Improved sentiment in the power generation market
Growth in electricity demand and changes in energy policies have driven interest in Wärtsilä’s power generation solutions during January-September 2016. Emerging markets remained active, while in the industrialised world economic uncertainty and stagnated electricity demand limited investments in new power generation capacity. Despite the more positive market signals in certain regions, including rapidly increasing renewable capacity, macroeconomic uncertainty and tight competition will continue to make the market for liquid and gas fuelled power generation challenging.
Energy Solutions market share
In the first half of 2016, global orders for natural gas and liquid fuel power plants of up to 500 MW totalled 11.8 GW (12.6), a decrease of 6% from the previous year. Wärtsilä’s market share increased to 16% (10). Global orders include all gas turbine and Wärtsilä orders with prime movers over 5 MW in size.
Weak demand in marine markets
Contracting volumes for the period January-September clearly reflect the weak marine market environment. By the end of September, only 349 contracts for new vessels were registered compared to 1,356 contracts in the previous year. The decline in vessel orders primarily affected the traditional merchant segment, while the demand for gas carriers and offshore vessels remained low. Overcapacity, weak freight rates, and low oil and gas prices continued to burden these segments. The contracting of cruise ships, ferries, and ro-ro vessels stayed on a good level, supported by fleet renewals, attractive newbuilding prices, and healthy earnings in the ro-ro segment.
In terms of compensated gross tonnage, China remained the largest shipbuilding nation, with 37% of all contracts confirmed in January-September, while South Korea accounted for 14% and Japan for 12%. The high demand for cruise vessels has driven a pick-up in activity for European yards, where Germany’s share of the confirmed contracts was 11%, and Italy’s 10%.
Marine Solutions market shares
Wärtsilä’s share of the medium-speed main engine market was 50% (58% at the end of the previous quarter). The market share in auxiliary engines was 16% (13% at the end of the previous quarter).
Stable activity in the service markets
Activity in the service markets has stabilised during January-September 2016. The demand for services in the traditional merchant markets developed at a slower pace than in the previous year, and challenges in certain regions continued to affect the interest for offshore services. The demand for power plant related services was healthy, with the exception of Brazil where the utilisation of power plants remained low.