All the troubles from the US Navy for Fincantieri
Fincantieri suffers on the stock market due to the negative opinion of analysts. The US Navy has stopped deliveries of the military ship Litoral Combat Ship (Lcs), Fincantieri has participated in the design and construction with the Fincantieri Marinette Marine shipyard
Tensions not only on the stock market for Fincantieri.
The stock of the shipbuilding group opens this morning in decline in Piazza Affari with a -0.36%.
And a day in decline yesterday for the naval giant of Trieste which has filed a decline of -0.45%. The recommendations of analysts weigh on Fincantieri's shares.
The latter were not positive yesterday on the Fincantieri title after news that the US Navy has stopped deliveries of Lockheed Martin's Freedom-class coastal fighter ship, citing a design flaw in the vessel's complex transmission system. In mid-December, the US Navy had sent an investigation into repeated problems involving the military ships Litoral Combat Ship (Lcs).
Fincantieri participated in the design and construction of the Lcs with the Fincantieri Marinette Marine shipyard of the subsidiary Fincantieri Marine Group .
All the details.
THE ORDER BY THE US NAVY SUSPENDED FOR THE SHIP BUILT IN THE FINCANTIERI SHIPYARD
On January 19, the US Navy announced that due to the discovery of a design flaw in the transmission system in every single Freedom-class ship, it will refuse to accept delivery of any new Freedom-class ships until the defect is Resolved.
The program envisages the construction of 16 ships (10 of which have already been delivered).
However, the defect is not attributable to Fincantieri. The Freedom class was designed by Lockheed Martin and built at Fincantieri's Marinette Marine shipyard.
“In partnership with the United States Navy, Lockheed Martin is pursuing a solution to the problem of the Freedom-class variant Littoral fighter ship,” Defense News reported. However, doubts remain about the timing for delivery.
ALSO CONSTELLATION PROGRAM AT RISK?
Also, according to Forbes , the prolonged disruption of the Freedom-class production line jeopardizes the highly anticipated program for FFG (X) frigates, dubbed Constellation.
Last May Fincantieri had won the tender for the future FFG (X) frigates. The US Navy FGG (X) requirement is twenty units. At the time, the construction of the first unit was authorized with the other nine in option of the first lot, while the other ten, also optional, will be set up later. According to the US Navy's estimate, each should cost $ 870 million.
THE WEIGHT OF THE FREEDOM CLASS PROGRAM ON FINCANTIERI
But let us now return to the setback of the LCS program. “According to the opinion of the experts, the Freedom class program should bring Fincantieri about 300-400 million euros per year, equal to 7% of revenues,” writes Milano Finanza .
THE NEGATIVE JUDGMENT OF THE ANALYSTS
Therefore a neutral judgment with a target price of € 0.65 confirmed by Mediobanca Securities, “which specified that it is not clear how long the delivery will be blocked. Given that long timelines are expected, even a few months, according to the broker this could represent a risk for the margins of the group in 2021 and for the generation of cash flow. On the other hand, the rating of Banca Akros remains to reduce and to 0.50 euro, which highlights how Fincantieri has already built about 11 Freedom class vessels for the American Navy and has another 6 under construction ”.
Furthermore, analysts recall, “the Italian group has won four tenders for the Saudi Navy, and even the Greek one could be interested in relying on the company”. “The news of the suspension of delivery”, conclude from Banca Akros, “has negative implications for the program, because it delays it. This is a negative event, partially expected and not taken for granted ”.
STALL IN BRUSSELS ON THE FINCANTIERI-STX FRANCE OPERATION
Finally, the Stx France dossier for the Trieste shipbuilding group is still on the high seas. On December 30, Fincantieri agreed to the French government's proposal to extend the completion of the contract for the sale of 50% of the Chantiers de l'Atlantique, the Saint Nazaire shipyard, by one month, whose deadline was previously December 31, 2020. All eyes remain focused on Brussels, where the European Commission's decision on the go-ahead for the acquisition is expected.
But during the week the European Commission reiterated that "the parties have not yet provided the missing information" deemed "essential to analyze the effects of the transaction on the market" and "ensure that (the acquisition, ed) does not lead to damage to customers and consumers ". The spokesperson of the Commission on competition matters, Arianna Podestà, said this during the daily press conference.
For this reason, the spokesperson continues, "the investigation remains suspended" and will resume "once the parties have provided the missing information". Only in that moment "will a new deadline be set for our evaluation".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/tutte-le-grane-dalla-marina-usa-per-fincantieri/ on Thu, 21 Jan 2021 11:27:29 +0000.