Slightly improved sentiment in challenging power generation markets
Power generation market activity was stable in the first quarter of 2016. In the emerging markets, growth in electricity demand supported power plant investments, while demand continued to be more limited in the industrialised world. The competitive environment remained challenging, as excess manufacturing capacity has caused engine manufacturers to focus more on the power plant sector. Wärtsilä’s power plant quotation activity was satisfactory in the first quarter of 2016, and remained concentrated on multi-fuel and natural gas based installations.
Energy Solutions market share
In 2015, global orders for natural gas and liquid fuel power plants of up to 500 MW totalled 29.5 GW (23.4), an increase of 26% from the previous year. Wärtsilä’s market share was 8.3% (10.7). The growth in market volumes came primarily from a handful of large orders from China and Iraq, with combined project sizes of over 500 MW. Global orders include all gas turbine and Wärtsilä orders with prime movers over 5 MW in size.
Limited demand for new vessels
During the first quarter of 2016, 77 contracts for new vessels were registered (222). The slowdown in contracting activity related mainly to the merchant markets, where weak freight rates and overcapacity adversely affected the ordering of containerships, bulkers, and gas carriers. Furthermore, the demand for new units in the offshore market remained sluggish, as depressed oil prices continued to limit investments in exploration and development. The level of contracting of cruise ships, ferries and RoRo vessels was, however, good.
In terms of compensated gross tonnage, contracting activity was more evenly distributed outside the traditional top three shipbuilding countries. China secured 49%, and South Korea 7% of the confirmed contracts, while France and Italy secured 14% and 9% respectively, mainly resulting from the increased number of cruise vessels within the contracting mix.
Marine Solutions market shares
Wärtsilä’s share of the medium-speed main engine market was 60% (59% at the end of the previous quarter). The market share in auxiliary engines was 13% (12% at the end of the previous quarter).
Steady development in the service markets
The service markets developed steadily during the first quarter. Service demand from marine customers was healthy, with a particularly favourable development in the merchant and cruise segments. However, low oil prices continued to create challenges in certain offshore markets. Demand for power plant related services was stable. The most positive development was seen in West Africa, while lower utilisation of plants under long-term agreements affected service activity in Brazil.