Wärtsilä's Interim Report January-March 2019
Wärtsilä Corporation INTERIM REPORT 25 April 2019 at 8.30 a.m. local time
WÄRTSILÄ’S INTERIM REPORT JANUARY-MARCH 2019
GROWTH IN NET SALES, GOOD DEVELOPMENT IN PROFITABILITY
This release is a summary of Wärtsilä’s Interim Report January-March 2019. The complete report is attached to this release as a pdf-file. It is also available at http://www.wartsilareports.com/en-US/2019/q1/frontpage/ and on the company website at www.wartsila.com.
HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-MARCH 2019
- Order intake decreased 6% to EUR 1,416 million (1,507)
- Order book at the end of the period increased 15% to EUR 6,330 million (5,490)
- Net sales increased 8% to EUR 1,151 million (1,066)
- Book-to-bill 1.23 (1.41)
- Comparable operating result increased to EUR 102 million (88), which represents 8.9% of net sales (8.3)
- Earnings per share were stable at 0.10 euro (0.10)
- Cash flow from operating activities increased to EUR 35 million (-42)
WÄRTSILÄ’S PROSPECTS
The demand for Wärtsilä’s services and solutions in the coming twelve months is expected to be in line with the comparative period of the previous year. Demand by business area is anticipated to be as follows:
- Solid in Wärtsilä Marine Business. Wärtsilä's demand outlook for both services and equipment is supported by an extensive product mix and broad segment coverage, which limits the impact of a slower than anticipated marine market recovery.
- Solid in Wärtsilä Energy Business. The global shift towards renewable energy sources and increasing electricity demand in the emerging markets support the need for distributed and flexible power capacity. However, geopolitical risks and global uncertainty continue to affect customers’ appetite for investments. The services demand outlook is supported by growth opportunities in selected regions and segments and by good order book development.
Wärtsilä’s current order book for 2019 deliveries is EUR 3,287 million (2,951). Deliveries are expected to be concentrated towards the latter part of the year.
JAAKKO ESKOLA, PRESIDENT AND CEO
“The beginning of 2019 was marked by growth in net sales, thanks to higher services volumes in both business areas and an increase in marine equipment deliveries. Profitability improved as a result of a more favourable sales mix within our services activities. Looking ahead, we expect net sales and profitability development to be weighted towards the end of the year, due to delivery phasing and the anticipated realisation of savings related to the realignment program announced in January.
In the marine industry, the pace of market recovery remains slow. Nevertheless, orders received by Wärtsilä Marine Business increased, primarily because of improved demand in the gas carrier segment where we received several orders for gas handling systems and related technology. Despite this positive development, reduced activity in the energy markets resulted in a decline in Group order intake. Geopolitical risks and global uncertainty continue to affect our energy customers’ appetite for investments. Furthermore, utilities in the developed world are updating their investment plans as they strive to achieve ambitious targets for increasing renewable penetration. While this is causing temporary delays in decision-making, we remain well positioned to benefit from the shift to low-carbon energy sources.
Our new organisational structure formed around two lifecycle businesses became operational at the beginning of the year. I am pleased to note that we have already started to see the initial benefits of this reorganisation in the form of improved cooperation internally with regards to developing and executing our full lifecycle offering. This further strengthens my conviction that the change will not only strengthen our partnerships with customers, but also support the progression towards our long-term target of profitable growth.”
KEY FIGURES
| MEUR | 1-3/2019 | Restated 1-3/2018 |
Change | Restated 2018 |
| Order intake | 1 416 | 1 507 | -6% | 6 307 |
| of which services | 653 | 665 | -2% | 2 598 |
| Order book, end of period | 6 330 | 5 490 | 15% | 6 166 |
| Net sales | 1 151 | 1 066 | 8% | 5 174 |
| of which services | 573 | 535 | 7% | 2 419 |
| Book-to-bill | 1.23 | 1.41 | 1.22 | |
| Operating result¹ | 91 | 85 | 8% | 543 |
| % of net sales | 7.9 | 8.0 | 10.5 | |
| Comparable operating result | 102 | 88 | 16% | 577 |
| % of net sales | 8.9 | 8.3 | 11.2 | |
| Comparable adjusted EBITA | 113 | 98 | 15% | 621 |
| % of net sales | 9.8 | 9.2 | 12.0 | |
| Profit before taxes | 78 | 76 | 3% | 502 |
| Earnings/share, EUR | 0.10 | 0.10 | 0.65 | |
| Cash flow from operating activities | 35 | -42 | 470 | |
| Net interest-bearing debt, end of period2 | 658 | 438 | 333 | |
| Gross capital expenditure | 23 | 37 | 306 | |
| Gearing | 0.29 | 0.21 | 0.14 | |
| Solvency, % | 39.6 | 42.9 | 44.4 | |
| Personnel, end of period | 19 225 | 18 182 | 6% | 19 294 |
¹Items affecting comparability in the first quarter of 2019 included costs related to restructuring programmes of EUR 11 million (3).
²The increase in net interest-bearing debt is largely related to the inclusion of lease liabilities on the balance sheet, as a result of the new IFRS 16 standard.
As of the first quarter of 2019, Wärtsilä’s financial reporting has been amended to reflect its new organisational structure. The two business areas, Wärtsilä Marine Business and Wärtsilä Energy Business, constitute the reportable segments. Financial reporting for 2018 has been adjusted to reflect this change. Wärtsilä will additionally report the services related order intake and net sales for the two segments. In Wärtsilä Marine Business, order intake and net sales for retrofit scrubber projects have been transferred from services to new equipment. The comparison figures have been adjusted accordingly.
Wärtsilä presents certain alternative performance measures in accordance with the guidance issued by the European Securities and Markets Authority (ESMA). The definition of these alternative performance measures is presented in the calculations of financial ratios.
ANALYST AND PRESS CONFERENCE
An analyst and press conference will be today, Thursday 25 April 2019, at 10.00 a.m. Finnish time (8.00 a.m. UK time), at Wärtsilä Helsinki Campus, located at Hiililaiturinkuja 2, Helsinki, Finland. The combined web- and teleconference will be held in English and can be viewed by registering on: http://www.mediaserver.fi/live/wartsila.
To participate in the teleconference, please register at the following address: http://emea.directeventreg.com/registration/3990234. 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.
A recording of the webcast will be available on the company website later during the day.
For further information, please contact:
Arjen Berends
Executive Vice President & CFO
Tel: +358 10 709 5444
arjen.berends@wartsila.com
Natalia Valtasaari
Vice President, Investor Relations
Tel: +358 10 709 5637
natalia.valtasaari@wartsila.com
For press information, please contact:
Atte Palomäki
Group 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 2018, Wärtsilä’s net sales totalled EUR 5.2 billion with approximately 19,000 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