Power generation markets closely follow global macro-economic development. Uncertainty in the macro economy, combined with slow global growth projections, has impacted the power generation markets, leading to two consecutive years of decline. Based on the forecasted GDP growth in 2014, the overall market for liquid and gas fuelled power generation is expected to improve slightly. Ordering activity remains focused on emerging markets, which continue to invest in new power generation capacity. In the OECD countries, there is still pent-up power sector demand, mainly driven by CO2 neutral generation and the ramp down of older, mainly coal-based generation.
The main drivers supporting activity in the shipping and offshore sectors are in place. World seaborne trade and the world economy are showing signs of improvement, which benefits the merchant shipping market. Furthermore, the current oil price level supports activity in the offshore industry, including operations in harsh and deep water areas. The importance of fuel efficiency and the regulatory environment are clearly visible, and the interest in gas as a fuel is increasing. Overall contracting is expected to remain at improved levels, keeping in mind the prevailing overcapacity and the market’s limited capacity to absorb new tonnage. Due to the relatively high level of contracting in the traditional merchant segment during 2013, a small downturn in merchant ordering activity may be seen in 2014.
The overall service market outlook remains stable. An increase in the installed base partly balances the slower service demand for older installations and the continued focus of merchant marine customers on reducing operating expenses. The outlook for services to offshore and gas fuelled vessels remains positive. Demand for services in the power plant segment continues to be good. From a regional perspective, the outlook for the Middle East and Asia is slightly more positive, supported by interest in power plant related services. The outlook is also good in the Americas and Africa.
Wärtsilä's prospects for 2014
Wärtsilä expects its net sales for 2014 to grow by 0-10% and its operational profitability (EBIT% before non-recurring items) to be around 11%.