INTERIM REPORT JANUARY-JUNE 212 BJÖRN ROSENGREN, PRESIDENT & CEO 18 JULY 212
Highlights Q2/212 Order intake EUR 1,198 million, +2% Net sales EUR 1,99 million, +6% Book-to-bill 1.9 (1.13) EBIT EUR 113 million, 1.3% of net sales EBITA EUR 123 million, 11.2% of net sales EPS EUR.38 (.35) EBIT is shown excluding non-recurring items. EBITA is shown excluding non-recurring items and intangible asset amortisation related to acquisitions. 2 Wärtsilä
Steady development in order intake MEUR 6 55 5 45 4 35 3 25 2 15 1 Second quarter development MEUR 14 1 17 1 198 12 2% 1 5% 8 6 46% 4 Services Ship Power Power Plants 5 2-33% 28 29 21 211 1-6/212 Q2/211 Q2/212 3 Wärtsilä
Growth in net sales MEUR 55 5 45 14% -13% 4-7.6% Second quarter development 35 MEUR 3 25 2 15 1 14 12 1 8 6 4 1 36 6% -1% 34% 1 99 Services Ship Power Power Plants 5 2-2% 28 29 21 211 1-6/212 Q2/211 Q2/212 4 Wärtsilä
Net sales by business 1-6/212 Ship Power 25% (24) Services 45% (42) Power Plants 3% (34) 5 Wärtsilä
Book-to-bill ratio remains above one MEUR 6 1,4 55 5 1.21 1.7 1.1 1,2 45 4 1, 35.88,8 3.63 25,6 2 15,4 1,2 5 28 29 21 211 1-6/212, Order intake Net sales Book-to-bill 6 Wärtsilä
Growth in order book MEUR 7 6 5 19% 4 515 4 3 779 7% 3 2 25% 1 2% 28 29 21 211 3.6.211 3.6.212 Power Plants Ship Power Services 7 Wärtsilä
Order book distribution MEUR 4 3 2 1 3.6.211 3.6.212 Delivery current year Delivery next year or later 8 Wärtsilä
Profitability MEUR 25 16% 2 15 11.9% 11.4% 12.8% 12.1% 11.% 1.7% 11.5% 11.1% 11.2% 1.3% 14% 12% 1% 8% EBIT% target: 1-14% 1 6% 5 4% 2% 28 29 21 211 212 Q1 Q2 Q3 Q4 EBIT% before non-recurring items EBITA% before non-recurring items and intangible asset amortisation related to acquisitions % 9 Wärtsilä
Power plant markets active, some delays in larger investments
High level of quoted MWs Quoted MW per Fuel Type 16 14 12 MW 1 Others 8 6 4 Natural gas Heavy fuel oil 2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 24 25 26 27 28 29 21 211 212 Share of natural gas is consistently increasing 11 Wärtsilä
Quarterly order intake MEUR 6 5 4 3 2 1 25 26 27 28 29 21 211 212 Q1 Q2 Q3 Q4 12 Wärtsilä
Order intake by application MEUR 2 18 16 14 12 Review period development Total EUR 591 million (672) 9% 9% 67% 16% Industrial self-generation Flexible baseload Oil & gas Grid stability & peaking 1 8 6 Review period order intake by fuel in MW 4 2 28 29 21 211 1-6/212 Oil 39% Gas 61% 13 Wärtsilä
Major power plant order from Azerbaijan Contract awarded to supply a 384 MW gas power plant to Azerbaijan to be operated for baseload production by Azerenerji JSC, the state-owned utility Scope of supply includes 21 Wärtsilä 5SG engines running on natural gas, related auxiliaries and process equipment The high efficiency of the Wärtsilä 5SG engines and our ability to deliver on a fast-track basis were major reasons for us being awarded this contract Wärtsilä has delivered over 86 MW of installed capacity to Azerbaijan 14 Wärtsilä
Global order intake Europe 19 (55) Asia 771 (298) 19 11 59 Americas 425 (199) 58 29 62 11 229 Africa and Middle East 186 (44) Flexible baseload Industrial self-generation Grid stability & peaking Oil & gas 127 59 Order intake 1-6/212: 1,41 MW (1,487) 15 Wärtsilä
Market for gas and liquid based power plants 211 Total market 1.8 GW 3.3% 4.3% 2.% 8.8% 3.3% GE Siemens MHI 34.6% Alstom 14.4% Wärtsilä 29.3% Russian Other gas turbines Other combustion engines* Market data includes all prime mover units over 5 MW and estimated output of steam turbines for combined cycles. The data is gathered from the McCoy Power Report. In engine technology, Wärtsilä has a leading position. * Other combustion engines figures based partly on Wärtsilä s own estimate. 16 Wärtsilä
Good development within specialised vessel segments
18 Vessel order development Merchant Offshore Cruise and Ferry Special vessels 3 months moving average in CGT* 14 4 12 1 3 8 6 2 4 1 2 1.9 2.9 3.9 4.9 5.9 6.9 7.9 8.9 9.9 1.9 11.9 12.9 1.1 2.1 3.1 4.1 5.1 6.1 7.1 8.1 9.1 1.1 11.1 12.1 1.11 2.11 3.11 4.11 5.11 6.11 7.11 8.11 9.11 1.11 11.11 12.11 1.12 2.12 3.12 4.12 5.12 6.12 # of vessels Million CGT* Source: Clarkson Research Services * CGT= gross tonnage compensated with workload Wärtsilä
Order intake increased by 51% MEUR 2 Review period development Total EUR 723 million (479) 16 12 Merchant 32% Offshore 43% 8 Other 2% 4 28 29 21 211 1-6/212 Special vessels 7% Cruise & ferry 4% Navy 12% 19 Wärtsilä
Increasing activity in scrubber markets Exhaust gas scrubbers enable efficient and economical reduction of SO x emissions in ships Wärtsilä s scrubber portfolio is the widest in the market and consists of: Open-loop scrubbers, well established Closed-loop scrubbers, in operation and new projects under delivery Hybrid scrubbers, orders received New scrubber orders: World s largest hybrid scrubber from the global rolling cargo operator Wilh. Wilhelmsen ASA Order received for four hybrid scrubber systems to be installed on two newbuilt vessels and an option for another similar order 2 Wärtsilä
Joint venture ordering activity MEUR 6 55 5 45 4 35 3 25 2 Order intake in the South Korean joint venture producing dual-fuel engines and the Chinese joint venture producing auxiliary engines totalled EUR 148 million (33) during the review period January-June 212 Wärtsilä s share of ownership in these companies is 5%, profits are reported as a share of result in associates and joint ventures 15 1 5 Joint venture order intake (Wärtsilä Hyundai Engine Company Ltd and Wärtsilä Qiyao Diesel Company Ltd) Ship Power order intake 21 Wärtsilä
Ship Power order book 3 June 212 LNG 1% RoRo 1% Merchant 38% Bulkers 6% Containers 2% Offshore 4% Tankers 13% Cargo 6% Others 2% Navy 8% Special vessels 13% Cruise & Ferry 5% 22 Wärtsilä
Market position of Wärtsilä s marine engines Medium-speed main engines Low-speed main engines Mitsubishi 3%(2) Auxiliary engines Wärtsilä 5%(5) Others 25%(26) Wärtsilä 49%(49) Wärtsilä 22%(24) MAN Diesel 19%(15) Caterpillar (MAK) 7%(1) MAN Diesel 75%(74) Others 95%(95) Total market volume last 12 months: 5,156 MW (5,495) Total market volume last 12 months: 11,984 MW (13,52) Total market volume last 12 months: 3,51 MW (3,793) Wärtsilä s market shares are calculated on a 12 months rolling basis, numbers in brackets are from the end of the previous quarter. Wärtsilä s own calculation is based on Marine Market Database. 23 Wärtsilä
Stable development in the service markets
Net sales development MEUR 2 18 16 14 12 1 8 6 4 2 % % % Second quarter development MEUR 6-1% 5 452 449 4 3 2 1 28 29 21 211 1-6/212 Q2/211 Q2/212 25 Wärtsilä
Net sales by quarter MEUR 6 5 4 3 2 1 25 26 27 28 29 21 211 212 Q1 Q2 Q3 Q4 26 Wärtsilä
Net sales distribution 1-6/212 Field service 24%(23) Spare parts 53%(54) Contracts 14%(15) Projects 9%(8) Total EUR 942 million (89) 27 Wärtsilä
Interest in service agreements continues Several service agreements signed during the second quarter: A 3-year O&M agreement with Sasol New Energy Holdings covering the 18 MW gas engine power plant project in Sasolburg, South Africa A long-term O&M agreement for the 12 MW Hera power plant in Dili, in the Democratic Republic of Timor-Leste A long-term service agreement covering seven Princess Cruise Lines vessels and 27 MW of installed capacity Wärtsilä has over 16 GW of generating capacity under O&M and other service agreements globally, covering more than 5 marine and land-based installations 28 Wärtsilä
Development of Power Plants service agreements MW 45 14% 4 35 3 25 115% 12% 1% 8% 2 53% 57% 58% 6% 15 1 5 31% 4% 2% 28 29 21 211 1-6/212 % O&M and maintenance agreements Power Plants deliveries % of delivered MWs 29 Wärtsilä
Services Fleet utilisation Anchored* & Idle Vessels**, percent of fleet 26% 2% 14% 8% 2% Jul.12 Jun.12 May.12 Apr.12 Mar.12 Feb.12 Jan.12 Dec.11 Nov.11 Oct.11 Sep.11 Aug.11 Jul.11 Jun.11 May.11 Apr.11 Mar.11 Feb.11 Jan.11 Anchored Idle 1,5 1, 9,5 9, Jul.12 Jun.12 May.12 Apr.12 Mar.12 Feb.12 Jan.12 Dec.11 Nov.11 Oct.11 Sep.11 Aug.11 Jul.11 Jun.11 May.11 Apr.11 Mar.11 Feb.11 Jan.11 * Source Bloomberg (AISLive). More than 25 vessels (>299 GT) covered. ** Idle (no movement for 19 days for containerships, others 35 days). Source Lloyd s MIU. Around 15 vessels (>299 GT) covered. *** Source Bloomberg 3 Wärtsilä Fleet Average Speed***, knots
Cash flow from operating activities MEUR 8 7 6 5 4 3 2 1-1 -2 28 29 21 211 1-6/212 31 Wärtsilä
Net working capital development MEUR 2 18 16 14 12 1 8 6 4 2 5.8% 267 9.2% 482.3,7% 17 6.8% 285 13.%* 545 25% 2% 15% 1% 5% Increase in net working capital a result of: Decrease in mainly project related accruals Increase in inventories, due to: Large deliveries scheduled for the remainder of the year Certain customers experiencing delays in arranging payment security Hamworthy opening balance for inventories approx. EUR 9 million 28 29 21 211 3.6.212 % Net Working Capital Total Inventories Advances Received Net Working Capital / Net sales * Working Capital / Annualised Net Sales 32 Wärtsilä
Committed loans 3 June 212 MEUR 16 14 12 534 1 8 262 Total EUR 942 million drawn 6 86 4 2 594 Drawn longterm loans Current portion of long-term loans Drawn shortterm loans Undrawn revolving credits At the end of the reporting period, drawn revolving credits amounted to euro. Drawn short-term loans include EUR 246 million Finnish Commercial Papers. The total amount of Finnish Commercial Paper Programs was EUR 7 million (uncommitted). 33 Wärtsilä
Financial position Solvency 5% 45% 4% 35% 3% 25% 2% 15% 1% Gearing,7,6,5,4,3,2,1 5% %, 28 29 21 211 3.6.212 -,1 28 29 21 211 3.6.212 34 Wärtsilä
Organising for entrepreneurial drive Change of organisational set up within Ship Power and Wärtsilä Industrial Operations to strengthen competitiveness and to serve customers more effectively Aim to further increase the flexibility of operations and ensure faster decision making Ship Power will be organised by products consisting of 4-stroke, 2-stroke, Propulsion, Flow & Gas, Environmental, and Solutions WIO will be renamed PowerTech and it will consist of Product Center 4-stroke and Central Operations No job reductions planned based on the changes in the organisational structure 35 Wärtsilä
Market outlook Power Plants: The power generation market is expected to remain active in 212. Ship Power: Full year vessel contracting expected to be somewhat lower than in 211. Robust contracting activity is expected for the offshore, gas carrier, and other specialised vessel markets. Services: The merchant marine segments are still expected to be under pressure, as overcapacity in the market continues to impact the potential for services in this area. The power plant service market is expected to develop steadily. 36 Wärtsilä
Wärtsilä expects its net sales for 212 to grow by 5-1% and its operational profitability (EBIT% before non-recurring items) to be 1-11%. Prospects for 212 reiterated
IR Contact: Pauliina Tennilä Director, Investor Relations Tel. +358 () 4 57 553 E-mail: pauliina.tennila@wartsila.com