municipality of Bologna
	D E F E N C E	OCCAR3  Naviris signed a second contract with to develop the feasibility study for the mid-life upgrade of the 4 Horizon frigates
		NexTech4 EO/IR5  Fincantieri awarded European Tender for programmable seeker emulator to be supplied to the Italian Ministry of Defence
	S U S T A I N A B I L I T Y	 Zeus keel-laying ceremony: Zeus is an experimental fuel cell-powered marine vessel for improving the level of environmental sustainability of cruise ships, by reducing GHG emissions, Nox, Sox and particulate
		 MIKE Award: Fincantieri received the Most Innovative Knowledge Enterprise award in the Global Companies category

(1) Guided-missile frigate

(2) The system was developed with the virology lab of ICGEB (International Centre for Genetic Engineering and Biotechnology)

(3) Organisation for Joint Armament Cooperation

(4) Insis was renamed Fincantieri Next Tech after the full takeover on October, 12

(5) Electro-optical/infrared seeker emulator for assessing the effectiveness of Electronic Defence systems countermeasures

Orders: strong focus on Naval, while shifting away from Oil & Gas

	Segment	Vessel	Client	# of ships	Expected Delivery
	 Shipbuilding	FFG(X) first-in-class frigate	US Navy	1	2026
Main orders	 Offshore &	Fishing vessel	Framherij	1	2022
	Specialized Vessels	Fishing vessel	Nergard Havfiske	1	2022
		Service operation vessel	Ta San Shang Marine	1	2022

Deliveries: ordinary business in an unprecedented year, 14 ships from 9 shipyards

	Segment	Vessel	Client	# of ships	Shipyard
	 Shipbuilding	Cruise ship "Seven Seas Splendor"	Regent Seven Seas Cruises	1*	Ancona
		Cruise ship "Scarlet Lady"	Virgin Cruises	1*	Genova
		Littoral Combat Ship "St. Louis" (LCS 19)	US Navy	1*	Wisconsin
		Expedition cruise vessel "Le Bellot"	Ponant	1*	VARD Soviknes
		Expedition cruise vessel "Le J. Cartier"	Ponant	1*	VARD Soviknes
		Fishing vessel	Finnmark Havfiske	1*	VARD Soviknes
Main deliveries		Washington Island Ferry		1*	Wisconsin
		Cruise ship "Enchanted Princess"	Princess Cruises	1*	Monfalcone
	 Offshore &	Fishing vessel	Nergard Havfiske	1*	VARD Brattvaag
	Specialized Vessels	OSCV	Island Offshore XII Ship	1*	VARD Brevik
		Aqua	Remøybuen	1*	VARD Langsten
		Ferry	Boreal Sjø	2*	VARD Langsten
		Fishing vessel	Australian Longline Vessel	1*	VARD Vung Tau

Backlog deployment Balanced visibility in Cruise and Naval with deliveries stretching up to 2027

9M 2020: 14 units delivered, 4 new orders, 88 ships in backlog

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

FINANCIAL RESULTS

Order intake and backlog

Backlog fully preserved and Offshore order intake gaining momentum

Book-to-bill³ Soft backlog Total backlog / Revenues Backlog / Revenues ⁴

(1) Total backlog is the sum of backlog and soft backlog

(2) Restated following the reallocation of VARD Electro from Offshore to Shipbuilding

(3) Order intake/revenues

(4) 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

Order intake at €1.9 bn

• Shipbuilding down YoY after past year's record achievements
• Offshore & Specialized Vessels gaining momentum vs. 9M 2019

Backlog successfully preserved thanks to solid partnership with clients

• Total backlog at €36.8 bn, approximately 6.3 times 2019 revenues
• 88 units in backlog

Revenues

Production volumes down 19% versus pre COVID-19 estimates due to downtime of operations

Revenues breakdown by segment¹

Severe effect of the production downtime and gradual resumption of operations. Whilst revenues have decreased 16.2% YoY, real revenues shortfall is €945 mln compared to pre COVID-19 production plan (€790 mln in 1H 2020)

€(42) mln from negative EUR/NOK conversion

• Shipbuilding revenues down 17.8% YoY
  • Cruise revenues down 15.7% YoY
  • Naval revenues down 22.7% YoY
• Offshore & Specialized Vessels revenues down only 1.1% YoY despite €19 mln negative effect from EUR/NOK conversion (+5.8% like for like exchange rate)
• Equipment, Systems & Services revenues up 1.6% YoY

(1) Breakdown calculated before eliminations

(2) Restated following the disposal of small fishery and aquaculture support vessels business and the closure of the Aukra yard, as well as the reallocation of VARD Electro from Offshore to Shipbuilding

EBITDA Lost EBITDA contribution of €71 mln as effect of production rescheduling. Breakeven of VARD Offshore

EBITDA breakdown by segment1,2

Shortfall in EBITDA of €71 mln (only €6 mln in 3Q) following rescheduling of production programs, with major impact on Shipbuildiing

• €51 mln lost EBITDA contribution from Shipbuilding (of which €48 mln in 1H 2020)
• Break-even of the Offshore & Specialized Vessels

• Equipment, Systems & Services margin below average

• EBITDA Margin by segment EBITDA Margin as % of total revenues Shipbuilding Offshore & Specialized Vessels Equipment, Systems & Services Other activities and Eliminations

(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 disposal of small fishery and aquaculture support vessels business and the closure of the Aukra yard, as well as the reallocation of VARD Electro from Offshore to Shipbuilding

Capex Capital expenditures broadly in line with 2019

Capex by segment

Capex broadly in line with 9M 2019:

• Improving efficiency at Italian yards
• Adjusting VARD Tulcea and VARD Braila production capacity
• Enhancing general safety and environmental conditions

Net Working Capital and Net Financial Position

Impact from slowdown in production schedule with cash-ins skewed towards 4Q

Provisions for risks & charges

(1) Construction loans are committed working capital financing facilities, treated as part of Net working capital, not in Net debt, as they are not general purpose loans and can be a source of financing only in connection with ship contracts

dynamics

payments of 2 deliveries

of cruise ship deliveries and

expected installments (≃€600 mln)

rescheduled to 4Q

Outlook

E-MARKET
SDIR CERTIFIED

Focus on Cruise

Enhanced health & safety protocols on board could reshape global cruise industry with an eye to sustainability

U P D AT E O N
O P E R AT I O N S

• EU operations: temporary suspension as new travel restrictions are being reintroduced amid second wave of COVID-19
• US operations: CDC lifted the no-sail order and issued a framework for conditional sailing for responsible resumption of cruising
• CLIA announced voluntary suspension through December 31 to meet the health & safety requirements set by the CDC

R E S P O N S I B L E R E S U M P T I O N

• Reduced occupancy rates
  • 100% testing of passengers and crew members both at embarkation and disembarkation

Major cruise operators are implementing rigorous safety protocols while preparing for a gradual resumption:

• Increased onboard testing and improved ship medical facilities
• Enhanced air sanitation standards
• The effectiveness of timely clinical developments and of the new health & safety protocols implemented on board will be key to industry recovery, with a gradual resumption of activities expected next year

N E W S TA N D A R D S

• Enhanced health & safety standards may be key to driving technological innovation: e.g. onboard contact tracing, improved air sanitation, and enhanced onboard medical capability
• New ships are more appealing: new health & safety measures, greater ROIs (through optimization of operating expenses), compliance with increasingly stringent environmental regulations

Company outlook

 All production workers safely back to shipyards, though operations V O L U M E S  4Q production volumes are expected to be back at pre	COVID-19 levels
 Enchanted Princess and Silver Moon – the first two handed over to Princess Cruises and Silversea Cruises C R U I S E  Costa Firenze is scheduled for delivery before year-end	ships to be delivered amid the pandemic – successfully respectively
 Further intake of new projects expected in the near term N AV A L  Planning to catch up with production delays caused by  Progress of the orders for the Qatari Ministry of Defence	suspension of operations and for the fleet renewal of the Italian Navy
F I N A N C I A L  Financially robust granted by a pool of banks and guaranteed by SACE), with 2-year grace S O U N D N E S S	with adequate liquidity and credit lines to face current and M-T challenges (€1.15 bn loan period and 2-year amortization

Investor Relations contacts

I N V E S T O R R E L A T I O N S T E A M

Caterina Venier-Romano +39 040 319 2229 caterina.venierromano@fincantieri.it

Valentina Fantigrossi +39 040 319 2243 valentina.fantigrossi@fincantieri.it

I N S T I T U T I O N A L I N V E S T O R S

investor.relations@fincantieri.it

I N D I V I D U A L S H A R E H O L D E R S

azionisti.individuali@fincantieri.it

www.fincantieri.com

APPENDIX

e-market
SDIR CERTIFIED

Financial overview – Shipbuilding

• Orders: €1,406 mln (€6,482 mln in 9M 2019)
  • 1 guided-missile frigate¹
  • Lengthening project²
• Backlog: €25,335 mln (€26,723 mln in 9M 2019)
• Deliveries³ :
  • 3 cruise ships
  • 1 Littoral Combat ship
  • 2 expedition cruise vessels
  • 1 fishing vessel
  • 1 ferry

• Revenues: €3,104 mln, representing 78.3% of total revenues before eliminations
• Lower volumes both in Cruise (-15.7% YoY) and in Naval (-22.7% YoY) due suspension and gradual resumption of production activities

• EBITDA: €191 mln, with margin at 6.2%
• Estimated shortfall in Shipbuilding EBITDA of €51 mln due to the slowdown of production activities
• VARD Cruise at break even

Capex: €130 mln

(1) First-in-class guided missile frigate of the "FFG(X)" program for the US Navy

(2) Lengthening project Norwegian Cruise Line

(3) "Seven Seas Splendor" for Regent Seven Seas Cruises; "Scarlet Lady" for Virgin Voyages; "Enchanted Princess" for Princess Cruises; LCS 19 "St. Louis" for the US Navy; "Le Bellot" and "Le Jacques Cartier" for Ponant; fishing vessel for Finnmark HAvfiske; ferry for Washington Island

(4) Restated following the disposal of small fishery and aquaculture support vessels business and the closure of the Aukra yard, as well as the reallocation of VARD Electro from Offshore to Shipbuilding

Financial overview – Offshore & Specialized Vessels

Orders, backlog and deliveries Revenues EBITDA Capex

• Orders: €186 mln (€89 mln in 9M 2019) including 2 fishing vessels and 1 SOV scheduled for delivery in 2022
• Backlog: €712 mln (€833 mln in 9M 2019)
• Deliveries¹ :
  • 2 fishing vessels
  • 1 OSCV
  • 1 Aqua
  • 2 ferries

• Revenues: €271 mln, broadly in line with 9M 2019 and despite negative EUR/NOK conversion (€19 mln)
• Offshore & Specialized Vessels revenues represent 6.8% of total revenues before eliminations

(75)

9M 2019 – Reported

-19.3% -17.5% 0.0%

(48)

0

9M 2019 – Restated²

EBITDA Margin

Positive effect of the restructuring plan

Capex: €2 mln

(1) 1 fishing vessel for Nergard Havfiske and 1 for Australian Longline Vessel; 1 OSCV for Island Offshore XII Ship; 1 aqua for Remøbuyen; 2 ferries for Boreal Sjø

(2) Restated following the disposal of small fishery and aquaculture support vessels business and the closure of the Aukra yard, as well as the reallocation of VARD Electro from Offshore to Shipbuilding

Financial overview – Equipment, Systems & Services

• Orders: €480 mln vs €424 mln in 9M 2019
• Backlog: €1,795 mln vs €1,525 mln in 9M 2019

	582		591

EBITDA Margin

20 21

• Revenues: €591 mln vs €582 mln in 9M 2019
• ESS revenues represent 14.9% of total revenues
• Confirmed growth trend despite the negative impact of the production downtime
• EBITDA: €37 mln with margin at 6.3%
• Major contribution of projects with strategic importance but limited margins

Capex: €21 mln