Wärtsilä Corporation INTERIM REPORT 23 April 2010 at 8.30 local time
MARKETS STILL CHALLENGING - STRONG PROFITABILITY AND CASH FLOW
FIRST QUARTER HIGHLIGHTS
- Net sales decreased 26% to EUR 922 million (1,241)
- Operating result (EBIT before nonrecurring items) EUR 94 million, or 10.2% of
net sales (EUR 130 million and 10.5%). EUR 44 million of nonrecurring items
related to restructuring measures recognised
- Strong cash flow from operating activities, EUR 181 million (23)
- Earnings per share excluding nonrecurring items amount to EUR 0.68 (0.89)
- Order intake fell 8% to EUR 881 million (958)
OLE JOHANSSON, PRESIDENT AND CEO:
"Our operating environment continues to be demanding. We see signs of gradual
recovery in the global economy, and believe that the lowest point in market
demand has been reached. Yet the shipping industry is far from stable, and the
timing and strength of the recovery remains uncertain. With the Power Plants and
Services markets continuing to be healthy, and having initiated restructuring
measures to improve our efficiency and competitiveness in the changing shipping
market, we reiterate our prospects for 2010."
WÄRTSILÄ'S PROSPECTS FOR 2010 REITERATED
Due to the weakness of the shipbuilding sector we expect net sales to decline by
10-20 percent in 2010. As a result of a stable service business, good demand for
power plants and proper adaptation of capacity, our operational profitability
(EBIT% before nonrecurring items) should be between 9-10%, well within the upper
end of our long-term target range.
ANALYST AND PRESS CONFERENCE
An analyst and press conference will be held on Friday 23 April 2010, at 10.45
a.m. Finnish time (8.45 a.m. UK time), at the Wärtsilä headquarters in Helsinki,
Finland. The combined web- and teleconference will be held in English and can be
viewed on the internet at the following address:
http://194.79.19.108/webcasts/wartsila/
To participate in the teleconference please call: +44 (0)207 1620 177 and enter
the Conference ID: 863163. If you want to ask questions during the
teleconference, press the number 1 on your phone to register for a question and
the # -key to withdraw a question. The event title for the call is: Results Q1.
Please be ready to state your details and the name of the conference to the
operator. If problems occur, please press the *-button followed by the
0-button. We would recommend that you would register to the conference in
advance at the following address:
https://eventreg2.conferencing.com/webportal3/reg.html?Acc=158744&Conf=201392
An on-demand version of the webcast will be available on the company website
later the same day.
Wärtsilä in brief
Wärtsilä is a global leader in complete lifecycle power solutions for the marine
and energy markets. By emphasising technological innovation and total
efficiency, Wärtsilä maximises the environmental and economic performance of the
vessels and power plants of its customers. In 2009, Wärtsilä's net sales
totalled EUR 5.3 billion with more than 18,000 employees. The company has
operations in 160 locations in 70 countries around the world. Wärtsilä is listed
on the NASDAQ OMX Helsinki, Finland.
INTERIM REPORT JANUARY-MARCH 2010
The figures in this interim report are unaudited.
REVIEW PERIOD JANUARY - MARCH 2010 IN BRIEF
MEUR 1-3/2010 1-3/2009 Change 2009
Order intake 881 958 -8% 3 291
Order book 31 March 4 330*) 6 477 -33% 4 491
Net sales 922 1 241 -26% 5 260
Operating result (EBIT) before nonrecurring
restructuring items 94 130 -28% 638
% of net sales 10.2% 10.5% 12.1%
Nonrecurring items 44
Operating result 49 592
% of net sales 5.3% 11.2%
Profit before taxes 49 123 558
Earnings/share, EUR 0.68 1) 0.89 4.30 2)
Cash flow from operating activities 181 23 349
Interest-bearing net debt
at the end of the period 410 613 414
Gross capital expenditure 15 24 152
*) Cancellations amounting to EUR 82 million have been eliminated from the order
book during the first quarter.
1) Earnings/share excluding nonrecurring items (EPS including nonrecurring items
total EUR 0.33)
2) Earnings/share excluding nonrecurring items (EPS including nonrecurring items
total EUR 3.94)
MARKET DEVELOPMENT
SHIP POWER
Markets show small signs of recovery
Ordering volumes for the first two months of 2010 remained similar to those at
the end of last year, while March marked a slight pick-up, showing the highest
number of orders, 95 vessels, since late 2008. Currently the markets are
characterised by relatively small players placing orders for only a few ships at
a time. New building prices are at 2004 levels, and have clearly attracted some
well-positioned owners to place orders. From Wärtsilä's point of view, the most
interesting developments have occurred in more specialised tonnage. Recovery has
started in cruise and ferry as well as in fishing, salvage and different kinds
of construction vessels. The offshore market is also active and orders are
expected to materialise later during this year.
Korea was the biggest shipbuilding nation during the period, capturing
approximately half of the orders, calculated in number of vessels. China was the
second biggest, Japan and Europe being far behind. In terms of tonnage, Korea
dominated even more clearly.
Ship Power market shares
Wärtsilä's share of the market in medium speed main engines was 35% (36% at the
end of the previous quarter) and the market share in low speed engines was 11%
(12). In auxiliary engines, Wärtsilä's share was 1% (2). Due to the very low
contracting volumes, market shares are still very sensitive to individual
orders.
POWER PLANTS
The market situation in the Power Plants business remained solid and market
activity continued to be at a good level. The closing of large projects is still
a lengthy process.
SERVICES
During the review period, our marine customers continued to suffer from the
global recession. The focus continued to be on repairs rather than on
maintenance. Investments were targeted mainly on upgrades and retrofits, with
the main purpose being to reduce operating costs. This trend is expected to
continue. By the end of the period the number of idled vessels decreased
somewhat for the first time since the economic crisis started, and vessel
scrapping levels remained stable compared to the previous quarter. Power Plants
customers continue to run their installations at high levels with a stable
demand for services.
ORDER INTAKE
The order intake for the review period totalled EUR 881 million (958), a
decrease of 8%. In relation to the previous quarter Wärtsilä's total order
intake grew 7% (EUR 823 million in the fourth quarter of 2009).
Ship Power order intake for the first three months totalled EUR 90 million
(127), down 29%. Compared to the previous quarter order intake was up 66%. Order
intake was clearly dominated by the Cruise&Ferry segment which represented 46%
of total orders. The share of various kinds of special vessels was 19%, while
Merchant and Offshore represented 15% and 12% respectively of total orders.
The order intake for Power Plants in the first quarter totalled EUR 267 million
(321), which was 17% less than for the corresponding period last year. During
the first quarter, the largest oil-fired power plant orders were received from
Africa. The largest gas-fired power plant orders came from Africa, Turkey and
India. Compared to the previous quarter, the Power Plants business order intake
fell 11% (EUR 300 million in the fourth quarter of 2009).
Order intake for the Services business totalled EUR 522 million (507) in the
first quarter, a growth of 3% compared to the corresponding period of 2009.
Compared to the fourth quarter 2009 order intake increased by 11% (EUR 470
million in the fourth quarter of 2009). Several maintenance contracts were
signed or renewed, in both the Power Plants and Ship Power businesses. Wärtsilä
signed a five-year maintenance agreement with Finnish Neste Oil for eight of
their vessels.
ORDER BOOK
The total order book at the end of the review period stood at EUR 4,330 (6,477).
The Ship Power order book stood at EUR 2,242 (4,127). During the period,
cancellations of EUR 82 million materialised and were deducted from the order
book. Cancellations were mainly concentrated within the Merchant and Offshore
segments. Wärtsilä estimates the remaining cancellation risk in the order book
to be approximately EUR 400 million (EUR 500 at the end of the previous quarter)
The Power Plants order book stood at EUR 1,392 million (1,829). The Services
order book totalled EUR 696 million (521).
Order intake by business
MEUR 1-3/2010 1-3/2009 Change 1-12/2009
Ship Power 90 127 -29% 317
Power Plants 267 321 -17% 1 048
Services 522 507 3% 1 917
Order intake, total 881 958 -8% 3 291
Order intake Power Plants
MW 1-3/2010 1-3/2009 Change 1-12/2009
Oil 79 344 -77% 1 172
Gas 360 243 48% 800
Renewable fuels 19 0 100% 35
Order book by business
MEUR 31 Mar. 2010 31 Mar. 2009 Change 31 Dec.2009
Ship Power 2 242*) 4 127 -46% 2 553
Power Plants 1 392 1 829 -24% 1 362
Services 696 521 34% 576
Order book, total 4 330 6 477 -33% 4 491
*) Cancellations amounting to EUR 82 million have been eliminated from the order
book during the first quarter.
NET SALES
Wärtsilä's net sales for January-March 2010 totalled EUR 922 million (1,241).
Ship Power's net sales decreased by 26% and totalled EUR 278 million (373). Net
sales for Power Plants totalled EUR 237 million (431), a decrease of 45%. Timing
of deliveries and the stevedore strike in Finnish harbours in March impacted
Power Plants' net sales negatively. The Power Plants business is characterised
by big individual projects and the timing of deliveries lead to fluctuations
between quarters.
Net sales from the Services business totalled EUR 409 million (434), a decrease
of 6%. The decrease was mainly due to marine customers' investment deferrals
and cost control. Postponement of maintenance, slow steaming, scrapping, as well
as seasonal fluctuations impacted first quarter Services sales.
Ship Power net sales accounted for 30%, Power Plants for 26% and Services net
sales for 44% of total net sales.
Net sales by business
MEUR 1-3/2010 1-3/2009 Change 1-12/2009
Ship Power 278 373 -26% 1 767
Power Plants 237 431 -45% 1 645
Services 409 434 -6% 1 830
Net sales, total 922 1 241 -26% 5 260
FINANCIAL RESULTS
The operating result before nonrecurring expenses totalled EUR 94 million (130)
for January-March 2010, which is 10.2% of net sales (10.5). Including the
nonrecurring items relating to the previously announced restructuring programme,
the operating result was EUR 49 million or 5.3% of net sales.
Financial items amounted to EUR 0 million (-7). Net interest totalled EUR -3
million (-6). Financial items for the period include gains from closed hedges.
Profit before taxes amounted to EUR 49 million (123). Taxes in the reporting
period amounted to EUR -14 million (-34). Earnings per share were EUR 0.33
(0.89).
BALANCE SHEET, FINANCING AND CASH FLOW
Cash flow from operating activities for January-March 2010 totalled EUR 181
million (23). Advances received at the end of the period totalled EUR 835
million (EUR 879 million at the end of the previous quarter). Liquid reserves at
the end of the period amounted to EUR 252 million (149). Net interest-bearing
loan capital totalled EUR 410 million (613). Dividends totalling EUR 173 million
were paid during the first quarter.
Wärtsilä had interest bearing loans totalling EUR 682 million (774) at the end
of March 2010. The existing funding programmes include long-term loans of
EUR 611 million, unutilised Committed Revolving Credit Facilities totalling
EUR 570 million and Finnish Commercial Paper programmes totalling
EUR 700 million. The total amount of short-term debt maturing within the next
12 months is EUR 71 million.
The solvency ratio was 36.4% (32.1) and gearing was 0.31 (0.55).
HOLDINGS
Wärtsilä owns 7,270,350 B shares in Assa Abloy, or 2.0% of the total. This
holding has been booked in the balance sheet at its market value at the end of
the reporting period, EUR 106 million.
CAPITAL EXPENDITURE
Gross capital expenditure in the review period totalled EUR 15 million (24),
which comprised EUR 1 million (2) in acquisitions and investments in securities,
and EUR 14 million (22) in production and information technology investments.
Depreciation amounted to EUR 30 million (30).
Maintenance capital expenditure for 2010 will be in line with or below
depreciation. Wärtsilä continues to pursue its strategy to expand the Services
offering and network, and any acquisition opportunities in this market may
affect total capital expenditure for the year.
RESTRUCTURING PROGRAMMES
In January, Wärtsilä announced its plans to adjust its manufacturing footprint
to the fundamental changes in the market. Wärtsilä plans to move the majority of
its propeller production and W20 generating set production to China, close to
the main marine markets. The current propeller manufacturing in Drunen, and the
component manufacturing DTS in Zwolle, both in The Netherlands, are planned to
be closed. The Wärtsilä 20 generating set production in Vaasa Finland is planned
to be closed and moved to China in order to stay competitive in this market.
WärtsiIä plans to reduce approximately 1,400 jobs globally within this programme
during 2010.
Wärtsilä is looking for annual cost savings of approximately EUR 80-90 million.
The effect of the savings will start to materialise gradually during 2010, and
will take full effect in the first half of 2011. The total nonrecurring costs
related to the restructuring will be approximately EUR 140 million, out of which
EUR 40 million non-cash write-offs were recognised in 2009 and EUR 100 million
will be recognised in 2010. During the review period EUR 44 million was
recognised.
Consultation processes have been initiated in several locations and are
proceeding according to plan. The first consultation processes are expected to
be concluded during the second quarter of 2010, after which execution of the
plans will start.
With the aim to streamline processes, decrease overlaps and improve the cost
efficiency of Wärtsilä's operations, all global staff functions will be
evaluated during the first part of 2010.
The adjustment programme announced in May 2009 to reduce 400-450 jobs in Ship
Power is proceeding according to plan and the majority of the savings have
materialised. The annual savings of EUR 30 million will take full effect by the
end of 2010.
PERSONNEL
Wärtsilä had 18,410 (18,844) employees at the end of March 2010. Personnel on
average for January - March 2010 totalled 18,481 (18,821). Ship Power employed
1,048 (1,283) people. The number of personnel in Ship Power has decreased as a
result of the restructuring measures initiated in May 2009. Power Plants
employed 853 (817) people, Services 11,357 (11,172) and Wärtsilä Industrial
Operations 4,697 (5,133) people. New O&M contracts in Services have required new
recruitments.
Of Wärtsilä's total employees, 18% (19) were located in Finland, 8% (9) in the
Netherlands and 31% (30) in the rest of Europe. The personnel employed in Asia
represented 30% (30), out of which 7% (7) were in China, in India 6% (6), in
Singapore 5% (6), and in the rest of the Asia 13% (12).
Within the restructuring programme announced in January 2010, WärtsiIä plans to
reduce approximately 1,400 jobs globally within the Group during 2010. Of these
reductions 570 are planned to be in the Netherlands. The remaining reductions
will impact various divisions, functions and countries, and will be clarified
during the first half of this year.
MANUFACTURING
During the review period Wärtsilä received the first order for its new Wärtsilä
RT-flex35 two-stroke engine. The Wärtsilä licensee, Yichang Marine Diesel Engine
Co., has signed a contract with Ningbo Donghai Shipping Co. Ltd. to deliver five
Wärtsilä RT-flex35 engines for a series of five chemical tankers. The Wärtsilä
RT-flex35 is designed to provide optimal power and speed combinations for a
number of ship types, including handy size bulk carriers, product tankers,
general cargo ships, reefer ships, feeder container ships, and small LPG
carriers.
RESEARCH & DEVELOPMENT
During the first quarter 2010, Wärtsilä and Hitachi Zosen signed an agreement to
develop and market fuel cell based power solutions for distributed power
generation applications in Japan.
Wärtsilä and Samsung Heavy Industries (SHI) signed a co-operation agreement to
develop gas-fuelled merchant vessels. The intention is to jointly develop
next-generation ships with efficient and competitive propulsion machinery
concepts that meet or exceed the demands of future environmental regulations.
During the review period Wärtsilä released a new product known as Wärtsilä NOR.
Wärtsilä NOR is a NOx reducer based on the Selective Catalytic Reduction
technology, which is a proven means for the effective reduction of NOx
emissions.
In March Wärtsilä signed an agreement with the Raytheon Group. The agreement
extends the scope of Wärtsilä's offering of integrated system solutions to
include navigation systems. The co-operation agreement gives Wärtsilä the
ability to combine its engine and propulsion controls, alarm and monitoring
systems, and the navigation systems into seamless integrated packages.
SUSTAINABLE DEVELOPMENT
The global quest for sustainable and environmentally sound development is an
important demand driver for Wärtsilä. Increased environmental concerns and more
stringent regulations, both globally and locally are creating pressure on the
marine industry to constantly investigate new ways of reducing the environmental
impact of ships. Greenhouse gas emissions reduction also continues to drive
change in the energy sector. Wärtsilä is well positioned to reduce sea transport
emissions and greenhouse gas emissions, thanks to its various technologies and
specialised services.
During the review period Wärtsilä's share was included in two new sustainability
indexes: The ECPI Global Carbon Equity Index, and the OMX GES Sustainability
Nordic index. Wärtsilä was also rated a PRIME company by Oekom Research.
SHARES AND SHAREHOLDERS
SHARES ON HELSINKI EXCHANGES
31 March 2010 Number of Number of Number of shares traded
shares votes 1-3/2010
--------------------------------------------------------------------------------
WRT1V 98 620 565 98 620 565 32 765 731
1 Jan. -31 March 2010 High Low Average 1) Close
--------------------------------------------------------------------------------
Share price 38.26 28.19 33.79 37.50
1) Trade-weighted average price.
31 Mar. 2010 31 Mar. 2009
----------------------------------------------------------------------
Market capitalisation, EUR 3 698 1 567
million
Foreign shareholders 46.4% 43.9%
DECISIONS TAKEN BY THE ANNUAL GENERAL MEETING
Wärtsilä's Annual General Meeting held on 4 March 2010 approved the financial
statements and discharged the members of the Board of Directors and the
company's President & CEO from liability for the financial year 2009. The
Meeting approved the Board of Directors' proposal to pay a dividend of EUR 1.75
per share. The dividend was paid on 16 March 2010.
The Annual General Meeting decided to change the eighth article of the Articles
of Association so that the latest time to publish the notice to the general
meeting will be three weeks, yet by latest nine (9) days before the record date
of the general meeting. The change is due to a change in the Finnish Limited
Liability Companies Act.
The Annual General Meeting decided to change the fourth article of the Articles
of Association so that the maximum number of members of the Board of Directors
was increased to ten and that the Board of Directors consists of 5-10 members.
The Annual General Meeting decided that the Board of Directors shall have nine
members. The following were elected to the Board: Ms Maarit Aarni-Sirviö, Mr
Kaj-Gustaf Bergh, Mr Alexander Ehrnrooth, Mr Paul Ehrnrooth, Mr Ole Johansson,
Mr Antti Lagerroos, Mr Bertel Langenskiöld, Mr Mikael Lilius and Mr Matti
Vuoria.
The firm of public auditors KPMG Oy Ab were appointed as the company's auditors.
The Annual General Meeting authorised the Board to resolve on donations of EUR
1,500,000 at the maximum to be made to universities during 2010. The primary
recipient of the donations would be Aalto University.
Organisation of the Board of Directors
The Board of Directors of Wärtsilä Corporation elected Antti Lagerroos as its
chairman and Matti Vuoria as the deputy chairman. The Board decided to establish
an Audit Committee, a Nomination Committee and a Compensation Committee. The
Board appointed from among its members the following members to the Committees:
Audit Committee:
Chairman Antti Lagerroos, Maarit Aarni-Sirviö, Alexander Ehrnrooth, Bertel
Langenskiöld
Nomination Committee:
Chairman Antti Lagerroos, Kaj-Gustaf Bergh, Paul Ehrnrooth, Matti Vuoria
Compensation Committee:
Chairman Antti Lagerroos, Bertel Langenskiöld, Mikael Lilius, Matti Vuoria
RISKS AND BUSINESS UNCERTAINTIES
Due to the uncertainty in the shipping industry, the main risks in Ship Power
remain the slippage of ship yard delivery schedules and it seems probable that
some orders will be rescheduled or cancelled. As a result, Wärtsilä sees a
cancellation risk of approximately EUR 400 million (EUR 500 at the end of the
previous quarter).
In the Power Plants business, the impact from the financial crisis can mainly be
seen in the timing of larger projects.
For Services, the biggest risk continues to be the uncertainty in the marine
markets and a potential further deterioration of the shipping industry leading
to a larger scale lay-up of ships.
The current market situation has impacted the entire supply chain during 2009,
and Wärtsilä is continuously monitoring its supplier base. The risk level has
not significantly changed during the year.
The annual report for 2009 contains a thorough description of Wärtsilä's risks
and risk management.
MARKET OUTLOOK
Although not yet visible in ordering activity, market activity picked up in the
shipbuilding industry during the first quarter of 2010. The activity level
increased especially in specialised tonnage and in the offshore area, and this
development is expected to continue during the year. Despite many recent bulk
carrier and some tanker orders, the market for merchant vessels is expected to
remain slow for up to the end of 2011. These recent orders can be seen as single
orders placed as a result of attractive prices rather than any market trend.
Even though markets have bottomed out, the current overcapacity and prevailing
conditions will maintain ordering volumes at low levels and lead to more intense
competition and price pressure among shipbuilding suppliers. Wärtsilä Ship Power
estimates order intake in 2010 to be moderately better than in 2009.
In 2010, the power generation market is expected to recover gradually, along
with the improvements in the financial sector. The recovery is expected to
happen at varying pace in different regions and countries, with emerging markets
expected to be in the forefront of the recovery. The flexible baseload and grid
stability & peaking customer segments are expected to recover first. Wärtsilä
Power Plants estimates order intake to improve in 2010.
Uncertainty will continue in 2010 with regards to larger service projects, as
many customers are still adapting to the economic crisis. Services development
is expected to remain steady. Though the size of the active fleet remains
stable, the scrapping of older tonnage and its replacement with new tonnage,
which is still under warranty and has lower maintenance needs, may impact
Services. Power plant installations continue to be run at high operating levels.
Environmental compliance and economic considerations have been the main drivers
of this business, and will remain so in the foreseeable future. Wärtsilä is
continuously developing its portfolio in these areas. Customers are increasingly
looking for remote management and optimisation of their assets, as this allows
them to simultaneously reduce both their costs and environmental footprint.
Wärtsilä also sees an increased interest in maintenance partnerships, which
reduce the fixed costs for our marine, offshore and power plant customers.
WÄRTSILÄ'S PROSPECTS FOR 2010 REITERATED
Due to the weakness of the shipbuilding sector we expect net sales to decline by
10-20 percent in 2010. As a result of a stable service business, good demand for
power plants and proper adaptation of capacity, our operational profitability
(EBIT% before nonrecurring items) should be between 9-10 %, well within the
upper end of our long-term target range.
WÄRTSILÄ INTERIM REPORT JANUARY - MARCH 2010
This interim financial report is prepared in accordance with IAS 34 (Interim
Financial Reporting) using the same accounting policies and methods of
computation as in the annual financial statements for 2009. All figures in the
accounts have been rounded and consequently the sum of individual figures can
deviate from the presented sum figure.
Use of estimates
The preparation of the financial statements in accordance with IFRS requires
management to make estimates and assumptions that affect the valuation of the
reported assets and liabilities and other information, such as contingent
liabilities and the recognition of income and expenses in the income statement.
Although the estimates are based on the management's best knowledge of current
events and actions, actual results may differ from the estimates.
Of the amended International Financial Reporting Standards (IFRS) and
interpretations mandatory as of 1 January 2010 the following are applicable on
the Group reporting:
* Revised IFRS 3 Business Combinations
* Amendment to IAS 27 Consolidated and Separate Financial Statements
* Amendment to IAS 39 Financial Instruments: Recognition and Measurement:
Eligible Hedged Items
* IFRIC 18 Transfers of Assets from Customers
- Amendments to IFRIC 9 Reassessment of Embedded Derivatives and IAS 39
Financial Instruments: Recognition and Measurement - Embedded Derivatives
The adaption of the revised standards and interpretations does not have any
material effect on the interim report.
This interim report is unaudited.
CONDENSED INCOME STATEMENT
MEUR 1-3/2010 1-3/2009 2009
--------------------------------------------------------------------------------
Net sales 922 1 241 5 260
Other income 7 5 50
Expenses -851 -1 087 -4 559
Depreciation and impairment -30 -30 -165
Share of profit of associates and joint ventures 2 1 6
Operating result 49 130 592
Financial income and expenses -7 -34
Profit before taxes 49 123 558
Income taxes -14 -34 -161
--------------------------------------------------------------------------------
Profit for the financial period 35 89 396
--------------------------------------------------------------------------------
Attributable to:
Owners of the parent 32 87 389
Non-controlling interest 2 1 8
--------------------------------------------------------------------------------
Total 35 89 396
--------------------------------------------------------------------------------
Earnings per share attributable to equity holders of
the parent company:
--------------------------------------------------------------------------------
Earnings per share, EUR (basic and diluted) 0.33 0.89 3.94
--------------------------------------------------------------------------------
STATEMENT OF COMPREHENSIVE INCOME
Profit for the financial period 35 89 396
Other comprehensive income after tax:
Exchange differences on translating foreign
operations 13 8 18
Investments available for sale 10 -9 34
Cash flow hedges -9 20
Share of other comprehensive income of associates and
joint ventures 1
--------------------------------------------------------------------------------
Other comprehensive income for the period 13 -1 73
--------------------------------------------------------------------------------
Total comprehensive income for the period 48 87 469
--------------------------------------------------------------------------------
Total comprehensive income attributable to:
Owners of the parent 45 86 460
Non-controlling interest 3 2 9
--------------------------------------------------------------------------------
48 87 469
CONDENSED BALANCE SHEET
MEUR 31 Mar. 2010 31 Mar. 2009 31 Dec. 2009
--------------------------------------------------------------------------------
Non-current assets
Intangible assets 782 796 779
Property, plant and equipment 456 452 457
Equity in associates and joint ventures 61 52 56
Investments available for sale 166 96 151
Deferred tax receivables 97 77 88
Other receivables 30 26 15
--------------------------------------------------------------------------------
1 593 1 500 1 548
Current assets
Inventories 1 633 1 784 1 577
Other receivables 1 169 1 349 1 287
Cash and cash equivalents 252 149 244
--------------------------------------------------------------------------------
3 054 3 282 3 108
--------------------------------------------------------------------------------
Assets 4 647 4 782 4 655
--------------------------------------------------------------------------------
Shareholders' equity
Share capital 336 336 336
Other shareholders' equity 1 033 785 1 160
--------------------------------------------------------------------------------
Total equity attributable to equity
holders of the parent 1 369 1 121 1 496
Minority interest 19 17 16
--------------------------------------------------------------------------------
Total shareholders' equity 1 388 1 138 1 512
Non-current liabilities
Interest-bearing debt 611 607 591
Deferred tax liabilities 95 80 93
Other liabilities 192 341 258
--------------------------------------------------------------------------------
898 1 029 941
Current liabilities
Interest-bearing debt 71 167 73
Other liabilities 2 290 2 448 2 129
--------------------------------------------------------------------------------
2 361 2 615 2 202
Total liabilities 3 259 3 644 3 143
--------------------------------------------------------------------------------
Shareholders' equity and liabilities 4 647 4 782 4 655
--------------------------------------------------------------------------------
CONDENSED CASH FLOW STATEMENT
MEUR 1-3/2010 1-3/2009 2009
--------------------------------------------------------------------------------
Cash flow from operating activities:
Profit before taxes 49 123 558
Depreciation and impairment 30 30 165
Financial income and expenses 7 34
Selling profit and loss of fixed assets and other
adjustments 3 -1 -7
Share of profit of associates and joint ventures -2 -1 -6
Changes in working capital 166 -90 -179
--------------------------------------------------------------------------------
Cash flow from operating activities before financial
items and taxes 246 69 564
Net financial items and income taxes -65 -46 -215
--------------------------------------------------------------------------------
Cash flow from operating activities 181 23 349
--------------------------------------------------------------------------------
Cash flow from investing activities:
Investments in shares and acquisitions -1 -2 -16
Net investments in tangible and intangible assets -13 -22 -133
Proceeds from sale of shares -23 -21
Cash flow from other investing activities 4 1 7
--------------------------------------------------------------------------------
Cash flow from investing activities -11 -46 -163
--------------------------------------------------------------------------------
Cash flow from financing activities:
New long-term loans 25 162 263
Amortization and other changes in long-term loans -12 2 -106
Changes in short term loans and other financing
activities -9 -43 -141
Dividends paid -173 -149 -156
--------------------------------------------------------------------------------
Cash flow from financing activities -168 -27 -140
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Change in cash and cash equivalents, increase (+) /
decrease (-) 2 -50 47
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period 244 197 197
Exchange rate changes 6 2
Cash and cash equivalents at end of period 252 149 244
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Total equity attributable to equity holders of
MEUR the parent Minority Total
interest equity
--------------------------------------------------------------------------------
Fair
value
Share
Share issue Translation and other Retained
capital premium differences reserves earnings
--------------------------------------------------------------------------------
Shareholders'
equity on 1
January 2010 336 61 -6 99 1 006 16 1 512
Dividends -173 -173
Total
comprehensive
income for the
period 12 1 33 3 48
--------------------------------------------------------------------------------
Shareholders'
equity on 31
March 2010 336 61 6 100 866 19 1 388
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shareholders'
equity on 1
January 2009 336 61 -27 50 764 15 1 199
Dividends -148 -1 -149
Total
comprehensive
income for the
period 10 -13 87 3 87
--------------------------------------------------------------------------------
Shareholders'
equity on 31
March 2009 336 61 -17 37 703 17 1 138
--------------------------------------------------------------------------------
Geographical distribution of net sales Europe Asia Americas Other Group
MEUR
-----------------------------------------------------------------------
Net sales 1-3/2010 279 342 199 101 922
Net sales 1-3/2009 347 491 290 113 1 241
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INTANGIBLE ASSETS AND PROPERTY, PLANT & EQUIPMENT
MEUR 1-3/2010 1-3/2009 2009
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Intangible assets
Book value at 1 January 779 793 793
Changes in exchange rates 10 13 26
Acquisitions 2 12
Additions 5 2 24
Depreciation and impairment -11 -14 -62
Disposals and intra-balance sheet transfer -14
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Book value at end of period 782 796 779
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Property, plant and equipment
Book value at 1 January 457 446 446
Changes in exchange rates 7 3 3
Acquisitions 1
Additions 10 20 112
Depreciation and impairment -18 -16 -103
Disposals and intra-balance sheet transfer -1 -1 -2
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Book value at end of period 456 452 457
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GROSS CAPITAL EXPENDITURE
MEUR 1-3/2010 1-3/2009 2009
--------------------------------------------------------------------------------
Investments in securities and
acquisitions 1 2 16
Intangible assets and property,
plant and equipment 14 22 136
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Group 15 24 152
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Wärtsilä centralises warehousing and logistics of spare parts by investing in a
new distribution centre in the Netherlands. The investments to the new
distribution centre amounted to EUR 1 million during the review period and
commitments related to the investment were EUR 30 million at the end of the
review period.
INTEREST-BEARING LOAN CAPITAL
MEUR 31 Mar. 2010 31 Mar. 2009 31 Dec. 2009
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Long-term liabilities 611 607 591
Current liabilities 71 167 73
Loan receivables -20 -12 -6
Cash and bank balances -252 -149 -244
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Net 410 613 414
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FINANCIAL RATIOS 1-3/2010 1-3/2009 2009
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Earnings per share, EUR (basic and diluted) 0.33 0.89 3.94
Equity per share, EUR 13.88 11.36 15.17
Solvency ratio, % 36.4 32.1 40.0
Gearing 0.31 0.55 0.28
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PERSONNEL
1-3/2010 1-3/2009 2009
-------------------------------------------
On average 18 481 18 821 18 830
At end of period 18 410 18 844 18 541
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CONTINGENT LIABILITIES
MEUR 31 Mar. 2010 31 Mar. 2009 31 Dec. 2009
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Mortgages 56 56 56
Chattel mortgages 12 10 10
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Total 68 66 66
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Guarantees and contingent liabilities
on behalf of Group companies 723 688 678
on behalf of associated companies 8 8
Nominal amount of rents according
to leasing contracts 81 70 77
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Total 812 757 763
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NOMINAL VALUES OF DERIVATIVE INSTRUMENTS
MEUR Total amount of which closed
---------------------------------------------------------------------
Interest rate swaps 70
Foreign exchange forward contracts 1 407 410
Currency options, purchased 63 7
Currency options, written 7 7
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CONDENSED INCOME STATEMENT,
QUARTERLY
MEUR 1-3/2010 10-12/2009 7-9/2009 4-6/2009 1-3/2009
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Net sales 922 1 519 1 167 1 333 1 241
Other income 7 11 20 13 5
Expenses -851 -1 280 -1 026 -1 167 -1 087
Depreciation and impairment -30 -73 -31 -30 -30
Share of profit of
associates and joint
ventures 2 1 3 1 1
Operating result 49 179 133 149 130
Financial income and
expenses -9 -9 -9 -7
Profit before taxes 49 170 125 141 123
Income taxes -14 -51 -38 -39 -34
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Profit for the financial
period 35 119 87 102 89
--------------------------------------------------------------------------------
Attributable to:
Owners of the parent 32 115 86 100 87
Non-controlling interest 2 4 1 2 1
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Total 35 119 87 102 89
--------------------------------------------------------------------------------
Earnings per share attributable to equity holders of
the parent company:
--------------------------------------------------------------------------------
Earnings per share, EUR 0.33 1.17 0.87 1.01 0.89
--------------------------------------------------------------------------------
CALCULATION OF FINANCIAL RATIOS
Earnings per share (EPS)
Profit for the period attributable to equity holders of the parent company
---------------------------------------------------------------------------
Adjusted number of shares over the period
Equity per share
Equity attributable to equity holders of the parent company
---------------------------------------------------------------------------
Adjusted number of shares at the end of the period
Solvency ratio
Shareholders' equity
---------------------------------------------------------------------------x 100
Balance sheet total - advances received
Gearing
Interest-bearing liabilities - cash and bank balances
---------------------------------------------------------------------------
Shareholders' equity
22 April 2010
Wärtsilä Corporation
Board of Directors
[HUG#1407246]
