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Reporting segment: Wärtsilä Marine Business

Wärtsilä is on a mission to create a Smart Marine Ecosystem – one in which the maritime industry uses only the cleanest available fuels. Where on-board power production is optimised, and routes are precision-planned to avoid navigational hazards, traffic congestion, and unexpected waiting times. Through our know-how, integrated product portfolio, and full lifecycle solutions – all supported by the market’s most extensive service network – we are committed to being the main driving force in sustainable shipping.

  • Order intake development was satisfactory in a challenging market environment, with the decline in orders received driven by softening demand for scrubber systems
  • Services activity was healthy throughout the year
  • Cost overruns in gas solution project deliveries burdened the operating result, while profitability was also affected by the higher proportional share of equipment deliveries
Key figures
MEUR 10-12/2019 10-12/2018 Change 1-12/2019 1-12/2018 Change
Order intake 951 1 031 -8% 3 517 3 945 -11%
of which services 443 447 -1% 1 715 1 747 -2%
Order book, end of period 3 799 3 651 4%
Net sales 1 020 831 23% 3 330 2 815 18%
of which services 484 461 5% 1 639 1 577 4%
Book-to-bill 0.93 1.24 1.06 1.40
Operating result 99 171 -42% 237 349 -32%
% of net sales 9.7 20.6 7.1 12.4
Comparable operating result 119 190 -37% 305 380 -20%
% of net sales 11.7 22.9 9.1 13.5
Personnel, end of period 13 460 13 582 -1%

Operating environment

During 2019, 1,153 contracts for new vessels were registered (1,237 in 2018, excluding late contracting). Economic uncertainty, trade tensions, and regulatory considerations resulted in subdued contracting activity particularly in the merchant marine market. A wave of shipyard consolidations was announced during the year, as yards moved towards improving their competitiveness and better managing the prevailing overcapacity.

Activity remained solid in the gas carrier segment, driven by the growth in demand for liquefied natural gas (LNG), the increasing role of gas in the global energy mix, and firm spot rates. In the cruise segment, contracting activity favoured small and medium-sized vessels, due to the growing interest in luxury and expedition cruises, as well as capacity constraints in building larger ships. Investments in the ferry segment continued to be driven mainly by the replacement of older vessels, while the ferry market remained balanced in terms of supply and demand. In the offshore sector, contracting was burdened by reactivation and upgrades of stacked vessels, as well as by the slow rate of growth in vessel utilisation and day rates.

The focus on environmental issues and related regulations are driving increased efforts to minimise the environmental footprint of the shipping industry. This is resulting in a growing interest in LNG as a fuel and hybrid battery packs across vessel segments. While fuel price spreads are supportive of investments in scrubber technology, uncertainty around future developments and fuel availability has delayed decision-making among customers.

The demand for marine services was solid, with the most positive development seen in the merchant and cruise and ferry segments. In the cruise segment, activity favoured the servicing of automation and navigation solutions. For merchant vessels, demand increased particularly in the gas carrier segment, driven by continued growth in LNG trade and LNG carriers reaching their maintenance window for larger overhauls. Economic and trade related uncertainties resulted in slower service activity in the container vessel segment. Activity improved from a low level in the offshore support vessel segment, thanks to fleet reactivation and improving vessel utilisation.

Financial development

Wärtsilä Marine’s fourth quarter order intake totalled EUR 951 million (1,031), a decrease of 8% compared to the corresponding period last year. Book-to-bill was 0.93 (1.24). Services orders were stable at EUR 443 million (447), while equipment orders decreased by 13% to EUR 508 million (584). Demand was highest in the cruise and ferry segment, which represented 53% and 28% of the order intake of equipment and services, respectively. Orders received from this segment included a sizeable order to supply a broad scope of solutions to multiple cruise vessels. Activity was healthy also in the merchant segment, where Wärtsilä received a strategically important order to supply its fleet operations solution to Anglo-Eastern’s global fleet of more than 600 vessels.

Fourth quarter net sales increased by 23% to EUR 1,020 million (831) compared to the corresponding period last year. Services net sales increased by 5% to EUR 484 million (461), while equipment net sales increased by 45% to EUR 536 million (370). The comparable operating result for the quarter was EUR 119 million (190), or 11.7% of net sales (22.9). The comparable operating result includes a charge of EUR 34 million related to cost overruns in certain gas solution project deliveries, while the comparison figure was elevated by a capital gain amounting to EUR 27 million from the divestment of the pumps business. Profitability was also affected by the higher proportional share of equipment deliveries in the net sales mix of 2019.

Order intake for January-December amounted to EUR 3,517 million (3,945), a decrease of 11% compared to the corresponding period last year. Book-to-bill was 1.06 (1.40). Services orders decreased by 2% to EUR 1,715 million (1,747), while equipment orders decreased by 18% to EUR 1,802 million (2,198). The order book at the end of December amounted to EUR 3,799 million (3,651), which is 4% higher than last year. Demand was highest in the merchant segment, which, including both traditional merchant vessels and gas carriers, represented 40% and 35% of the order intake of equipment and services, respectively. In the gas carrier segment, Wärtsilä received multiple orders for gas solutions, power supply solutions, and service agreements during the year. Activity was strong also in the cruise and ferry segment, where, in addition to several equipment orders for cruise ships, Wärtsilä was awarded a contract to supply an integrated package of products, systems, and solutions to Wasaline’s new, efficient, and environmentally sustainable RoPax ferry.

January-December net sales increased by 18% to EUR 3,330 million (2,815) compared to the corresponding period last year. Services net sales increased by 4% to EUR 1,639 million (1,577), while equipment net sales increased by 37% to EUR 1,691 million (1,238) largely due to a significant increase in scrubber deliveries. The comparable operating result during the same period amounted to EUR 305 million (380), which represents 9.1% of net sales (13.5). The decline is largely due to charges of EUR 51 million related to cost overruns in certain gas solution project deliveries and a lower share of result from joint ventures. Profitability was also affected by the higher proportional share of equipment deliveries in the net sales mix.

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