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Wartsila sees marine market remaining challenging

It reported that order intake over the nine month period was stable at EUR 3,529 million (3,562 million in the prior year equivalent period) and that net sales increased 6% to EUR 3,439 million (3,230).

Wärtsilä expects its net sales for 2015 to grow by 5-10% and its operational profitability (EBIT% before non-recurring items) to be 12.0-12.5%. This guidance includes the impact of the L-3 Marine Systems International (MSI) acquisition. MSI is expected to contribute approximately EUR 250 million to net sales and EUR 9 million to the operating result during 2015. Excluding purchase price allocation amortization, MSI’s operating result is estimated to reach EUR 16 million.

Björn Rosengren, who will be succeeded as President and CEO by Jaakko Eskola on November 1, said that the Marine Solutions markets remain challenging.

“Low vessel contracting volumes, together with weak sentiment in the offshore segment, is impacting our order intake,” he said. “I am pleased to note that our Services business is compensating well for the lower demand in our equipment markets. Improved maintenance demand from marine customers and stability within power plant service indicates a positive outlook for the rest of this year.”

Wärtsilä expects the overall outlook for the shipping and shipbuilding markets to remain challenging.

“Overcapacity continues to affect demand,” says the company. “Low oil prices are impacting investments in offshore exploration and development, resulting in weak contracting of offshore drilling units and support vessels. Gas carrier contracting is expected to remain on a normalized level. The outlook for the cruise segment remains positive thanks to an anticipated increase in Asian passenger traffic, while the outlook for ferries is supported by signs of economic recovery in the USA and Europe. The importance of fuel efficiency and environmental regulations are clearly visible. The regulatory environment is driving interest in gas as a marine fuel in the wider marine markets.”

The overall service market outlook is positive with growth opportunities in selected regions and segments. An increase in the installed base of medium-speed engines and propulsion equipment is offsetting the slower service demand for older installations and the uncertainty regarding short-term demand in the merchant marine segment. The service demand for installations operating on oil based fuels is expected to grow as low oil prices have had a favorable impact on operating costs. Although the decline in oil prices has resulted in a challenging outlook for offshore services in specific regions, the growth during recent years in the offshore installed base partially compensates for a potential decline in service volumes. The service outlook for gas fueled vessels remains favorable.”

Read the interim report HERE

Euro MPs want to fast track setting of shipping GHG target

 

Specifically, the resolution “calls for all the Parties to work through the International Civil Aviation Organization (ICAO) and the International Maritime Organization (IMO) to develop a global policy framework to enable an effective response, and to take measures to set adequate targets before the end of 2016 for achieving the necessary reductions in the light of the 2 °C target [for a limit on global warming].”

The resolution has drawn a very guarded response from European shipowners.

“We are happy to see that the European Parliament recognizes the importance of a global solution for international shipping and gives a vote of confidence to the IMO, which should be allowed to pursue its efforts,” said Patrick Verhoeven, Secretary General of ECSA, the European Community Shipowners Association. “We are however also concerned by the deadline adopted by MEPs on Wednesday. 2016 is right around the corner and as such it is rather unrealistic to expect the IMO to come up with a solution in a matter of months. A unilateral European push for a hard deadline may be counterproductive.”

ECSA calls IMO’s track record in developing technical CO2 energy efficiency measures for the maritime sector “impressive.”

Following the adoption of the amendments to MARPOL Annex VI, which came into force worldwide in 2011 and which now apply to about 95% of the global merchant fleet, international shipping is the only industrial sector already covered by mandatory and binding global measures, notes ECSA. IMO also recently adopted the Energy Efficiency Design Index (EEDI), which requires all ships constructed after 2025 to be 30% more efficient that those built in the 2000s, with further efficiency improvements going forward. Finally, the shipping industry itself, prompted by an increase in bunker prices, has made strides in increasing its energy efficiency and curbing its CO2 emissions.

As a result of recent efforts, the contribution of shipping to global CO2 emissions has in fact dropped, says ECSA.

According to the latest IMO Green House Gas study, published in 2014, international shipping (while transporting about 90% of world trade) produces about 2.2% of the world’s total CO2 emissions. This figure was 2.8% in 2007, and the total CO2 emissions from shipping went down by over 10% between 2007 and 2012. This was despite continuing growth in maritime trade which means that shipping is already delivering carbon neutral growth.

“The 2016 deadline is not consistent with the steps already taken at EU level” commented Benoit Loicq, ECSA Safety and Environment Director. “By pushing for an extremely tight deadline, the EU would essentially undermine the IMO procedure. If the EU would then focus on regional measures, it would be backtracking on its own policy.”

ECSA says the EU Monitoring, Reporting and Verification (MRV) Regulation is intended to be the first phase of a stepwise approach geared towards a global (read IMO) solution by allowing to determine the real contribution of shipping to global CO2 emissions.

“The course of action that has been agreed is to start with an accurate picture of the shipping industry’s CO2 emissions in 2018 (i.e. two years after the MEP-backed deadline),” says Mr. Loicq. “If we now backtrack and skip the data collection phase altogether, how would it be possible to set realistic and fair targets?”

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