Fincantieri Earnings Call: Record Backlog, Profits Surge

Fincantieri S.p.A. ((IT:FCT)) has held its Q4 earnings call. Read on for the main highlights of the call.

Fincantieri’s latest earnings call struck an upbeat tone as management highlighted record orders, a growing backlog and sharply stronger profitability. Executives framed 2025 as a validation of the group’s turnaround, with healthier margins, better cash generation and a reinforced balance sheet, even as they acknowledged some short‑term revenue timing risks and accounting headwinds.

Revenue and EBITDA Growth

Fincantieri reported revenues of about EUR 9.2 billion, up roughly 13.1% year‑on‑year as the shipbuilding cycle gained traction across key programs. EBITDA climbed to EUR 681 million, an increase of about 34% versus last year, lifting the EBITDA margin to 7.4% from 6.3%, a clear sign of improving operating leverage.

Record Net Profit and Improved Profitability

Net profit surged to a record EUR 117 million, more than four times the level achieved in 2024 and signaling a structural recovery in bottom‑line performance. EBIT rose to EUR 368 million from EUR 246 million, underlining the benefits of cost discipline and better mix across cruise, defense and underwater activities.

All‑time High Order Intake and Backlog

Order intake reached an all‑time high of EUR 20.3 billion, more than 32% higher year‑on‑year and driving a robust book‑to‑bill ratio of 2.2 times. The total backlog swelled to EUR 63.2 billion, equivalent to about 6.9 years of work, with firm backlog at EUR 41.1 billion and soft backlog at EUR 22.1 billion, giving long‑term revenue visibility.

Strong Segment Performance — Shipbuilding, Defense, Underwater

Shipbuilding revenues grew 15.1% year‑on‑year, while shipbuilding EBITDA rose 29.3% to EUR 451 million, lifting the margin to 6.8% and confirming improved cruise economics. Defense revenues advanced 20.7%, and underwater revenues surged 88.2%, with the WASS business contributing EUR 117 million of EBITDA at a high 17.6% margin.

Deleveraging, Liquidity and Capital Move

Leverage metrics improved as net debt to EBITDA dropped to 2.7 times from 3.3 times at year‑end 2024, and adjusted net debt stood around EUR 1.3 billion, or about EUR 1.8 billion excluding noncurrent receivables. Management also executed a EUR 500 million capital increase and arranged a EUR 395 million Schuldschein refinancing, extending maturities and lifting free float to 36%.

Robust Commercial Wins and Large Pipeline

The company secured major commercial wins across cruise, naval and offshore, including orders from NCL, Crystal, Viking and TUI, plus Italian Navy units, offshore contracts with Ocean Infinity and a large WASS torpedo order for the Saudi Navy. Management highlighted a shortlisted tender pipeline of about EUR 32.5 billion and roughly EUR 5 billion of near‑term naval opportunities, while also pointing to a key U.S. Navy competition where its Marinette yard made the final two.

Operational Execution and Delivery

Operational execution remained a strong point, with 24 vessels delivered across 11 shipyards, including five cruise ships, seven defense units and 12 offshore vessels. The backlog now includes 97 units, 36 of which are cruise, providing visibility through 2037 and supporting stable capacity utilization and margin resilience through better fixed‑cost absorption.

Margin Recovery in Equipment & Infrastructure and Offshore

The Equipment, Systems & Infrastructure division delivered an EBITDA increase of about 33%, with its margin improving to 8.2% from 6.1%, demonstrating successful restructuring. Offshore and specialized vessels also recovered, posting EBITDA of EUR 72 million and raising margins to 5.3%, suggesting that formerly weaker segments are now contributing meaningfully to group profitability.

Timing and Revenue Volatility in Naval Production

Management cautioned that naval revenue recognition will slow in the fourth quarter of 2025 due to production curve phasing rather than demand softness. This introduces some short‑term top‑line volatility even though the underlying naval backlog remains strong, making quarterly revenue trends less smooth despite solid fundamentals.

Higher D&A from WASS Acquisition

The integration of WASS is boosting underwater revenues and margins but also driving higher depreciation and amortization through purchase price allocation effects. These non‑cash charges partly offset EBITDA gains and weigh on near‑term net profit, although management expects the impact to diminish over time as the acquisition matures.

Reverse Factoring and Working Capital

Reverse factoring usage increased by about EUR 200 million to roughly EUR 850 million in 2025, signaling ongoing reliance on supplier financing arrangements. The company expects a similar level in 2026, which supports liquidity but represents a working capital factor that investors will likely continue to track carefully.

Legacy and Contingent Costs

Asbestos‑related litigation costs fell for a third consecutive year, yet legacy disputes continue to represent a recurring drag on the income statement. While the trend is improving, management acknowledged that these contingent liabilities remain part of the risk profile and require ongoing oversight.

Limited Disclosure on Cruise Margins

Despite emphasizing structural improvement in cruise profitability, executives declined to provide detailed margin guidance for recent cruise contracts such as those with NCL and Viking. This limited disclosure leaves some uncertainty around the precise earnings contribution of new awards, even if the broader message on cruise economics was constructive.

Revenue Guidance and Limited Top‑line Growth

For 2026, Fincantieri is signaling broadly flat revenues of EUR 9.2–9.3 billion, despite the exceptionally strong backlog and order intake. The guidance underscores that production scheduling and project phasing will dictate when the backlog converts to revenue growth, highlighting near‑term top‑line constraints rather than a demand problem.

Forward‑Looking Guidance and Outlook

Management reaffirmed 2026 guidance calling for revenues of EUR 9.2–9.3 billion, EBITDA of about EUR 700 million and an EBITDA margin near 7.5%, with net profit expected to exceed the 2025 record of EUR 117 million. The company also targets an adjusted net debt to EBITDA ratio around 2.0 times, or 1.3 times including the capital increase, underpinned by 2025 outperformance, record order intake and a EUR 63.2 billion backlog.

Fincantieri’s earnings call painted the picture of a shipbuilder that has moved decisively out of restructuring mode and into profitable growth, even if reported revenue will pause before the next up‑leg. With record orders, a deep backlog, deleveraging and improving margins across divisions, the main questions now center on execution timing and accounting headwinds rather than on underlying demand.