montecarlo, 4 may, 2011 where is the shipping industry going? fincantieris way forward rome, 8 may...

Montecarlo, 4 May, 2011

Where is the shipping industry going?

Fincantieri’s way forward

Rome, 8 May 2013

Enrico Buschi

Mare Forum Italy 20132

• Fincantieri has decided to implement a new strategy

and adapt its organizational model in the attempt,

hopefully successful, of retaining long-term

competitiveness, in other words to survive and

possibly to grow.

• This presentation deals with two main issues:

- market scenario new

products

- Fincantieri strategy

organizational evolution

SHIPPING FUTURE & FINCANTIERI’S WAY FORWARD: PREAMBLE

PREAMBLE


MARKET SCENARIO: SHIPPING & SHIPBUILDING

• The crisis has impacted both shipping and shipbuilding industry after a long

lasting period of growth and a high new-building demand, with a peak year in 2007.

• Now, speaking about the current situation of maritime sector, it’s the fourth

consecutive year that shipbuilding deliveries exceed new orders: that is to say,

investments in new ships are not enough to feed the shipbuilding production

capacity.

3

Mil.Cgt Structural imbalance between supply and demand: 50% of

the global shipbuilding production capacity is idle


MARKET SCENARIO: SHIPPING & SHIPBUILDING

4

0

20

40

60

80

100

120

0

50

100

150

200

250

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Price Index

Investment

• In term of value, investments stand at 100 BillUS$ compared to more than 250 BillUS$

in 2007

• And, as a consequence, prices are declining: 2012 Clarkson Newbuilding Price Index

stood 32 points below 2007 level.

BillUS$ 2007=100

100

266 BillUS$

Prices comparable to those of 10 years ago


MARKET SCENARIO: NICHE MARKETS

5

• In the medium term, demand forecasts are not favorable and outline a

state of structural imbalance between supply and demand.

• This implies the need to face a very challenging competitive scenario and

choose the right market positioning.

• In general, European shipbuilding has lost market share and reduced

employment; but some European shipbuilders have managed to maintain

a strong position in highly specialized and qualitatively outstanding

vessels, developing new high-technology solutions and innovative

production processes to existing markets and new ones.

• Fincantieri has pursued a niche strategy. Since many years, it is a market

leader in the field of cruise ships and confirms its engagement in this

sector for the future. In general, niche markets are more attractive

because they are more resilient to the crisis.

Long term

view

Niche

market


MARKET SCENARIO: NICHE MARKETS

6

Offshore

• Market scenario suggests that, for the European shipbuilders specialized

in high tech products, being unrealistic to switch again to standard / mass

ships, there is no alternative but to preserve their niches and to look for

the opportunities rising in other niches characterized by:

positive market prospects

high technological content

high innovation rate

Offshore and “green” niches comply with these features.

• The energy and environmental sectors are growing and require to design:

˗ “green-ships” to meet higher environmental standards

˗ new offshore units for the exploitation of oil & gas fields and

renewable energy (wind, tidal, etc,.)

Niche

market


FINCANTIERI STRATEGY: OFFSHORE

7

• Fincantieri has reacted to the long-lasting market contraction entering

and possibly growing in the offshore market, pursuing a strategy of

diversification in order to retain long-term competitiveness.

Fincantieri

strategy

• The entrance in the offshore market is being achieved through:

through the acquisition

of STX OSV

(renamed VARD)

capitalizing on the past

experiences of construction of big

and customized offshore units

external growth internal development


• The strategic rationale of Vard’s acquisition is:

to enter into a market segment complementary to Fincantieri’s

current ones, through the acquisition of a world leader in the

construction of offshore support vessels;

to benefit, after the acquisition, from 21 shipyard locations in 3

different continents, positioned in strategic areas (e.g.: US/Golf of

Mexico, Brazil, North Sea, Vietnam, UAE,…);

to enhance technologic capabilities through the fertilization with

one of the main players in the segment of high-end offshore

support vessels;

to achieve a financial outstanding position at a worldwide level,

reaching revenues of Euro 4 billion, becoming the first Western

shipbuilder.


External

growth

8


FINCANTIERI: THE FIFTH SHIPBUILDER IN THE WORLD

14.4

8.0 7.9

5.4

4.03.3

2.9 2.9

Hyundai Samsung Daewoo STX Fincantieri Keppel Mitsubishi Mitsui(2)

Revenues of key shipbuilding companies worldwide(1)

Euro Billion, 2011

(3)

Source: Companies Annual Report, specialized press

(5) (5)

9

FC = 2,4


FINCANTIERI’S NETWORK

(1) JV agreement with Al Fattan Ship Industries and Melara Middle East(2) JV agreement with ABB S.p.A.(3) Under construction

• 21 shipyards• Approx. 20.000 direct employees of which 15.400 in Europe


• The internal development is being pursued:

through the creation of a dedicated business unit (Fincantieri

Offshore) focused in building drillships, semisubmersible drilling

rigs and other specialized offshore vessels;

the establishment of an integrated value chain of specialized Italian

offshore suppliers (“Polo Offshore”)


Internal

development

11

• Electrical manufacturer and designer

• Offshore design / engineering


Offshore Support & Supply vessel

FINCANTIERI OFFSHORE 2013

Drillship Product. platforms Special VslSeismic Vsl. Crane Vsl.Pipe-laying Vsl

Semi Sub (SSDR) FSOOceanographic Diving/ROV Vsl.Cable Laying Vsl

Drilling barges FSRUBarges

Jack-up FPSOHeavy Lift Vsl

Offshore subsea Construction Vsl., AHTS PSV

Oil Well Production Vsl., Survey Vsl., Emergency Response/Safety Standby Vsl., Survey Ship ROV Vsl

Well Intervention Vsl. Diving Support Vsl. Accommodation Vsl.

“Offshore family products” include a wide range of ship types serving different phases of an oil & gas project (from the initial survey activity to the final de-commissioning of a production plant) and carrying out different tasks.Fincantieri has decided to focus on…

Surveying

Drilling

DevelopmentConstruction

ProductionStorage

Facilities upgrade

De-com-missioning


FINCANTIERI: STRATEGY & ORGANIZATIONAL MODEL

13

• Fincantieri has reacted to the challenging market conditions:

implementing a rationalization program consisting in the integration

of the production sites and centralization of a number of key

processes;

reaching innovative agreements with the trade unions aimed at

increasing flexibility;

pursuing a strategy of internationalization, launched in 2008, with the

acquisition of the US company Manitowoc Marine Group (now

Fincantieri Marine Group). Some markets, like US or Brazil, can be

served only through domestic companies or, in other case,

shipyard’s location in strategic areas (e.g.: US/Golf of Mexico, Brazil,

North Sea, Vietnam, UAE,…) is a strength;

focussing products characterized by high innovation rates and

developing its product range in line with the “green issue”.

Fincantieri


FINCANTIERI: CONCLUSION

14

• Fincantieri, as we used to know it so far, was born following the crisis

of the Eighties, when it was necessary to abandon the role of generic

shipbuilder, mainly committed to Italian shipping companies and till

2000 supported by governmental subsidies.

• This change has contributed to the growth in the cruise shipbuilding

sector and to the survival and the success of the Company in the

market.

• Today Fincantieri is firmly convinced that in order to overcome this

long lasting crisis it is necessary to proceed with:

the internationalization of the Company;

the continuous improvement of its technological know-how,

progressing from medium-tech products to high-tech ones.

and this is what we believe is the Fincantieri’s way forward.

Fincantieri


Thank you for your attention!

montecarlo, 4 may, 2011 where is the shipping industry going? fincantieris way forward rome, 8 may...

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