Result presentation Q314

© Wärtsilä

WÄRTSILÄ CORPORATIONINTERIM REPORT JANUARY-SEPTEMBER 2014

23 OCTOBER 2014Björn Rosengren,President & CEO

• Order intake EUR 1,309 million, +21%• Net sales EUR 1,117 million, -7%• Book-to-bill 1.17• EBIT EUR 142 million, 12.7% of net sales

(EUR 148 million or 12.3%)• EPS EUR 0.43 (0.48)• Efficiency programme proceeding according to

plan, EUR 10 million savings achieved in Q3• Guidance for EBIT% before non-recurring items

revised to 11.5-12.0% (previously around 11.5%)

EBIT is shown excluding non-recurring items.As of the third quarter of 2014, the two-stroke business is reported as discontinuedoperations. Income statement related comparison figures for 2013 have been restated.

Highlights Q3/2014

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0

200

400

600

800

1000

1200

1400

Q3/2013 Q3/2014

21%

47%

24%

2%

1,086

MEUR

Third quarter development

MEUR

3

Strong development in third quarter order intake

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

2010 2011 2012 2013 1-9/2014

1,309

Q1-Q3 Q4

Power Plants

Ship Power

Services

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0

200

400

600

800

1000

1200

1400

Q3/2013 Q3/2014

Net sales in line with our expectations

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2010 2011 2012 2013 1-9/2014

-7%

9%

6%

-33%

1,199

MEUR


MEUR

1,117

4

Net sales developed according to expectations

Power Plants

Ship Power

Services

Q1-Q3 Q4

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Net sales by business 1-3/2012

Ship Power36% (28)

Power Plants22% (31)

Services43% (42)

5

Net sales by business 1-9/2014

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0.88

1.07 1.05 1.051.10

0,0

0,2

0,4

0,6

0,8

1,0

1,2

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

2010 2011 2012 2013 1-9/2014

Order intake Net sales Book-to-bill

MEUR

6

Book-to-bill ratio remains above one

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Order book distribution

MEUR

7

Order book distribution

Delivery current year Delivery next year or later

0

500

1000

1500

2000

2500

3000

3500

30.9.2013 30.9.2014

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12.3% 12.7%

0%

2%

4%

6%

8%

10%

12%

14%

0

20

40

60

80

100

120

140

160

Q3/2013 Q3/2014

10.7%11.1% 10.9%

12.1%

0%

2%

4%

6%

8%

10%

12%

14%

0

100

200

300

400

500

600

2010 2011 2012 2013

MEUR


MEUR

8

Profitability developed well

EBIT% before non-recurring items

EBIT before non-recurring items

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Improved activity in smaller power plantorders

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Power plant quotation activity on a high level

Quotations remain focused on gas

0

2000

4000

6000

8000

10000

12000

14000

16000

18000Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

MW

Quoted MW per Fuel Type

Others

Natural gas

Heavy fuel oil

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0

200

400

600

800

1000

1200

1400

1600

1800

2000

2010 2011 2012 2013 1-9/2014

MEUR Review period developmentTotal EUR 792 million (884)

IPP’s*

Utilities

Industrials

Oil 46%

Gas54%

Review period order intake by fuel in MW

x%

11

Power Plants order intake picked up in the third quarter

28%

21%

51%

Q1-Q3 Q4

*IPP = Independent Power Producer

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308

99

217

56

171130

Order intake 1-9/2014: 1,716 MW (1,786)

Americas 539 (324)

Asia 326 (738)

Africa and Middle East 440 (424)

UtilitiesIPP’sIndustrials

12

Power Plants’ order intake evenly spread globally

3

140

53

Europe 410 (300)

290

65

185

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• Wärtsilä to supply a 139 MW flexicycle power plant for Energia del Caribe in Mexico

• Scope of supply: EPC contract based on seven 50SG gas engines and a combined cycle

• The capability to produce efficient, flexible and reliable energy, and ensure firm capacity without interruptions were key reasons for being awarded the contract

• The project doubles Wärtsilä’s installed generating capacity in Mexico to 280 MW

13

Significant power plant order from Mexico

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Market for gas and liquid based power plants

14

10.4%

62.3%10.4%

2.8%

Market <500MW10.6 GW (12.7)

9.4%

2.8%

14

Market for gas and liquid based power plants 1-6/2014

Includes all Wärtsilä power plants and other manufacturers’ gas and liquid fuelled turbine based power plants with prime movers above 5 MW, as well as estimated output of steam turbines for combined cycles. The data is gathered from the McCoy Power Report.Other combustion engines not included. In engine technology Wärtsilä has a leading position.

0.9%

Total market23.4 GW (18.8)

GE Siemens MHI Wärtsilä Alstom Ansaldo Other GTs

24.8%

44.0%9.0%

4.2%15.9%

1.3% 0.4%

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Ship Power order intake supported by activity in gas carriers and cruise vessels

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Vessel contracting development

Source: Clarkson Research Services, figures exclude late contracting* CGT= gross tonnage compensated with workload

*

*

0

1

2

3

4

5

0

50

100

150

200

250

01.0

903

.09

05.0

907

.09

09.0

911

.09

01.1

003

.10

05.1

007

.10

09.1

011

.10

01.1

103

.11

05.1

107

.11

09.1

111

.11

01.1

203

.12

05.1

207

.12

09.1

211

.12

01.1

303

.13

05.1

307

.13

09.1

311

.13

01.1

403

.14

05.1

407

.14

09.1

4

Mill

ion

CG

T

# of

ves

sels

Merchant Offshore Cruise and Ferry Special vessels 3 months moving average in CGT

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0

300

600

900

1200

1500

1800

2010 2011 2012 2013 1-9/2014

MEUR

Review period developmentTotal EUR 1,286 million (1,176)

Offshore27%

Traditional merchant

11%

Special vessels5%

17

Ship Power order intake developed well

Others 1%

Q1-Q3 Q4

Gas carriers40%

Cruise and ferry11%

Navy 5%

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• Gas handling systems ordered for six new very large ethane carriers (VLECs), being built for the Reliance Group based in India

• Scope of supply: complete cargo handling package for each ship, the solutions cover everything from loading the gas at the terminal to keeping it safe during freight and unloading it at the final destination

• The transportation of ethane is a rapidly growing segment of the marine gas carrying business

18

Wärtsilä’s gas handling systems for world’s largest ethane carriers

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• Joint venture order intake totalledEUR 126 million (143) during January-September 2014

• Wärtsilä’s share of ownership in these companies is 50%, and the results are reported as a share of result of associates and joint ventures

MEUR

Ship Power order intake

Joint venture order intake, includes figures from Wärtsilä Hyundai Engine Company Ltd. and Wärtsilä Qiyao Diesel Company Ltd.

19

Joint venture ordering continues active

0

50

100

150

200

250

300

350

400

450

500

550

600

Q1/2010

Q2/2010

Q3/2010

Q4/2010

Q1/2011

Q2/2011

Q3/2011

Q4/2011

Q1/2012

Q2/2012

Q3/2012

Q4/2012

Q1/2013

Q2/2013

Q3/2013

Q4/2013

Q1/2014

Q2/2014

Q3/2014

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Wärtsilä’s market shares are calculated on a 12 months rolling basis, numbers in brackets are from the end of the previous quarter. The calculation is based on Wärtsilä’s own data portal.

Wärtsilä51%(52)

Others 21%(20)

MAN D&T17%(17)

Caterpillar11%(11)

Total market volume last 12 months:4,554 MW (4,139)

Medium-speed main enginesWärtsilä2%(2)

Auxiliary engines

Total market volume last 12 months:7,628 MW (7,860)

Others98%(98)

20

Ship Power marketMarket position of Wärtsilä’s marine engines

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Focus on growth in Services is paying off

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0

200

400

600

800

1000

1200

1400

1600

1800

2000

2010 2011 2012 2013 1-9/2014

-3%

0

100

200

300

400

500

600

Q3/2013 Q3/2014

MEUR


MEUR

435

9% 472

0%

22

Growth in Services net sales

5%

Q1-Q3 Q4

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Spare parts 51%(53)

Field service 24%(23)

Contracts 17%(17)

Projects8%(7)

23

Total EUR 1,375 million (1,334)

Services net sales distribution 1-9/2014

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• 5-year technical management agreement signed with Harvey Gulf International Marine LLC

• Scope of supply: condition based maintenance and dynamic maintenance planning for 8 new offshore vessels

• The agreement ensures ideal running conditions and reduced operating costs through optimisedtiming of major overhauls and reduced consumption of spare parts

24

Continued interest for marine service agreements

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0%

5%

10%

15%

20%

25%

30%

0

2000

4000

6000

8000

10000

12000

14000

2009 2010 2011 2012 2013 Q3 2014

MW under agreement - Power MW under agreement - Marine% of Total installed Base - Power % of Total installed Base - Marine

Development of Service agreements

MW

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Fleet utilisation

* Source Bloomberg. Sample of more than 25 000 vessels (>299 GT) covered by IHS AIS Live.** Source Bloomberg

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Fleet utilisation

Fleet Average Speed, knots**

Anchored Vessels & Fleet Development*

20500

21000

21500

22000

22500

15%

20%

25%

30%

35%

03.12

06.12

09.12

12.12

03.13

06.13

09.13

12.13

03.14

06.14

09.14

Nr o

f A

ctiv

e V

esse

ls

Per

cent

Anc

hore

d

Anchored Active Fleet

8,0

8,5

9,0

9,5

10,0

10,5

03.12

06.12

09.12

12.12

03.13

06.13

09.13

12.13

03.14

06.14

09.14

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MEUR

Cash flow from operating activities

0

50

100

150

200

250

300

1-9/2013 1-9/2014

Review period development

MEUR

0

100

200

300

400

500

600

700

2010 2011 2012 2013

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118235

465

3132.6%

5.6%

9.8%

6.8%

0%

5%

10%

15%

20%

25%

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2010 2011 2012 2013

Working capital Total inventories Advances received Working capital / Net sales

MEUR

29

Focus on working capital development

488379

10.3%*

8.2%*

0%

2%

4%

6%

8%

10%

12%

0

200

400

600

800

1000

1200

1400

1600

30.9.2013 30.9.2014

MEUR


* Working capital / 12 months rolling net sales

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Gearing remains low

0,00

0,10

0,20

0,30

0,40

0,50

30.9.2013 30.9.2014

-0,10

0,00

0,10

0,20

0,30

0,40

0,50

2010 2011 2012 2013


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• Power Plants: Power generation markets closely follow the global macroeconomic development. Based on the difficult market situation seen during the three first quarters of the year and the revised GDP forecasts for 2014, the overall market for liquid and gas fuelled power generation is expected to continue to be challenging.

• Ship Power: Overcapacity continues to affect the demand for traditional merchant vessels. In the offshore segment, the contracting of drilling units and certain support vessels is expected to continue on a lower level. The outlook for gas carriers remains positive, although the recent strong ordering volumes may affect activity in the short term.

• Services: The overall service market outlook remains stable, with positive developments in selected regions.

31

Market outlook

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Wärtsilä estimates its profitability for 2014 (EBIT% before non-recurring items) to be 11.5-12.0%. Wärtsilä reiterates its expectation that net sales will grow by around 5%.

Prospects for 2014 revised

IR Contact:Natalia ValtasaariDirector, Investor Relations Tel. +358 (0) 40 187 7809E-mail: [email protected]

Result presentation Q314

Presentations & Public Speaking

Transcript of Result presentation Q314