WÄRTSILÄ CORPORATION INTERIM REPORT JANUARY-MARCH April 2018 Jaakko Eskola, President & CEO. Wärtsilä PUBLIC

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1 WÄRTSILÄ CORPORATION INTERIM REPORT JANUARY-MARCH April 218 Jaakko Eskola, President & CEO 1 Wärtsilä PUBLIC 24 April 218 Q1 Result presentation

2 ORDER INTAKE AND NET SALES DEVELOPED WELL IN THE EQUIPMENT BUSINESSES 2

3 Highlights Q1/218 Order intake EUR 1,57 million, +7% Net sales EUR 1,66 million, +6% Book-to-bill 1.41 (1.41) Comparable operating result EUR 88 million (82), which represents 8.3% of net sales (8.1) Earnings per share EUR.1 (.9) Cash flow from operating activities EUR -42 million (2) Order book at the end of the period EUR 5,49 million (5,114) Comparison figures have been restated due to the adoption of IFRS 15. 3

4 Good development in order intake First quarter development 1,57 1,413 7% % 31% 2% Services Marine Solutions Energy Solutions Q1/217 Q1/218 Q1 Q2-Q4 Comparison figures for 217 have been restated due to the internal reorganisation of service activities. 4

5 Net sales favoured equipment deliveries First quarter development ,5 6% 1, % Services % 12% Marine Solutions Energy Solutions Q1/217 Q1/218 Q1 Q2-Q4 Comparison figures for 217 have been restated due to the internal reorganisation of service activities and the adoption of IFRS 15. 5

6 Net sales by business 1-3/218 Marine Solutions 25% (23) Services 5% (53) Energy Solutions 25% (24) Comparison figures for 217 have been restated due to the internal reorganisation of service activities and the adoption of IFRS 15. 6

7 Book-to-bill ,6 1,4 1,2 1, 3, ,6 1 5,4 1 5, /218 Order intake Net sales Book-to-bill, Comparison figures for 217 have been restated due to the adoption of IFRS Wärtsilä PUBLIC 24 April 218 Q1 Result presentation

8 Order book distribution Delivery current year Delivery next year or later Comparison figures for 217 have been restated due to the adoption of IFRS 15. 8

9 Operating result 7 14% % 12.2% 12.1% 11.7% 12% 1% 12 First quarter development 14% % 6% 4% % 8.3% 12% 1% 8% 6% 4% 1 2% 2 2% % Q1/217 Q1/218 % Comparable operating result % of net sales Comparison figures for 217 have been restated due to the adoption of IFRS 15. 9

10 SERVICES 1

11 SERVICES Services net sales development stable First quarter development % Q1/217 Q1/218 Q1 Q2-Q4 Comparison figures for 217 have been restated due to the internal reorganisation of service activities and the adoption of IFRS Wärtsilä PUBLIC 24 April 218 Q1 Result presentation

12 SERVICES Net sales distribution 1-3/218 By product area By segment Field service 21% (22) Offshore 4% (4) Special vessels 8% (7) Oil&Gas 4% (4) Spare parts 49% (54) Navy 8% (9) Power plants 34% (34) Agreements 23% (16) Merchant 22% (25) Projects 7% (8) Cruise & ferry 21% (18) Total EUR 535 million (534) Comparison figures for 217 have been restated due to the internal reorganisation of service activities and the adoption of IFRS

13 MW SERVICES Installed base covered by service agreements 2 3% % 14 2% % 8 6 1% 4 5% Q1/218 % MW under agreement Energy Solutions % of Energy Solutions installed base MW under agreement Marine Solutions % of Marine Solutions installed base 13 Wärtsilä PUBLIC 24 April 218 Q1 Result presentation

14 American Hydro is contracted to increase the efficiency of Brookfield s Bear Swamp Pumped Storage Generating Station The order scope consists of the design, model testing, manufacturing and installation of two 33 MW upgraded, reversible pumpturbine runners and motor-generator rotors Modernising the facility enhances plant efficiency and ensures reliable energy supply when demand is needed the most 14

15 ENERGY SOLUTIONS 15

16 Q1/215 Q2/215 Q3/215 Q4/215 Q1/216 Q2/216 Q3/216 Q4/216 Q1/217 Q2/217 Q3/217 Q4/217 Q1/218 ENERGY SOLUTIONS Quotation activity by fuel type MW Multi-fuel Gas Liquid fuel 1 Calculated on a 12 months rolling basis 16 Wärtsilä PUBLIC 24 April 218 Q1 Result presentation

17 ENERGY SOLUTIONS Energy Solutions order intake on a healthy level 1 8 First quarter development Total EUR 414 million (45) % 67% Utilities Independent power producers 1 2 Industrials First quarter order intake by fuel in MW 4 2 Oil 48% Gas 52% Q1 Q2-Q4 17

18 ENERGY SOLUTIONS Order intake globally Europe 7 (198) Asia 441 (457) 1 Americas 186 (126) Utilities IPP s (Independent Power Producers) Industrials 135 Africa and Middle East 132 (51) 132 Order intake 1-3/218: 828 MW (832) 18

19 Improving the reliability and security of the South Australian power system A new 211 MW power plant will enable AGL Energy Limited to respond to fluctuations that are inherent to renewable generation The benefits of Wärtsilä s smart power generation solution include high efficiency, fast response and flexible capacity The value of the EPC delivery is over 1 million 19

20 ENERGY SOLUTIONS Market for gas and liquid fuel power plants, <5 MW MHI 1% Other GT s 1% Ansaldo 16% GE 3% Wärtsilä 19% Siemens 24% <5 MW market volume: 2.1 GW (25.2) Total market volume: 46.8 GW (54.9) Market shares are calculated on a 12 months rolling basis, numbers in brackets are from the end of the previous period. Market data includes all Wärtsilä power plants and other manufacturers gas and liquid fuelled gas 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. 2

21 MARINE SOLUTIONS 21

22 Number of vessels Million CGT MARINE SOLUTIONS Solid activity in the marine markets Merchant Offshore Cruise and Ferry Special vessels 3 months moving average in CGT * 25 5, 4,5 2 4, 3,5 15 3, * 2,5 1 2, 1,5 5 1,,5, Source: Clarkson Research Services, figures exclude late contracting * CGT= gross tonnage compensated with workload 22 Wärtsilä PUBLIC 24 April 218 Q1 Result presentation

23 MARINE SOLUTIONS Strong growth in Marine Solutions order intake First quarter development Total EUR 357 million (273) Gas carriers 5% (39) Offshore 2% (2) Special vessels 5% (7) 9 6 Traditional merchant 43% (17) Cruise 38% (23) Q1 Q2-Q4 Navy 6% (7) Ferry 2% (3) Comparison figures for 217 have been restated due to the internal reorganisation of service activities. 23

24 Wärtsilä acquires Transas to accelerate its Smart Marine vision Transas is a global market leader in marine navigation solutions, professional training and simulation services, and ship traffic control The acquisition plays a key role in the development of smart products and a digital platform The transaction is valued at 21 (enterprise value) and is expected to be closed during the second quarter of 218 Kuva pitää vaihtaa, bonny kalvon kuva voisi sopia tähän 24

25 MARINE SOLUTIONS Market position of Wärtsilä Marine Solutions GAS CARRIERS TRADITIONAL MERCHANT CRUISE & FERRY OFFSHORE SPECIAL VESSELS NAVY Top player Challenger Top player Mid-player Mid-player Challenger Gas systems Auxiliary engines Main engines (FSRU) Gas systems Auxiliary engines Auxiliary Propulsion engines Propulsion Navigation & Environmental automation solutions (containerships) Environmental solutions Main engines Main Navigation engines & Navigaton automation& automation Propulsion Propulsion Environmental Environmental solutions solutions Main engines Main Propulsion engines Propulsion Ship design Ship design Main engines Main Propulsion engines Propulsion Navigation & Automation automation & Navigation Environmental Environmental solutions Auxiliary engines Auxiliary Propulsion engines Propulsion Navigation & Navigation Automation& Automation Main offering 25 Wärtsilä PUBLIC 24 April 218 Q1 Result presentation

26 FINANCIALS 26

27 FINANCIALS Cash flow from operating activities Review period development Q1/217 Q1/218 27

28 FINANCIALS Working capital % 1 4 Review period development 1 2 2% % % % % % % 15% 1% 5% %* %* 2% 15% 1% 5% % % Working capital Total inventories Advances received Working capital / Net sales *Working capital / 12 months rolling net sales Comparison figures for 217 have been restated due to the adoption of IFRS Wärtsilä PUBLIC 24 April 218 Q1 Result presentation

29 FINANCIALS Gearing,5 Review period development,4,5,3,4,2,3,2,1,1, , Wärtsilä PUBLIC 24 April 218 Q1 Result presentation

30 Prospects for 218 unchanged Setti 1 Setti 1 The demand for Wärtsilä s services and solutions in 218 is expected to improve somewhat from the previous year. Demand by business area is anticipated to be as follows: Good in Services Good in Energy Solutions Solid in Marine Solutions 3

31 THANK YOU Further information: Natalia Valtasaari Director, Investor & Media Relations Tel () natalia.valtasaari@wartsila.com 31