WÄRTSILÄ CORPORATION JP MORGAN CAZENOVE EUROPEAN CAPITAL GOODS CEO CONFERENCE Jaakko Eskola President & CEO 1 Wärtsilä PUBLIC 16 June 2017 Jaakko Eskola
Wärtsilä s net sales by business Q1/2017 SERVICES, 49% ENERGY SOLUTIONS, 24% MARINE SOLUTIONS, 28% 2
Net sales and profitability MEUR 5 500 14% 5 000 4 500 4 000 10,9 % 11,2 % 11,9 % 12,2 % 12,1 % 12% 10% 1200 First quarter development 14% 3 500 3 000 2 500 2 000 1 500 1 000 500 8% 6% 4% 2% 1000 800 600 400 200 8.7% 8.5% 12% 10% 8% 6% 4% 2% 0 2012 2013 2014 2015 2016 0% 0 Q1/2016 Q1/2017 0% Net sales Comparable operating result, % of net sales Figures for 2012-2013 include both discontinued and continuing operations. 3 Wärtsilä PUBLIC 16 June 2017 Jaakko Eskola
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SERVICES We are where our customers need us to be 11,000 service professionals in 70 countries, 160 locations Marine installed base by operating country Power installed base by operating country Service locations 5
SERVICES Services net sales development MEUR 2 400 2 200 2 000 1 800 1 600 1 400 First quarter development EUR 490 million (500) Special vessels 7% (7) Offshore 7% (9) 1 200 1 000 800 600 400 Navy 9% (9) Power plants 37% (35) 200 0 2013 2014 2015 2016 2017 Q1 Q2-Q4 Merchant 24% (26) Cruise & ferry 16% (14) 6 Wärtsilä PUBLIC 16 June 2017 Jaakko Eskola
SERVICES Strategic focus areas CUSTOMER FIRST GO DIGITAL ASSET & LIFECYCLE NEW CUSTOMER MANAGEMENT ACCESS Growth in existing business by improving customer loyalty Growth through optimising customer performance Growth through value-adding lifecycle services & projects Growth beyond the traditional Wärtsilä installed base 7
Wärtsilä and Carnival Corporation announce strategic partnership 12-year agreement Ensuring safety and reliability of Carnival s fleet Reducing operational costs Wärtsilä provides all engine maintenance and monitoring for fleet of 79 vessels Continuous planning together with Carnival Performance-based revenue model Wärtsilä s biggest service contract in history Digitising fleet operations 8
ENERGY SOLUTIONS Market trends & drivers Growth in sustainable energy, reducing carbon emissions Rapid growth of intermittent renewable generation and escalating demand fluctuation Economic growth, electrification and improving standard of living Ageing installed capacity driving investments in new technologies Natural gas replacing other fossil fuels Storage systems needed in order to support renewable intermittent energies 9
ENERGY SOLUTIONS MEUR 1 800 1 600 1 400 1 200 Strong ordering activity in Energy Solutions First quarter development Total EUR 405 million (312) 19% 8% 73% Utilities Independent power producers Industrials 1 000 800 600 First quarter order intake by fuel in MW 400 200 Oil 24% Gas 76% 0 2013 2014 2015 2016 2017 Q1 Q2-Q4 10
ENERGY SOLUTIONS LNG INFRASTRUCTURE CAPTURING GROWTH THROUGH GLOBAL ENERGY SYSTEMS INTEGRATION ENGINE POWER PLANTS Wärtsilä PUBLIC ENERGY STORAGE INTEGRATION SOLAR PV AND ENGINE-SOLAR HYBRID POWER PLANTS
The acquisition of Greensmith will enable Wärtsilä to become a global systems integrator A US-based leader in intelligent energy storage technology and solutions Specialised in energy storage optimization and integration software Through the acquisition Wärtsilä expands its footprint in the energy storage market with solutions that combine and optimise different forms of power generation, energy storage and demand side management 12
MARINE SOLUTIONS THE MOST COMPLETE MARINE OFFERING ON EARTH 13
MARINE SOLUTIONS Market trends & drivers Urbanisation, globalisation and population growth support seaborne trade development Technological developments and new breakthroughs create a need for new business models Increasing consumption and growing middle class population support demand for cruise sector Gas remains an important fuel 14
MARINE SOLUTIONS Marine market environment continues to be soft 250 200 Merchant Offshore Cruise and Ferry Special vessels 3 months moving average in CGT* 5,0 4,5 4,0 3,5 Number of vessels 150 100 3,0 2,5 2,0 1,5 * Million CGT 50 1,0 0,5 0 0,0 01.09 03.09 05.09 07.09 09.09 11.09 01.10 03.10 05.10 07.10 09.10 11.10 01.11 03.11 05.11 07.11 09.11 11.11 01.12 03.12 05.12 07.12 09.12 11.11 01.13 03.13 05.13 07.13 09.13 11.13 01.14 03.14 05.14 07.14 09.14 11.14 01.15 03.15 05.15 07.15 09.15 11.15 01.16 03.16 05.16 07.16 09.16 11.16 01.17 03.17 05.17 Source: Clarkson Research Services, figures exclude late contracting * CGT= gross tonnage compensated with workload 15 Wärtsilä PUBLIC 16 June 2017 Jaakko Eskola
MARINE SOLUTIONS Marine Solutions order intake satisfactory MEUR 1 800 1 500 1 200 First quarter development Total EUR 322 million (379) Offshore 3% Special vessels 6% 900 600 Gas carriers 33% Cruise 23% 300 Ferry 4% 0 2013 2014 2015 2016 2017 Q1 Q2-Q4 Traditional merchant 19% Others 4% Navy 8% 16
MARINE SOLUTIONS Opportunities through our broad product portfolio and connectivity WÄRTSILÄ KNOWS GAS PORTFOLIO PROVIDES ROBUST SUPPORT FOR DIGITALISATION MARINE HYBRID SOLUTIONS Wärtsilä is involved in the whole gas value chain Data generation across the portfolio enabling big data analytics and a full-blown automation, navigation and control system offering Wärtsilä s battery/hybrid systems include energy management control, power electronics and battery integrations 17 Wärtsilä PUBLIC 16 June 2017 Jaakko Eskola
Prospects for 2017 Setti 1 Setti 1 The overall demand for Wärtsilä s services and solutions in 2017 is expected to be relatively unchanged from the previous year. Demand by business area is anticipated to develop as follows: Solid in Services with growth opportunities Good in Energy Solutions (upgraded from solid) Soft in Marine Solutions 18
OUR LONG-TERM FINANCIAL TARGETS Grow faster than global GDP Reach 14% profitability Maintain gearing below 50% Dividend 50% of EPS over the cycle Focus on strengthening our position in strategic growth markets Enhanced performance through continuous improvement Unleveraged balance sheet supports growth through acquisitions Committed to providing solid shareholder returns 19 Wärtsilä PUBLIC 16 June 2017 Jaakko Eskola
THANK YOU IR Contact: Natalia Valtasaari Director, Investor & Media Relations Tel. +358 (0) 40 187 7809 E-mail: natalia.valtasaari@wartsila.com 20 Wärtsilä PUBLIC 16 June 2017 Jaakko Eskola