Wärtsilä Interim Report January-June 2012

Wärtsilä Corporation
  • Stock exchange release
18 July 2012 at 11:30 AM E. Europe Standard Time

Interim report Q2 2012

STEADY DEVELOPMENT IN THE SECOND QUARTER

SECOND QUARTER HIGHLIGHTS
- Order intake increased 2% to EUR 1,198 million (1,170)
- Net sales increased 6% to EUR 1,099 million (1,036)
- Operating result EUR 113 million or 10.3% of net sales (EUR 117 million and 11.3%)
- Earnings per share amounted to EUR 0.38 (0.35)
- Book-to-bill 1.09 (1.13)

HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-JUNE 2012
- Order intake increased 7% to EUR 2,308 million (2,149)
- Net sales decreased 1% to EUR 2,104 million (2,119)
- Operating result EUR 215 million, or 10.2% of net sales (EUR 230 million and 10.9%)
- At the end of the period the order book totalled EUR 4,515 million (3,779), +19%
- Earnings per share amounted to 0.72 euro (0.73)
- Cash flow from operating activities EUR -154 million (84)

BJÖRN ROSENGREN, PRESIDENT AND CEO:
“The second quarter marked steady progress for Wärtsilä. Our net sales grew by 6% and our profitability was 10.3%. We continue to work towards reaching our growth and profitability targets this year. I am pleased with the good development within Ship Power’s specialised vessel segments, which compensated for Power Plants’ slightly weaker second quarter order intake. Ship Power also received interesting pump, gas and environmental system orders. Services development remained rather steady, despite the tough market conditions in the merchant vessel markets.

To further strengthen our competitiveness and to serve our customers more effectively, we have decided to change the organisational set up within Ship Power and Wärtsilä Industrial Operations (WIO). The main change will be that the product development related to 2-stroke, and the manufacturing and product development related to Propulsion and Electrical & Automation will be transferred from WIO to Ship Power. WIO will be renamed PowerTech and it will continue to serve both market areas of Ship Power and Power Plants. There are no job reductions planned based on this change.”

KEY FIGURES

MEUR 4-6/2012 4-6/2011 Change 1-6/2012 1-6/2011 Change 2011
Order intake 1 198 1 170 2% 2 308 2 149 7% 4 516
Order book at the end of the period       4 515 3 779 19% 4 007
Net sales 1 099 1 036 6% 2 104 2 119 -1% 4 209
Operating result (EBITA)1 123 120 3% 232 237 -2% 485
% of net sales 11.2% 11.6%   11.0% 11.2%   11.5%
Operating result (EBIT)2 113 117 -3% 215 230 -7% 469
% of net sales 10.3%  11.3%    10.2% 10.9%   11.1%
 
Profit before taxes 98 108   192 215   429
Earnings/share, EUR  0.38 0.35   0.72 0.73   1.44
 
Cash flow from operating activities       -154 84   232
 
Net interest-bearing debt at the end of the period       790 64   58
Gross capital expenditure       501 44   187
Gearing       0.49 0.04   0.04

1 EBITA is shown excluding non-recurring items of EUR 13 million (12) and intangible asset amortisation related to acquisitions of EUR 17 million (7) during the review period January-June 2012. During the second quarter, non-recurring items amounted to EUR 6 million (9) and intangible asset amortisation related to acquisitions to EUR 10 million (3).
2 EBIT is shown excluding non-recurring items.

MARKET OUTLOOK
The power generation market is expected to remain active in 2012. The growing emerging markets will continue to invest in new power generation capacity, which will drive demand - especially in the flexible baseload segment. In the OECD countries, there is still pent-up power sector demand, mainly driven by CO2 neutral generation and the ramp down of older, mainly coal-based, generation.

The outlook for overall vessel contracting activity during 2012 is slightly negative, with full year contracting expected to be somewhat lower than contracting during 2011. The decrease is largely driven by the low contracting levels in traditional merchant segments. Robust contracting activity, in line with activity levels seen during 2011 and so far in 2012, is expected for the offshore, gas carrier, and other specialised vessel markets. Interesting opportunities are seen in the following areas: efficiency improvement, gas as a fuel, and environmental solutions. These are now central issues in many newbuilding discussions and are expected to grow in importance going forward.

Despite the slightly improved market situation in the review period, some uncertainties remain in the service market. The merchant marine segments are still expected to be under pressure, as overcapacity in the market continues to impact the potential for services in this area. Development in the active installed base is also expected to be moderate, with continued scrapping, layups, slow steaming, and low utilisation of vessels in the merchant segments. The power plant service market is expected to develop steadily.

WÄRTSILÄ’S PROSPECTS FOR 2012 REITERATED
Wärtsilä expects its net sales for 2012 to grow by 5-10% and its operational profitability (EBIT% before non-recurring items) to be 10-11%.

DISCLOSURE PROCEDURE
Wärtsilä Corporation follows the disclosure procedure enabled by Standard 5.2b published by the Finnish Financial Supervision Authority. This stock exchange release is a summary of Wärtsilä Corporation’s Interim Report January-June 2012. The complete report is attached to this release in pdf format and is also available on Wärtsilä’s website at www.wartsila.com/investors.

ANALYST AND PRESS CONFERENCE AT 10.00 A.M. LOCAL TIME
An analyst and press conference will be held on Wednesday 18 July 2012 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 on the internet at the following address: http://storm.zoomvisionmamato.com/player/wartsila/objects/gwc27jyf/ .

To participate in the teleconference please register at the following address: http://www.yourconferencecentre.com/r.aspx?p=1&a=DZmpnCKQhoFbgF.
You will receive dial-in details by e-mail once you have registered. If you want to ask questions during the teleconference, press the *-button followed by the 1-button on your phone to register for a question and the # -key to withdraw a question. The event name is: Q2 Results 2012. Please be ready to state your details and the name of the conference to the operator. If problems occur, please press the *-button followed by the 0-button.

An on-demand version of the webcast will be available on the company website later the same day.

For further information, please contact:

Raimo Lind
Executive Vice President & CFO
Tel: +358 10 709 5640
raimo.lind@wartsila.com

Pauliina Tennilä
Director, Investor Relations
Tel: +358 40 570 5530
pauliina.tennila@wartsila.com

For press information, please contact:

Atte Palomäki
Group Vice President, Communications & Branding
Tel: +358 40 547 6390
atte.palomaki@wartsila.com

Wärtsilä in brief
Wärtsilä is a global leader in complete lifecycle power solutions for the marine and energy markets. By emphasising technological innovation and total efficiency, Wärtsilä maximises the environmental and economic performance of the vessels and power plants of its customers. In 2011, Wärtsilä’s net sales totalled EUR 4.2 billion with approximately 18,000 employees. The company has operations in nearly 170 locations in 70 countries around the world. Wärtsilä is listed on the NASDAQ OMX Helsinki, Finland.