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Reporting segment: Wärtsilä Marine Business

In the marine and oil & gas industries, no other company has a broader offering of technologically advanced, environmentally sustainable, and economically sound solutions. We are leading the industry’s transformation towards a Smart Marine Ecosystem, whereby real-time communication and the digitalisation of all aspects of shipping and port operations, are utilised to create long-term value for our customers and partners. With an integrated product portfolio comprising full lifecycle solutions supported by the market’s most extensive service network, we are able to optimise performance and achieve the safest, smartest, most ecological and efficient operating profiles possible.

  • Declining interest in scrubber investments, project timing, and weak vessel contracting resulted in fewer equipment orders received
  • Services activity remained sound
  • Cost overruns in gas solution project deliveries burdened the operating result
Key figures
MEUR 7-9/2019 7-9/2018 Change 1-9/2019 1-9/2018 Change 2018
Order intake 705 1 009 -30% 2 565 2 914 -12% 3 945
of which services 445 425 5% 1 271 1 300 -2% 1 747
Order book, end of period 3 895 3 536 10% 3 651
Net sales 776 680 14% 2 310 1 984 16% 2 815
of which services 376 372 1% 1 155 1 116 3% 1 577
Book-to-bill 0.91 1.48 1.11 1.47 1.40
Operating result 21 69 -69% 137 177 -23% 349
% of net sales 2.7 10.1 5.9 8.9 12.4
Comparable operating result 49 68 -29% 185 190 -2% 380
% of net sales 6.3 10.1 8.0 9.6 13.5
Personnel, end of period 13 530 13 727 -1% 13 582

Operating environment

Economic uncertainty, trade tensions, and the impact of upcoming regulations have resulted in subdued activity in the marine market, with 655 contracts for new vessels registered during the period January-September 2019 (801). Newbuild orders in all the major vessel segments have declined, with LNG carrier and cruise vessel segments being the least affected. Demand for larger cruise vessels has stabilised following the contracting of most of the major fleet replacement programs and the increased interest in the refurbishment of the existing fleet due to capacity constraints at shipyards. In the offshore sector, interest in vessel contracting is burdened by reactivation and upgrades of stacked vessels, as well as by the slow rate of growth in vessel utilisation and day rates.

Sustainability issues and regulations are pushing increased efforts to minimise the environmental footprint of the shipping industry. This is resulting in a growing interest in LNG as a fuel and in hybrid battery packs across all vessel segments. Uncertainty concerning bunker fuel pricing and availability has delayed decision-making among customers for scrubber technology investments, despite supportive initial price indications.

The demand for marine services was sound. Activity improved from a low level in the offshore support vessel segment, where the laid-up fleet is increasingly being re-activated into production around the globe. Activity continued to be at a good level in the gas carrier segment, as LNG carriers are reaching their maintenance windows for major overhauls. In the container and general cargo vessel segments, economic and geopolitical uncertainties resulted in stable demand for services.

Financial development

Wärtsilä Marine’s third quarter order intake totalled EUR 705 million (1,009), a decrease of 30% compared to the corresponding period last year. Book-to-bill was 0.91 (1.48). Services orders increased by 5% to EUR 445 million (425), while equipment orders decreased by 55% to EUR 260 million (584). Demand was highest in the merchant segment, which, including both traditional merchant vessels and gas carriers, represented 55% and 32% of the order intake of equipment and services respectively. Activity was solid also in the cruise and ferry segment.

Third quarter net sales increased by 14% to EUR 776 million (680) compared to the corresponding period last year. Services net sales increased by 1% to EUR 376 million (372), while equipment net sales increased by 30% to EUR 400 million (308). The comparable operating result for the quarter was EUR 49 million (68), or 6.3% of net sales (10.1).

Order intake for January-September amounted to EUR 2,565 million (2,914), a decrease of 12% compared to the corresponding period last year. Book-to-bill was 1.11 (1.47). Services orders decreased by 2% to EUR 1,271 million (1,300), while equipment orders decreased by 20% to EUR 1,294 million (1,613). The order book at the end of September amounted to EUR 3,895 million (3,536), which is 10% higher than last year.

January-September net sales increased by 16% to EUR 2,310 million (1,984) compared to the corresponding period last year. Services net sales increased by 3% to EUR 1,155 million (1,116), while equipment net sales increased by 33% to EUR 1,155 million (868). The comparable operating result during the same period amounted to EUR 185 million (190), which represents 8.0% of net sales (9.6). The comparable operating result includes a charge of EUR 17 million related to cost overruns in certain gas solution project deliveries. The charge was booked during the third quarter.

 

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