Interim report Q1 2014 (pdf)
HEALTHY DEVELOPMENT IN SHIP POWER AND SERVICES OFFSETTING CHALLENGES IN POWER GENERATION MARKETS
This release is a summary of Wärtsilä’s Interim Report January-March 2014. The complete report is attached to this release as a pdf-file. It is also available at http://www.wartsilareports.com/en-US/2014/q1/frontpage/ and on the company website at www.wartsila.com.
HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-MARCH 2014
- Order intake decreased 16% to EUR 1,142 million (1,352)
- Net sales increased 15% to EUR 1,012 million (882)
- Book-to-bill 1.13 (1.53)
- Operating result before non-recurring items EUR 90 million, or 8.9% of net sales (EUR 70 million or 8.0%)
- Earnings per share 0.31 euro (0.37)
- Cash flow from operating activities EUR 111 million (84)
- Order book at the end of the period decreased 10% to EUR 4,505 million (4,998)
BJÖRN ROSENGREN, PRESIDENT AND CEO
“In line with our expectations, first quarter net sales developed well with profitability at 8.9%. Favourable development was also seen in the operating cash flow. The power plant markets remain challenging with customers continuing to delay decision-making due to global economic uncertainty and emerging market currency fluctuations. However, activity in the marine market was at a healthy level and Ship Power performed well, which partly offset the current challenges within the power generation markets. Several orders were received for offshore support vessels and there was active ordering of dual-fuel solutions and gas handling systems for the merchant fleet. The demand for services was stable within both of our end markets.
While the market situation continues to be volatile, we remain focused on improving efficiency and our competitive position. The restructuring measures announced in January have proceeded according to plan and are contributing to the efficiency improvement. Based on these measures, the current order book and a stable service market our prospects for 2014 remain unchanged.”
WÄRTSILÄ’S PROSPECTS FOR 2014 UNCHANGED
Wärtsilä expects its net sales for 2014 to grow by 0-10% and its operational profitability (EBIT% before non-recurring items) to be around 11%.
Power generation markets closely follow global macro-economic development. Uncertainty in the macro economy, combined with slow global growth projections, has lead to two consecutive years of decline in the power generation markets. Although customers are still delaying their decision-making, the forecasted GDP growth in 2014 is expected to result in a slightly improved overall market for liquid and gas fuelled power generation. Ordering activity remains focused on the emerging markets, which continue to invest in new power generation capacity. 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 main drivers supporting activity in the shipping and offshore sectors are in place. World seaborne trade and the world economy are showing signs of improvement, which benefits the merchant shipping market. In the offshore segment, the current oil price level is supportive of investments. Furthermore, the strong drilling rig order book supports the ordering of offshore support vessels and there is continued demand for production units. The importance of fuel efficiency and the regulatory environment are clearly visible, and the interest in gas as a fuel is increasing. Financing has eased with more options and better terms available. Overall contracting is expected to be in line with that seen in 2013, keeping in mind the prevailing overcapacity and the market’s limited capacity to absorb new tonnage. Offshore activity is anticipated to be stable and the shipping markets to remain healthy, although a slight decline in traditional merchant vessel orders may be seen. The gas carrier market is expected to continue to be active, particularly in the LPG vessel segment.
The overall service market outlook remains stable. An increase in the installed base partly balances the slower service demand for older installations and the continued focus of merchant marine customers on reducing operating expenses. The outlook for services to offshore and gas fuelled vessels remains positive. Demand for services in the power plant segment continues to be good. From a regional perspective, the outlook for the Middle East and Asia is slightly more positive, supported by interest in power plant related services. The outlook is also good in the Americas and Africa.
ANALYST AND PRESS CONFERENCE AT 10.00 A.M. LOCAL TIME
An analyst and press conference will be held on Thursday 24 April 2014 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 at the following address:
To participate in the teleconference please register at the following address: http://emea.directeventreg.com/registration/23538436. You will receive dial-in details by e-mail once you have registered. If problems occur, please press *0 for operator assistance. Please use *6 to mute your phone during the teleconference and the same code to unmute.
An on-demand version of the webcast will be available on the company website later the same day.
For further information, please contact:
Executive Vice President & CFO
Tel: +358 10 709 5640
Director, Investor Relations
Tel: +358 40 187 7809
For press information, please contact:
Executive Vice President, Communications & Branding
Tel: +358 10 709 5599
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 maximizes the environmental and economic performance of the vessels and power plants of its customers. In 2013, Wärtsilä's net sales totalled EUR 4.7 billion with approximately 18,700 employees. The company has operations in more than 200 locations in nearly 70 countries around the world. Wärtsilä is listed on the NASDAQ OMX Helsinki, Finland.