Wärtsilä’s Interim Financial Report January–September 2020
This release is a summary of Wärtsilä’s Interim Report January–September 2020. The complete report is attached to this release as a pdf file. It is also available on the company website at www.wartsila.com.
Wärtsilä expects the near-term demand in the marine and energy markets to improve from current levels. However, visibility remains limited, and the prevailing market conditions make the outlook uncertain.
Based on its current order book, Wärtsilä expects net sales for 2020 to decline by approximately 10% (EUR 5,170 million in 2019). Profitability is expected to continue to be burdened by the effects of COVID-19 and, while service demand is anticipated to improve, the seasonal pick-up is unlikely to be as strong as in previous years.
“The COVID-19 pandemic continued to limit the appetite for investments in both the marine and energy markets in the third quarter, resulting in depressed vessel contracting and the postponement of decisions on new power plant capacity. Furthermore, despite some easing of mobility restrictions, low vessel utilisation, power plant site access constraints, and customers’ focus on conserving cash led to soft demand for services.
The difficult market backdrop was reflected in the low level of orders received during the third quarter, as well as in the decline in net sales from services and some delays in equipment deliveries. Profitability remained low due to COVID-19 driven cost inflation, fixed cost underabsorption, and a higher share of equipment deliveries within the net sales mix. However, a better than anticipated service mix contributed to sequential improvement, as did the ongoing temporary cost saving actions. I am pleased to note that our efforts to improve working capital, particularly in the areas of inventory management and receivables collection, resulted in yet another quarter of positive cash flow development.
Looking at the months ahead, our solid order book will contribute to a reasonable level of equipment deliveries. However, as service activity is likely to remain subdued, we expect the resulting unfavourable sales mix to put pressure on profitability. Visibility into demand development remains low, due to widespread concerns over escalating virus infection rates and the longer-term implications of the COVID-19 pandemic. Thus, our near-term focus will be on ensuring both a sound financial position and an optimal cost structure for the prevailing market conditions. Simultaneously, we will continue to invest in developing our digital offering and fuel flexible solutions, enabling us to capture future growth opportunities related to the decarbonisation and transformation of the marine and energy industries.”
|of which services||521||681||-23%||1,641||1,957||-16%||2,683|
|Order book, end of period||5,265||5,982||-12%||5,878|
|of which services||499||579||-14%||1,602||1,764||-9%||2,505|
|% of net sales||4.3||1.0||4.3||5.7||7.0|
|Comparable operating result||61||39||55%||172||254||-32%||457|
|% of net sales||6.1||3.5||5.1||7.3||8.8|
|Comparable adjusted EBITA*||69||49||40%||197||285||-31%||498|
|% of net sales||7.0||4.4||5.8||8.2||9.6|
|Profit before taxes||34||-0||113||162||-30%||315|
|Cash flow from operating activities||114||-61||407||-63||232|
|Net interest-bearing debt, end of period||678||987||726|
|Gross capital expenditure||79||79||122|
|Personnel, end of period||18,183||19,018||-4%||18,795|
*Comparable adjusted EBITA excludes items affecting comparability and purchase price allocation amortisation.
Wärtsilä’s financial information for the first quarter of 2020 and for the full year 2019 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.
As published in the Interim report January-March 2020, order book figures for 2019 have been restated due to the stricter requirements for booking new orders, and personnel comparison figures for 2019 have been adjusted to correctly reflect the business line composition of the Portfolio Business and a change in allocation principles. The tables in the interim report reflect both changes.
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, Friday 23 October 2020, at 3:00 p.m. Finnish time (1:00 p.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/6187026006942501643.
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.
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:
Executive Vice President & CFO
Tel: +358 10 709 5444
Vice President, Investor Relations
Tel: +358 10 709 5637
For press information, please contact:
Executive Vice President, Communications, Branding & Marketing
Tel: +358 10 709 5599
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 2019, 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.