Risks and business uncertainties
In the Power Plants business uncertainty in the financial markets and significant currency fluctuations can impact financing availability and the timing of bigger projects. Geopolitical tension may slow customer decision-making in specific regions. In the industrial segment the lack of demand for commodities, e.g. minerals, may also affect investment decisions. Low oil prices can affect investment decisions in oil and gas based economies.
The business environment for the shipping and shipbuilding industry remains challenging. The weak short term global economic outlook, overcapacity, and low demand for cargo tonnage limit freight rate recovery within the traditional shipping markets. Low oil prices, slow growth in oil demand, and increasing exploration and production costs may further impact offshore investments.
Continued risks in the global economy and political instability in specific 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. There are currently two claims, which are unusually sizable. 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 annual report contains a more specific description of Wärtsilä’s risks and risk management.