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    Wärtsilä's interim financial report January-September 2019
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    October-December 2023

    • Order intake increased by 13% to EUR 1,856 million (1,638), and the organic growth, which excludes FX impact and the impact of acquisitions and divestments, was 21%
    • Service order intake increased by 11% to EUR 876 million (791)
    • Net sales decreased by 7% to EUR 1,644 million (1,770), and the organic decrease was 3%
    • Book-to-bill amounted to 1.13 (0.93)
    • Comparable operating result increased by 90% to EUR 177 million (93), which represents 10.8% of net sales (5.3)
    • Operating result increased by 248% to EUR 128 million (37), which represents 7.8% of net sales (2.1)
    • Basic earnings per share increased to 0.16 euro (0.05)
    • Cash flow from operating activities increased to EUR 389 million (51)

    January-December 2023

    • Order intake increased by 16% to EUR 7,070 million (6,074), and the organic growth was 22%
    • Service order intake increased by 15% to EUR 3,519 million (3,066)
    • Order book at the end of the period increased by 13% to EUR 6,694 million (5,906)
    • Net sales increased by 3% to EUR 6,015 million (5,842), and the organic growth was 7%
    • Book-to-bill amounted to 1.18 (1.04)
    • Comparable operating result increased by 53% to EUR 497 million (325), which represents 8.3% of net sales (5.6)
    • Operating result increased by EUR 427 million to EUR 402 million (-26), which represents 6.7% of net sales (-0.4)
    • Basic earnings per share increased to 0.44 euro (-0.11)
    • Cash flow from operating activities increased to EUR 822 million (-62)
    • Dividend proposal 0.32 euro per share (0.26)

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    Wärtsilä's interim financial report January-September 2019

    Oct 25, 2019, 08:30 by Wärtsilä Corporation

    WÄRTSILÄ’S INTERIM FINANCIAL REPORT JANUARY-SEPTEMBER 2019

    Third quarter burdened by project related challenges and low equipment demand - services activity remains sound

    This release is a summary of Wärtsilä’s Interim Report January-September 2019. The complete report is attached to this release as a pdf file. It is also available at http://www.wartsilareports.com/en-US/2019/q3/frontpage/ and on the company website at www.wartsila.com.

    HIGHLIGHTS OF THE THIRD QUARTER

    • Order intake decreased 29% to EUR 979 million (1,372)
    • Net sales decreased 16% to EUR 1,118 million (1,330)
    • Book-to-bill amounted to 0.88 (1.03)
    • Comparable operating result decreased to EUR 39 million (141), which represents 3.5% of net sales (10.6).
    • Earnings per share decreased to -0.01 euro (0.17)
    • Cash flow from operating activities decreased to EUR -61 million (122)

    HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-SEPTEMBER 2019

    • Order intake decreased 15% to EUR 3,772 million (4,433)
    • Order book at the end of the period increased 6% to EUR 6,294 million (5,918)
    • Net sales decreased 4% to EUR 3,486 million (3,642)
    • Book-to-bill amounted to 1.08 (1.22)
    • Comparable operating result decreased to EUR 254 million (352), which represents 7.3% of net sales (9.7)
    • Earnings per share decreased to 0.20 euro (0.39)
    • Cash flow from operating activities decreased to EUR -63 million (121)

    As announced in September, Wärtsilä’s full-year operating result will be impacted by a one-time charge related to project cost overruns in the Marine and Energy Businesses amounting to EUR 150 million. Of the total amount, EUR 84 million was booked in the period January-September and EUR 65 million in the third quarter.

    WÄRTSILÄ’S PROSPECTS

    The demand for Wärtsilä’s services and solutions in the coming 12 months is expected to be somewhat below that of the previous 12 months. Demand by business area is anticipated to be as follows:

    • Soft in Wärtsilä Marine Business, due to lower vessel contracting volumes and a decline in the demand for scrubber solutions from last year’s exceptionally high level. Activity in the marine services market is expected to be stable.
    • Weak in Wärtsilä Energy Business (downgraded from soft). Market conditions in the energy industry are challenging, as the rapidly changing energy landscape is creating uncertainty among customers. The geopolitical and economic environment is further slowing decision-making. The demand for energy services is expected to be stable.        

    Wärtsilä’s current order book for 2019 deliveries is EUR 1,708 million (1,364), comprised mainly of equipment deliveries. The comparable operating result for the full year 2019 is expected to be approximately EUR 100 million lower than in the previous year (EUR 577 million in 2018).

    JAAKKO ESKOLA, PRESIDENT AND CEO

    “The third quarter proved to be challenging for Wärtsilä, both in terms of equipment demand trends and financial performance. The decline in order intake reflected weak vessel contracting and softened demand for scrubber systems, as well as continued slow decision-making in the energy markets. While the project pipeline is healthy in both businesses, visibility on order intake timing is limited and competition is intensifying. Price pressure remains a headwind in the prevailing market environment. I am pleased to note that despite the challenges we face in the equipment businesses, services related activity remained sound.

    Wärtsilä’s financial performance was significantly below that of the previous year. The decline in net sales was anticipated, as energy equipment and scrubber deliveries are concentrated towards the latter part of the year. Our operating result, on the other hand, was weakened by unforeseen cost overruns in a handful of complex marine and energy projects. The full-year result will be impacted by a one-time charge amounting to EUR 150 million, of which EUR 84 million has already been recognised. A review of the projects in question revealed incorrect underlying assumptions in cost estimates, insufficient risk identification, and supplier related challenges. We have taken corrective actions to prevent similar issues from occurring in the future. These include introducing tighter controls on technical assessments and the supplier approval process, as well as strengthening the project management organisation. With these measures, we aim to improve our project execution quality and ensure better upfront identification of risks and opportunities. I am confident that this will enable us to live up to our reputation for providing high quality and value enhancing solutions.”

    KEY FIGURES

    MEUR 7-9/
    2019    		 7-9/
    2018    		 Change 1-9/
    2019    		 1-9/
    2018    		 Change 2018
    Order intake 979 1 372 -29% 3 772 4 433 -15% 6 307
    of which services 679 640 6% 1 954 1 898 3% 2 598
    Order book, end of period 6 294 5 918 6% 6 166
    Net sales 1 118 1 330 -16% 3 486 3 642 -4% 5 174
    of which services 578 571 1% 1 762 1 688 4% 2 419
    Book-to-bill 0.88 1.03 1.08 1.22 1.22
    Operating result 11 141 -92% 198 337 -41% 543
    % of net sales 1.0 10.6 5.7 9.2 10.5
    Comparable operating result* 39 141 -72% 254 352 -28% 577
    % of net sales 3.5 10.6 7.3 9.7 11.2
    Comparable adjusted EBITA** 49 152 -68% 285 384 -26% 621
    % of net sales 4.4 11.5 8.2 10.5 12.0
    Profit before taxes -0 130 -100% 162 308 -48% 502
    Earnings/share, EUR -0.01 0.17 0.20 0.39 0.65
    Cash flow from operating activities -61 122 -63 121 470
    Net interest-bearing debt, end of period*** 987 647 333
    Gross capital expenditure 79 258 306
    Gearing 0.44 0.28 0.14
    Solvency, % 39.4 43.7 44.4
    Personnel, end of period 19 018 19 420 -2% 19 294

    *Items affecting comparability in the third quarter of 2019 included costs related primarily to restructuring programmes of EUR 28 million (0). During January-September, items affecting comparability amounted to EUR 56 million (15).
    **Comparable adjusted EBITA excludes items affecting comparability and purchase price allocation amortisation.
    ***The increase in net interest-bearing debt is largely related to the inclusion of lease liabilities on balance sheet as a result of the new IFRS 16 standard.                                                                                                                               

    As of the first quarter of 2019, Wärtsilä’s financial reporting has been amended to reflect its new organisational structure. The two business areas, Wärtsilä Marine Business and Wärtsilä Energy Business, constitute the reportable segments. Financial reporting for 2018 has been adjusted to reflect this change. In Wärtsilä Marine Business, order intake and net sales for retrofit scrubber projects have been transferred from services to new equipment. The comparison figures have been adjusted accordingly.

    Wärtsilä presents certain alternative performance measures in accordance with the guidance issued by the European Securities and Markets Authority (ESMA). The definition of these alternative performance measures is presented in the calculations of financial ratios, at the end of this interim report.

    ANALYST AND PRESS CONFERENCE

    An analyst and press conference will be held today, Friday 25 October 2019, at 10:00 a.m. Finnish time (8:00 a.m. UK time), at Wärtsilä Helsinki Campus, located at Hiililaiturinkuja 2, Helsinki, Finland. The combined web- and teleconference will be held in English and can be viewed by registering on: http://www.mediaserver.fi/live/wartsila.

    To participate in the teleconference, please register at the following address: http://emea.directeventreg.com/registration/3683345. You will receive dial-in details by e-mail once you have registered. If problems occur, please press *0 for operator assistance. Please press *6 to mute your phone during the teleconference and to unmute.    

    A recording of the webcast will be available on the company website later during the day.

    For further information, please contact:

    Arjen Berends
    Executive Vice President & CFO
    Tel: +358 10 709 5444
    arjen.berends@wartsila.com

    Natalia Valtasaari
    Vice President, Investor Relations
    Tel: +358 10 709 5637
    natalia.valtasaari@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 2018, Wärtsilä’s net sales totalled EUR 5.2 billion with approximately 19,000 employees. The company has operations in over 200 locations in more than 80 countries around the world. Wärtsilä is listed on Nasdaq Helsinki.
    www.wartsila.com

    Interim report Q3 2019

    Stock exchange releases

    Wärtsilä's interim financial report January-September 2019

    Oct 25, 2019, 08:30 by Wärtsilä Corporation

    WÄRTSILÄ’S INTERIM FINANCIAL REPORT JANUARY-SEPTEMBER 2019

    Third quarter burdened by project related challenges and low equipment demand - services activity remains sound

    This release is a summary of Wärtsilä’s Interim Report January-September 2019. The complete report is attached to this release as a pdf file. It is also available at http://www.wartsilareports.com/en-US/2019/q3/frontpage/ and on the company website at www.wartsila.com.

    HIGHLIGHTS OF THE THIRD QUARTER

    • Order intake decreased 29% to EUR 979 million (1,372)
    • Net sales decreased 16% to EUR 1,118 million (1,330)
    • Book-to-bill amounted to 0.88 (1.03)
    • Comparable operating result decreased to EUR 39 million (141), which represents 3.5% of net sales (10.6).
    • Earnings per share decreased to -0.01 euro (0.17)
    • Cash flow from operating activities decreased to EUR -61 million (122)

    HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-SEPTEMBER 2019

    • Order intake decreased 15% to EUR 3,772 million (4,433)
    • Order book at the end of the period increased 6% to EUR 6,294 million (5,918)
    • Net sales decreased 4% to EUR 3,486 million (3,642)
    • Book-to-bill amounted to 1.08 (1.22)
    • Comparable operating result decreased to EUR 254 million (352), which represents 7.3% of net sales (9.7)
    • Earnings per share decreased to 0.20 euro (0.39)
    • Cash flow from operating activities decreased to EUR -63 million (121)

    As announced in September, Wärtsilä’s full-year operating result will be impacted by a one-time charge related to project cost overruns in the Marine and Energy Businesses amounting to EUR 150 million. Of the total amount, EUR 84 million was booked in the period January-September and EUR 65 million in the third quarter.

    WÄRTSILÄ’S PROSPECTS

    The demand for Wärtsilä’s services and solutions in the coming 12 months is expected to be somewhat below that of the previous 12 months. Demand by business area is anticipated to be as follows:

    • Soft in Wärtsilä Marine Business, due to lower vessel contracting volumes and a decline in the demand for scrubber solutions from last year’s exceptionally high level. Activity in the marine services market is expected to be stable.
    • Weak in Wärtsilä Energy Business (downgraded from soft). Market conditions in the energy industry are challenging, as the rapidly changing energy landscape is creating uncertainty among customers. The geopolitical and economic environment is further slowing decision-making. The demand for energy services is expected to be stable.        

    Wärtsilä’s current order book for 2019 deliveries is EUR 1,708 million (1,364), comprised mainly of equipment deliveries. The comparable operating result for the full year 2019 is expected to be approximately EUR 100 million lower than in the previous year (EUR 577 million in 2018).

    JAAKKO ESKOLA, PRESIDENT AND CEO

    “The third quarter proved to be challenging for Wärtsilä, both in terms of equipment demand trends and financial performance. The decline in order intake reflected weak vessel contracting and softened demand for scrubber systems, as well as continued slow decision-making in the energy markets. While the project pipeline is healthy in both businesses, visibility on order intake timing is limited and competition is intensifying. Price pressure remains a headwind in the prevailing market environment. I am pleased to note that despite the challenges we face in the equipment businesses, services related activity remained sound.

    Wärtsilä’s financial performance was significantly below that of the previous year. The decline in net sales was anticipated, as energy equipment and scrubber deliveries are concentrated towards the latter part of the year. Our operating result, on the other hand, was weakened by unforeseen cost overruns in a handful of complex marine and energy projects. The full-year result will be impacted by a one-time charge amounting to EUR 150 million, of which EUR 84 million has already been recognised. A review of the projects in question revealed incorrect underlying assumptions in cost estimates, insufficient risk identification, and supplier related challenges. We have taken corrective actions to prevent similar issues from occurring in the future. These include introducing tighter controls on technical assessments and the supplier approval process, as well as strengthening the project management organisation. With these measures, we aim to improve our project execution quality and ensure better upfront identification of risks and opportunities. I am confident that this will enable us to live up to our reputation for providing high quality and value enhancing solutions.”

    KEY FIGURES

    MEUR 7-9/
    2019    		 7-9/
    2018    		 Change 1-9/
    2019    		 1-9/
    2018    		 Change 2018
    Order intake 979 1 372 -29% 3 772 4 433 -15% 6 307
    of which services 679 640 6% 1 954 1 898 3% 2 598
    Order book, end of period 6 294 5 918 6% 6 166
    Net sales 1 118 1 330 -16% 3 486 3 642 -4% 5 174
    of which services 578 571 1% 1 762 1 688 4% 2 419
    Book-to-bill 0.88 1.03 1.08 1.22 1.22
    Operating result 11 141 -92% 198 337 -41% 543
    % of net sales 1.0 10.6 5.7 9.2 10.5
    Comparable operating result* 39 141 -72% 254 352 -28% 577
    % of net sales 3.5 10.6 7.3 9.7 11.2
    Comparable adjusted EBITA** 49 152 -68% 285 384 -26% 621
    % of net sales 4.4 11.5 8.2 10.5 12.0
    Profit before taxes -0 130 -100% 162 308 -48% 502
    Earnings/share, EUR -0.01 0.17 0.20 0.39 0.65
    Cash flow from operating activities -61 122 -63 121 470
    Net interest-bearing debt, end of period*** 987 647 333
    Gross capital expenditure 79 258 306
    Gearing 0.44 0.28 0.14
    Solvency, % 39.4 43.7 44.4
    Personnel, end of period 19 018 19 420 -2% 19 294

    *Items affecting comparability in the third quarter of 2019 included costs related primarily to restructuring programmes of EUR 28 million (0). During January-September, items affecting comparability amounted to EUR 56 million (15).
    **Comparable adjusted EBITA excludes items affecting comparability and purchase price allocation amortisation.
    ***The increase in net interest-bearing debt is largely related to the inclusion of lease liabilities on balance sheet as a result of the new IFRS 16 standard.                                                                                                                               

    As of the first quarter of 2019, Wärtsilä’s financial reporting has been amended to reflect its new organisational structure. The two business areas, Wärtsilä Marine Business and Wärtsilä Energy Business, constitute the reportable segments. Financial reporting for 2018 has been adjusted to reflect this change. In Wärtsilä Marine Business, order intake and net sales for retrofit scrubber projects have been transferred from services to new equipment. The comparison figures have been adjusted accordingly.

    Wärtsilä presents certain alternative performance measures in accordance with the guidance issued by the European Securities and Markets Authority (ESMA). The definition of these alternative performance measures is presented in the calculations of financial ratios, at the end of this interim report.

    ANALYST AND PRESS CONFERENCE

    An analyst and press conference will be held today, Friday 25 October 2019, at 10:00 a.m. Finnish time (8:00 a.m. UK time), at Wärtsilä Helsinki Campus, located at Hiililaiturinkuja 2, Helsinki, Finland. The combined web- and teleconference will be held in English and can be viewed by registering on: http://www.mediaserver.fi/live/wartsila.

    To participate in the teleconference, please register at the following address: http://emea.directeventreg.com/registration/3683345. You will receive dial-in details by e-mail once you have registered. If problems occur, please press *0 for operator assistance. Please press *6 to mute your phone during the teleconference and to unmute.    

    A recording of the webcast will be available on the company website later during the day.

    For further information, please contact:

    Arjen Berends
    Executive Vice President & CFO
    Tel: +358 10 709 5444
    arjen.berends@wartsila.com

    Natalia Valtasaari
    Vice President, Investor Relations
    Tel: +358 10 709 5637
    natalia.valtasaari@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 2018, Wärtsilä’s net sales totalled EUR 5.2 billion with approximately 19,000 employees. The company has operations in over 200 locations in more than 80 countries around the world. Wärtsilä is listed on Nasdaq Helsinki.
    www.wartsila.com

    Interim report Q3 2019

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    Please contact Ms Janine Tourneur regarding investor meeting requests.

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    tel. +358 10 709 5645
    e-mail: janine.tourneur@wartsila.com
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    tel. +358 10 709 1461
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    Senior Manager, Investor Relations
    tel. +358 10 709 1121
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    tel. +358 10 709 3178
    e-mail: maija.hongas@wartsila.com

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    tel. +358 10 709 1101
    e-mail: noora.suni@wartsila.com

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