Italy’s Fincantieri strikes it rich in Qatar, gets a €4 bn order to supply 5 warships

ItalyEurope24 ^ | June 15, 2016 | Gianni Dragoni

[sukhoi-30mki]

Italian state-controlled ship builder Fincantieri has won a €4 billion contract from Qatar as leader of Italy’s defense industry to supply five warships equipped with radars, systems and missiles, according to trustworthy sources of Il Sole 24 Ore-ItalyEurope24.

The official ratification of the agreement will take place tomorrow afternoon in Rome between Italy’s Defense Minister Roberta Pinotti and her counterpart from Doha, Khalid bin Muhammad Al-Attiyar. Fincantieri will supply to Doha four corvette warships and a support vessel. The order is very important also for Leonardo-Finmeccanica, which is bound to receive about half the total amount for the supply of missiles through MBDA (around €1 billion) and radars and electronics systems through the former Selex ES (€700-800 million), which is currently a division of Finmeccanica. The contacts between Italy and Doha have been going on for a few years now. But the basis for this agreement was confidentially set only last January, during a visit to Rome of the emir Tamim Bin Hamad Al-Thani.

Italy’s defense industry has beat tough competition from France. In the past two months, Paris (through the powerful DCNS, in close cooperation with Thales), has tried to snatch the contract away from the Italian industry by offering different ships: three frigates (evolution of the FREMM multi-mission frigates, in the “extended range” version). The FREMMs are the result of a long and troubled industrial collaboration between Italy and France. While the Italian FREMMs have been purchased only by Italy’s navy, France managed to sell some abroad (one to Morocco and one to Egypt).

But France didn’t succeed in Qatar. Frigates are larger than corvette warships, and more expensive. In the end, French industry and diplomacy were defeated by the alliance between the Italian industry and government, in a virtual battleship in the Gulf state’s sea, filled with gas fields. The four corvette warships and the support vessel will be built in Italy, in Fincantieri’s shipyards of Riva Trigoso and Muggiano, both in the northern region of Liguria. According to the contract, Fincantieri will be paid in advance 30% of the total value of the order.

This will significantly improve the financial situation of the group headed since May 2002 by Giuseppe Bono, which ended 2015 €175 million in the red with revenues of €4.18 billion. It was a tough year for Fincantieri, also marked by the resignation of the CEO Andrea Mangoni some six months after his appointment, due to internal disagreements. In 2015 the group received new orders for €10 billion and in December it had an order portfolio of over €22 billion. Bono was confirmed as CEO of the group on May 19, with the new president Giampiero Massolo, already director of Intelligence.

Shares in Fincantieri yesterday jumped as much as 5.94% at €0.362, while Leonardo-Finmeccanica lost 2.27% at €9.03.

In July 2015, Minister Pinotti was in Qatar to sign an agreement for the cooperation on military training in aerial, naval and helicopter transport, in the framework of the “Agreement on Defense Cooperation between Italy and Qatar” signed in May 2010 and implemented starting from February 2014. The multi-billion order is therefore the result of a very long courtship.

[DrPretorius]

The Italian Navy has a rich maritime tradition of designing and building very good warships and other classes of ships. The Roman Navy controlled the Mediterannean Sea for hundreds of years. Various Italian fleets held off the Moslem hordes during the Middles Ages. Columbus was Italian. Many explorers during the Age of Discovery were Italians. The Venetian Navy was good enough to sustain the Venetian Republic, which lasted longer than the Roman Empire. The Vittorio Veneto was considered one of the best battleships afloat in WW2. It is the lack of competent leadership that has eroded their fame in recent years.