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The year 2018

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Market development

Steady development in the service markets

Service market activity improved somewhat during 2018, supported by a seasonal pick-up in demand towards the end of the year. In the marine markets, the cruise and ferry segment developed positively and the high level of interest in environmental retrofit projects, combined with improved service volume in the gas carrier segment, supported activity in the merchant segment. The demand for services in the oil and gas industry improved, while conditions in the offshore markets remained challenging. Power plant related service activities were steady across all geographical areas.

Power generation markets stable with continued interest in flexible capacity

The interest in flexible power capacity in the form of generation and storage solutions is growing. Costs of solar and wind energy continue to decrease, and it has become more economical to replace traditional baseload capacity with renewables and flexibility. Utilities are assessing how to integrate such energy sources into their generation portfolios, and are updating their long-term investment plans accordingly. Currency volatility in the emerging markets, which has resulted in slower decision-making in certain countries, eased towards the end of the year. At the same time, the continued need for reliable capacity to support economic growth and alleviate power shortages supported power plant investments. 

For the twelve months period ending in September, Wärtsilä’s market share in the <500 MW market segment decreased to 13% (17). Global orders for natural gas and liquid fuel power plants remained stable at 20.8 GW (20.7). Global orders include all gas turbine and Wärtsilä orders with prime movers over 5 MW in size. The data is gathered from the McCoy Power Report.

Gradual recovery in marine markets with strong demand for environmental solutions

During the year 2018, 1.237 contracts for new vessels were registered (1.037 excluding late contracting). Market conditions in the LNG carrier segment improved, with vessel contracting being driven by increasing spot rates and the trend towards more environmentally friendly fuels. Investments in containerships and bulkers were partly limited by high fuel costs and global tariff concerns. Contracting activity was solid in the cruise segment, being supported by the need for modern capacity to match the expected growth in cruise passenger numbers. Investments in the ferry segment were mainly related to fleet replacements. Fluctuating oil prices created uncertainty in the offshore industry, and overcapacity continued to limit newbuild investments. Environmental compliance emerged as a key theme in shipping during the year, and the IMO 2020 sulphur regulations led to an uptake in orders for exhaust gas cleaning systems.

In terms of compensated gross tonnage, South Korea and China remained the largest shipbuilding nations with 43% and 32% of all confirmed contracts respectively. Japan and Italy accounted for 13% and 3% of the global total.

Order intake

Wärtsilä’s order intake for 2018 increased by 12% to EUR 6,307 million (5,644). The book-to-bill ratio was 1.22 (1.15).

Services’ order intake increased by 16% to EUR 3,086 million (2,670), thanks to the strong demand for exhaust gas cleaning retrofit projects and continued demand for long-term service agreements. In the marine markets, highlights of the year included a EUR 170 million order for hybrid scrubber systems and retrofit services from a major European container shipping company, as well as the extension of Wärtsilä’s service agreement with Royal Caribbean to the year 2028. Important agreements signed in the energy markets included a 10-year asset management agreement for a power station in Papua New Guinea, as well a three-year operation and maintenance agreement for a 130 MW power plant delivered to Mexico.

Energy Solutions’ order amounted to EUR 1,511 million (1,685), which represents a 10% decrease from the previous year. Asia was the most active region in terms of ordering activity, followed by the Americas. Demand was good in Bangladesh, where the government continues its efforts to increase the number of households with access to electricity, as well as in growing economies such as Indonesia. In the developed markets, Wärtsilä received major contracts in Australia and the USA to support the expansion of renewable energy. Wärtsilä also received several energy storage and grid management software orders during the year.

Marine Solutions’ order intake increased by 33% to EUR 1,710 million (1,288). Several orders were received from major cruise companies, contributing to strong order activity in the cruise and ferry segment, which represented 30% of the order intake. The demand for environmental solutions continued throughout the year, largely as a result of the approaching IMO 2020 regulations. A considerable number of scrubber systems were ordered for newbuild vessels, particularly in the merchant segment, which amounted to 28% of the order intake. Other significant orders received in this segment included the supply of volatile organic compounds (VOC) recovery technology, LNG fuel gas handling systems, and the auxiliary engines for two new shuttle tankers being built for Singapore based AET Tankers, as well as solutions for shuttle tankers being built for TEEKAY. The gas carrier’s share of the order intake was 14%, while special vessels represented 8%, navy 8%, and offshore 7% of the total. Other orders accounted for 5%.

Order intake in joint ventures

Order intake in the Wärtsilä Hyundai Engine Company Ltd joint venture company in South Korea, and in the Wärtsilä Qiyao Diesel Company Ltd, CSSC Wärtsilä Engine Company Ltd. and CSSC Wärtsilä Electrical & Automation Company Ltd. joint venture companies in China totalled EUR 156 million (70). The results of these companies are reported as a share of the result of associates and joint ventures. 

Order book

The total order book at the end of the financial period amounted to EUR 6,166 million (5,100), an increase of 21%. The Services order book totalled EUR 1,878 million (1,220), which is 54% higher than at the same time last year thanks to the increased demand for exhaust gas cleaning retrofit projects and continued interest in long-term service agreements. For service agreements, only the expected net sales for the next 24 months are included in the Services order book. The Energy Solutions order book was stable at EUR 1,871 million (1,871), while the Marine Solutions order book increased by 20% to EUR 2,417 million (2,009).

Net sales

Wärtsilä’s net sales for 2018 amounted to EUR 5,174 million (4,911), an increase of 5% over the corresponding period last year thanks largely to higher delivery volumes in the equipment businesses.

Net sales from the Services business was solid at EUR 2,426 million (2,407). Adjusting for the effects of currency translation, Services’ net sales increased by 4%. Net sales for Energy Solutions totalled EUR 1,517 million (1,401), an increase of 8%. Marine Solutions’ net sales increased by 12% to EUR 1,232 million (1,104). Of the total net sales, Services accounted for 47%, Energy Solutions for 29%, and Marine Solutions for 24%.

Of Wärtsilä’s net sales, approximately 67% was EUR denominated, 21% USD denominated, with the remainder being split between several currencies.

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Megawatts delivered
2018 2017 Change %
Energy Solutions engines 3 706 3 119 19%
Marine Solutions engines 1 087 1 203 -10%
Wärtsilä total 4 793 4 322 11%
By joint ventures 756 601 26%
Engine deliveries total 5 549 4 923 13%

Operating result and profitability

The operating result for 2018 was EUR 543 million (538), which represents 10.5% of net sales (11.0). The group sales mix favoured equipment deliveries, which, together with increased costs related to research, development and digitalisation, burdened profitability. The comparable operating result was EUR 577 million (576), or 11.2% of net sales (11.7). Items affecting comparability amounted to EUR 35 million (37), of which EUR 29 million (36) was related to restructuring programmes and EUR 6 million (2) to acquisitions and other costs. The comparable adjusted EBITA was EUR 621 million (612), or 12.0% of net sales (12.5). Purchase price allocation amortisation amounted to EUR 43 million (36).

The profit figures include a provision amounting to approximately EUR 70 million to cover cost overruns and project delays in two nuclear power plant back-up genset projects. The need for additional provisions was identified during a detailed review of the company’s nuclear power plant projects, following Wärtsilä’s decision to cease providing new equipment to this segment. The negative impact to the result was partially offset by a capital gain of EUR 27 million from the divestment of the pumps business and the release of a EUR 21 million provision related to ongoing long-term incentive schemes. Wärtsilä’s three-year long-term incentive schemes are tied to the development of the company's share price, and they apply to approximately 100 company executives.

Financial items amounted to EUR -40 million (-47). Net interest totalled EUR -7 million (-8). Profit before taxes amounted to EUR 502 million (491). Taxes amounted to EUR 116 million (117), implying an effective tax rate of 23.1% (23.7). The profit for the financial period amounted to EUR 386 million (375). Earnings per share were EUR 0.65 (0.63) and the equity per share was EUR 4.09 (3.97). The return on investments (ROI) was 18.1% (18.5), while return on equity (ROE) was 16.1% (16.0).

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Balance sheet, financing and cash flow

Wärtsilä’s operating cash flow totalled EUR 470 million (430) in 2018. At the end of the financial period, working capital totalled EUR 581 million (563), a decrease of EUR 201 million from the end of September 2018. Advances received at the end of the period totalled EUR 584 million (522). At the end of September, advances totalled EUR 557 million. Cash and cash equivalents at the end of the period amounted to EUR 487 million (379). Unutilised Committed Credit Facilities totalled EUR 640 million (765).

Wärtsilä had interest-bearing debt totalling EUR 823 million (619) at the end of December 2018. The total amount of short-term debt maturing within the next 12 months was EUR 74 million. Long-term loans amounted to EUR 748 million. Net interest-bearing debt totalled EUR 333 million (234) and gearing was 0.14 (0.10).

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Capital expenditure

Capital expenditure related to intangible assets and property, plant, and equipment amounted to EUR 110 million (64) in 2018. Capital expenditure related to acquisitions and investments in joint ventures totalled EUR 196 million (191). Depreciation, amortisation, and impairment for the financial period amounted to EUR 130 million (134).

In 2019, capital expenditure related to intangible assets and property, plant, and equipment is expected to be below depreciation and amortisation.

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Acquisitions and divestments

In February, Wärtsilä announced the expansion of its QuantiServ service offering with the acquisition of Lock-n-Stitch Inc., an American engineering company specialised in cast iron repairs. The acquisition strengthens Wärtsilä’s service portfolio for customers operating multiple brands. Wärtsilä also completed the acquisition of Trident BV, a Netherlands based company specialised in underwater ship maintenance, inspection, and repair services. This acquisition enables Wärtsilä to become a leading global operator in the underwater services market. Further supporting the growth of Wärtsilä’s underwater services was the acquisition in October of Burriel Navarro, S.L, a company operating in underwater services in the main ports of Spain.

In March, Wärtsilä announced the acquisition of Transas, a global market leader in marine navigation solutions, professional training and simulation services, ship traffic control, as well as in monitoring and support. The acquisition represents a considerable step forward towards the realisation of Wärtsilä’s Smart Marine vision, whereby smart vessels connect with smart ports and beyond to deliver three fundamental industry benefits: maximising the use of resources and operational efficiency, minimising environmental impact and risk, and achieving the highest levels of safety and security. Valued at EUR 210 million (enterprise value), the transaction closed in May 2018.

In October, Wärtsilä divested its pumps business to Solix Group, a Scandinavian investment company with offices in Copenhagen, Denmark, and Malmö, Sweden. Wärtsilä Pumps has belonged to the Wärtsilä Marine Solutions organisation and became part of the company along with the acquisition of Hamworthy in 2012. The divestment enables Wärtsilä to devote greater focus to its Smart Marine vision.

Strategic projects, partnerships, and joint ventures 

In January, Wärtsilä and Schneider Electric signed an agreement to collaborate on data centre projects. The objective of the agreement is to work together to open markets for innovative data centre energy optimisation solutions, focusing on hyperscale projects having an electrical load of at least 10 MW. Wärtsilä will provide the power generation plants, whereas Schneider Electric will focus on energy distribution optimisation.

In April, Wärtsilä announced a partnership with the cyber security company Templar Executives to establish a world-class cyber academy in Singapore. The academy will offer courses designed to support and enhance the collective cyber maturity of the wider shipping community, notably operators and owners. Wärtsilä has also partnered with the Maritime and Port Authority of Singapore to promote maritime innovation and R&D. The partnership covers four different streams: digital acceleration, cyber-physical security, intelligent vessels, and port operations.

In June, Wärtsilä and Hyundai Motor Group signed a technology and commercial partnership contract designed to utilise second-life electric vehicle (EV) batteries for the growing energy storage market. The partnership will target advanced energy storage products and platforms that maximise Hyundai’s second-life EV batteries to be commercialised via Wärtsilä’s existing customer and channel networks throughout 178 countries globally. 

In August, Wärtsilä announced that it will build a new centre of research, product development and production, the Smart Technology Hub, in Vaasa, Finland. The hub will be unique in its field, enabling more agile, more efficient testing and product development of solutions for the maritime, oil and gas industries, as well as new energy systems. As a part of the project, Wärtsilä will invest EUR 83 million in modern testing and production technology for the hub. The majority of these costs will materialise in 2020. The total investment in the Smart Technology Hub will be in the region of EUR 200 million, consisting of office and factory buildings, logistics and infrastructure.

In November, Wärtsilä, Finland’s Lappeenranta University of Technology (LUT), and Nebraska Public Power District (NPPD), the largest electricity utility in the state of Nebraska, signed a Memorandum of Understanding (MoU) for the study of the development of a business case for the use of alternative fuels with Wärtsilä generating sets. The aim of the business case is to achieve a technically and commercially viable solution, allowing to proceed with an industrial scale pilot project.

In December, Wärtsilä introduced its Innovation Community Initiative together with Tieto, St1, Fortum, and Demos Helsinki, with the aim of accelerating the global energy sector’s transition towards more sustainable energy generation. The community will provide an arena to study, improve, experiment, validate and bring to market new innovations that challenge current energy system paradigms.

Research and development, product launches

Research and development expenses totalled EUR 165 million (141) in 2018, which represents 3.2% of net sales (2.9). The key focus areas included digitalisation, efficiency improvement, fuel flexibility, and the reduction of environmental impact.

In the marine markets, Wärtsilä completed a series of test procedures related to its automated dock-to-dock solution during the year. The auto-docking tests culminated in autonomous operation being utilised uninterrupted for the entire route of the Norwegian operator Norled’s 83-metre long ferry ‘Folgefonn’. Developments in the area of environmental solutions included type approval being received for the Aquarius EC ballast water management system by the United States Coastguard (USCG), as well as the completion of all testing processes required for USCG approval for the Aquarius UV ballast water management system. In October, Wärtsilä inaugurated its new Hybrid Centre. The facility represents an innovative concept that will enable further development and deployment of the Wärtsilä HY hybrid power module, while at the same time providing customers with the possibility to experience the benefits of the Wärtsilä HY. It will also be used to train crews and provide hands-on experience for technicians. Products launched during the year included the new Nacos Platinum solid state S-Band radar system, as well as the first Wärtsilä-branded high-speed engine. The Wärtsilä 14 is a compact engine designed to fit requirements for limited space and weight, lower capital expense, compliance with current and future global emission regulations, and to provide customers with improved efficiency, safety, and environmental sustainability. 

In the energy markets, June saw the launch of Wärtsilä’s new solar PV and storage hybrid solution. The Wärtsilä Hybrid Solar integrates engines, solar PV generation, and storage to deliver a solution that is climate-friendly, with increased resilience and efficiencies, and that can be supported by a power producer’s existing grid infrastructure. A critical component in maximising the value of this hybrid solution is the GEMS software and controls platform developed by Greensmith Energy, a Wärtsilä company. In September, GridSolv, an advanced, modularised storage solution designed to offer maximum flexibility and speed of deployment, was introduced. The solution architecture supports both standalone deployments, as well as hybrid solutions with thermal or renewable generation assets. The latest generation of Wärtsilä’s advanced energy management software platform, the GEMS 6, was released in December. GEMS is deployed across more than 70 grid-scale systems in nine countries, and is integrated with a multitude of thermal and renewable generation assets, as well as load and weather forecasting data.

During the year, Wärtsilä, together with Templar Executives, introduced MCERT, an international cyber intelligence and incident support platform enhancing cyber resilience for the entire maritime ecosystem. It provides international intelligence feeds, advice and support, including real-time assistance to members on cyber attacks and incidents, and a cyber security reporting portal for its members. The MCERT operates from the Wärtsilä Acceleration Centre facilities in Singapore, which was launched during the year.

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Personnel

Wärtsilä had 19,294 (18,065) employees at the end of December 2018. On average, the number of personnel for January-December 2018 totalled 18,899 (17,866). The increase in the number of employees relates mainly to the acquisition of Transas. Services employed 11,322 (11,234) people, Energy Solutions 1,171 (1,038), and Marine Solutions 5,995 (5,235).

Of Wärtsilä’s total number of employees, 20% (20) were located in Finland and 40% (38) elsewhere in Europe. Personnel employed in Asia represented 24% (27) of the total, personnel in the Americas 11% (11), and personnel in other countries 4% (4).

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Changes in management

The following appointments were made to the Board of Management of Wärtsilä Corporation in 2018:

Mr Marco Wirén (52), M.Sc. (Econ.), was appointed President of Energy Solutions, Executive Vice President, and a member of the Board of Management of Wärtsilä Corporation, effective from 1 October 2018. In this position, he is responsible for Wärtsilä's Energy Solutions business globally, and will report to President & CEO Jaakko Eskola. He succeeds Mr Javier Cavada Camino, who left Wärtsilä to become President & CEO of the London-based energy storage company, Highview Power.

Mr Arjen Berends (50), MBA, was appointed Chief Financial Officer, Executive Vice President and a member of the Board of Management of Wärtsilä Corporation, effective from 1 October 2018. He reports to President & CEO Jaakko Eskola.

Wärtsilä’s new organisational structure, formed around two business areas that incorporate both newbuild activities and services, became operational on 1 January 2019. Roger Holm, previously President of Marine Solutions, was appointed to lead Wärtsilä Marine Business and President of Energy Solutions Marco Wirén was appointed to lead Wärtsilä Energy Business. Mr Pierpaolo Barbone (61), President of Services, EVP and Deputy to the CEO, left Wärtsilä at the end of 2018 to pursue opportunities outside the company. 

Non-financial report

Increasing environmental awareness is resulting in fundamental changes in both the marine and energy industries. Thanks to its various technologies and specialised services, Wärtsilä is well positioned to reduce exhaust emissions and the use of natural resources, and to support its customers in preparing for new regulatory requirements. R&D efforts continue to focus on the development of advanced environmental technologies and solutions. Wärtsilä emphasises responsible business conduct, and is committed to supporting the UN Global Compact and its principles with respect to human rights, labour, the environment and anti-corruption.

Responsible business conduct

The Wärtsilä Code of Conduct defines common rules for all employees, and provides guidance on Wärtsilä’s approach to responsible business practices. The Code of Conduct is complemented by group-wide policies, including the Quality, Environmental, Health and Safety Policy, the corporate policy on equal opportunities and fair employment practices, as well as policies related to anti-corruption, compliance reporting, and sourcing and purchasing.

Wärtsilä takes an active approach to the application of the Code of Conduct and promotes its implementation through the effective communication of its contents to its employees. Wärtsilä monitors the application of the Code internally to ensure understanding and commitment throughout the organisation. At the end of 2018, 17,255 employees, covering 90% of the total number of employees, had participated in the Code of Conduct training programme.

Suppliers and business partners are an integral part of the total value chain of the products and services of Wärtsilä. They are expected to conduct their businesses in compliance with the same high legal and ethical standards and business practices as Wärtsilä. Information on Wärtsilä’s requirements is included in supplier agreement templates. 

Environmental performance

Wärtsilä’s main contribution to improved environmental performance lies in providing its customers with reliable and safe technologies and services, which, in addition to enabling environmental compliance, support the sustainable development of the marine and energy industries. Wärtsilä’s products and solutions are designed to operate for up to 30 years. Therefore, focusing R&D efforts on improving the product or system level performance is crucial, as is adopting a lifecycle approach to performance optimisation. In addition to improving the environmental performance of its product and solutions, Wärtsilä also continuously monitors the impact caused by its own activities and targets reduced energy consumption in its facilities.

Wärtsilä's Quality, Environmental, Health and Safety Policy sets principles for managing the environmental impacts of Wärtsilä’s products and services. The potential risks related to environmental matters and climate change are in the areas of regulatory emission restrictions and changes in customer attitudes to using combustion engines and fossil fuels. Risks are managed by focusing on product efficiency improvement and emission reduction in R&D activities, as well as by developing a wide product offering, including technologies related to waste reduction, noise abatement, and effluent and ballast water treatment. During 2018, R&D investments totalled EUR 165 million, which represents 3.2% of net sales. The majority of these investments targeted improved environmental performance. Significant achievements related to sustainable innovation included advances made in the field of intelligent shipping with the successful testing of Wärtsilä’s automated dock-to-dock solution. In the energy markets, Wärtsilä introduced the Wärtsilä Hybrid Solar, an integrated solar PV generation and storage solution, as well as GridSolv, an advanced energy storage solution. 

Social and employee matters

Wärtsilä is a responsible employer, offering employees a workplace where openness, respect, trust, equal opportunities, and scope for personal development prevail. Wärtsilä is a signatory of the UN Global Compact initiative and supports the work-related rights defined by the International Labour Organization (ILO). Wärtsilä's corporate policy on equal opportunities and fair employment practices creates a common framework for employee practices in all Wärtsilä companies. People management processes, tools, and ways of working are developed to ensure consistency across national and organisational boundaries. Wärtsilä has a global job grading system and rewarding principles to ensure transparency and fairness for all employees, which are followed by all the entities in Wärtsilä globally.

The objective of Wärtsilä’s people management strategy is to ensure that the businesses have the required resources, and skilled and motivated people at their disposal. In order to develop their competences, employees are offered a wide variety of internal training courses, including topics like technology, health and safety, language and culture, project management, environment, security, and leadership. The average number of learning days was 2.16 per employee in 2018.

Wärtsilä aims at offering employees and contractors a hazard-free working environment, and at minimising the health and safety risks associated with the use of its products and services. The company’s occupational health and safety principles are defined in the Code of Conduct, the quality, environmental, health and safety (QEHS) policy, and in the directive on environment, health, and safety (EHS). Wärtsilä's units are required to have a management system in place that conforms to the QEHS Policy and the EHS directive. In addition to the management system, Wärtsilä companies apply occupational health and safety programmes as required by local legislation. Wärtsilä’s aim is to reach a long-term goal of zero injuries. In 2018, the corporate lost-time injury frequency rate was 2.50 (2.48).

Respect for human rights

Wärtsilä supports and respects basic human values as outlined in the UN's Universal Declaration of Human Rights. Wärtsilä is also a signatory of the UN Global Compact and is thereby committed to its principles with respect to human rights, labour, the environment and anti-corruption. No employee is allowed to take any action that violates these human rights principles, either directly or indirectly. Wärtsilä does not accept the use of forced labour or child labour in any form. Human and Labour rights are a part of the Code of Conduct training material, and are included in Wärtsilä’s policy on equal opportunities and fair employment practices as well as in the company’s supplier handbook.

Anti-corruption and bribery matters

Wärtsilä's Code of Conduct, Anti-Corruption Policy, and Broker Directive expressly prohibit the company and its employees from offering or accepting any kind of benefit considered a bribe and from taking actions that could give rise to a conflict of interest or breach of loyalty. The instructions make it compulsory to comply with anti-corruption laws of all the countries in which Wärtsilä does or intends to do business and urge the reporting of any cases of corruption and bribery.

Wärtsilä is aware of the risk of being subject to fraud by external business parties, and that the risk of corruption and fraud is heightened in many markets where the company operates. Therefore, full compliance with a stringent anti-corruption regime is required of all employees. An extensive training programme is in place for personnel on anti-corruption principles and applicable legislation as well as the relevant company policies and procedures. By the end of 2018, 90% of Wärtsilä’s employees had participated in anti-corruption trainings. Employees are encouraged to provide feedback and communicate suspected misconduct to line management or directly to the Compliance, Legal Affairs or Internal Audit function. Wärtsilä also has a dedicated tool through which employees can report infringements.

Shares and shareholders

During January-December 2018, the volume of trades on Nasdaq Helsinki was 278,938,159 shares, equivalent to a turnover of EUR 4,754 million. Wärtsilä's shares are also traded on alternative exchanges, such as Turquoise, BATS CXE, and BATS BXE. The total trading volume on these alternative exchanges was 226,474,065 shares.

Wärtsilä shares on Nasdaq Helsinki
31.12.2018 Number of shares and votes Number of shares traded 1-12/2018
WRT1V 591 723 390 278 938 159
1.1. - 31.12.2018 High Low Average1 Close
Share price 19.88 12.75 17.04 13.90
1 Trade-weighted average price
Market capitalisation 31.12.2018 31.12.2017
MEUR 8 222 10 375
Foreign shareholders 31.12.2018 31.12.2017
% 54.5 55.9
Flagging notifications

During 2018, Wärtsilä was informed of the following changes in ownership.

Release date Transaction date Shareholder Threshold Direct holding, % Total holding, %
26.2.2018 23.2.2018 BlackRock, Inc. Above 10% 9.88 10.04
28.2.2018 27.2.2018 BlackRock Investment Management (UK) Limited Below 5% 4.85 6.10
2.3.2018 1.3.2018 BlackRock, Inc. Below 10% 7.13 9.98
8.3.2018 6.3.2018 BlackRock, Inc. Above 10% 6.64 10.01
9.3.2018 8.3.2018 BlackRock, Inc. Below 10% 6.60 9.97
14.3.2018 13.3.2018 BlackRock, Inc. Above 10% 6.69 10.04
19.3.2018 16.3.2018 BlackRock, Inc. Below 10% 8.22 9.66
22.3.2018 21.3.2018 BlackRock Investment Management (UK) Limited Above 5% 5.07 6.03
6.9.2018 5.9.2018 BlackRock Investment Management (UK) Limited Below 5% 4.75 5.78
28.9.2018 27.9.2018 BlackRock Investment Management (UK) Limited Above 5% 5.03 5.14
2.10.2018 1.10.2018 BlackRock Investment Management (UK) Limited Below 5% 4.9999 5.11
3.10.2018 2.10.2018 BlackRock Investment Management (UK) Limited Above 5% 5.04 5.16
5.10.2018 4.10.2018 BlackRock Investment Management (UK) Limited Below 5% 4.99 5.11
8.10.2018 5.10.2018 BlackRock Investment Management (UK) Limited Above 5% 5.04 5.11
16.10.2018 12.10.2018 BlackRock Investment Management (UK) Limited Below 5% 4.98 5.04
18.10.2018 16.10.2018 BlackRock Investment Management (UK) Limited Below 5% - -
23.10.2018 19.10.2018 BlackRock Investment Management (UK) Limited Above 5% 4.98 5.01
24.10.2018 22.10.2018 BlackRock Investment Management (UK) Limited Above 5% 5.005 5.029
25.10.2018 23.10.2018 BlackRock Investment Management (UK) Limited Below 5% - -

Decisions taken by the Annual General Meeting

Wärtsilä Corporation’s Annual General Meeting, held on 8 March 2018, approved the financial statements and discharged the members of the Board of Directors and the company’s President & CEO from liability for the financial year 2017.

The Annual General Meeting decided that the Board of Directors shall have eight members. The following were elected to the Board: Maarit Aarni-Sirviö, Kaj-Gustaf Bergh, Karin Falk, Johan Forssell, Tom Johnstone, Mikael Lilius, Risto Murto and Markus Rauramo. 

The audit firm PricewaterhouseCoopers Oy was elected as the company’s auditor for the year 2018.

Dividend distribution

The Annual General Meeting approved the Board of Directors’ proposal to pay a dividend of EUR 1.38 per share in two instalments. The first instalment of EUR 0.69 per share was paid on 19 March 2018. In accordance with the approved share issue without payment (share split), the second instalment was divided between one old and two new shares so that EUR 0.23 was paid on each share. The second instalment was paid on 27 September 2018. Adjusted to reflect the increased number of shares resulting from the share issue, the dividend amounted to EUR 0.46 per share.

Share issue without payment (Share split)

The Annual General Meeting approved the Board of Directors’ proposal to issue new shares to the shareholders without payment in proportion to their holdings so that two new shares are issued for each share. Thereby, a total of 394,482,260 new shares were issued. The new shares were registered in the trade register on 12 March 2018.

Authorisation to repurchase and distribute the Company’s own shares

The Board of Directors was authorised to resolve to repurchase a maximum of 57,000,000 of the Company’s own shares. The authorisation to repurchase the Company’s own shares shall be valid until the close of the next Annual General Meeting, however no longer than for 18 months from the authorisation of the shareholders’ meeting.

The Board of Directors was authorised to resolve to distribute a maximum of 57,000,000 of the Company’s own shares. The authorisation for the Board of Directors to distribute the Company’s own shares shall be valid for three years from the authorisation of the shareholders’ meeting and it cancels the authorisation given by the General Meeting on 2 March 2017. The Board of Directors was authorised to resolve to whom and in which order the shares will be distributed. The Board of Directors was authorised to decide on the repurchase or distribution of the Company’s own shares otherwise than in proportion to the existing pre-emptive right of the shareholders to purchase the Company’s own shares.

Organisation of the Board of Directors

The Board of Directors of Wärtsilä elected Mikael Lilius as its chairman and Tom Johnstone as the deputy chairman. The Board decided to establish an Audit Committee, a Nomination Committee and a Remuneration Committee. The Board appointed from among its members the following members to the Committees:

Audit Committee: Chairman Markus Rauramo, Maarit Aarni-Sirviö, Risto Murto.
Nomination Committee: Chairman Mikael Lilius, Kaj-Gustaf Bergh, Johan Forssell, Risto Murto.
Remuneration Committee: Chairman Mikael Lilius, Maarit Aarni-Sirviö, Tom Johnstone.

Risks and business uncertainties

In the Services business, slow economic growth and political instability in specific regions are the main risks for demand development. Weakening currencies in certain countries may affect customers’ purchasing power. The challenging conditions in the traditional merchant and offshore markets continue to create uncertainty.

In the power generation markets, fragile economic growth and slow decision-making continue to be the primary risks for demand development. Geopolitical tensions and trade barriers implications, as well as significant currency fluctuations, can result in investment decisions being postponed in certain countries. Price pressure resulting from the prevailing competitive environment remains a risk.

Global trade tensions and macro-economic uncertainty continues to be a concern in the marine industry. The offshore segment remains challenging due to overcapacity and volatile oil price development. Climate change requires increasing efforts to reduce emissions within the shipping industry. However, the enforcement of environmental regulations and potential new regulations are a source of uncertainty. Effective cyber risk management is increasingly important as cyber security has become vital to the operation and management of many safety, security, and protection systems in the shipping environment.

Wärtsilä emphasises a holistic approach to the management of cyber and physical security risks in its internal operations and customer offerings. The company’s cyber security team carries out its operational, governance and compliance activities in line with the IEC62443 and ISO 27k protocols. Such activities include cyber assurance, risk management, detection, a secure software development lifecycle, training, endpoint protection, network security, and cyber advisory services. Wärtsilä has implemented new procedures for storing, processing, and using data in the company’s systems so as to comply with the General Data Protection Regulation. Cyber security was taken into consideration in this implementation.

The Group is a defendant in a number of legal cases that have arisen out of, or are incidental to, the ordinary course of its business. These lawsuits mainly concern issues such as contractual and other liability, labour relations, property damage, and regulatory matters. The Group receives from time to time claims of different amounts and with varying degrees of substantiation. There is currently one unusually sizeable claim. It is the Group’s policy to provide for amounts related to the claims, as well as for litigation and arbitration matters, when an unfavourable outcome is probable, and the amount of the loss can be reasonably estimated.

The Risks and risk management section of this Annual Report contains a more detailed description of Wärtsilä’s risks and business uncertainties.

Events after the reporting period

On 30 January 2019, Wärtsilä announced plans to realign its operations and resources to secure future profitability and competitiveness. The Group-wide programme emphasises sustainable savings and actions that increase customer value. The planned actions include an increased focus on targeted sales activities, developing the agreements-based and “as-a-service” business, reviewing the cost structure, as well as optimising the business portfolio and organisation. The program is expected to lead to a reduction of approximately 1.200 employees globally. The reductions will impact all businesses and support functions. With these actions Wärtsilä seeks annual savings of EUR 100 million. Savings are expected to materialise gradually during the second half of 2019, with full effect by the end of 2020. The non-recurring costs related to the restructuring measures are expected to be EUR 75 million.

Related pages

CEO review

Five years in figures

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