Wärtsilä’s purpose is to enable sustainable societies with smart technology. The demand for clean and flexible energy, and the need for efficient and safe transportation are increasingly affecting the way that customers operate. This forms the basis for Wärtsilä’s Smart Marine and Smart Energy visions. With an integrated portfolio of services, systems and products that covers customer needs across the full lifecycle, Wärtsilä is well positioned to respond to the demand for energy efficient and innovative solutions. Strong emphasis is given to optimising installation performance, using data analytics and artificial intelligence to support customer business decisions. Wärtsilä’s digital transformation will provide enhanced customer value through an increased focus on collaboration and knowledge sharing. A strong presence in key markets and a superior global service network support the company’s profitable growth ambitions.
With its flexible production and supply chain management, Wärtsilä constantly seeks new ways to maintain high quality and cost efficiency - often in co-operation with customers and leading industrial partners. The investments in R&D and the focus on digitalisation create a strong foundation for securing and strengthening the company’s position at the forefront of market innovation. This innovative culture, together with a constant emphasis on safety, diversity, and high ethical standards, attracts skilled and committed people and creates the basis for a high performing organisation. The implementation of operational excellence ensures that Wärtsilä is easy to do business with, and drives increased productivity and efficiencies for its customers.
Strategy implementation in 2018
Wärtsilä introduced several new concepts and solutions during 2018 to support the realisation of its strategy. The launch of the Smart Energy vision, which emphasises leading the industry’s transformation towards a future that utilises 100% renewable energy with flexible capacity as the enabler, was followed up by the introduction of new solutions for the integration of renewables and storage. The expansion of renewable energy was evidenced with major contracts awarded to Wärtsilä from Australia and the USA. In the marine industry, the acquisition of Transas was a key step in further strengthening Wärtsilä’s offering of smart solutions. Significant advances made in intelligent shipping included the successful testing of an automated dock-to-dock concept, and a project launched for developing a harbour tug with autonomous navigation.
Collaboration and knowledge sharing, both within the Group and externally with partners, suppliers and customers, is central for developing the smart technologies needed to meet the changing market requirements. In this context, the decision to build a new centre for research, development and production in Vaasa, Finland was a key milestone of the year.
The focus on digitalising Wärtsilä’s operations and customer offering continued. During the year, Wärtsilä opened an Acceleration Centre in Singapore with the aim of promoting innovation and collaboration with industry, academia, and local partners to strengthen and develop Singapore’s maritime ecosystem. Wärtsilä also announced a partnership with the cyber security company Templar Executives to establish a cyber academy offering courses designed to support and enhance the collective cyber maturity of the wider shipping community. The partnership introduced MCERT, an international cyber intelligence and incident support platform that enhances cyber resilience for the maritime ecosystem.
To promote a high performance culture, Wärtsilä has continued its leadership development programmes in many areas. Since the launch of the Operational Excellence Academy in 2016, nearly 2,000 managers and employees have participated in operational excellence learning modules. The academy was established to ensure that continuous improvement becomes an integrated part of the company culture and way of working. During the year Wärtsilä launched the company culture initiative Leap and the WeLeap app to accelerate the developments of digital competencies throughout the company. Since its introduction in June, the online learning portal has had over 3,300 users. Furthermore, with particular attention to the ongoing digital transformation, a new recruitment system was taken into use with the aim of attracting new talent, improving the candidates’ experience, and promoting Wärtsilä’s employer brand. MyVoice, Wärtsilä’s employee engagement survey, was also updated to better meet the company’s needs. The renewed survey emphasises engagement and motivation, and is completely online and available on mobile devices.
The health and safety of personnel is a priority for Wärtsilä, and zero lost-time injuries continues to be the company’s global target. After successive years of improvement in this area, the lost-time injury frequency for the year 2018 increased slightly to 2.50 (2.48). Further strengthening safety leadership within the company has been an area of focus, and by the end of the year 3,200 Wärtsilä leaders had completed a full day safety leadership workshop. The fourth global Safety Day was arranged under the theme ‘On the Road’, with the aim of raising awareness of risks and supporting employees in making safer choices when travelling.
Wärtsilä’s long-term financial target is to grow faster than global GDP, and to maintain its operating profit margin between 14% at the peak of the cycle and 10% at the trough. Furthermore, the target is to maintain gearing below 0.50, and to pay a dividend of at least 50% of earnings per share over the cycle.
Wärtsilä’s performance in 2018 was in line with its long-term targets. Net sales increased by 5%, bringing Wärtsilä’s 5-year compound annual growth rate to 2.4%. The global real GDP is estimated to have increased by 3.7% in 2018, giving a 5-year compound annual growth rate of 2.0%. The comparable operating result was 11.2% of net sales. Gearing was 0.14 and the Board of Directors' proposed dividend of EUR 0.48 per share represents 73.7% of operational earnings.
|Target||Development in 2018||Development in 2017, restated|
|Net sales growth faster than global GDP||5% increase||3% increase|
|Comparable operating result margin between 10% and 14%||11.2%||11.7%|
|Gearing below 0.50||0.14||0.10|
|Dividend payment at least 50% of earnings per share over the cycle||73.7%1||70.8%|
|1 Proposal of the Board of Directors.|
|Figures in the comparison period 2017 have been restated due to the adoption of IFRS 15.|