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Wärtsilä Corporation Interim Report

January – March 2017

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"Wärtsilä’s order intake development was clearly the highlight of the first quarter. Services’ order intake was boosted by growing interest in long-term service agreements, while customers in the energy markets continued to invest in new power generation."

Jaakko Eskola, President & CEO

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Positive development in order intake

“Wärtsilä’s order intake development was clearly the highlight of the first quarter. Services’ order intake was boosted by growing interest in long-term service agreements, while customers in the energy markets continued to invest in new power generation, both in the emerging markets and industrialised countries. Orders received in the Marine Solutions business were also at a reasonable level, thanks to continued activity in the cruise and FSRU markets. Although vessel contracting has remained low, signs of improving sentiment indicate a gradual recovery in demand towards the latter part of the year.

The higher level of power plant deliveries supported both net sales development and our underlying performance in the first quarter. Looking ahead, we expect service activity to improve thanks to customers’ maintenance schedules and the increased demand for long-term agreements in both of our end markets. This, together with the stabilised pricing environment in Energy Solutions, provides a good basis for the second half of 2017.”

Jaakko Eskola President & CEO
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Wärtsilä's prospects for 2017

The overall demand for Wärtsilä’s services and solutions in 2017 is expected to be relatively unchanged from the previous year. Demand by business area is anticipated to be as follows:

  • Solid in Services with growth opportunities in selected regions and segments.
  • Good in Energy Solutions (previously solid), thanks to increasing electricity demand in the emerging markets and the global shift towards renewable energy sources, which will support the need for distributed, flexible, gas-fired power generation.
  • Soft in Marine Solutions. Although the outlook for the cruise and ferry segment is positive, the merchant, gas carrier, and offshore segments continue to suffer from overcapacity, slow trade growth, and the financial constraints of customers.


Wärtsilä’s current order book for 2017 deliveries is EUR 2,744 million (2,681), which mainly comprises Marine Solutions’ and Energy Solutions’ deliveries. Wärtsilä will continue to focus on improving efficiency, which is expected to partially offset lower volumes in the marine markets. The pricing environment in Energy Solutions’ markets has stabilised, but the order book is still impacted by the competitive pressure seen in previous years. The good performance in Services is expected to continue.

Highlights

Review period January-March 2017

  • Order intake increased 11% to EUR 1,413 million (1,271)
  • Net sales increased 4% to EUR 1,007 million (967)
  • Book-to-bill 1.40 (1.31)
  • Comparable operating result increased to EUR 86 million (84), which represents 8.5% of net sales (8.7)
  • Earnings per share declined to 0.28 euro (0.30)
  • Cash flow from operating activities increased to EUR 2 million (-13)
  • Order book at the end of the period was stable at EUR 5,096 million (5,103)

Key figures
MEUR 1-3/2017 1-3/2016 Change 2016
Order intake 1 413 1 271 11% 4 927
Order book at the end of the period 5 096 5 103 0% 4 696
Net sales 1 007 967 4% 4 801
Operating result1 80 83 -4% 532
% of net sales 7.9 8.6 11.1
Comparable operating result 86 84 2% 583
% of net sales 8.5 8.7 12.1
Comparable adjusted EBITA 94 93 1% 618
% of net sales 9.4 9.6 12.9
Profit before taxes 74 80 479
Earnings/share, EUR 0.28 0.30 1.79
Cash flow from operating activities 2 -13 613
Net interest-bearing debt at the end of the period 260 639 150
Gross capital expenditure 9 11 146
Gearing 0.13 0.32 0.07
1Items affecting comparability in the first quarter of 2017 included costs related to restructuring programmes of EUR 6 million (1).
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