Power generation markets closely follow global macro-economic development. Uncertainty in the macro economy, combined with slow global growth projections, has lead to two consecutive years of decline in the power generation markets. Although customers are still delaying their decision-making, the forecasted GDP growth in 2014 is expected to result in a slightly improved overall market for liquid and gas fuelled power generation. Ordering activity remains focused on the 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. In the offshore segment, the current oil price level is supportive of investments. Furthermore, the strong drilling rig order book supports the ordering of offshore support vessels and there is continued demand for production units. The importance of fuel efficiency and the regulatory environment are clearly visible, and the interest in gas as a fuel is increasing. Financing has eased with more options and better terms available. Overall contracting is expected to be in line with that seen in 2013, keeping in mind the prevailing overcapacity and the market’s limited capacity to absorb new tonnage. Offshore activity is anticipated to be stable and the shipping markets to remain healthy, although a slight decline in traditional merchant vessel orders may be seen. The gas carrier market is expected to continue to be active, particularly in the LPG vessel segment.
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 unchanged
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%.