2015 was in many ways a successful year for Wärtsilä. Net sales and profitability grew steadily from the previous year as a result of the Company’s well-positioned offering, its growing Services business, and the focus on continuous improvement. Given the developments in our market environment, we can be pleased with our performance.
Conditions in the power generation markets were challenging. The decline in our Energy Solutions order intake reflected hesitancy on the part of our customers to commit to investment decisions in the wake of continued macro-economic uncertainty. Nevertheless, industrialisation and changing demographics continue to drive growth in electricity consumption in the emerging markets, and the increasing share of renewables within the energy mix raises the need for dynamic balancing power. The flexibility and efficiency of our power plant offering positions us well to benefit from the trend towards decentralised, sustainable power production.
In the marine markets, contracting activity remained under pressure. Low oil prices reduced exploration and development activities, which resulted in a sharp decline in demand for offshore vessels. At the same time, the shipping industry continues to suffer from overcapacity and low freight rates. While our broad market exposure and extensive offering has enabled us to navigate the current shipbuilding cycle relatively well, we need the flexibility to adapt to changes in market dynamics. Therefore, during the summer, we announced measures to realign our Marine Solutions organisation. The decision to adjust capacity is never made lightly, but it became necessary in order to maintain our competitive position in the global market.
Services' net sales reached an all-time high level of EUR 2,184 million.
The Services business was a key contributor to our improved financial performance. We have worked actively to develop a more targeted sales approach, and to enhance our value proposition, in order to achieve our growth ambition for this business area. The 13% growth in Services' net sales clearly demonstrates that our efforts have paid off.
Environmental awareness and changing energy needs are increasingly influencing investments in the markets in which we operate. During the summer, we revised our strategy and mission to reflect these changing industry dynamics. Our aim is to shape the marine and energy markets with advanced technologies and focus on lifecycle performance to enhance our customers’ businesses and benefit the environment. We seek growth by offering innovative and energy efficient lifecycle solutions, as well as by leveraging our leading position in gas based technology. Digitalisation will support our growth ambition, as we utilise the increasing amount of data available to optimise our customers’ operations and equipment, as well as our own internal processes and performance.
During 2015, our digital presence was expanded by the launch of a new digital service portfolio as well as by the acquisition of L-3 Marine Systems International.
The emphasis we place on sustainable innovations becomes increasingly important as the regulatory environment intensifies. The agreement reached during the Paris Climate Conference last fall was a clear milestone in the universal effort to limit global warming. In the marine industry, the ratification of the Ballast Water Convention is close at hand, and the sulphur directive has been implemented in environmentally controlled areas as of the beginning of 2015. Our R&D activities, which represent 2.6% of net sales, are focused on developing clean technologies to support our customers in improving the environmental performance and efficiency of their installations.
Attracting and retaining skilled and committed people is central to our success.
Our aim is to foster an inclusive corporate culture, emphasising diversity and high ethical standards. In this context, we are committed to supporting the UN Global Compact and its principles with respect to human rights, labour, the environment, and anti-corruption. Ensuring the safety of our personnel is our priority and I am pleased that we have continued to move steadily closer to our on-going target of zero lost-time injuries.
We expect the market environment to remain more or less unchanged in 2016. Nevertheless, we anticipate modest growth in sales and profitability based on our solid order book and pipeline.
I would like to take this opportunity to thank our shareholders for your confidence in our future development, our customers for your trust in our products and services, and last but not least, the entire staff of Wärtsilä for your commitment towards reaching our common goals.
President & CEO
|Net sales||5 029||1 590||1 222||1 230||988||4 779||4 607|
|Energy Solutions||1 126||374||243||327||182||1 138||1 459|
|Marine Solutions||1 720||598||448||354||321||1 702||1 309|
|Services||2 184||619||531||548||485||1 939||1 842|
|Depreciation, amortisation and impairment||-124||-33||-32||-30||-29||-115||-120|
|Operating result1, %||12.2||13.5||13.1||11.1||10.1||11.9||12.1|
|Profit before taxes||553||199||132||140||82||494||544|
|Earnings per share, EUR||2.25||0.79||0.49||0.54||0.43||1.76||1.98|
|Order intake||4 932||1 403||1 086||1 159||1 285||5 084||4 821|
|Balance sheet total||5 589||5 589||5 609||5 622||5 271||5 280||5 209|
|Interest-bearing liabilities, gross||724||724||778||779||648||666||665|
|Cash and cash equivalents||334||334||250||269||382||571||388|
|ROI, continuing operations, %||21.0||21.0||20.3||20.8||22.0||20.3||22.6|
|Order book, end of period||4 882||4 882||5 112||5 325||4 931||4 530||4 311|
|Year-end market capitalisation||8 314||-||-||-||-||7 315||7 055|
|Personnel, number at end of period||18 856||18 856||19 237||19 427||17 707||17 717||18 315|
|1||Figures exclude non-recurring items.|
|*||Figures related to the statement of income have been restated due to the two-stroke business being classified as discontinued operations.|