“The third quarter proved to be challenging for Wärtsilä, both in terms of equipment demand trends and financial performance. The decline in order intake reflected weak vessel contracting and softened demand for scrubber systems, as well as continued slow decision-making in the energy markets. While the project pipeline is healthy in both businesses, visibility on order intake timing is limited and competition is intensifying. Price pressure remains a headwind in the prevailing market environment. I am pleased to note that despite the challenges we face in the equipment businesses, services related activity remained sound.
Wärtsilä’s financial performance was significantly below that of the previous year. The decline in net sales was anticipated, as energy equipment and scrubber deliveries are concentrated towards the latter part of the year. Our operating result, on the other hand, was weakened by unforeseen cost overruns in a handful of complex marine and energy projects. The full-year result will be impacted by a one-time charge amounting to EUR 150 million, of which EUR 84 million has already been recognised. A review of the projects in question revealed incorrect underlying assumptions in cost estimates, insufficient risk identification, and supplier related challenges. We have taken corrective actions to prevent similar issues from occurring in the future. These include introducing tighter controls on technical assessments and the supplier approval process, as well as strengthening the project management organisation. With these measures, we aim to improve our project execution quality and ensure better upfront identification of risks and opportunities. I am confident that this will enable us to live up to our reputation for providing high quality and value enhancing solutions."