WÄRTSILÄ CORPORATION INTERIM REPORT JANUARY-JUNE 215 17 JULY 215 Björn Rosengren, President & CEO Wärtsilä
Highlights Q2/215 Order intake EUR 1,159 million, +2% Net sales EUR 1,23 million, +1% Book-to-bill.94 (1.2) EBIT EUR 137 million, 11.1% of net sales (EUR 132 million or 11.8%) EBITA EUR 144 million, 11.7% of net sales (EUR 138 million or 12.4%) EPS EUR.54 (.42) Cash flow from operating activities EUR 47 million (61) Order book at the end of the period EUR 5,325 million, +2% Acquisition of L-3 MSI finalised Strategy fine-tuned, business names changed EBIT is shown excluding non-recurring items. EBITA is shown excluding non-recurring items and purchase price allocation amortisation. As a result of the 2-stroke operations being classified as discontinued operations in 214, comparison figures related to the statement of income have been restated. 2 Wärtsilä
Order intake growth supported by Services 55 5 45 Second quarter development 4 35 3 25 2 14 12 1 8 1,138 2% 13% 1,159 Services Marine Solutions 15 1 6 4 2% Energy Solutions 5 2-23% 211 212 213 214 215 Q2/214 Q2/215 Q1-Q2 Q3-Q4 3 Wärtsilä
Net sales developed well Net sales in line with our expectations 5 45 4 Second quarter development 35 3 25 2 15 1 14 12 1 8 6 4 1,116 1% 17% -15% 1,23 Services Marine Solutions Energy Solutions 5 2 4% 211 212 213 214 215 Q2/214 Q2/215 Q1-Q2 Q3-Q4 4 Wärtsilä
Net sales by business 1-6/215 Net sales by business 1-3/212 Services 47% (43) Marine Solutions 3% (37) Energy Solutions 23% (2) 5 Wärtsilä
Book-to-bill ratio remains above one 55 5 1.7 1.5 1.5 1.6 1.1 1,2 45 1, 4 35,8 3 25,6 2,4 15 1,2 5 211 212 213 214 1-6/215, Order intake Net sales Book-to-bill 6 Wärtsilä
Order book distribution Order book distribution 35 3 25 2 15 1 5 3.6.214 3.6.215 Delivery current year Delivery next year or later 7 Wärtsilä
Operating result and profitability 6 14% 5 4 11.1% 1.9% 11.2% 11.9% 12% 1% 8% Second quarter development 14 1.8% 11.1% 12 12% 1% 3 2 1 6% 4% 2% 1 8 6 4 2 8% 6% 4% 2% 211 212 213 214 % Q2/214 Q2/215 % EBIT EBIT% EBIT is shown before non-recurring items. Figures for 211-213 and Q2/214 include both discontinued and continuing operations. 8 Wärtsilä
Challenging environment in the power generation markets 9 Wärtsilä
Energy Solutions quotation activity on a good level MW 18 16 14 12 1 8 6 Multi-fuel Gas Liquid fuel 4 2 Q2/215 Q1/215 Q4/214 Q3/214 Q2/214 Q1/214 Q4/213 Q3/213 Q2/213 Q1/213 Q4/212 Q3/212 Q2/212 Q1/212 1 Wärtsilä
Growth in Energy Solutions order intake 18 Review period development Total EUR 475 million (49) 16 1% Utilities 14 41% 49% IPP s* 12 Industrials 1 x% 8 6 Review period order intake by fuel in MW 4 2 Oil 56% Gas 44% 211 212 213 214 215 Q1-Q2 Q3-Q4 *IPP = Independent Power Producer 11 Wärtsilä
Energy Solutions orders globally Europe 698 (361) 4 58 Asia 111 (284) Americas 239 (76) 636 31 4 4 239 Africa and Middle East 175 (265) 4 Utilities IPP s Industrials 135 Order intake 1-6/215: 1,222 MW (986) 12 Wärtsilä
Market for gas and liquid fuel based power plants 1-3/215 Total market 9.7 GW (11.) Market <5 MW 4.7 GW (6.5) 7.2%.4%.9% 1.3% 2.1% 43.3% 15.% 52.4% 29.% 21.5% GE Siemens MHI Wärtsilä Other GTs Market data 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. 13 Wärtsilä
Contracting volumes remain low 14 Wärtsilä
Vessel contracting activity Merchant Offshore Cruise and Ferry Special vessels 3 months moving average in CGT * 25 5 2 4 # of vessels 15 1 3 2 * Million CGT 5 1 1.9 3.9 5.9 7.9 9.9 11.9 1.1 3.1 5.1 7.1 9.1 11.1 1.11 3.11 5.11 7.11 9.11 11.11 1.12 3.12 5.12 7.12 9.12 11.12 1.13 3.13 5.13 7.13 9.13 11.13 1.14 3.14 5.14 7.14 9.14 11.14 1.15 3.15 5.15 6.15 Source: Clarkson Research Services, figures exclude late contracting * CGT= gross tonnage compensated with workload 15 Wärtsilä
Marine Solutions order intake 18 Review period development Total EUR 728 million (823) 15 12 9 6 Gas carriers 34% Offshore 15% Special vessels 1% 3 211 212 213 214 215 Traditional merchant 16% Others 4% Navy 3% Cruise & Ferry 18% Q1-Q2 Q3-Q4 16 Wärtsilä
Joint venture ordering activity 7 6 5 4 3 2 Joint venture order intake totalled EUR 14 million (92) during January-June 215 Wärtsilä s share of ownership in these companies is 5%, and the results are reported as a share of result of associates and joint ventures 1 Q2/215 Q1/215 Q4/214 Q3/214 Q2/214 Q1/214 Q4/213 Q3/213 Q2/213 Q1/213 Q4/212 Q3/212 Q2/212 Q1/212 Q4/211 Q3/211 Q2/211 Q1/211 Q4/21 Q3/21 Q2/21 Q1/21 Joint venture order intake, includes figures from Wärtsilä Hyundai Engine Company Ltd. and Wärtsilä Qiyao Diesel Company Ltd. Marine Solutions order intake 17 Wärtsilä
Strong position in marine engine market Medium-speed main engines Others 16% (16) Auxiliary engines Wärtsilä 5% (4) Caterpillar 1% (13) Wärtsilä 59% (56) Others 95% (96) MAN D&T 15% (15) Total market volume last 12 months: 4,988 MW (5,711) Total market volume last 12 months: 4,78 MW (4,988) 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. 18 Wärtsilä
Acquisition of L-3 Marine Systems International finalised Key figures Marine Solutions 1-6/215 MSI s contribution 6/215 MSI 1-6/215 Order intake 728 41 161 Net sales 674 3 197 Order book, end of period 2,785 519 519 The integration of MSI with Wärtsilä s existing E&A business within Marine Solutions has started In addition to sales synergies, Wärtsilä expects MSI to reach current group profitability within five years Purchase price allocation amortisation is expected to be EUR 7 million in 215 The goodwill value of the transaction is estimated at EUR 161 million In 215, MSI is expected to contribute approx. EUR 25 million to net sales and EUR 16 million to the operating result excluding PPA amortisation 19 Wärtsilä
Marine Solutions business to be adjusted to reflect the current market situation Wärtsilä Marine Solutions plans to realign its organisation to maintain competitiveness in an environment of low demand Approx. 6 jobs will be reduced, of which 16 in Finland Wärtsilä seeks annual savings in the region of EUR 4 million The non-recurring costs related to the restructuring measures will be approximately EUR 25-3 million Currently, Wärtsilä Marine Solutions employs 7,217 people globally 2 Wärtsilä
Good activity in the service markets, market outlook remains positive 21 Wärtsilä
Services net sales increased by 14% in 1-6/215 2 Second quarter development 18 16 5% -3% 5% 6 17% 548 14 12 1 5 4 468 8 3 6 2 4 2 1 211 212 213 214 215 Q2/214 Q2/215 Q1-Q2 Q3-Q4 22 Wärtsilä
Services net sales distribution 1-6/215 Field service 24%(25) Spare parts 51%(52) Contracts 17%(17) Projects 7%(6) Total EUR 1,34 million (93) 23 Wärtsilä
Development of service agreements MW 14 3% 12 25% 1 2% 8 15% 6 4 1% 2 5% 29 21 211 212 213 214 3.6.215 % MW under agreement Energy Solutions % of Energy Solutions installed base MW under agreement Marine Solutions % of Marine Solutions installed base 24 Wärtsilä
QuantiParts B.V. a new subsidiary to trade spare parts for classic 4-stroke Wärtsilä engines QuantiParts operates from the Netherlands and serves customers in the marine, locomotive and power plant industries worldwide QuantiParts trades OEM spare parts for selected mature Wärtsilä medium- and highspeed 4-stroke engines Establishing QuantiParts fits well with Wärtsilä Services strategy of aligning its organisation in order to ensure tailor-made services for its customers 25 Wärtsilä
Solid financial standing 26 Wärtsilä
Cash flow from operating activities 7 6 5 4 3 2 1 Review period development 18 16 14 12 1 8 6 4 2 211 212 213 214 1-6/214 1-6/215 27 Wärtsilä
Working capital 16 25% 14 12 2% Review period development 1 8 6 4 2 235 5.6% 465 9.8% 313 6.8% 251 5.2% 15% 1% 5% 18 16 14 12 1 8 6 4 2 7.2%* 339 44 8.3%* 25% 2% 15% 1% 5% 211 212 213 214 % 3.6.214 3.6.215 % Working capital Total inventories Advances received Working capital / Net sales * Working capital / 12 months rolling net sales 28 Wärtsilä
Gearing impacted by L-3 MSI acquisition,5 Review period development,4,5,3,4,3,2,2,1,1, 211 212 213 214, 3.6.214 3.6.215 29 Wärtsilä
Market outlook Energy Solutions: Based on the market situation during 214 and the GDP forecasts for 215, the market for liquid and gas fuelled power generation is expected to remain challenging. Marine Solutions: The outlook for the shipping and shipbuilding market environment is challenging. Low oil prices are impacting demand for offshore vessels. The sentiment in the gas carrier market and cruise & ferry is healthy. Services: The overall service market outlook is positive with growth opportunities in selected regions and segments. 3 Wärtsilä
Prospects for 215 revised Wärtsilä expects its net sales for 215 to grow by 5-1% and its operational profitability (EBIT% before non-recurring items) to be between 12.-12.5%. The guidance includes the impact of the L-3 Marine Systems International acquisition. 31 Wärtsilä
Company strategy fine-tuned Environmental awareness and changing energy needs are increasingly steering investments in the markets in which we operate We seek growth by offering energy efficient lifecycle solutions, gas based technology, as well as innovative solutions that leverage our project management and engineering competence Our growth ambitions are supported by our superior global service network 32 Wärtsilä
A brand new medium-speed Wärtsilä 31 engine launched in June The Wärtsilä 31 engine is the marine industry s most advanced, powerful, fuel efficient, fuel flexible, and environmentally sound engine The engine achieved a Guinness World Records title for the most efficient 4-stroke diesel engine Remarkable increases in fuel efficiency and fuel flexibility are matched by significant reductions in maintenance costs The engine comes in three alternative versions; diesel, dual-fuel and spark-ignited gas 33 Wärtsilä
IR Contact: Natalia Valtasaari Director, Investor Relations Tel. +358 () 4 187 789 E-mail: natalia.valtasaari@wartsila.com