Steady development in the service markets
Service markets were stable during the first half of the year. Activity in the cruise and gas carrier segments was on a healthy level, which compensated for continued challenges in the offshore and conventional merchant markets. Demand for power plant related services was steady. Customers in both end markets continued to show interest in long-term service agreements.
Power generation markets shifting towards flexible technologies
The demand for Wärtsilä’s power generation solutions was good in the first half of 2017. Electricity demand in the emerging markets continued to increase, and the growing share of intermittent renewable sources in several developed markets drove investments in flexible generation capacity. These encouraging developments are counterbalanced with strong competition in the liquid and gas fuelled power generation markets, as well as by the potential impacts of geopolitical and macroeconomic uncertainties.
Energy Solutions’ market share
For the twelve months ending in March, global orders for natural gas and liquid fuel power plants of up to 500 MW increased by 9% to 28.4 GW (26.1 GW at the end of the previous quarter). Wärtsilä's market share was 12% (13). Global orders include all gas turbine and Wärtsilä orders with prime movers over 5 MW in size.
Marine market environment remains challenging
During the first half of 2017, 376 contracts for new vessels were registered (378). Despite some signs of a gradual recovery in demand, the marine industry continues to be burdened by weak utilisation levels, overcapacity, low freight rates, and low oil and gas prices. LNG carrier contracting improved somewhat thanks to the positive sentiment in the FSRU market and project driven investments. Contracting activity remained on a good level in niche vessel segments, such as cruise, ferry, special vessels and Ro-Ro, where newbuild investments were supported by higher earnings, ageing fleets, planned regulatory developments, and attractive newbuilding prices.
In terms of compensated gross tonnage, China and South Korea remained the largest shipbuilding nations with 32% and 31% of all confirmed contracts respectively. Italy and Finland accounted for 8% and 7% of the global total, thanks to the continued healthy activity in the cruise market.
Marine Solutions’ market shares
Wärtsilä’s share of the medium-speed main engine market was 40% (45% at the end of the previous quarter). The market share in auxiliary engines decreased to 8% (20% at the end of the previous quarter). In the comparison period, Wärtsilä’s auxiliary engine market share was boosted by large orders placed in the containership and LNG carrier segments. Wärtsilä is well positioned in other key product and solution areas, such as electrical and automation systems and gas systems.