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Wärtsilä Corporation Interim Report

Wärtsilä Corporation Interim Report

January – March 2019

“The beginning of 2019 was marked by growth in net sales, thanks to higher services volumes in both business areas and an increase in marine equipment deliveries. Profitability improved as a result of a more favourable sales mix within our services activities.”

Jaakko Eskola, President & CEO

Q1 Interim Report PDF

Growth in net sales, good development in profitability

“The beginning of 2019 was marked by growth in net sales, thanks to higher services volumes in both business areas and an increase in marine equipment deliveries. Profitability improved as a result of a more favourable sales mix within our services activities. Looking ahead, we expect net sales and profitability development to be weighted towards the end of the year, due to delivery phasing and the anticipated realisation of savings related to the realignment program announced in January.

In the marine industry, the pace of market recovery remains slow. Nevertheless, orders received by Wärtsilä Marine Business increased, primarily because of improved demand in the gas carrier segment where we received several orders for gas handling systems and related technology. Despite this positive development, reduced activity in the energy markets resulted in a decline in Group order intake. Geopolitical risks and global uncertainty continue to affect our energy customers’ appetite for investments. Furthermore, utilities in the developed world are updating their investment plans as they strive to achieve ambitious targets for increasing renewable penetration. While this is causing temporary delays in decision-making, we remain well positioned to benefit from the shift to low-carbon energy sources.

Our new organisational structure formed around two lifecycle businesses became operational at the beginning of the year. I am pleased to note that we have already started to see the initial benefits of this reorganisation in the form of improved cooperation internally with regards to developing and executing our full lifecycle offering. This further strengthens my conviction that the change will not only strengthen our partnerships with customers, but also support the progression towards our long-term target of profitable growth.”


Jaakko Eskola

President & CEO

Wärtsilä's prospects

The demand for Wärtsilä’s services and solutions in the coming twelve months is expected to be in line with the comparative period of the previous year. Demand by business area is anticipated to be as follows:
  • Solid in Wärtsilä Marine Business. Wärtsilä's demand outlook for both services and equipment is supported by an extensive product mix and broad segment coverage, which limits the impact of a slower than anticipated marine market recovery.
  • Solid in Wärtsilä Energy Business. The global shift towards renewable energy sources and increasing electricity demand in the emerging markets support the need for distributed and flexible power capacity. However, geopolitical risks and global uncertainty continue to affect customers’ appetite for investments. The services market outlook is supported by growth opportunities in selected regions and segments and by good order book development.
Wärtsilä’s current order book for 2019 deliveries is EUR 3,287 million (2,951). Deliveries are expected to be concentrated towards the latter part of the year.

Highlights of the review period January-March 2019

  • Order intake decreased 6% to EUR 1,416 million (1,507)
  • Order book at the end of the period increased 15% to EUR 6,330 million (5,490)
  • Net sales increased 8% to EUR 1,151 million (1,066)
  • Book-to-bill 1.23 (1.41)
  • Comparable operating result increased to EUR 102 million (88), which represents 8.9% of net sales (8.3)
  • Earnings per share were stable at 0.10 euro (0.10)
  • Cash flow from operating activities increased to EUR 35 million (-42)
Key figures
MEUR 1-3/2019 Restated
Change Restated
Order intake 1 416 1 507 -6% 6 307
of which services 653 665 -2% 2 598
Order book, end of period 6 330 5 490 15% 6 166
Net sales 1 151 1 066 8% 5 174
of which services 573 535 7% 2 419
Book-to-bill 1.23 1.41 1.22
Operating result¹ 91 85 8% 543
% of net sales 7.9 8.0 10.5
Comparable operating result 102 88 16% 577
% of net sales 8.9 8.3 11.2
Comparable adjusted EBITA 113 98 15% 621
% of net sales 9.8 9.2 12.0
Profit before taxes 78 76 3% 502
Earnings/share, EUR 0.10 0.10 0.65
Cash flow from operating activities 35 -42 470
Net interest-bearing debt, end of period2 658 438 333
Gross capital expenditure 23 37 306
Gearing 0.29 0.21 0.14
Solvency, % 39.6 42.9 44.4
Personnel, end of period 19 225 18 182 6% 19 294
¹Items affecting comparability in the first quarter of 2019 included costs related to restructuring programmes of EUR 11 million (3).
²The increase in net interest-bearing debt is largely related to the inclusion of lease liabilities on the balance sheet, as a result of the new IFRS 16 standard.

As of the first quarter of 2019, Wärtsilä’s financial reporting has been amended to reflect its new organisational structure. The two business areas, Wärtsilä Marine Business and Wärtsilä Energy Business, constitute the reportable segments. Financial reporting for 2018 has been adjusted to reflect this change. Wärtsilä will additionally report the services related order intake and net sales for the two segments. In Wärtsilä Marine Business, order intake and net sales for retrofit scrubber projects have been transferred from services to new equipment. The comparison figures have been adjusted accordingly.

Wärtsilä presents certain alternative performance measures in accordance with the guidance issued by the European Securities and Markets Authority (ESMA). The definition of these alternative performance measures is presented in the calculations of financial ratios.


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