“2018 was marked by positive order intake development resulting from improved demand in the marine newbuild and service markets. Environmental considerations emerged as a key theme in the marine markets, as customers sought to prepare themselves for compliance with the IMO 2020 global sulphur cap. For Wärtsilä, this trend was reflected in a significant growth in demand for exhaust gas cleaning systems. Another contributor to the increase in order intake was the high level of activity in the cruise and ferry markets, as well as our customers’ interest in long-term service agreements. Energy Solutions' order intake was, on the other hand, lower than for the previous year, mainly due to slower decision-making among our customers. However, the long-term trends of growth in the emerging markets, and the shift towards flexible capacity to accommodate renewables, remain supportive of demand going forward.
Net sales for the year developed well, thanks to higher volumes in both Marine and Energy Solutions. Despite the pick-up in Services’ net sales toward the end of the year, the group sales mix favoured equipment deliveries, which, together with increased costs related to research, development and digitalisation, burdened profitability. To stay competitive in the current market environment, we must initiate actions to increase customer value and secure profitable growth. This includes increasing the focus on targeted sales activities, developing the agreements-based business, reviewing our cost structure, as well as optimising the business portfolio.
The marine and energy industries are being transformed through increasing connectivity, new business models, and the shift to a sustainable, low emissions economy. We are committed to supporting our customers by taking a leading role in this transition. Among the key milestones for the year was the introduction of new solutions for the integration of renewables and energy storage, as well as the successful testing of our automated dock-to-dock concept, and a project to develop an autonomously navigated harbour tug. The acquisition of Transas further strengthened our offering of smart solutions for the marine industry, and was important in this development work. Furthermore, our investment to build a Smart Technology Hub in Vaasa will speed up the time to market of new customer solutions.
We enter the year with a new organisation formed around two business areas that incorporate both newbuild activities and services. With this structure our primary focus is to better meet customer needs throughout the full lifecycle, and thus enhance the value we deliver. In so doing, we are supporting the progression towards our long-term target of profitable growth. In 2019, we expect market conditions to remain similar to those seen in the previous year. The pace of recovery in the marine markets is anticipated to remain slow, while the need for flexible power capacity supports the demand outlook in the energy markets. The competitive environment and geopolitical tension remain a concern. Our order book for this year’s deliveries is healthy, with deliveries again expected to be concentrated to the latter part of the year. The successful implementation of planned actions to ensure sustainable savings and increased customer value will be central to the development of our profitability in 2019.”