Wärtsilä “cautious” on shipbuilding outlook

APRIL 18, 2013 — “The beginning of 2013 developed according to our expectations. Order intake grew by 22 percent, thanks to good development in both Power Plants and Ship Power, especially in the offshore segment,” said Wärtsilä Corporation President & CEO Björn Rosengren (left) as the company released its interim report for January – March, 2013.

“First quarter net sales and profitability were impacted by the anticipated low level of deliveries, mainly due to timing of projects,” continued Mr. Rosengren. “Interest in natural gas based power generation continued and Power Plants received significant orders from Jordan and the U.S.A. In Ship Power, the offshore and specialized vessel markets remained robust. Strategically important orders were received for exhaust gas cleaning systems, and for comprehensive solutions packages from the offshore industry. There is continued interest in service agreements in the marine industry, as evidenced by the maintenance agreement signed for Viking Grace, the largest passenger ferry ever to operate on liquefied natural gas. Supported by our solid order book and the stable Services business, our prospects for 2013 remain unchanged.”

HIGHLIGHTS OF THE REVIEW PERIOD JANUARY–MARCH 2013

• Order intake increased 22 percent to EUR 1,352 million (1,109)
• Net sales decreased 12 percent to EUR 882 million (1,005)
• Book-to-bill 1.53 (1.10)
• Operating result EUR 70 million, or 8.0 percent of net sales (EUR 102 million or 10.1 percent)
• EBITA EUR 79 million or 8.9 percent of net sales (EUR 109 million or 10.9 percent)
• Earnings per share 0.37 euro (0.33)
• Cash flow from operating activities EUR 84 million (28)
• Order book at the end of the period increased by 13 percent to EUR 4,998 million (4,409)

MARKET OUTLOOK

Wärtsilä says its outlook for the shipping and shipbuilding markets in 2013 is cautious, although market conditions are expected to be better than in 2012. Despite the recent pick up in orders, financing and overcapacity related issues are still visible in the traditional merchant markets. The orders placed in these markets focus more on fuel-efficient design and technology. Current emission regulations create interesting opportunities for environmental solutions. The contracting mix is expected to be in line with that seen in 2012, favouring contracting in the offshore and specialized vessel segments. The outlook for gas demand remains healthy, and the attractiveness of LNG as a fuel is supported by its low carbon intensity, global trade, and pricing.

The overall service market outlook remains stable despite the slower start in 2013 compared to 2012. A continued increase in the medium-speed engine and propulsion installed base helps to balance the market environment in regions such as Europe, where the market is expected to remain challenging – especially on the marine side. The outlook for the Middle East and Asia continues to be slightly more positive, supported by interest in power plant related service projects. The outlook is also good in the Americas, where there is a mix of marine and power customers. The outlook for offshore services remains positive.

Wärtsilä expects its net sales for 2013 to grow by 0-10 percent and its operational profitability (EBIT percent before non-recurring items) to be around 11 percent.