Wärtsilä's half year financial report January-June 2018

Wärtsilä Corporation Half year financial report 19 July 2018 at 8.30 a.m. local time

WÄRTSILÄ’S HALF YEAR FINANCIAL REPORT JANUARY-JUNE 2018

GOOD DEVELOPMENT IN ORDERS RECEIVED

This release is a summary of Wärtsilä’s Half year financial report January-June 2018. The complete report is attached to this release as a pdf-file. It is also available at http://www.wartsilareports.com/en-US/2018/q2/frontpage/ and on the company website at www.wartsila.com.

SECOND QUARTER HIGHLIGHTS

- Order intake increased 14% to EUR 1,553 million (1,363)
- Net sales decreased 3% to EUR 1,246 million (1,290)
- Book-to-bill 1.25 (1.06)
- Comparable operating result stable at EUR 123 million (122), which represents 9.8% of net sales (9.5)
- Earnings per share increased to 0.13 euro (0.12)
- Cash flow from operating activities increased to EUR 41 million (2)

HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-JUNE 2018

- Order intake increased 10% to EUR 3,060 million (2,776)
- Net sales stable at EUR 2,312 million (2,295)
- Book-to-bill 1.32 (1.21)
- Comparable operating result increased to EUR 211 million (204), which represents 9.1% of net sales (8.9)
- Earnings per share increased to 0.22 euro (0.21)
- Cash flow from operating activities decreased to EUR -1 million (3)
- Order book at the end of the period increased 16% to EUR 5,904 million (5,089)

WÄRTSILÄ’S PROSPECTS FOR 2018

The demand for Wärtsilä’s services and solutions in 2018 is expected to improve somewhat from the previous year. Demand by business area is anticipated to be as follows:

• Good in Services, although there are concerns related to fuel price development and escalating trade tensions.
• Good in Energy Solutions. The global shift towards renewable energy sources and increasing electricity demand in the emerging markets are supporting the need for distributed and flexible power capacity, including gas-fired generation, energy storage, and smart integration technology.
• Good in Marine Solutions (raised from solid), supported by an extensive product mix and a broad market exposure.

Wärtsilä’s current order book for 2018 deliveries is EUR 2,336 million (2,087), which mainly comprises equipment deliveries. Services’ business is largely transactional, with only around 30% of annual net sales coming from the order book.

JAAKKO ESKOLA, PRESIDENT AND CEO

“The positive momentum in ordering activity continued in the second quarter of 2018. Although vessel contracting activity has been somewhat slower than anticipated, our extensive portfolio of solutions and a favourable contracting mix resulted in the Marine Solutions’ order intake developing well. I am pleased to note the increased demand for exhaust gas cleaning solutions in both the newbuild and retrofit markets ahead of the global sulphur regulations, which enter into force in 2020. In the Services business, we have also seen continued interest in service agreements, the agreement to optimise the maintenance of all Wärtsilä thrusters installed within the Transocean fleet being a highlight of the quarter. Market trends remain favourable in the Energy Solutions business, and our project pipeline provides confidence for improved activity in the second half.

Net sales in the second quarter were affected by the timing of power plant deliveries and by customers continuing to limit spending to essential repairs and maintenance, while the operating profit was in line with last year. Looking ahead, we expect deliveries to be concentrated to the latter part of the year. A pick up in transactional service activity and the resulting effect on the group sales mix will be central to the development of our profitability in the second half. The impact of increased geopolitical uncertainty on customer decision-making remains a concern.

Maximising renewable generation is essential in ensuring a sustainable and profitable future for the energy industry. In this context, Wärtsilä has launched a new vision for the energy market. Our ambition is to lead the industry’s transformation towards a future that utilises 100% renewable energy, with flexible capacity as the enabler. Coupled with our Smart Marine vision, this reinforces our commitment to developing sustainable societies with smart technology.”

KEY FIGURES
 

¹Items affecting comparability in the second quarter of 2018 included costs related to restructuring programmes and acquisitions of EUR 12 million (8). During the review period January-June 2018 restructuring and acquisition related costs amounted to EUR 15 million (14).

As of 1 January 2018, Wärtsilä has adopted the IFRS 15 Revenue from Contracts with Customers standard by using the full retrospective method. The half year financial report is published according to the new standard and comparison periods for 2017, including the opening balance sheet, have been restated accordingly. Wärtsilä has also restated the 2017 figures for Marine Solutions and Services, due to an internal transfer of certain service activities. This transfer has no impact on Group totals.

The share issue without payment approved by Wärtsilä’s Annual General Meeting on 8 March 2018 increased the total number of Wärtsilä shares to 591,723,390. The share related figures in the comparison periods have been adjusted to reflect the increased number of shares.

ANALYST AND PRESS CONFERENCE
An analyst and press conference will be held today, Thursday 19 July 2018, 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=1784107&s=1&k=23BA6A517FD0A0B62372F47BB24099A6 

To participate in the teleconference, please register at the following address: http://emea.directeventreg.com/registration/9493289. You will receive dial-in details by e-mail once you have registered. If problems occur, please press *0 for operator assistance. Please press *6 to mute your phone during the teleconference and 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 & Media Relations
Tel: +358 10 709 5637
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 smart technologies and complete lifecycle solutions for the marine and energy markets. By emphasising sustainable innovation, total efficiency and data analytics, Wärtsilä maximises the environmental and economic performance of the vessels and power plants of its customers. In 2017, Wärtsilä’s net sales totalled EUR 4.9 billion with approximately 18,000 employees. The company has operations in over 200 locations in more than 80 countries around the world. Wärtsilä is listed on Nasdaq Helsinki.
www.wartsila.com