Wärtsilä’s Interim Financial Report January–March 2021
ORDER INTAKE STABLE, BUT COVID-19 CONTINUES TO BURDEN NET SALES AND PROFITABILITY
This release is a summary of Wärtsilä’s Interim Report January–March 2021. The complete report is attached to this release as a pdf file. It is also available on the company website at www.wartsila.com.
HIGHLIGHTS OF JANUARY–MARCH 2021
WÄRTSILÄ'S PROSPECTS
Wärtsilä expects the near-term demand environment to be somewhat better than that of the corresponding period in the previous year. However, visibility remains limited, and the prevailing market conditions make the outlook uncertain.
HÅKAN AGNEVALL, PRESIDENT AND CEO
“During the first quarter of 2021, the prolonged COVID-19 pandemic continued to pose challenges to our business operations, our people, and our financial performance. The cruise industry remained depressed, customers held up investments in new power plant capacity, deliveries were delayed, and profitability remained low due to cost inflation and fixed cost under absorption. However, there were signs of stabilisation and recovery. Vessel ordering activity in general improved, and the demand for services and energy storage solutions was at a good level. As a result, our order intake remained stable compared to the first quarter of 2020, despite the pandemic having a larger impact during the first quarter of 2021. Vaccination programmes are ongoing in many countries, although at varying speeds. This makes us cautiously optimistic about further recovery in the marine markets, while recovery in many of our core energy markets is expected to take longer. Furthermore, our firm focus on working capital resulted in yet another quarter of positive cash flow development. It is of utmost importance to maintain cost control and preserve cash in order to maintain a strong position in the low-demand markets. We will continue to carefully consider our capacity needs and adjust if and where needed.
We have several exciting R&D and strategic projects ongoing, both in-house and together with our partners. These are aimed at accelerating the decarbonisation of the energy and marine industries. During the quarter, we announced that we are installing a pilot plant in Norway to test our carbon capture and storage technologies, and we launched further cost-optimised grid balancing technology capable of ramping up to full load in two minutes. In addition, we are co-operating with several stakeholders in Finland with the aim of utilising emission-free hydrogen in power production, industry, and traffic applications. We also established a strategic partnership with Ocean Technologies Group to enhance safety and efficiency in the maritime sector by combining on-demand digital training, virtual and simulation events via cloud-based solutions, and in-person learning experiences.
In the era of rapid development of new technologies, our starting point will be how we best can make our customers more successful. We will focus on open innovation, services, and cooperation with an end-to-end perspective. Embracing new ideas and sharing best practices will be key, with the ambition to learn something new every day. The technological changes taking place in both of our end-markets during this decade will be more extensive than anything seen during the past 30 years and will result in significant opportunities for Wärtsilä. I believe that with our customer-oriented and innovation-driven culture, leading technologies, highly skilled people, and extensive service network, we are well positioned to harvest on those opportunities.
Visibility into demand development remains low, as the market environment continues to be challenging and unpredictable. We expect the near-term demand environment to be somewhat better than that seen a year ago. Despite our cautious market outlook, we believe that the increasing demand for efficiency and alternative fuels, the digital transformation, and changing energy needs will work in our favour over the long term. In order to maintain our technological leadership, we will continue to invest in developing our fuel flexible solutions and digital offering.”
KEY FIGURES
| MEUR | 1–3/2021 | 1–3/2020 | Change | 2020 |
| Order intake | 1,244 | 1,247 | 0% | 4,359 |
| of which services | 704 | 635 | 11% | 2,267 |
| Order book, end of period | 5,399 | 5,745 | -6% | 5,057 |
| Net sales | 946 | 1,170 | -19% | 4,604 |
| of which services | 550 | 593 | -7% | 2,255 |
| Book-to-bill | 1.32 | 1.07 | 0.95 | |
| Operating result | 36 | 52 | -30% | 234 |
| % of net sales | 3.8 | 4.5 | 5.1 | |
| Comparable operating result | 41 | 56 | -28% | 275 |
| % of net sales | 4.3 | 4.8 | 6.0 | |
| Comparable adjusted EBITA* | 49 | 65 | -25% | 308 |
| % of net sales | 5.1 | 5.6 | 6.7 | |
| Profit before taxes | 35 | 43 | -19% | 191 |
| Earnings/share, EUR | 0.04 | 0.05 | 0.23 | |
| Cash flow from operating activities | 67 | 42 | 681 | |
| Net interest-bearing debt, end of period | 419 | 849 | 394 | |
| Gross capital expenditure | 29 | 27 | 117 | |
| Gearing | 0.20 | 0.42 | 0.18 | |
| Solvency, % | 37.0 | 35.3 | 38.1 | |
| Personnel, end of period | 17,742 | 18,642 | -5% | 17,792 |
*Comparable adjusted EBITA excludes items affecting comparability and purchase price allocation amortisation.
Wärtsilä’s financial information for the first quarter of 2020 has been adjusted to reflect the group’s new reporting structure. As of the second quarter of 2020, Marine Power, Marine Systems, Voyage, and Energy constitute the reportable segments of the group, while Portfolio Business continues to be reported as other business activities. This restatement has no impact on the group’s total financial figures.
Wärtsilä presents certain alternative performance measures in accordance with the guidance issued by the European Securities and Markets Authority (ESMA). The definitions of these alternative performance measures are presented in the Calculations of financial ratios section.
ANALYST AND PRESS CONFERENCE
A virtual analyst and press conference will be held as a webinar today, Thursday 22 April 2021, at 10:00 a.m. Finnish time (8:00 a.m. UK time).
If you only wish to view the stream, please register at: http://www.mediaserver.fi/live/wartsila.
If you plan to view the stream and ask questions in the Q&A session, please register at: https://attendee.gotowebinar.com/register/6183517468884024075.
Please register using only one of the links above, not both. Once you have registered, you will receive a confirmation email that includes specific joining instructions.
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Please note that there will be no separate audio (phone) line for the event. The Q&A session will use the audio in the GoToWebinar tool itself. In case you are joining via mobile, you may need to install the free GoToWebinar app from the app store.
To enter into the questions and answers queue, please use the raise your hand function in the webinar platform and unmute your microphone when the moderator announces your name. Please remember to lower your hand once your question has been answered.
For more information on joining and setting up your audio for Q&A, you may visit the official GoToWebinar attendee joining guide at: https://support.goto.com/webinar/how-to-join-attendees. Instructions on Q&A related functionalities can be found at: https://support.logmeininc.com/gotowebinar/help/raise-your-hand.
A recording of the webcast will be available on the company website as soon as possible after the event.
For further information, please contact:
Arjen Berends
Executive Vice President & CFO
Tel. +358 10 709 5444
arjen.berends@wartsila.com
Emilia Rantala
Manager, Investor Relations
Tel. +358 10 709 1114
emilia.rantala@wartsila.com
For press information, please contact:
Atte Palomäki
Executive Vice President, Communications, Branding & Marketing
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 2020, Wärtsilä's net sales totalled EUR 4.6 billion with approximately 18,000 employees. The company has operations in over 200 locations in more than 70 countries around the world. Wärtsilä is listed on Nasdaq Helsinki.
www.wartsila.com