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Annual Report 2013

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Jaakko Eskola, President and CEO

“In terms of Wärtsilä’s operations, 2016 has started in line with our expectations. We continued to advance steadily in our maintenance markets, as reflected by an increase of 3% in Services’ net sales during the first quarter. I am satisfied with this development given the strong volumes in the corresponding period last year. Order intake was on a good level in Marine Solutions, largely due to healthy demand for electrical & automation systems and positive activity in the cruise and ferry segment. Ordering activity was solid also in the Energy Solutions business, but the reduction in power plant deliveries and price pressure in the power generation markets affected Wärtsilä’s overall financial performance. Group net sales declined slightly to EUR 967 million in the first quarter and profitability ended up at 8.7%. Nevertheless, we remain committed to our guidance of modest growth in sales based upon our broad customer offering, our current order book and the demand outlook in the Services business. Furthermore, we expect our continuous focus on cost control and increased efficiency to support an improvement in profitability this year.

We have seen market conditions weakening in our equipment businesses. Despite the somewhat improved sentiment in the power generation markets, the competitive environment remains tough. Furthermore, the combined effect of overcapacity of merchant ships, and a continued lack of demand in the offshore segment, caused vessel contracting to decline in the first quarter. We continue to strive for success despite the prevailing market challenges. Consequently, we have today announced plans to realign our Marine Solutions and Energy Solutions businesses. These adjustments, although unfortunate, are necessary for securing our future competitiveness and performance. In addition, we plan to concentrate more of the engine related R&D activities to Finland with the aim of reducing development cycles.”

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