Wärtsilä Corporation QUARTERLY REPORT 3 August 2007 at 8.30 local
time
STRONG ORDER INTAKE CONTINUED - MARKET EXPECTED TO REMAIN ACTIVE
HIGHLIGHTS OF THE SECOND QUARTER APRIL-JUNE 2007
- Order intake EUR 1,369 million (1,190), growth 15%
- Net sales EUR 797 million (845), -6%
- Operating result EUR 73 million (70)
- Profitability 9.2% (8.3)
HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-JUNE 2007
- Order intake EUR 2,526 million (2,214), growth 14%
- Order book total EUR 5,460 million (3,772), growth 45%
- Net sales EUR 1,558 million (1,437), growth 8%
- Operating result EUR 136 million (106), growth 29%
- Profitability 8.8% (7.4)
- EPS 0.98 (2.15; comparable EPS 0.75)
- Cash flow continued to be strongly positive
OLE JOHANSSON, PRESIDENT & CEO:"Good demand continued in the markets boosting new orders and
resulting in yet another all-time high order book of EUR 5.5 billion.
Slight decline in net sales during the second quarter is due to the
timing of the power plant deliveries. The Services grew strongly at
23%. Profitability developed as expected. The enlarged manufacturing
capacity in Vaasa, Trieste and China will support continuing growth
prospects."
WÄRTSILÄ'S PROSPECTS IN 2007
Demand in the ship power and energy markets looks likely to remain
active for Wärtsilä for the next two quarters. Based on the strong
order book, Wärtsilä's net sales are expected to grow this year by
around 15%. Profitability will exceed 9%. Wärtsilä's profitability
varies considerably between the quarters as will also be the case
this year. Wärtsilä sees further possibilities for growth in 2008.
ANALYST AND PRESS CONFERENCE
An analyst and press conference will be held on Friday 3 August 2007
starting 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 can be viewed on the Internet at the following
address:
http://194.100.179.98:80/wip/directlink.do?newbrowser=1&pid=1592175.
To participate in the teleconference and have the possibility to ask
questions, please call: +358 9 8248 6642 and enter the PIN-code
657020. To only listen to the teleconference call the same number and
enter PIN-code 831966.
An on-demand version of the conference will be available on the
company website later the same day.
Wärtsilä Corporation
Raimo Lind
Executive Vice President & CFO
Eeva Kainulainen
Vice President, Corporate Communications
Wärtsilä in brief
Wärtsilä enhances the business of its customers by providing them
with complete lifecycle power solutions. When creating better and
environmentally compatible technologies, Wärtsilä focuses on the
marine and energy markets with products and solutions as well as
services. Through innovative products and services, Wärtsilä sets out
to be the most valued business partner of all its customers. This is
achieved by the dedication of more than 15,000 professionals manning
130 Wärtsilä locations in close to 70 countries around the world.
INTERIM REPORT JANUARY-JUNE 2007
The figures in this interim report are unaudited.
SECOND QUARTER 4-6/2007 IN BRIEF
MEUR 4-6/2007 4-6/2006 Change
Order intake 1 369 1 190 15%
Net sales 797 845 -6%
Operating result 73 70 4%
% of net sales 9.2% 8.3%
Profit before taxes 72 204 1)
Earnings/share, EUR 0.54 1.60 1)
1) The April-June 2006 result includes Wärtsilä's share of Ovako's
profit after taxes EUR 8 million and a capital gain of EUR 124
million from the sale of Assa Abloy B-shares.
REVIEW PERIOD JANUARY - JUNE 2007 IN BRIEF
MEUR 1-6/2007 1-6/2006 Change 2006
Order intake 2 526 2 214 14% 4 621
Order book, 30 June 5 460 3 772 45% 4 439
Net sales 1 558 1 437 8% 3 190
Operating result 136 106 29% 262
% of net sales 8.8% 7.4% 8.2%
Profit before taxes 132 244 1) 447 2)
Earnings/share, EUR 0.98 2.15 3) 3.72 3)
Cash flow from
operating activities 129 49 302
Interest-bearing net debt at the end
of the period 178 293 55
Gross capital Expenditure 112 116 193
1) The January-June 2006 result includes Wärtsilä's share of Ovako's
profit after taxes, EUR 15 million and a capital gain of EUR 124
million from the sale of Assa Abloy B-shares.
2) The 2006 result includes Wärtsilä's share of Ovako's profit after
taxes, EUR 67 million, and a capital gain of EUR 124 million from the
sale of Assa Abloy B shares.
3) The January-June 2006 result also includes deferred tax assets
totalling EUR +26 million relating to previously recognized
restructuring expenses.
MARKET DEVELOPMENT
Ship Power
The shipbuilding market during the first half of 2007 was very active
despite a somewhat slow start at the beginning of the year. Measured
in number of vessels contracting was above the level of the
corresponding period last year with 1,676 (1,566) vessels registered.
Measured in deadweight tons, the order level was also higher than in
the same period last year especially due to the very high volume of
dry bulk vessels ordered.
The shift in focus from smaller to larger vessels and revitalization
of the container vessel market have evened out the differences
between the geographical shipbuilding markets. China remains the
biggest beneficiary having a share of 42% in the number of vessels
ordered. Korea has closed the gap from the beginning of the year,
raising its share to 33%. Europe received 8% and Japan 9% of the new
orders.
Wärtsilä's market shares in Ship Power
The total market volume for medium-speed main engines for the last 12
months at the end of the second quarter 2007 was 9,400 MW. Wärtsilä's
share fell slightly from a very high level to 42% (46% at the end of
the previous quarter). The change in the order mix from big engines
to smaller ones was the main factor behind this development. The
low-speed main engine market grew to 29,400 MW (27,700). Wärtsilä's
market share in this market was 15% (14% at the end of the previous
quarter). In auxiliary engines Wärtsilä's market share was 5% (6% at
the end of the first quarter of 2007).
Power Plants
Demand in the Power Plant market remained high and all segments
relevant to Wärtsilä - baseload production, industrial
self-generation and grid stability - were active during the review
period. Markets continued to be globally active.
Demand for oil-fired power plants was strong during the review
period, especially in Africa and the Middle East. The order intake
for power plants running on renewable fuels, which includes among
others liquid bio-fuel power plants, continued actively especially in
Italy. Demand for gas-fired power plants, remained at a good level.
Wärtsilä's market shares in Power Plants
Wärtsilä has a strong foothold in the market for heavy fuel oil (HFO)
power plants and holds approximately a third of the market in
Wärtsilä's power range. In the market for light fuel oil (LFO) power
plants, including liquid biofuels, Wärtsilä has approximately a
quarter of the market. The gas power plant market is a growing market
where Wärtsilä sees good growth potential. Wärtsilä's current market
share in gas power plants is approximately 8% of the relevant market.
ORDER INTAKE AND ORDER BOOK
Wärtsilä's order intake continued strong showing growth of 15% in the
second quarter and amounted to EUR 1,369 million (1,190). In the Ship
Power business the April-June period marked an all time high quarter
with the order intake amounting to EUR 673 million (660). The Power
Plants order intake for the second quarter amounted to EUR 326
million (243) representing growth of 34%.
In the review period January-June Wärtsilä's order intake totalled
EUR 2,526 million (2,214), representing growth of 14%. The Ship Power
order intake grew further by 3% from the high level in the
corresponding period last year (1,161) and was EUR 1,194 million.
Offshore vessels and platforms continued to dominate the new orders.
One of the landmarks was a contract to supply an entire power,
automation and propulsion system for a well-testing FPSO vessel for
Brasilian Dynamic Producer Inc. In the cruise ship segment Wärtsilä
received an order for the second vessel in the project Genesis for
Caribbean Cruise Ltd. Delivery will consist of the main engines and
transverse tunnel thrusters.
The Power Plants order intake for the review period was 41% higher
than during the corresponding period last year and totalled EUR 537
million (381). The largest oil-fired power plant orders were received
from Pakistan, Senegal and Aruba. Success in the liquid bio-fuel
power plants continued during the second quarter and Wärtsilä
received three orders with a total output of 114 MW in Italy. The
largest gas power plant orders were received from Russia and
Bangladesh.
At the end of the review period Wärtsilä's order book stood at an
all-time high of EUR 5,460 million (3,772), representing growth of
45%. Some 30% of Wärtsilä's total order book is due for delivery in
2007. The Ship Power order book was EUR 3,681 million (2,505),
corresponding deliveries for approximately two years. The Power
Plants order book stood at EUR 1,361 million (887), roughly half of
which is due for delivery in 2007.
ORDER INTAKE, SECOND QUARTER 4-6/2007
MEUR 4-6/2007 4-6/2006 Change
Ship Power 673 660 2%
Services 369 286 29%
Power Plants 326 243 34%
Order intake, total 1 369 1 190 15%
Order intake Power Plants
MW 4-6/2007 4-6/2006 Change
Oil 313 377 -17%
Gas 236 177 33%
Renewable fuels 114 17 554%
ORDER INTAKE REVIEW PERIOD 1-6/2007
MEUR 1-6/2007 1-6/2006 Change 2006
Ship Power 1 194 1 161 3% 2 270
Services 792 668 19% 1 322
Power Plants 537 381 41% 1 027
Order intake, total 2 526 2 214 14% 4 621
Order intake Power Plants
MW 1-6/2007 1-6/2006 Change 2006
Oil 443 549 -19% 766
Gas 358 283 27% 1 232
Renewable fuels 317 159 99% 353
ORDER BOOK
MEUR 30 June 2007 30 June 2006 Change 2006
Ship Power 3 681 2 505 47% 3 020
Services 416 377 10% 357
Power Plants 1 361 887 53% 1 061
Order book, total 5 460 3 772 45% 4 439
NET SALES
During the second quarter Wärtsilä's net sales decreased by 6% due to
the timing of power plant deliveries. Ship Power net sales grew 24%
and Services net sales by 23%. Organic growth in Services accounted
for 17%. Power Plants net sales decreased by 62%.
Wärtsilä's net sales for the review period January-June totalled EUR
1,558 million (1,437), growth of 8%. Ship Power net sales grew
strongly by 42% to EUR 561 million (397), representing 36% of
Wärtsilä's total net sales. Power Plants net sales amounted to EUR
262 million (432), 17% of total net sales. The net sales from the
Services business increased to EUR 726 million (604), growth of 20%
on the corresponding period last year. Organic growth represented 15%
of Services net sales growth. Services net sales accounted for 47% of
total Wärtsilä net sales.
NET SALES 4-6/2007
MEUR 4-6/2007 4-6/2006 Change
Ship Power 305 245 24%
Services 374 304 23%
Power Plants 112 292 -62%
Net sales, total 797 845 -6%
NET SALES REVIEW PERIOD 1-6/2007
MEUR 1-6/2007 1-6/2006 Change 2006
Ship Power 561 397 42% 985
Services 726 604 20% 1 266
Power Plants 262 432 -39% 934
Net sales, total 1 558 1 437 8% 3 190
FINANCIAL RESULTS
In the second quarter the operating result rose to EUR 73 million
(70) and the profitability increased to 9.2% (8.3). In the review
period 1-6/2007 the operating result improved to EUR 136 million
(106), representing profitability of 8.8 % (7.4).
In the review period 1-6/2007 the financial items amounted to EUR -5
million
(-1). Net interest totalled EUR -6 million (-7). Dividends received
amounted to EUR 6 million (8). Profit before taxes was EUR 132
million (244).
Taxes in the reporting period amounted to EUR 37 million (41). Taxes
in the comparison period included deferred tax assets totalling EUR
+26 million relating to previously recognized restructuring expenses.
Earnings per share for the review period were EUR 0.98 (2.15).
BALANCE SHEET, FINANCING AND CASH FLOW
Liquid reserves at the end of the period amounted to EUR 133 million
(137). Net interest-bearing loan capital totalled EUR 178 million
(293). The solvency ratio was 44.3% (44.0) and gearing was 0.18
(0.25).
Cash flow from operating activities for January-June 2007 was strong
and totalled EUR 129 million (49).
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 119 million.
CAPITAL EXPENDITURE
Gross capital expenditure in the review period totalled EUR 112
million (116), which comprised EUR 43 million (72) in acquisitions
and investments in securities and EUR 69 million (44) in production
and information technology investments. Depreciation amounted to EUR
37 million (35).
Due to the strong volume growth the total capital expenditure for
2007 is expected to be approx. EUR 200 million.
STRATEGIC ACQUISITIONS AND JOINT VENTURES
In January Wärtsilä and Hyundai Heavy Industries Co. Ltd (HHI) signed
an agreement to set up a 50/50-owned joint venture in Korea to
manufacture dual-fuel engines for LNG (liquefied natural gas)
carriers. The total equity of the company will be EUR 58 million,
Wärtsilä's share being EUR 29 million. The joint venture will
manufacture Wärtsilä 50DF dual-fuel engines for the Korean, Japanese,
Chinese and Taiwanese shipbuilding markets. The first engine will be
delivered in the second half of 2008. The Trieste delivery center in
Italy will continue to manufacture Wärtsilä 50DF dual-fuel engines
for the marine markets outside East Asia and for the growing
worldwide power plant market. In June the European Union competition
authorities cleared the joint venture and the permits from different
authorities have been received to start the business.
In February Wärtsilä acquired the Swedish company Senitec AB. The
company is specialized in environmental technology products for
separating waste such as oily water and sludge in power plants,
harbours and ships. This new business gives Wärtsilä the possibility
to expand its offering of environmental solutions in waste
management.
In February Wärtsilä acquired the entire business of Marine Propeller
(Pty) Ltd in Cape Town, South Africa. Marine Propeller (Pty) Ltd
focuses mainly on repairing propellers.
In May Wärtsilä continued extending its service offering in
Propulsion services with the acquisition of UK-based propeller repair
company McCall Propellers Ltd. The acquisitions complement Wärtsilä's
propeller services.
The total acquisition price of the acquisitions mentioned above is
EUR 25 million out of which EUR 17 million is reported as goodwill.
In May Wärtsilä signed an agreement to acquire the marine business of
Railko Ltd. in the UK, a company specializing in stern tube bearing
technology. The acquisition will improve Wärtsilä's competitive
position in oil-lubricated bearing systems and adds water-lubricated
bearings to the product portfolio. Railko's products are used on all
types of vessels, from cruise ships to cargo vessels. The acquisition
was closed at the beginning of July.
OTHER STRATEGIC ISSUES
In January Wärtsilä announced a public offer to the minority
shareholders of Wärtsilä India Ltd to acquire 1,240,599 shares, or
10.3% of the share capital. The offer period expired on 23 March
2007. The delisting offer was successful and pursuant to the offer
7.3% of the total shares were acquired. This implies a consideration
of EUR 10 million, of which EUR 7 million was recognised as goodwill.
Wärtsilä Corporation holds directly or indirectly 97.0% of Wärtsilä
India shares. The shares of Wärtsilä India Ltd were delisted from the
Bombay Stock Exchange on 18 June 2007.
To improve marine customer service in the rapidly growing Chinese
markets Wärtsilä opened a large reconditioning workshop in Shanghai
in March. In May Wärtsilä also opened a service workshop close to
Saigon port in Ho Chi Minh City and an office in Hanoi to serve the
growing Vietnamese shipping, shipbuilding and power industries.
The demand for training services is steadily rising and Wärtsilä
opened a new training centre in Korea to provide customer training in
the world's largest shipbuilding country.
MANUFACTURING
The investment programmes for enlarged production capacity of
medium-speed engines in Vaasa and Trieste to meet the growing market
demand are proceeding. The full capacity increase will be in use
during the second half of 2007 as planned. Wärtsilä's worldwide
supplier network has continued to build up capacity and most of these
investments made by the suppliers will also be operational during
2007.
In May Wärtsilä and Vietnam Shipbuilding Industry Corporation
(Vinashin) signed a licence agreement for the manufacture and sale of
certain types of Wärtsilä low-speed engines in Vietnam. The first
engine delivery is scheduled for the beginning of 2010.
Wärtsilä's joint venture company in China, Wartsila CME Zhenjiang
Propeller Co Ltd, opened its new fixed pitch propeller factory in
June. The new factory doubles Wärtsilä's capacity to manufacture this
type of propeller.
The manufacturing and technology activities of the propulsor business
are being merged with the engine manufacturing into an Industrial
Operations organization. The target of the new structure is to
further strengthen untilization of core competences.
R&D
Wärtsilä is further increasing its focus on combustion research and
engine performance technology development by making new investments
in this area.
The current Hercules programme aiming at reduction of fuel
consumption and CO2 emissions ends in September 2007. The main
parties in the present programme, Wärtsilä and MAN Diesel, are
preparing the next phase of the project. The proposal for the next
phase was submitted to the EU Commission at the beginning of June.
Testing of the Wärtsilä Auxpac 26 engine began during the review
period with positive results. This product will enhance the Auxpac
product range to meet market demand for bigger auxiliary engines.
PERSONNEL
Wärtsilä had 14,791 (12,650) employees on average during the
reporting period and 15,180 (12,918) at the end of June. The largest
personnel increases took place in the Services business where the
personnel increase was close to 19% compared to the correponding
period 2006. At the end of the period the Services business employed
8,937 (7,537).
SHARES AND SHAREHOLDERS
SHARES ON HELSINKI EXCHANGES
30 June 2007 A-share B-share Total
Number of shares 23 579 587 72 223 078 95 802 665
Number of votes 235 795 870 72 223 078 308 018 948
Number of shares traded
1-6/2007 868 828 57 218 179 58 087 007
1 Jan.- 30 June 2007 High Low Average 1) Close
A-share 50.50 38.05 45.80 47.80
B-share 51.40 38.44 46.38 48.90
1) Trade-weighted average price.
Market capitalization 30 June 2007 30 June 2006
EUR million 4 659 3 110
Foreign shareholders 30 June 2007 30 June 2006
32.6% 28.8%
CHANGES IN OWNERSHIP AFTER THE REPORTING PERIOD
On 3rd of July Varma Mutual Pension Insurance Company increased its
holding in Wärtsilä Corporation. Following the transaction Varma owns
2,795,615 A shares and 1,188,691 B shares giving a total holding of
3,984,306 Wärtsilä shares or 4.16% of Wärtsilä's share capital and
9.46% of the total votes.
On 3rd of July Sampo plc decreased its holding in Wärtsilä
Corporation. Following the transaction Sampo owns 584,668 A shares or
0.61% of Wärtsilä's share capital and 1.90% of the total votes.
OPTION SCHEMES
During the review period Wärtsilä had two option schemes. The 2001
option scheme ended on 31 March 2007. The 2002 option scheme will end
on 31 March 2008. Based on the option schemes altogether 197.952
shares, representing 0.2 % of the share capital remained unsubscribed
at the end of the review period.
DECISIONS TAKEN BY THE ANNUAL GENERAL MEETING
Wärtsilä's Annual General Meeting on 14 March 2007 approved the
financial statements and discharged the company's President & CEO and
the members of the Board of Directors from liability for the
financial year 2006. The Meeting approved the Board of Directors'
proposal to pay a dividend of 1.75 euros per share.
Wärtsilä's Annual General Meeting decided that the Board of Directors
shall have six members. The following were elected to the Board: Ms
Maarit Aarni-Sirviö, Mr Heikki Allonen, Mr Göran J. Ehrnrooth, Mr
Antti Lagerroos, Mr Bertel Langenskiöld and Mr Matti Vuoria.
The firm of authorized public accountants KPMG Oy Ab were appointed
as the company's auditors.
AUTHORIZATIONS GRANTED TO THE BOARD OF DIRECTORS
The AGM authorized the Board to issue new Series A and/or Series B
shares in one or several instalments. The share issue can be executed
on the conditions and at the price determined by the Board.
Under this authorization at most totally 9,555,434 new shares may be
issued. Within this total amount of shares
- at most 2,357,958 new A shares and at most 7,197,476 new B shares
are issued to the shareholders in proportion to their existing
holdings, and/or
- at most 9,555,434 B shares are issued, disapplying the pre-emptive
right of the shareholders provided that the Company has important
financial grounds for doing so.
The authorization may be exercised, within the restrictions listed
above, to develop the company's capital structure, to broaden its
ownership base, as consideration in acquisitions or when the company
acquires assets related to its business. The rights issue may also be
executed as payment in kind or by using the right of set-off.
The authorization remains in force until the following Annual General
Meeting.
ORGANIZATION OF THE BOARD OF DIRECTORS
The Board of Directors of Wärtsilä Corporation elected Antti
Lagerroos as its chairman and Göran J. Ehrnrooth 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; Members Maarit Aarni-Sirviö, Heikki Allonen
and Matti Vuoria.
Nomination Committee:
Chairman Antti Lagerroos; Members Göran J. Ehrnrooth and Matti
Vuoria.
Compensation Committee:
Chairman Antti Lagerroos; Members Heikki Allonen and Matti Vuoria.
RISKS AND BUSINESS UNCERTAINTIES
The very high demand has led to a short supply of certain key
components. Examples of bottlenecks are castings and forgings where
global demand exceeds supply. Wärtsilä has taken several measures to
ensure the availability of these key components. Investments have
been implemented by many of the company's suppliers and most of these
will be operational during 2007.
MARKET OUTLOOK
The outlook for the global world economy remains strong and is
expected to remain favourable in the near future. The shipping and
shipbuilding industries continue to be active. The freight market has
remained strong and freight rates are still at historically high
levels. Slightly higher interest rates and inflation have not
affected the shipbuilding market. However, the increase in deliveries
of new ships has become faster than growth in demand for new tonnage
and this is expected to start affecting the freight market in the
medium term. The market is expected to continue active at least for
upcoming six months. Also offshore investments in both vessels and
various production units are expected to remain at a high level for
at least half a year.
In the Power Plant market the situation remains good. Order intake is
expected to remain high during the reminder of the year with
particularily good prospects in South Asia, Africa and the Americas.
WÄRTSILÄ'S PROSPECTS FOR 2007
Demand in the ship power and energy markets looks likely to remain
active for Wärtsilä for the next two quarters. Based on the strong
order book, Wärtsilä's net sales are expected to grow this year by
around 15%. Profitability will exceed 9%. Wärtsilä's profitability
varies considerably between the quarters as will also be the case
this year. Wärtsilä sees further possibilities for growth in 2008.
WÄRTSILÄ INTERIM REPORT JANUARY - JUNE 2007
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
2006. 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.
Amended and new International Financial Reporting Standards (IFRS) as
of 1
January 2007:
- IFRS 7, financial instruments: Disclosures
- Amendment to IAS 1, Capital disclosures
- IFRIC 8: Scope of IFRS 2
- IFRIC 9, Reassessment of Embedded Derivatives
- IFRIC 10, Interim financial Reporting and Impairment.
The adoption of the new and revised standards and interpretations
does not have any material affect on the interim financial report.
This interim report is unadited.
CONDENSED INCOME STATEMENT
MEUR 1-6/2007 1-6/2006 2006
Net sales 1 558 1 437 3 190
Other income 8 10 25
Expenses -1 393 -1 305 -2 881
Depreciation and impairment -37 -35 -72
Operating result 136 106 262
Financial income and expenses -5 -1 -7
Net income from assets
available for sale 124 124
Share of profit of associates 15 68
Profit before taxes 132 244 447
Taxes for the period -37 -41 -94
Profit for the financial period 95 203 353
Attributable to:
Equity holders of the parent
company 94 203 351
Minority interest 1 2
Total 95 203 353
Earnings per share attributable to equity
holders of the parent company:
Earnings per share, EUR 0.98 2.15 3.72
Diluted earnings per share, EUR 0.98 2.13 3.71
CONDENSED BALANCE SHEET
31 December
MEUR 30 June 2007 30 June 2006 2006
Non-current assets
Intangible assets 634 594 602
Property, plant and equipment 333 291 315
Equity in associates 11 126 3
Investments available for sale 184 148 183
Deferred tax receivables 76 92 87
Other receivables 43 7 43
1 281 1 258 1 233
Current assets
Equity in associates 1 6
Inventories 1 087 847 838
Other receivables 929 887 932
Cash and cash equivalents 133 137 179
2 149 1 871 1 955
Assets 3 430 3 129 3 188
Shareholders' equity
Share capital 335 331 334
Other shareholders' equity 817 835 882
Total equity attributable to
equity holders of the parent 1 152 1 166 1 217
Minority interest 8 10 13
Total shareholders' equity 1 160 1 176 1 230
Non-current liabilities
Interest-bearing debt 259 222 205
Deferred tax liabilities 77 56 74
Other liabilities 75 75 73
411 353 352
Current liabilities
Interest-bearing debt 89 212 66
Other liabilities 1 771 1 389 1 540
1 860 1 601 1 606
Total liabilities 2 270 1 954 1 958
Shareholders' equity and
liabilities 3 430 3 129 3 188
CONDENSED CASH FLOW STATEMENT
MEUR 1-6/2007 1-6/2006 2006
Cash flow from operating
activities:
Profit before taxes 132 244 447
Depreciation and impairment 37 35 72
Financial income and expenses 5 1 6
Selling profit and loss of
fixed assets and other
adjustments -3 -126 -129
Share of profit of associates -15 -68
Changes in working capital 51 -41 52
Cash flow from operating
activities before financial
items and taxes 221 98 379
Net financial items and income
taxes -92 -49 -77
Cash flow from operating
activities 129 49 302
Cash flow from investing
activities:
Investments in shares and
acquisitions -43 -72 -86
Net investments in tangible and
intangible assets -66 -31 -94
Proceeds from sale of shares 148 318
Cash flow from other investing
activities 10 10 11
Cash flow from investing
activities -99 55 148
Cash flow from financing
activities:
Issuance of share capital 3 7 19
New long-term loans 61 2 6
Amortization and other changes
in long-term loans -18 -13 -37
Dividends paid -168 -141 -283
Changes in short term loans and
other financing activities 46 64 -92
Cash flow from financing
activities -76 -82 -387
Change in liquid funds,
increase (+) / decrease (-) -46 22 63
Cash and cash equivalents at
beginning of period 179 120 120
Fair value adjustments,
investments 1 1
Exchange rate changes -1 -4 -4
Cash and cash equivalents at
end of period 133 137 179
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Total equity attributable to equity
MEUR holders of the parent Minority Total
interest equity
Fair
value
Share and
Share issue Translation other Retained
capital premium differences reserves earnings
Shareholders'
equity on 31
December 2006 334 58 3 128 693 13 1 230
Translation
differences 3 4
Other changes -5 -5
Available-for-sale
investments
gain / loss from
fair valuation,
net of taxes 1 1
Cash flow hedges
after taxes 1 1
Net income
recognized
directly in equity 3 2 -5 0
Profit for the
financial period 94 1 95
Total recognized
income and expense
for the period 3 2 94 -4 95
Options exercised 1 2 3
Dividends paid -167 -1 -168
Shareholders'
equity on 30 June
2007 335 60 6 130 620 8 1 160
Shareholders'
equity on 31
December 2005 329 44 7 147 626 10 1 163
Translation
differences -1 -1 -2
Other changes 1 1
Available-for-sale
investments
gain/loss from
fair valuation,
net of taxes -1 -1
transferred to
income statement,
net of taxes -81 -81
Cash flow hedges
after taxes 28 28
Net income
recognized
directly in equity -1 -54 -55
Profit for the
financial period 203 203
Total recognized
income and expense
for the period -1 -54 203 148
Options exercised 2 5 7
Dividends paid -141 -141
Shareholders'
equity on 30 June
2006 331 49 6 93 687 10 1 176
BUSINESS SEGMENTS
Income statement 1-6/2007 Power Holdings Unallocated Group
MEUR Businesses
Net sales 1 558 1 558
Operating result 136 136
Financial income and expenses,
dividends 6 -10 -5
Profit before taxes 132
Assets 3 198 145 87 3 430
Liabilities 2 157 113 2 270
Investments 112 112
Depreciation and impairment -37 -37
Income statement 1-6/2006 Power Holdings Unallocated Group
MEUR Businesses
Net sales 1 437 1 437
Operating result 106 106
Financial income and expenses,
dividends 8 -9 -1
Net income from assets
available for sale 124 124
Share of profit of associates 15 15
Profit before taxes 244
Assets 2 770 252 108 3 129
Liabilities 1 840 114 1 954
Investments 116 116
Depreciation and impairment -35 -35
Geographical segments Europe Asia Americas Other Group
MEUR
Net sales 1-6/2007 677 558 188 134 1 558
Net sales 1-6/2006 539 488 310 99 1 437
INTANGIBLE ASSETS AND PROPERTY, PLANT & EQUIPMENT
MEUR 1-6/2007 1-6/2006 2006
Intangible assets
Book value at 1 January 602 541 541
Changes in exchange rates -1 -3 -4
Acquisitions 34 56 69
Additions 15 10 22
Depreciation and
impairment -14 -13 -28
Disposals and
intra-balance sheet
transfer -3 3 2
Book value at end of
period 634 594 602
Property, plant and
equipment
Book value at 1 January 315 273 273
Changes in exchange rates -4 -6
Acquisitions 1 18 18
Additions 54 34 84
Companies sold -17
Depreciation and
impairment -23 -22 -44
Disposals and
intra-balance sheet
transfer 3 -8 -11
Book value at end of
period 333 291 315
GROSS CAPITAL EXPENDITURE
MEUR 1-6/2007 1-6/2006 2006
Investments in securities
and acquisitions 43 72 86
Other investments 69 44 107
Group 112 116 193
During the review period investments in the factories in Vaasa,
Finland and Trieste, Italy amounted to EUR 18 million, and Wärtsilä
had commitments related to the investment programmes amounting to EUR
9 million at the end of the review period. The investment in the
enlargement of propulsion equipment manufacturing in the Netherlands
and China amounted to EUR 5 million during the review period, and
Wärtsilä had commitments related to the enlargements amounting to EUR
11 million at the end of the review period.
IMPACT OF ACQUISITIONS ON THE CONSOLIDATED BALANCE SHEET
During the reporting period Wärtsilä has acquired the propeller
repair business of the South African company Marine Propeller (Pty)
Ltd., a Swedish environmental technology company Senitec AB and a
propeller repair company McCall Propellers Ltd in UK.
In addition, Wärtsilä acquired 7.3% of Wärtsilä India Ltd. and at the
end of the review period the percentage of ownership was 97.0%.
MEUR 1-6/2007
Acquisition costs 35
Acquired assets to fair
value 11
Goodwill 24
Specification of acquired
assets:
Tangible and intangible
assets 7
Property, plant and
equipment 1
Inventories 1
Receivables 4
Minority interest 3
Liabilities -3
Deferred tax liabilities -2
Total 11
INTEREST-BEARING LOAN
CAPITAL
31 December
MEUR 30 June 2007 30 June 2006 2006
Long-term liabilities 259 222 205
Current liabilities 89 212 66
Loan receivables -36 -4 -36
Cash and bank balances -133 -137 -179
Net 178 293 55
FINANCIAL RATIOS 1-6/2007 1-6/2006 2006
Earnings per share, EUR 0.98 2.15 3.72
Diluted earnings per
share, EUR 0.98 2.13 3.71
Equity per share, EUR 12.03 12.33 12.74
Solvency ratio, % 44.3 44.0 47.0
Gearing 0.18 0.25 0.07
PERSONNEL
1-6/2007 1-6/2006 2006
On average 14 791 12 650 13 264
At end of period 15 180 12 918 14 346
CONTINGENT LIABILITIES
31 December
MEUR 30 June 2007 30 June 2006 2006
Mortgages 15 15 20
Chattel mortgages 22 21 21
Total 38 37 42
Guarantees and contingent
liabilities
On behalf of Group
companies 391 304 317
On behalf of associated
companies 1
Nominal amount of rents
according
to leasing contracts 51 39 50
Total 442 345 367
NOMINAL VALUES OF
DERIVATIVE INSTRUMENTS
of which
MEUR Total amount closed
Interest rate swaps 140
Foreign exchange forward
contracts 1 169 135
Currency options,
purchased 22 7
Currency options, written 8 8
CONDENSED INCOME STATEMENT,
QUARTERLY
4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
MEUR 2007 2007 2006 2006 2006 2006
Net sales 797 761 986 767 845 592
Other income 4 4 11 4 8 2
Expenses -710 -683 -880 -696 -764 -541
Depreciation and impairment -18 -18 -18 -18 -18 -18
Operating result 73 63 99 56 70 36
Financial income and expenses -1 -4 -8 1 2 -3
Net income from assets available
for sale 124
Share of profit of associates 50 4 8 7
Profit before taxes 72 60 141 61 204 40
Taxes for the period -20 -17 -33 -20 -53 12
Profit for the financial period 52 42 108 42 151 52
Attributable to:
Equity holders of the parent
company 52 42 107 41 150 52
Minority interest 1 1
Total 52 42 108 42 151 52
Earnings per share attributable to
equity holders of the parent company:
Earnings per share, EUR 0.54 0.44 1.13 0.44 1.60 0.55
Diluted earnings per share, EUR 0.54 0.44 1.15 0.43 1.58 0.55
CALCULATION OF FINANCIAL RATIOS
Earnings per share (EPS)
Profit before taxes - income taxes - minority interests
------------------------------------
Adjusted number of shares over the financial year
Equity per share
Shareholders' equity
------------------------------------
Adjusted number of shares at the end of the period
Solvency ratio
Shareholders' equity + minority interests
------------------------------------ x 100
Balance sheet total - advances received
Gearing
Interest-bearing liabilities - cash and bank balances
------------------------------------
Shareholders' equity + minority interests
2 August 2007
Wärtsilä Corporation
Board of Directors
