Wärtsilä Corporation Interim Report q2 2014

Risks and business uncertainties

In the Power Plants business uncertainty in the financial markets and significant currency fluctuations may impact financing availability and the timing of bigger projects. A lack of demand for commodities, such as minerals, can affect the investment decisions of industrial customers.

The business environment for the shipping and shipbuilding industry remains challenging. Despite the modestly optimistic outlook for the global economy, there are still concerns related to certain regions. Overcapacity and a low cargo tonnage demand are limiting freight rate development within the traditional shipping markets. Stable oil and gas prices, combined with increasing exploration and production costs, may cause near-term hesitation towards increasing offshore investments.

Continued risks in the global economy and political instability in certain regions may have a negative impact on Services’ order intake. The challenging conditions in several marine market segments are also seen as a potential risk.

The Group is a defendant in a number of legal cases that have arisen out of, or are incidental to, the ordinary course of its business. These lawsuits mainly concern issues such as contractual and other liability, labour relations, property damage, and regulatory matters. The Group receives from time to time claims of different amounts and with varying degrees of substantiation. It is the Group’s policy to provide for amounts related to the claims, as well as for the litigation and arbitration matters, when an unfavourable outcome is probable and the amount of the loss can be reasonably estimated.

The 2013 annual report contains a more specific description of Wärtsilä’s risks and risk management.

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