Wärtsilä Corporation INTERIM REPORT 23 October 2014 at 8.30 a.m. local time
WÄRTSILÄ INTERIM REPORT JANUARY-SEPTEMBER 2014
GOOD DEVELOPMENT IN ORDER INTAKE AND PROFITABILITY
This release is a summary of Wärtsilä's Interim Report January-September 2014.
The complete report is attached to this release as a pdf-file. It is also
available at http://www.wartsilareports.com/en-US/2014/q3/frontpage/ and on the
company website at www.wartsila.com.
THIRD QUARTER HIGHLIGHTS
- Order intake increased 21% to EUR 1,309 million (1,086)
- Net sales decreased 7% to EUR 1,117 million (1,199)
- Book-to-bill 1.17 (0.91)
- Operating result before non-recurring items EUR 142 million, or 12.7% of net
sales (EUR 148 million or 12.3%)
- Earnings per share EUR 0.43 (0.48)
- Cash flow from operating activities EUR 68 million (139)
HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-SEPTEMBER 2014
- Order intake increased 2% to EUR 3,562 million (3,487)
- Net sales increased 1% to EUR 3,230 million (3,203)
- Book-to-bill 1.10 (1.09)
- Operating result before non-recurring items EUR 373 million, or 11.5% of net
sales (EUR 346 million or 10.8%)
- Earnings per share EUR 1.16 (1.24)
- Cash flow from operating activities EUR 240 million (261)
- Order book at the end of the period increased 5% to EUR 4,674 million (4,455)
WÄRTSILÄ'S PROSPECTS FOR 2014 REVISED
Wärtsilä estimates its profitability for 2014 (EBIT% before non-recurring items)
to be 11.5-12.0%. Previously profitability was expected to be around 11.5%.
Wärtsilä reiterates its expectation that net sales will grow by around 5%.
BJÖRN ROSENGREN, PRESIDENT AND CEO
"The third quarter was characterised by the strong development in order intake.
In the power generation markets customers are gradually beginning to commit to
investments. The improved activity levels especially for smaller orders,
combined with the 139 MW order we received from Mexico and the 112 MW order from
North Dakota, resulted in a 47% increase in Power Plants' order intake. In the
marine markets the recent activity in LNG and LPG carriers has supported the
ordering of gas handling systems. The 24% increase in Ship Power's order intake
was further enhanced by good activity in the cruise markets. I am confident that
the positive trend in order development will continue during the upcoming
quarter.
Third quarter net sales and profitability developed in line with our
expectations. I am especially pleased that Services' net sales grew by 9%, which
shows that our focus on growth is paying off. Profitability reached 12.7% partly
thanks to the ongoing efficiency program, which resulted in savings of EUR 10
million in the third quarter. Profitability has developed well thus far in
2014, reaching 11.5% for the period January-September, and consequently we raise
our full year profitability guidance to 11.5-12.0%."
KEY FIGURES
Restated Restated Restated
MEUR 7-9/2014 7-9/2013 Change 1-9/2014 1-9/2013 Change 2013
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Order intake 1 309 1 086 21% 3 562 3 487 2% 4 821
Order book at the
end of the period 4 674 4 455 5% 4 311
Net sales 1 117 1 199 -7% 3 230 3 203 1% 4 607
Operating result
(EBIT)(1) 142 148 -4% 373 346 8% 557
% of net sales 12.7 12.3 11.5 10.8 12.1
Profit before
taxes (2) 129 136 338 353 544
Earnings/share,
EUR (2) 0.43 0.48 1.16 1.24 1.98
Cash flow from
operating
activities 68 139 240 261 578
Net interest-
bearing debt at
the end of the
period 277 534 276
Gross capital
expenditure 75 84 134
Gearing 0.14 0.31 0.15
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(1) EBIT is shown excluding non-recurring items. Wärtsilä recognised non-
recurring items related to restructuring measures amounting to EUR 1 million
(8) in the third quarter and EUR 17 million (10) during the review period
January-September 2014. Non-recurring items amounted to EUR 20 million in
2013, of which EUR 11 million related to restructuring measures.
(2) Earnings/share and profit before taxes for January-September 2013 and the
full year 2013 include the sale of Wärtsilä's shares in Sato Oyj.
MARKET OUTLOOK
Power generation markets closely follow global macro-economic development. Based
on the difficult market situation seen during the three first quarters of the
year and the revised GDP forecasts for 2014, the overall market for liquid and
gas fuelled power generation is expected to continue to be challenging. Ordering
remains active in emerging markets, which continue to invest in new power
generation capacity. Furthermore, the current market situation is creating pent-
up demand in certain emerging countries where investment decisions have been
delayed. In the OECD countries demand is mainly driven by CO2 neutral generation
and the ramp down of older, largely coal-based generation.
Overcapacity continues to affect the demand for traditional merchant vessels.
Vessels are being scrapped at a younger age, which along with a more balanced
fleet growth supports a gradual recovery in the freight market. In the offshore
segment, the contracting of drilling units and certain support vessels is
expected to continue to be at a lower level. The outlook for gas carriers
remains positive, although the recent strong ordering volumes may affect
activity in the short term. The importance of fuel efficiency and environmental
regulations are clearly visible. The regulatory environment is also driving
interest in gas as a marine fuel in the wider marine markets, a trend further
strengthened in the US by favourable pricing.
The overall service market outlook remains stable, with positive developments in
selected regions. An increase in the installed base offsets the slower service
demand for older installations and the continued emphasis of merchant marine
customers on reducing operating expenses. The outlook for services to offshore
and gas fuelled vessels remains favourable. Demand for services in the power
plant segment continues to be good. The interest in service agreements is strong
in both of Wärtsilä's end markets. From a regional perspective, the outlook for
the Middle East and Asia is positive, and is supported by interest in power
plant related services. The outlook is also good in the Americas and in Africa.
ANALYST AND PRESS CONFERENCE AT 10.00 A.M. LOCAL TIME
An analyst and press conference will be held on Thursday 23 October 2014 at
10.00 a.m. Finnish time (8.00 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 at the following address:
http://wcc.webeventservices.com/r.htm?e=860895&s=1&k=65BEF013C787E3A0BC58A93E095
28E8E. To participate in the teleconference please register at the following
address: http://emea.directeventreg.com/registration/17563899. You will receive
dial-in details by e-mail once you have registered. If problems occur, please
press *0 for operator assistance. Please use *6 to mute your phone during the
teleconference and the same code to unmute.
An on-demand version of the webcast will be available on the company website
later the same day.
For further information, please contact:
Marco Wirén
Executive Vice President & CFO
Tel: +358 10 709 5640
marco.wiren@wartsila.com
Natalia Valtasaari
Director, Investor Relations
Tel: +358 40 187 7809
natalia.valtasaari@wartsila.com
For press information, please contact:
Atte Palomäki
Executive Vice President, Communications & Branding
Tel: +358 10 709 5599
atte.palomaki@wartsila.com
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 maximizes the environmental and economic performance of the
vessels and power plants of its customers. In 2013, Wärtsilä's net sales
totalled EUR 4.7 billion with approximately 18,700 employees. The company has
operations in more than 200 locations in nearly 70 countries around the world.
Wärtsilä is listed on the NASDAQ OMX Helsinki, Finland. www.wartsila.com
[HUG#1865057]
