Italy’s Fincantieri Swaps Cruise Ships for Warships in Defense Bid

(Bloomberg) —

Fincantieri SpA plans to focus some Italian civil and military shipyards on just making warships, in the latest sign that Europe’s defense-spending bonanza is reshaping industrial strategy. 

The state-controlled shipbuilder is preparing to boost its naval capacity and is weighing the roles of two locations in southern Italy, Chief Executive Officer Pierroberto Folgiero said. 

The Castellammare di Stabia site south of Naples and one in Palermo, Sicily, make both commercial and military vessels. Their use could shift as demand for warships increases, the CEO said in an interview in Milan.

“We can easily increase military capacity and simply reallocate existing civilian production capacity elsewhere in our extensive system,” Folgiero said. “We have a strong tailwind from the gigantic opportunity of a spending surge across Europe and overseas.” 

A rapid upturn in European defense spending has given Trieste-based Fincantieri and other makers of military hardware an unprecedented opportunity for growth over the next decade. Companies in adjacent industries are also looking at ways to reorient their factories and take part in the boom.

Governments in the region are poised to shift hundreds of billions of euros toward national security as they overhaul budget priorities, including NATO members’ commitment last week to target spending 5% of GDP toward defense.

Fincantieri anticipates a boost in demand from the higher defense spending, the new NATO targets and from export sales, the CEO said. In a May investor presentation, the company said it aims to capture at least €20 billion ($23.4 billion) of the windfall. 

The company projects its naval unit, which builds warships from frigates to destroyers and aircraft carriers, will constitute about 30% of revenue by 2027, up from 20% last year, while the cruise liner business shrinks to about 35% of sales from 44%. Fincantieri also makes other vessels such as submarines and offshore cable-laying rigs.

Flexibility

The expected changes at the shipyards will be detailed as part of a new business plan set to be unveiled this fall, with the first phase of the reorganization expected to take 6 to 18 months after business plan approval, Folgiero said. 

The plan would entail moving some civilian shipbuilding activities from Italy, Folgiero said, with Romania gaining more work on steel fabrication for cruise liners and the Vung Tau site in Vietnam taking on higher specialized vessel volumes given its favorable costs, Folgiero said. 

Still, final hull assembly and outfitting of Fincantieri’s cruise liners is set to remain at its Monfalcone, Marghera, Ancona and Genoa facilities in Italy, he said.

“Military, cruise and specialized vessels businesses will all benefit from the planned reorganization,” Folgiero said, adding that skills and capabilities present at the civil sites in Italy will jump-start Fincantieri’s military shipbuilding capacity. 

Fincantieri shares advanced as much as 4% in Milan on Monday, near record highs set late last month. Since Folgiero became CEO in May 2022, the company’s market value has increased more than fivefold to about €5.2 billion. That compares with a near-quadrupling of the Bloomberg Europe Defense Select index over the same period.

Across Europe, firms from Daimler Truck Holding AG to printing press maker Heidelberger Druckmaschinen AG and carmaker Renault SA have been leaning into defense.

Italian Prime Minister Giorgia Meloni’s government has been studying plans to reorient some of the country’s underused carmaking capacity toward defense, though those efforts will take time.   

Underwater

Fincantieri also plans to continue developing underwater technology like submarine drones, Folgiero said. The company presented a new division in May, targeting revenue surpassing €800 million by 2027 and margins approaching 19%. The CEO is open to evaluate smaller technological acquisitions; a Fincantieri spokesperson said these minor potential deals would be financed with internal resources and not require a capital increase.

Fincantieri remains interested in Thyssenkrupp AG’s marine unit as it moves toward an initial public offering, and will monitor further developments, Folgiero said, reiterating he’s open to expand existing commercial cooperation.

© 2025 Bloomberg L.P.

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