Wärtsilä Corporation Annual report 2014

Net sales and profitability

Net sales developed according to expectations

Net sales for the financial period increased by 4% to EUR 4,779 million (4,607), which is in line with the guidance of around 5% growth. Power Plants’ net sales declined by 22% due to slow order intake during the first half of the year, and totalled EUR 1,138 million (1,459). Ship Power’s net sales increased by 30% and totalled EUR 1,702 million (1,309). Net sales from the Services business amounted to EUR 1,939 million (1,842), an increase of 5%. The Services sales mix saw an increase in revenues from spare parts and projects. Of the total net sales, Power Plants accounted for 24%, Ship Power for 36% and Services for 41%.

Of Wärtsilä’s net sales for January-December 2014, approximately 67% was EUR denominated, 19% USD denominated, with the remainder being split between several currencies.

Solid profitability

The operating result (EBIT) before non-recurring items was EUR 569 million (557) for the financial period. This represents 11.9% of net sales (12.1), which is at the upper end of the guided 11.5-12.0% range. Profitability development was somewhat held back by an unfavourable business mix. Including non-recurring items, the operating result was EUR 522 million (537) or 10.9% of net sales (11.7). Non-recurring items amounted to EUR 47 million (20), of which EUR 42 million related to the efficiency programme announced in January and EUR 5 million to acquisitions and other costs. Intangible asset amortisation related to acquisitions amounted to EUR 26 million (32) during the financial period.

Financial items amounted to EUR -28 million (-19). The weakening of the euro resulted in unrealised exchange rate losses. Net interest totalled EUR -9 million (-14). Profit before taxes amounted to EUR 494 million (544). Profit before taxes for 2013 includes the sale of Wärtsilä’s Sato Oyj shares. Taxes in the financial period amounted to EUR 106 million (119), implying an effective tax rate of 21%. The profit for the financial period amounted to EUR 351 million (393), which includes a loss from discontinued operations of EUR 37 million (31). Earnings per share were EUR 1.76 (1.98) and equity per share was EUR 9.94 (9.35). Return on investment (ROI) was 18.7% (21.2). Return on equity (ROE) was 18.0% (21.4). ROI and ROE for continuing operations were respectively 20.3% (22.6) and 20.0% (23.1).

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