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Wärtsilä Corporation
Interim report

Wärtsilä Corporation# Interim report

January – September 2018

“Net sales developed well in the third quarter, thanks to the strong growth in newbuild marine and energy deliveries.”

Jaakko Eskola, President & CEO

Q3 Interim report PDF

Good development in net sales

“Wärtsilä's net sales developed well in the third quarter, thanks to the strong growth in newbuild marine and energy deliveries. This, in combination with slower than anticipated development in transactional service volumes, is affecting the group sales mix and burdening profitability.

In the marine industry, the approaching IMO 2020 sulphur regulations have resulted in increased demand for exhaust gas cleaning systems. This boosted order intake in both Marine Solutions and Services. Marine Solutions’ orders were further supported by the continued high level of activity in the cruise and ferry segment. In the energy markets, postponed investment decisions for certain projects adversely affected Energy Solutions’ order intake. Nevertheless, a healthy project pipeline provides confidence in improved activity going forward.

In August, Wärtsilä announced that it will build a new centre for research, development and production, in Vaasa, Finland. When finalised in 2020, this Smart Technology Hub will enable more agile and efficient testing, development, and production of solutions for the maritime, oil and gas, and energy industries. Another key step in the execution of our strategies was the decision to reorganise into two business areas, Wärtsilä Marine Business and Wärtsilä Energy Business, as of the beginning of next year. By forming two business areas that cover both new sales and services, we will enhance customer value through a stronger focus on lifecycle solutions tailored to specific market needs. Customers will also benefit from increased flexibility and even faster response times. I firmly believe that this will support our progression towards our long-term financial targets.”


Jaakko Eskola

President & CEO

Wärtsilä’s prospects for 2018

The demand for Wärtsilä’s services and solutions in 2018 is expected to improve somewhat from the previous year. Demand by business area is anticipated to be as follows:
  • Solid in Services (lowered from good). Although there are growth opportunities in selected regions and segments, the development of transactional service volumes has been slower than anticipated.
  • Good in Energy Solutions. The global shift towards renewable energy sources and increasing electricity demand in the emerging markets are supporting the need for distributed and flexible power capacity, including gas-fired generation, energy storage, and smart integration technology.
  • Good in Marine Solutions. Wärtsilä’s demand outlook is supported by its extensive product mix and broad segment exposure, which compensates for the slow pace of recovery in overall vessel contracting.
Wärtsilä’s current order book for 2018 deliveries is EUR 1,364 million (1,206) and is comprised mainly of equipment deliveries. Services’ business is largely transactional, with only around 30% of its annual net sales coming from the order book.

Third quarter highlights

  • Order intake stable at EUR 1,372 million (1,354)
  • Net sales increased 13% to EUR 1,330 million (1,175)
  • Book-to-bill 1.03 (1.15)
  • Comparable operating result increased to EUR 141 million (131), which represents 10.6% of net sales (11.2)
  • Earnings per share increased to 0.17 euro (0.14)
  • Cash flow from operating activities decreased to EUR 122 million (150)

Highlights of the review period January–September 2018

  • Order intake increased 7% to EUR 4,433 million (4,130)
  • Net sales increased 5% to EUR 3,642 million (3,471)
  • Book-to-bill 1.22 (1.19)
  • Comparable operating result improved to EUR 352 million (335), which represents 9.7% of net sales (9.7)
  • Earnings per share increased to 0.39 euro (0.35)
  • Cash flow from operating activities decreased to EUR 121 million (154)
  • Order book at the end of the period increased 16% to EUR 5,918 million (5,107)

As of 1 January 2018, Wärtsilä has adopted the IFRS 15 Revenue from Contracts with Customers standard by using the full retrospective method. This interim report is published according to the new standard and comparison periods for 2017, including the opening balance sheet, have been restated accordingly. Wärtsilä has also restated the 2017 figures for Marine Solutions and Services, due to an internal transfer of certain service activities. This transfer has no impact on Group totals.

The share issue without payment approved by Wärtsilä’s Annual General Meeting on 8 March 2018 increased the total number of Wärtsilä shares to 591,723,390. The share related figures in the comparison periods have been adjusted to reflect the increased number of shares.

Key figures
MEUR 7-9/2018 Restated
Change 1-9/2018 Restated
Change Restated
Order intake 1 372 1 354 1% 4 433 4 130 7% 5 644
Order book at the end of the period 5 918 5 107 16% 5 100
Net sales 1 330 1 175 13% 3 642 3 471 5% 4 911
Operating result1 141 127 11% 337 316 6% 538
% of net sales 10.6 10.8 9.2 9.1 11.0
Comparable operating result 141 131 7% 352 335 5% 576
% of net sales 10.6 11.2 9.7 9.7 11.7
Comparable adjusted EBITA 152 141 8% 384 362 6% 612
% of net sales 11.5 12.0 10.5 10.4 12.5
Profit before taxes 130 110 18% 308 280 10% 491
Earnings/share, EUR 0.17 0.14 0.39 0.35 0.63
Cash flow from operating activities 122 150 121 154 430
Net interest-bearing debt at the end of the period 647 462 234
Gross capital expenditure 258 176 255
Gearing 0.28 0.20 0.10
¹Items affecting comparability in the third quarter comparison period included costs related to restructuring programmes of EUR 4 million. During the review period January-September 2018 restructuring and acquisition related costs amounted to EUR 15 million (19).


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