Wärtsilä Corporation Annual report 2014

Order intake and order book

Order intake increased despite market challenges

Wärtsilä’s order intake for the financial period was EUR 5,084 million (4,821), which represents an increase of 5% compared to the corresponding period in 2013. The book-to-bill ratio for the financial period was 1.06 (1.05).

Power Plants' order intake was stable at EUR 1,293 million (1,292). 61% of the orders received, measured in MW, were for gas based power plants. Activity was high in Russia and the USA. Highlights included the order to supply a 112 MW peaking power plant to North Dakota. Other major orders were the 140 MW power plant order from Mexico, and the 120 MW order from Oman. Wärtsilä also received its first order for a turnkey LNG receiving terminal to be built in Tornio, northern Finland.

Despite the slowdown in vessel contracting, Ship Power’s order intake increased by 6% to EUR 1,746 million (1,644). The ordering of gas handling systems and dual fuel engines for LNG and LPG carriers was strong, and gas as a marine fuel is being increasingly applied also in other vessel markets. In line with the Ship Power strategy, Wärtsilä received several orders for the delivery of integrated solutions, including ship design, propulsion machinery, automation and other equipment. Among the noteworthy orders was the contract to supply an integrated solution, comprising the main propulsion equipment, the gas fuel supply system, and the cargo handling system, for three multigas carriers being built for the Danish operator Evergas. This order is an extension of the one placed in 2013 for a series of three similar vessels. Important offshore related orders included a contract to supply the design and integrated solutions for four new platform supply vessels being built for Siem Offshore. Customers continued to show interest in environmental solutions. A total of 41 (41) exhaust gas cleaning systems for 26 (17) vessels were ordered during 2014. The gas carrier segment represented 34% of the order intake for the financial period, while the offshore segment’s share was 28% and cruise & ferry accounted for 16%. The traditional merchant segment represented 9% of the order intake, special vessels 6% and navy 4%. Other orders accounted for 2%.

Services’ order intake increased by 9%, totalling EUR 2,045 million (1,885). Several important long-term service agreements were signed during the year, with particular interest from customers with gas fuelled vessels, as well as cruise customers. Noteworthy contracts included the 10-year maintenance and technical support agreement with Royal Caribbean Cruises Ltd covering 36 vessels, and the 5-year technical maintenance agreements signed with three Greek LNG carrier owners for a total of 15 vessels. Power plant related service agreements included the 5-year renewal of the operation and maintenance agreement with Cemex Colombia.

Order intake in joint ventures

Order intake in the Wärtsilä Hyundai Engine Company Ltd joint venture company in South Korea, and the Wärtsilä Qiyao Diesel Company Ltd joint venture company in China, totalled EUR 306 million (222) during the financial period. Wärtsilä’s share of ownership in these joint venture companies is 50%, and the results are reported as a share of the result of associates and joint ventures. In November, Wärtsilä Hyundai Engine Company Ltd received a major order to supply 54 dual-fuel engines to power icebreaking LNG carriers being built for use in arctic conditions. The order was placed by Daewoo Shipbuilding and Marine Engineering and the vessels will serve the Yamal LNG project in northern Russia.

Order book remains sound

The total order book at the end of the financial period stood at EUR 4,530 million (4,311), an increase of 5%. The Power Plants order book amounted to EUR 1,475 million (1,367), which is 8% higher than at the same date last year. The Ship Power order book was stable at EUR 2,213 million (2,193). The Services order book increased by 12% to EUR 842 million (751).

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