Wärtsilä Corporation INTERIM REPORT 23 April 2015 at 8.30 a.m. local time
WÄRTSILÄ INTERIM REPORT JANUARY-MARCH 2015
SERVICES AND POWER PLANTS' ORDERING ACTIVITY COMPENSATES FOR WEAKER MARINE MARKETS
This release is a summary of Wärtsilä's Interim Report January-March 2015. The complete report is attached to this release as a pdf-file. It is also available at http://www.wartsilareports.com/en-US/2015/q1/frontpage/ and on the company website at www.wartsila.com .
HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-MARCH 2015 - Order intake increased 15% to EUR 1,285 million (1,115) - Net sales decreased 1% to EUR 988 million (997) - Book-to-bill 1.30 (1.12) - Operating result before non-recurring items EUR 100 million, or 10.1% of net sales (EUR 98 million or 9.8%) - Earnings per share 0.43 euro (0.31) - Cash flow from operating activities EUR 37 million (111) - Order book at the end of the period increased 12% to EUR 4,931 million (4,384) WÄRTSILÄ'S PROSPECTS FOR 2015 UNCHANGED
Wärtsilä expects its net sales for 2015 to grow by 0-10% and its operational profitability (EBIT% before non-recurring items) to be between 12.0-12.5%. The guidance excludes the impact of the L-3 Marine Systems International acquisition. BJÖRN ROSENGREN, PRESIDENT AND CEO
"As anticipated, the year 2015 started with a slow marine market. Low oil prices are causing a wait and see attitude among offshore customers that, combined with subdued vessel contracting, resulted in fewer orders being received within the Ship Power business. In the Power Plants business, market sentiment is improving. Economic growth in the emerging markets and electricity consumption growth in the USA supported power plant investments, and our quotation activity indicates a continued good level of underlying customer demand.
Services' development was clearly the highlight of the first quarter. The increased maintenance activity seen towards the end of last year continued into the first quarter, boosting both order intake and sales. Services' sales grew by 11%, which compensated for the lower delivery volumes in the Ship Power and Power Plants businesses. Consequently, Group sales reached a similar level to that of the corresponding period last year and profitability improved somewhat to 10.1%. We remain committed to our guidance for 2015, and continue to see some opportunities for sales growth and improved profitability despite the prevailing market uncertainties." KEY FIGURES
| MEUR | 1-3/2015 | 1-3/2014 | Change | 2014 |
| Order intake | 1 285 | 1 115 | 15% | 5 084 |
| Order book at the end of the period | 4 931 | 4 384 | 12% | 4 530 |
| Net sales | 988 | 997 | -1% | 4 779 |
| Operating result (EBIT) 1 | 100 | 98 | 2% | 569 |
| % of net sales | 10.1 | 9.8 | 11.9 | |
| Profit before taxes | 82 | 89 | 494 | |
| Earnings/share, EUR | 0.43 | 0.31 | 1.76 | |
| Cash flow from operating activities | 37 | 111 | 452 | |
| Net interest-bearing debt at the end of the period | 251 | 390 | 94 | |
| Gross capital expenditure | 18 | 19 | 94 | |
| Gearing | 0.14 | 0.22 | 0.05 | |
| 1 EBIT is shown excluding non-recurring items. Wärtsilä recognised non-recurring items amounting to EUR 47 million during 2014, of which EUR 6 million was recognised in the first quarter. | ||||
MARKET OUTLOOK
Based on the market situation during 2014 and the GDP forecasts for 2015, the market for liquid and gas fuelled power generation is expected to remain challenging. However, the trend towards distributed, flexible gas-fired power generation is continuing. The increasing deployment of intermittent renewable power, such as wind and solar, in many parts of the world will require flexible solutions to balance fluctuations in the grid. In OECD countries, slow economic growth continues to limit demand for new power plants. At the same time, customers are awaiting new electricity market rules which is creating pent up demand. Furthermore, the shift towards CO2-neutral generation and the consequential ramp down of older, largely coal-based generation will favour flexible, efficient power solutions. In the developing world, GDP growth remains supportive of investments in power generation capacity.
The outlook for the shipping and shipbuilding market environment remains cautious due to weaker market conditions in the dry bulk and offshore segments. Low oil prices continue to impact investments in exploration and development, limiting demand for offshore drilling and support vessels. Overcapacity continues to affect demand for conventional merchant vessels. However, increased scrapping together with a more balanced fleet growth support a gradual recovery in the freight market. The decline in oil prices presents opportunities in the markets for crude oil tankers and containerships, as lower bunkering costs are expected to have a positive impact on operating expenses for ship owners. The sentiment in the gas carrier market remains healthy; activity is however expected to revert to normal levels after strong ordering volumes in 2014. The outlook for cruise and ferry is positive and is backed by new entrants to the market, fleet renewals and increased passenger traffic from Asia. The importance of fuel efficiency and environmental regulations is clearly visible, driving interest in environmental solutions and gas as a marine fuel for the broader marine markets.
The overall service market outlook is cautiously positive with growth opportunities in selected regions and segments. An increase in the installed base of medium-speed engines and propulsion equipment offsets the slower service demand for older installations and uncertainty regarding short-term demand development in the merchant marine segment. The service demand for installations operating on oil based fuels is expected to grow as recent oil price developments have had a favourable impact on operating costs. Although the decline in oil prices has resulted in a cautious outlook for offshore service, the recent years' growth in the offshore installed base partially compensates for a potential decline in service volumes. The service outlook for gas fuelled vessels remains favourable. Demand for services in the power plant segment continues to be good with an especially positive outlook in the Middle East and Africa. Customers in both the marine and power plant markets continue to show healthy interest in long-term service agreements. ANALYST AND PRESS CONFERENCE AT 10.00 A.M. LOCAL TIME
An analyst and press conference will be held on Thursday 23 April 2015 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=97934...693BDE3594 . To participate in the teleconference please register at the following address: http://emea.directeventreg.com/registration/20405211 . 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 2014, Wärtsilä's net sales totalled EUR 4.8 billion with approximately 17,700 employees. The company has operations in more than 200 locations in nearly 70 countries around the world. Wärtsilä is listed on the Nasdaq Helsinki. www.wartsila.com
Interim Report January - March 2015 http://hugin.info/131481/R/1913797/683651.pdf
HUG#1913797
