Wärtsilä has completed the first part of the business analysis launched at the end of July. The goal is to adapt the Group to the market situation and to significantly improve the company’s profit generating ability. The Group’s targeted operating margin of 7-8% is to be reached by the end of 2005.
The group will seek future growth in the area of ship power and service.
Wärtsilä has secured significant power plant orders in recent weeks. The total order book of the Power Divisions at the end of August was EUR 1,500 million which was 14% higher than a year ago. The demand in the market, however, is clearly lower than the capacity available in the Group, which is why the capacity will be adapted and the number of employees reduced accordingly.
Power Plant business to focus on competitive offering
Wärtsilä will focus the Power Plant business on the most competitive offering and fewer products in order to adapt to the market conditions and the high volatility in demand.
Wärtsilä to reduce the production of high-speed engines
In its present form the high-speed engine business has not met the expectations. Wärtsilä is therefore planning to discontinue the production of the Wärtsilä 200 and 220SG engines in Mulhouse, France. The manufacturing of special products will continue in Surgères.
Wärtsilä France will be stepped up as a service company and will continue to provide service for the customers of the high-speed engines as earlier. Wärtsilä announced last month its intent to start a co-operation with Volvo regarding service and sales of Volvo Penta marine engines.
Changes would affect 400-500 people at the first stage
Consultations on intended changes in the Group companies will be initiated with the employee representatives in compliance with the regulations in the respective countries. The changes at this first stage are estimated to affect 400-500 persons of Wärtsilä’s total personnel of 12,500.
Focusing on capacity will continue
The business analysis will continue and is expected to lead to further capacity reductions. Dependent on the final scope and timing of the plan, a provision of EUR 75-150 million will be made in the fourth quarter of 2003. It will burden the Power Divisions’ result for 2003. As announced at the end of July Wärtsilä’s operational profitability excluding the restucturing provision will be at previous year’s level.
In 2002 Wärtsilä’s net sales were EUR 2.5 billion and the number of employees 12,500.