Wartsila sees marine market staying soft

Jaako Eskola Jaako Eskola

JANUARY 27, 2017 — Wärtsilä has released its financial results for 2016. You can download them HERE.

"Thanks to solid delivery execution, growth in Services' revenues, and an improved project mix in the fourth quarter, we were able to meet our revised net sales and profitability targets for the year 2016," said President and CEO Jaakko Eskola. "I am pleased with our cash flow development, which improved primarily due to our focus on working capital management.

"The weak growth in seaborne trade, low oil and gas prices, as well as customers' financial constraints burdened the marine industry throughout the year, which resulted in exceptionally low contracting activity," said Mr. Eskola. "Considering these headwinds, Wärtsilä's order intake developed well. This was largely due to the improved sentiment in the energy markets, where growth in electricity demand and energy policy changes supported the demand for Wärtsilä's power generation solutions in both the emerging markets and the industrialised world. The development of our Services business was solid, despite challenges related primarily to the offshore service market."

Fourth quarter highlights

• Order intake declined 6% to EUR 1,324 million (1,403)
• Net sales declined 2% to EUR 1,559 million (1,590)
• Book-to-bill 0.85 (0.88)
• Comparable operating result improved to EUR 253 million, or 16.3% of net sales (EUR 215 million or 13.5%)
• Earnings per share increased to 0.87 euro (0.79)
• Cash flow from operating activities increased to EUR 235 million (176)

Highlights January-December 2016

• Order intake was stable at EUR 4,927 million (4,932)
• Net sales declined 5% to EUR 4,801 million (5,029)
• Book-to-bill 1.03 (0.98)
• Comparable operating result declined to EUR 583 million, or 12.1% of net sales (EUR 612 million or 12.2%)
• Earnings per share declined to 1.79 euro (2.25)
• Cash flow from operating activities increased to EUR 613 million (255)
• Order book at the end of the period decreased 4% to EUR 4,696 million (4,882)
• The dividend is proposed to increase by 8% to 1.30 (1.20) euro per share. In line with growing practice, the dividend will be paid in two equal instalments in March and September.

The overall demand for Wärtsilä's services and solutions in 2017 is expected to be relatively unchanged from the previous year. Demand by business area is anticipated to develop as follows:

Solid in Services with growth opportunities in selected regions and segments.

Solid in Energy Solutions, thanks to growth in electricity demand in the emerging markets and the global shift towards renewable energy sources, which will support the need for distributed, flexible, gas fired power generation.

Soft in Marine Solutions. Although the outlook for the cruise and ferry segment is positive, the merchant, gas carrier, and offshore segments continue to suffer from overcapacity, slow trade growth and customers' financial constraints.

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