Italy's Fincantieri falls as US Navy revises frigate orders

Shares in Italy's Fincantieri FCT.MI fall as much as 5% after the shipbuilder announced late on Tuesday a revised contract for the U.S. Navy's Constellation program

The Trieste-based vessel-maker said work will proceed on two frigates currently under construction, while four additional commissioned frigates have been cancelled in return for undisclosed compensation measures

Fincantieri's overall order backlog with the U.S. Navy totalled 5 billion euros ($5.79 billion), a person with knowledge of the matter said

The two confirmed ships with 1 billion euros in compensation have a value of 3 billion euros, the person noted, adding that the remaining 2 billion euros would be covered through new orders yet to be placed.

"Since the decision to terminate the contract was taken at the U.S. Navy's own convenience, we believe the compensation will fully cover the costs already incurred by Fincantieri for the cancelled ships," Equita brokerage says

Equita doesn't flag any significant financial impacts for the shipbuilder

However, it warns of possible implications of the US Navy's decision on investment programs for large warships in other naval forces and potential new orders for Fincantieri

The brokerage estimates that the cancelled ships value in the backlog is about 1.8 billion euros

Including Wednesday's fall the stock has gained 141.56% YTD

($1 = 0.8639 euros)