Wärtsilä Corporation INTERIM REPORT 25 October 2016 at 8.30 a.m. local time
WÄRTSILÄ INTERIM REPORT JANUARY-SEPTEMBER 2016
POSITIVE DEVELOPMENT IN ORDER INTAKE
This release is a summary of Wärtsilä's Interim Report January-September 2016. The complete report is attached to this release as a pdf-file. It is also available at
and on the company website at
THIRD QUARTER HIGHLIGHTS
- Order intake increased 5% to EUR 1,139 million (1,086)
- Net sales decreased 12% to EUR 1,079 million (1,222)
- Book-to-bill 1.06 (0.89)
- Comparable operating result EUR 123 million, or 11.4% of net sales (EUR 160 million or 13.1%)
- Earnings per share 0.43 euro (0.49)
- Cash flow from operating activities EUR 189 million (-5)
HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-SEPTEMBER 2016
- Order intake increased 2% to EUR 3,604 million (3,529)
- Net sales decreased 6% to EUR 3,242 million (3,439)
- Book-to-bill 1.11 (1.03)
- Comparable operating result EUR 330 million, or 10.2% of net sales (EUR 397 million or 11.5%)
- Earnings per share 0.92 euro (1.46)
- Cash flow from operating activities EUR 378 million (78)
- Order book at the end of the period decreased 2% to EUR 5,024 million (5,112)
WÄRTSILÄ'S PROSPECTS FOR 2016
Wärtsilä revised its prospects on 12 October 2016. Wärtsilä now expects its net sales to decline by around 5% and its profitability (comparable operating result as a percent of net sales) to be around 12%. Previously Wärtsilä expected its net sales to grow by 0-5% and its profitability to be 12.5-13.0%.
JAAKKO ESKOLA, PRESIDENT AND CEO
"The third quarter of 2016 developed largely in line with our expectations. As anticipated, the concentration of deliveries towards the end of the year resulted in lower sales, which burdened our operating result. We continue to focus on increasing efficiency and flexibility within our organisation.
Although service activity has stabilised at a high level, we remain confident in the positive long-term drivers. In the equipment markets, the demand for new vessels was weak, reflecting the challenges related to overcapacity and low earnings. Nevertheless, improved sentiment in the power generation markets has contributed to the growth in overall order intake. I am pleased to note that a solid project pipeline supports continued momentum in our Energy Solutions business.
Despite the growth in order intake, lower than anticipated power plant deliveries in the current year has caused us to adjust our guidance for 2016. We now expect a small decline in sales, and estimate profitability to be around 12%."
|Order intake||1 139||1 086||5%||3 604||3 529||2%||4 932|
|Order book at the end of the period||5 024||5 112||-2%||4 882|
|Net sales||1 079||1 222||-12%||3 242||3 439||-6%||5 029|
|Operating result 1||122||149||-18%||301||386||-22%||587|
|% of net sales||11.3||12.2||9.3||11.2||11.7|
|Comparable operating result||123||160||-23%||330||397||-17%||612|
|% of net sales||11.4||13.1||10.2||11.5||12.2|
|Comparable adjusted EBITA||132||170||-22%||356||420||-15%||643|
|% of net sales||12.3||13.9||11.0||12.2||12.8|
|Profit before taxes||115||132||-13%||253||354||-29%||553|
|Cash flow from operating activities||189||-5||378||78||255|
|Net interest-bearing debt at the end of the period||384||513||372|
|Gross capital expenditure||126||314||346|
|1 Items affecting comparability included restructuring costs of EUR 2 million (11) in the third quarter of 2016. During the review period January-September 2016 restructuring costs amounted to EUR 29 million (11), of which EUR 17 million were non-cash write-downs.|
Despite slower economic growth in the emerging markets, growth in electricity demand and the availability of international funding for infrastructure projects will continue to support power plant investments. In the industrialised countries, the slow economic growth continues to limit demand for new power plants, except in North America where the market situation is more positive for gas-fired power plants. The megatrend towards renewable energy sources is evident, with investments expected to favour utility scale solar photovoltaic installations. Furthermore, distributed, flexible, gas fired power generation continues to gain ground globally. Electricity markets are being developed to reward the necessary flexibility, thereby enabling new profitable investments. Wärtsilä's systematic market development work in these markets will continue to promote the benefits of Smart Power Generation.
The outlook for the shipping and shipbuilding markets remains challenging. Overcapacity and weak earnings continue to limit the demand for new vessels in the merchant segment, while low oil prices are impacting investments in offshore exploration and development. In the gas carrier markets, the demand for both LNG and LPG carriers remains under pressure due to the low oil and gas prices and supply-demand imbalances. The outlook for the cruise and ferry segment remains positive. Cruise vessel demand is supported by increasing passenger volumes, particularly in Asia, while the contracting of ferries is supported by fleet renewals in Europe, the potential implementation of new emission regulations, and favourable newbuilding prices.
The service market outlook remains solid with growth opportunities in selected regions and segments. An increase in the installed base of medium-speed engines and propulsion equipment, as well as the shift to gas based technology, offsets the slower service demand for older installations and the uncertainty regarding short-term demand development in the merchant marine segment. In the offshore segment, the growth in the installed base during recent years is expected to partially compensate for the challenging outlook in certain regions. The service outlook for gas-fuelled vessels remains favourable. Service demand in the power plant segment continues to be good with an especially positive outlook in the Middle East and Africa. Customers in both the marine and power plant markets continue to show interest in long-term service agreements.
ANALYST AND PRESS CONFERENCE
An analyst and press conference will be held today 25 October 2016, at 10.00 a.m. Finnish time (8.00 a.m. UK time), at the Wärtsilä headquarters in Helsinki, Finland. The combined web- and teleconference will be held in English and can be viewed at the following address: http://wcc.webeventservices.com/r.htm?e=1278954&s=1&k=6DAAD0150CB60B0FBAD47F8A58FD8D46 . To participate in the teleconference please register at the following address: http://emea.directeventreg.com/registration/89931295 . You will receive dial-in details by e-mail once you have registered. If problems occur, please press *0 for operator assistance. Please use *6 to mute your phone during the teleconference and the same code to unmute.
An on-demand version of the webcast will be available on the company website later the same day.
For further information, please contact:
Executive Vice President & CFO
Tel: +358 10 709 5640
Director, Investor & Media Relations
Tel: +358 10 709 5637
For press information, please contact:
Executive Vice President, Communications & Branding
Tel: +358 10 709 5599
Wärtsilä in brief
Wärtsilä is a global leader in advanced technologies and complete lifecycle solutions for the marine and energy markets. By emphasising sustainable innovation and total efficiency, Wärtsilä maximises the environmental and economic performance of the vessels and power plants of its customers.
In 2015, Wärtsilä's net sales totalled EUR 5 billion with approximately 18,800 employees. The company has operations in over 200 locations in more than 70 countries around the world. Wärtsilä is listed on Nasdaq Helsinki.