Latest Developments on Cruise Ship Design
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Maurizio Cergol Senior Vice President Marketing & New Concept Development Merchant Ships Business Unit Latest Developments of Cruise Ship Design IMAM 2017 9 - 11 October 2017 International Martime Association of Lisbon – Portugal the Mediterranean Table of Contents • Who we are • Cruise Vessel Market Situation • Latest Developments on Cruise Vessels Design RoyalCarnival Princess Vista CarnivalPrincess Cruise Cruises Lines “ECO 1Notation”° cruise ship by Lloyd‘s fully compliant Register for exceeding environmental with the new safety and standards environmental rules Who we are Fincantieri Video clip Littoral Combat Ship "Freedom" US Navy World's fastest steel frigate Fincantieri at a glance #1 Western designer & shipbuilder(1) with 230 years of history & >7,000 ships built Norway • 5 shipyards 20 shipyards € 4,429 mln revenues 4 continents Romania China • 2 shipyards ~ € 25.5 bln total backlog(2,3) • 1 Joint Venture ~ 19,200 employees • € 20.4 bln backlog ~ 80,000 subcontractors • € 5.1 bln soft backlog USA • 3 shipyards UAE Vietnam Revenues by geography • 1 Joint Venture • 1 shipyard Employees by location Italy 16% Brazil Italy • 1 shipyard Italy 41% € 4.4 bln • 8 shipyards ~19,200 RoW RoW 59% 84% Note: all figures reported at December 31, 2016, except for backlog and soft backlog which are referred to 1H 2017(at June 30, 2017) Corporate/BU headquarters (1) By revenues, excluding naval contractors in the captive military segment. Based on Fincantieri estimates of shipbuilders’ revenues in 2015 (2) At June 30, 2017 Shipyard Joint Venture (3) 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 Operating subsidiary negotiation, none of which yet reflected in the order backlog Representative / Sales office 4 Fincantieri market positioning • World most Business diversification diversified player active in all high value added segments Cruise Naval • Balanced Ferries exposure to Mega-Yachts Cruise, Naval Repair & and Offshore Conversion Offshore Equipment & • Significant Systems share of After sales revenues 2016 revenues breakdown coming from By client’s country By end market(1) foreign countries Offshore Equipment, Italy 16% 20% Systems and Services 11% €4.4 bln Naval €4.4 bln 25% RoW 84% Cruise 44% Source: Company information (1) Breakdown calculated based on revenues gross of consolidation effects 5 Business units, products and positioning End markets Main products Positioning Revenues 2016(4) Backlog(5) Cruise • All cruise ships • #1 worldwide (from contemporary to luxury) (~45% market share(1)) € 2,078 mln (44.2% on total) Naval • All surface vessels (also stealth) • Leader: • Support & Special vessels − #1 in Italy(2) € 1,156 mln € 18,512 mln Shipbuilding • Submarines − Key supplier for US Navy & Coast Guard(3) (24.6% on total) (58 ships) − Key supplier for Qatar Emiri Naval Forces Other • High tech ferries • Leading player: • Large mega-yachts − High tech ferries € 12 mln − Large mega-yachts (0.3% on total) • OSV • Offshore wind • Leading player in • Drilling • OPV high-end OSVs € 960 mln € 1,403 mln Offshore units • Expedition • Fisheries/ cruise (20.4% on total) (44 ships) aquaculture • Special vessels • Marine systems, components & • Leading player worldwide Equipment turnkey solutions € 495 mln Systems & • Ship interiors € 1,288 mln (10.5% on total) Services • Naval services • Ship repairs & conversions (1) By oceangoing cruise ships > 10,000 gross tons ordered in the 2004 – june 2017 period (including VARD). Source: (4) Breakdown calculated based on revenues gross of consolidation effects Fincantieri analysis based on IHS Lloyd’s Fairplay – Shippax data and Company press releases (5) At June 30, 2017 (2) For all the large ships and excluding minesweepers and small ships below 45 m in length (3) For medium size ships, e.g. patrol vessels and corvettes 6 Cruise ships: Fincantieri, Vard products and clients Fincantieri Vard Segment Cruise Ships Deliveries Orderbook Orderbook Main customers Silversa Muse Luxury 9 4 7 Niche Le Lyrial Viking Sky Crown Princess 1990 Upper 6 4 Premium Riviera Nieuw Amsterdam Premium 39 8 Majestic Princess Carnival Breeze Contemporary 25 10 Costa Diadema 79 26 7 7 SHIPBUILDING – CRUISE SHIPS: PRODUCTION OVERVIEW (MAIN LOCATIONS) (1) Italy • 4 shipyards devoted to cruise Shipbuilding Marghera Area (‘000m2): 388 Monfalcone Employees: 1,010 Dock: 334x54m 2 Area (‘000m ): 787 Quays: 660m Trieste Employees: 1,420 Crane capacity: 400t Dock: 350x56m Quays: 1,065m • Large ships Crane capacity: 1,000/400t • Large ships Ancona Sestri Area (‘000m2): 359 Area (‘000m2): 242 Employees: 535 Employees: 600 Dock: 240x55m Dock: 284x42m Quay: 270m Quays: 900m Crane capacity: 500t Crane capacity: 200t • Small ships • Medium / large ships Other products: Ferries and • = Main products Shipyard Design & engineering Offshore vessels • The same ship can be built simultaneously in different shipyards • Different size of the shipyards allows for better utilization of production capacity Source: Company information (1) Employees as of August, 2016 80 ships delivered 9 Shipbuilding – Cruise Products Target Market / Positioning Luxury / Niche(1) • Worldwide cruise ships market • Cruise ships (10 – 60,000 Gross • Global leader with presence in all cruise market segments Tonnage and up to 750 passengers) and niches expressly designed for exclusive cruises operated on less popular routes (e.g. high • Well established technological and project management cultural / environmental value) capabilities Upper Premium • Cruise ships (40 – 90,000 Gross Tonnage and 750 – 1,500 passengers) Client Portfolio dedicated to destination-oriented cruises Luxury / Niche Premium with upscale on board service on route / destinations out of reach for premium / contemporary ships Premium • Large cruise ships (90 – 150,000 Gross Tonnage and 1,500 – 3,600 passengers) Upper premium Contemporary dedicated to a wide range of cruise routes with higher on board standards and services than contemporary ships Contemporary both Fincantieri and Vard client Vard client • Largest cruise ships (over 130,000 Gross Tonnage and over 3,600 passengers) for Shipyards mainstream cruises with standard routes and on board features representing the Italy: Romania: destination itself • Monfalcone • Sestri Ponente • Tulcea • Marghera • Ancona (1) Terminology used in the cruise sector to indicate cruises with niche characteristics (e.g. arctic destinations, coastal routes, regional routes) 10 Cruise Vessel Market Situation MSC SEASIDE Cruise vessel under construction Monfalcone Shipyard - Italy 1° Cruise Ships: steady long-term passenger growth Dynamics of cruise market Dynamics of global tourism and cruise passengers • The cruise industry has proven to be mln CAGR remarkably resilient, having continued to Total tourists ’08-’16 ’16-’20 1,800 grow throughout the 2008-2010 Cruise tourists 1,360 economic crisis +3.6% +2.4% 1,235 • Cruise tourists on total tourists at only 2% and growing 809 678 530 49,0 • Cruise penetration (cruise passengers 24,7 30,6 +6.3% +5.5% on national population) is still very low: at 13,4 5,6 9,7 a mere 5.3%, Australia has the highest '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '20 '30 penetration in the world % cruise guests/ 1.1% 1.4% 1.6% 2.0% 2.3% 2.7% tourists • In view of the positive market outlook of Key source market penetration rate development the leisure industry and of the increasing penetration of the cruise High potential of emerging markets (e.g. sector, the latter is expected to China) with penetration significantly grow in the future, in rate < 1% particular thanks to the development of some emerging markets: China and Australia USA Australia UK&Ireland Canada Germany Italy Scandinavia Spain China 2012 2013 2014 2015 2016 Source:Total Tourists: World Tourism Organization, UNWTO – Tourism Highlights, 2016 Edition & Total cruise Tourist: Fincantieri estimates; China National Tourism Administration; CLIA Australia 12 CRUISE VESSELS ORDERBOOK ORDERBOOK LATEST ** Total ships: 80 Total berths: 207,450 Total Order Book Value: $50,2bn Average Price Per Berth: $361,599 **http://www.seatrade-cruise.com • Cruise passenger growth: recently CLIA positively modified its 2016 projection to 24.2m ocean cruisers. • New emerging markets (China, Australia) should fuel demand, enabling the achievement of a 30.0 M passengers in Royal Princess Princess Cruises 2020. 1° cruise ship fully compliant with the new safety13 and environmental rules Cruise Ships: from buyer’s market to builder’s market Cruise ships demand Cruise ship orders • After a long period of high and constant level # of ships of orders characterized by a substantial 25 19 balance between demand and production 16 16 12 12 capacity of European yards, in 2008 the 11 17 8 9 10 economic crisis caused a sudden and severe 8 7 8 6 6 6 3 3 8 1 demand drop 5 5 9 6 6 8 1 4 6 8 8 3 2 1 2 3 2 • Due to the investment programs’ cuts and the 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 complete freeze of the credit market, in 2008- 2009 only 4 ships were ordered causing Fincantieri Other shipbuilders progressive workload reduction 2014 - today: from «Buyer’s Market» to «Builder’s Market» • 2010-2013 was still a very challenging period • Recovery in demand for cruises and increase of cruise prices in the "traditional" market in characterized by: relation to the improvement of the US and European