Wärtsilä Corporation Financial statements bulletin 2014

CEO REVIEW

Net sales and profitability developed in line with our expectations. Net sales grew by 4% and profitability reached 11.9%.

-Björn Rosengren, President and CEO

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Good performance despite challenging market conditions

“Wärtsilä performed well in 2014, a year characterised by challenging market conditions. Net sales and profitability developed in line with our expectations. Net sales grew by 4% to EUR 4,779 million (4,607), largely due to a strong fourth quarter. Profitability reached 11.9% (12.1), with the good development in Services and Ship Power performance and the restructuring measures introduced in January compensating for the effect of lower Power Plants’ sales.

Although overall vessel contracting slowed during 2014, the robust ordering of gas carriers and the continued demand for specialised tonnage resulted in good ordering activity for Ship Power. In the power generation markets, activity among our customers increased significantly during the second half. Consequently, Power Plants’ order intake picked up after a difficult first six months. I am especially pleased that we have achieved our ambition to grow the Services business. Supported by an all-time high fourth quarter, Services’ full year net sales increased by 5%.

In December we announced the acquisition of L-3 Marine Systems International, a global supplier of automation, navigation and electrical systems to the marine, naval and offshore markets. Through this acquisition our position in the electrical and automation business will be unique in terms of sector competence.

How the current market uncertainties will impact customers’ investment decisions is not yet clear, and therefore our market outlook remains cautious. We are, however, confident that our strategic focus areas position us well, and continue to see opportunities to grow sales and improve profitability in the coming year.”

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Björn Rosengren, President and CEO

WÄRTSILÄ'S PROSPECTS FOR 2015

Wärtsilä expects its net sales for 2015 to grow by 0-10% and its operational profitability (EBIT% before non-recurring items) to be between 12.0-12.5%. The guidance excludes the impact of the L-3 Marine Systems International acquisition.


FOURTH QUARTER HIGHLIGHTS

  • Order intake increased 14% to EUR 1,522 million (1,334)

  • Net sales increased 10% to EUR 1,549 million (1,403)

  • Book-to-bill 0.98 (0.95)

  • Operating result before non-recurring items EUR 196 million, or 12.7% of net sales (EUR 211 million or 15.0%)

  • Earnings per share EUR 0.60 (0.74)

  • Cash flow from operating activities EUR 212 million (317)

1-12/2014 REVIEW PERIOD HIGHLIGHTS

  • Order intake increased 5% to EUR 5,084 million (4,821)

  • Net sales increased 4% to EUR 4,779 million (4,607)

  • Book-to-bill 1.06 (1.05)

  • Operating result before non-recurring items EUR 569 million, or 11.9% of net sales (EUR 557 million or 12.1%)

  • Earnings per share EUR 1.76 (1.98)

  • Cash flow from operating activities EUR 452 million (578)

  • Order book at the end of the period increased 5% to EUR 4,530 million (4,311)

  • Dividend proposal 1.15 euro per share


 KEY FIGURES

MEUR 10-12/2014 Restated
10-12/2013
Change 1-12/2014 Restated
1-12/2013
Change
Order intake 1 522 1 334 14% 5 084 4 821 5%
Order book at the end of the period 4 530 4 311 5%
Net sales 1 549 1 403 10% 4 779 4 607 4%
Operating result (EBIT)1 196 211 -7% 569 557 2%
% of net sales 12.7 15.0 11.9 12.1
Profit before taxes 2 157 191 494 544
Earnings/share, EUR 2 0.60 0.74 1.76 1.98
Cash flow from operating activities 212 317 452 578
Net interest-bearing debt at the end of the period 94 276
Gross capital expenditure 101 134
Gearing 0.05 0.15
1 EBIT is shown excluding non-recurring items. Wärtsilä recognised non-recurring items amounting to EUR 30 million (9) in the fourth quarter, of which EUR 25 million related to the efficiency programme announced in January and EUR 5 million to acquisitions and other costs. During the review period January-December 2014, non-recurring items amounted to EUR 47 million (20), of which EUR 42 million (11) related to the efficiency programme and EUR 5 million to acquisitions and other costs.
2 Earnings/share and profit before taxes for January-December 2013 include the sale of Wärtsilä’s shares in Sato Oyj.