Wärtsilä Corporation Interim Report
January – September 2017
"Order intake increased by 19% in the third quarter, thanks to good demand for our energy solutions, a favourable vessel mix and continued interest for long-term service agreements."
Jaakko Eskola, President & CEO
Strong development in order intake
“Wärtsilä’s performance in the third quarter was satisfactory. Although power plant deliveries continued to drive overall sales development, challenges in the offshore segment and low volumes from service projects resulted in lower than expected sales growth in the Services business. Profitability was supported by certain deliveries being brought forward from the fourth quarter to the third. These timetable changes also result in a more even distribution of deliveries between the quarters than in the previous year.
I am pleased with the continued growth in order intake. In addition to good demand for our power generation solutions, we received an order to build our third LNG terminal in Finland, which will be located in Hamina. The project will provide cleaner fuel for both marine transport applications and local industry, thereby demonstrating Wärtsilä’s contribution to the development of sustainable societies. A favourable contracting mix in the marine markets supported order intake growth in Marine Solutions, the highlight being a contract to supply the main engines and exhaust gas cleaning systems to Norwegian Cruise Line’s four new generation cruise ships to be built by Fincantieri. The high level of activity in the cruise segment over the past few years has lengthened delivery times for both yards and equipment suppliers. Finally, the continued demand for long-term service agreements resulted in order intake growth also for Services.
After the third quarter, we announced two acquisitions in our Marine Solutions business. Puregas Solutions will expand our overall reach in the gas value chain by strengthening our position in the biogas liquefaction market. The acquisition of Guidance Marine, on the other hand, represents a further step in our digital transformation. Being a technology leader in sensor solutions relating to dynamic positioning and other vessel control systems, such as collision avoidance and remote control operations, Guidance Marine enhances our frontrunner position in intelligent shipping technologies.”
Wärtsilä's prospects for 2017
The overall development for 2017 is expected to be relatively unchanged from the previous year. Demand by business area is anticipated to be as follows:
- Solid in Services with growth opportunities in selected regions and segments.
- Good in Energy Solutions, thanks to increasing electricity demand in the emerging markets and the global shift towards renewable energy sources, which will support the need for distributed, flexible, gas-fired power generation.
- Solid in Marine Solutions. Despite good order intake growth, the marine market environment remains challenging, as the merchant, gas carrier, and offshore segments continue to suffer from overcapacity and slow trade growth.
Wärtsilä’s current order book for 2017 deliveries is EUR 1,206 million (1,346). Wärtsilä will continue to focus on improving efficiency, which is expected to partially offset lower volumes in the marine markets. The pricing environment in Energy Solutions’ markets has stabilised, but the order book is still impacted by the competitive pressure seen in previous years. The good performance in Services is expected to continue.
- Order intake increased 19% to EUR 1,354 million (1,139)
- Net sales increased 9% to EUR 1,178 million (1,079)
- Book-to-bill reached 1.15 (1.06)
- Comparable operating result increased to EUR 135 million (123), which represents 11.4% of net sales (11.4)
- Earnings per share amounted to 0.43 euro (0.43)
- Cash flow from operating activities decreased to EUR 150 million (189)
Review period January-September 2017
- Order intake increased 15% to EUR 4,130 million (3,604)
- Net sales increased 7% to EUR 3,477 million (3,242)
- Book-to-bill reached 1.19 (1.11)
- Comparable operating result increased to EUR 346 million (330), which represents 10.0% of net sales (10.2)
- Earnings per share increased to 1.10 euro (0.92)
- Cash flow from operating activities decreased to EUR 154 million (378)
- Order book at the end of the period amounted to EUR 5,075 million (5,024)
|Order intake||1 354||1 139||19%||4 130||3 604||15%||4 927|
|Order book at the end of the period||5 075||5 024||1%||4 696|
|Net sales||1 178||1 079||9%||3 477||3 242||7%||4 801|
|% of net sales||11.1||11.3||9.4||9.3||11.1|
|Comparable operating result||135||123||9%||346||330||5%||583|
|% of net sales||11.4||11.4||10.0||10.2||12.1|
|Comparable adjusted EBITA||144||132||9%||373||356||5%||618|
|% of net sales||12.2||12.3||10.7||11.0||12.9|
|Profit before taxes||114||115||-1%||291||253||15%||479|
|Cash flow from operating activities||150||189||154||378||613|
|Net interest-bearing debt at the end of the period||432||384||150|
|Gross capital expenditure||176||126||146|
|1Items affecting comparability in the third quarter of 2017 included costs related to restructuring programmes of EUR 4 million (2). During the review period January-September 2017 restructuring costs amounted to EUR 19 million (29).|