© Wärtsilä PUBLIC
WÄRTSILÄ CORPORATION
INTERIM REPORT JANUARY-MARCH 2016
21 April 2016
Jaakko Eskola, President & CEO
21 April 2016 Q1 Result presentation1
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation2
Highlights Q1/2016
• Order intake EUR 1,271 million, -1%
• Net sales EUR 967 million, -2%
• Book-to-bill 1.31 (1.30)
• Comparable operating result EUR 84 million, 8.7%
of net sales (EUR 100 million or 10.1%)
• Earnings per share EUR 0.30 (0.43)
• Cash flow from operating activities EUR -13 million (37)
• Order book at the end of the period EUR 5,103 million, +3%
Wärtsilä has revised the terminology used for alternative performance measures due to
new guidelines by the European Securities and Market Authority.
‘Operating result before non-recurring items’ has been replaced with ‘comparable
operating result’.
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation3
Order intake developed well in the equipment businesses
0
200
400
600
800
1 000
1 200
1 400
1 600
Q1/2015 Q1/2016
First quarter development
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
5 500
2012 2013 2014 2015 2016
MEUR
MEUR
Q1 Q2-Q4
-1%
9%
1,285 1,271
13%
-12%
Energy
Solutions
Marine
Solutions
Services
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation4
Stable development in net sales
0
200
400
600
800
1 000
1 200
1 400
Q1/2015 Q1/2016
988
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
5 500
2012 2013 2014 2015 2016
-2%
3%
4%
-27%
967
First quarter development
Energy
Solutions
Marine
Solutions
Services
MEUR
Q1 Q2-Q4
MEUR
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation5
Net sales by business 1-3/2016
Marine Solutions
35% (32)
Energy Solutions
14% (18)
Services
52% (49)
© Wärtsilä PUBLIC
1.05 1.05 1.06 0.98
1.31
0,0
0,2
0,4
0,6
0,8
1,0
1,2
1,4
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
5 500
2012 2013 2014 2015 1-3/2016
21 April 2016 Q1 Result presentation6
Book-to-bill ratio
MEUR
Order intake Net sales Book-to-bill
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation7
Order book distribution
0
500
1 000
1 500
2 000
2 500
3 000
31.3.2015 31.3.2016
Delivery current year Delivery next year or later
MEUR
© Wärtsilä PUBLIC
10.1%
8.7%
0%
2%
4%
6%
8%
10%
12%
14%
0
20
40
60
80
100
120
140
Q1/2015 Q1/2016
21 April 2016 Q1 Result presentation8
Operating result and profitability
10.9%11.2%
11.9%12.2%
0%
2%
4%
6%
8%
10%
12%
14%
0
100
200
300
400
500
600
700
2012 2013 2014 2015
MEUR
Items affecting comparability include restructuring costs of EUR 1 million for Q1 2016 and EUR 25 million for the full year 2015.
Figures for 2012-2013 include both discontinued and continuing operations.
Comparable operating result % of net sales
First quarter development
MEUR
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation9
ENERGY SOLUTIONS
© Wärtsilä PUBLIC
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
Q1/
2013
Q2/
2013
Q3/
2013
Q4/
2013
Q1/
2014
Q2/
2014
Q3/
2014
Q4/
2014
Q1/
2015
Q2/
2015
Q3/
2015
Q4/
2015
Q1/
2016
MW
21 April 2016 Q1 Result presentation10
Quotation activity on a satisfactory level
ENERGY SOLUTIONS
Liquid fuel
Gas
Multi-fuel
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation11
Solid power plant ordering activity
ENERGY SOLUTIONS
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2012 2013 2014 2015 2016
MEUR
Utilities
Industrials
First quarter developmentTotal EUR 312 million (287)
First quarter order intake
by fuel in MW
Gas
35%
Oil
65%
Q1 Q2-Q4
Independent
power producers
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation12
ENERGY SOLUTIONS
Americas 74 (75)
Asia 30 (20)
Africa and Middle East 199 (175)
Europe* 564 (433)
3836
199
564
Order intake 1-3/2016: 868 MW (702)
30
IPP’s
(Independent
Power Producers)
Utilities
Industrials
Order intake globally
*Turkish owners contributed to the high level of activity in Europe.
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation13
Market for gas and liquid fuel power plants, <500 MW
ENERGY SOLUTIONS
2014 2015
Market data includes all Wärtsilä power plants and other manufacturers’ gas and liquid fuelled gas turbine based power plants with prime movers above 5 MW,as well as estimated output of steam turbines for combined cycles. The data is gathered from the McCoy Power Report.Other combustion engines not included. In engine technology Wärtsilä has a leading position.
<500 MW market volume: 29.5 GW (23.4), +26%
Total market volume: 73.5 GW (47.8), +54%
GE
50.4%
MHI
20.1%
Siemens
13.2%
Wärtsilä
10.7%
Ansaldo
3.8%
Alstom
1.3% Other GT’s
0.4%
GE
37.9%
Siemens
18.8%
MHI
14.6%
Wärtsilä
8.3%
Ansaldo
10.4%
Other GT’s
10.0%
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation14
Leveraging our global EPC expertise to help our customers reduce carbon emissions by offering hybrid solutions that couple solar PV parks with Smart Power Generation power plants in focus areas such as Africa, the Middle East, the Americas and Southeast Asia.
Wärtsilä enters the utility-scale solar business
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation15
MARINE SOLUTIONS
© Wärtsilä PUBLIC
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
5,0
0
50
100
150
200
250
01
.09
03
.09
05
.09
07
.09
09
.09
11
.09
01
.10
03
.10
05
.10
07
.10
09
.10
11
.10
01
.11
03
.11
05
.11
07
.11
09
.11
11
.11
01
.12
03
.12
05
.12
07
.12
09
.12
11
.11
01
.13
03
.13
05
.13
07
.13
09
.13
11
.13
01
.14
03
.14
05
.14
07
.14
09
.14
11
.14
01
.15
03
.15
05
.15
07
.15
09
.15
11
.15
01
.16
03
.16
Mill
ion C
GT
Num
ber
of
vessels
Merchant Offshore Cruise and Ferry Special vessels 3 months moving average in CGT
*
*
21 April 2016 Q1 Result presentation16
Limited demand for new vessels
MARINE SOLUTIONS
Source: Clarkson Research Services, figures exclude late contracting
* CGT= gross tonnage compensated with workload
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation17
Order intake supported by strong activity in Cruise & Ferry
MARINE SOLUTIONS
0
300
600
900
1 200
1 500
1 800
2012 2013 2014 2015 2016
First quarter developmentTotal EUR 379 million (336)
Offshore
3%
Traditional
merchant
11%
Others
6%
Gas carriers
11%
Navy
10%
MEUR
Q1 Q2-Q4
Cruise &
Ferry
48%
Special vessels
11%
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation18
Joint venture ordering activity
MARINE SOLUTIONS
0
100
200
300
400
500
600
700
Q1/2
011
Q2/2
011
Q3/2
011
Q4/2
011
Q1/2
012
Q2/2
012
Q3/2
012
Q4/2
012
Q1/2
013
Q2/2
013
Q3/2
013
Q4/2
013
Q1/2
014
Q2/2
014
Q3/2
014
Q4/2
014
Q1/2
015
Q2/2
015
Q3/2
015
Q4/2
015
Q1/2
016
Marine Solutions order intake
Joint venture order intake, includes figures from Wärtsilä Hyundai Engine Company Ltd,
Wärtsilä Qiyao Diesel Company Ltd and CSSC Wärtsilä Engine (Shanghai) Co. Ltd
MEUR
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation19
Wärtsilä has been awarded the contract to supply a comprehensive gas solution for the mid-life upgrading of two Canadian RoPax ferries. Converting the ferries to operate on LNG fuel will make them environmentally sustainable.
Marine markets shifting towards gas
Kuva
pitää
vaihtaa,
bonny
kalvon
kuva voisi
sopia
tähän
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation20
Strong position in marine engine market
MARINE SOLUTIONS
Medium-speed main engines Auxiliary engines
Wärtsilä’s market shares are calculated on a 12 months rolling basis, numbers in brackets are from the end of the previous quarter.The calculation is based on Wärtsilä’s own data portal.
Wärtsilä
60% (59)
Others
15% (18)
MAN D&T
20% (16)
Caterpillar
5% (7)
Total market volume last 12 months:
2,307 MW (3,246)
Wärtsilä
13% (12)
Total market volume last 12 months:
5,273 MW (4,668)
Others
87% (88)
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation21
SERVICES
© Wärtsilä PUBLIC
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
2 200
2 400
2012 2013 2014 2015 2016
21 April 2016 Q1 Result presentation22
Steady progression in Services net sales
SERVICES
0
100
200
300
400
500
600
Q1/2015 Q1/2016
MEUR
MEUR
485
3%
500
First quarter development
Q1 Q2-Q4
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation23
Net sales distribution 1-3/2016
SERVICES
Spare parts
51% (53)
Field service
24% (24)
Projects
8% (6)
Agreements
17% (17)
Total EUR 500 million (485)
© Wärtsilä PUBLIC
0%
5%
10%
15%
20%
25%
30%
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
2010 2011 2012 2013 2014 2015 1-3/2016
MW
21 April 2016 Q1 Result presentation24
Development of service agreements
SERVICES
MW under agreement – Energy Solutions MW under agreement – Marine Solutions
% of Marine Solutions’ installed base% of Energy Solutions’ installed base
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation25
Wärtsilä will optimise maintenance and enhance engine performance for Bonny Gas Transport’s six new LNG carriers through dynamic maintenance planning and digital services.
A five-year maintenance agreement signed with Bonny Gas Transport Limited
Image: Bonny Gas Transport Limited
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation26
FINANCIALS
© Wärtsilä PUBLIC
-20
-10
0
10
20
30
40
50
Q1/2015 Q1/2016
21 April 2016 Q1 Result presentation27
Cash flow from operating activities
FINANCIALS
0
100
200
300
400
500
600
700
2012 2013 2014 2015
MEUR
Review period development
MEUR
© Wärtsilä PUBLIC
296
709
6.2%*
14.2%*
0%
5%
10%
15%
20%
25%
0
200
400
600
800
1 000
1 200
1 400
1 600
31.3.2015 31.3.2016
21 April 2016 Q1 Result presentation28
Working capital
FINANCIALS
465
313251
5439.8%
6.8%5.2%
10.8%
0%
5%
10%
15%
20%
25%
0
200
400
600
800
1 000
1 200
1 400
1 600
2012 2013 2014 2015
MEUR
Working capital Total inventories Advances received Working capital / Net sales
Review period development
MEUR
* Working capital / 12 months rolling net sales
© Wärtsilä PUBLIC
0,00
0,10
0,20
0,30
0,40
0,50
31.3.2015 31.3.2016
21 April 2016 Q1 Result presentation29
Gearing
FINANCIALS
0,00
0,10
0,20
0,30
0,40
0,50
2012 2013 2014 2015
Review period development
© Wärtsilä PUBLIC
Market outlook
21 April 2016 Q1 Result presentation30
Energy Solutions
The market for liquid and gas fuelled power generation is expected to remain challenging as economic uncertainty continues. The megatrend towards renewables is evident, with investments expected to favour utility scale solar PV installations. Furthermore, distributed, flexible, gas-fired power generation continues to gain ground globally.
Marine Solutions
The outlook for the shipping and shipbuilding markets remains challenging. Overcapacity continues to limit demand for new vessels in the merchant segment, while low oil prices are impacting investments in offshore exploration and development. The gas carrier market is under pressure, while the outlook for cruise vessels and ferries remains positive.
Services
The service market outlook is positive with growth opportunities in selected regions and segments. Customers in both the marine and power plant markets continue to show healthy interest in long-term service agreements.
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation31
Plans for organisational adjustments to reflect the weak market situation
• Wärtsilä plans to realign its Marine Solutions’ and
Energy Solutions’ global operations to adjust to the
weakened market situation and the tough
competitive environment
• Engine related R&D activities planned to be
concentrated to Finland in order to reduce
development cycles
• Approx. 550 jobs will be reduced, of which
some 270 in Finland
• Wärtsilä seeks annual savings in the region of
EUR 50 million
• The costs related to the restructuring measures
will be approx. EUR 50 million
• Currently, Marine Solutions employs 6,681 people
and Energy Solutions 958 people globally
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation32
Wärtsilä expects its net sales for 2016 to grow by 0-5% and its profitability (comparable operating result as a percent of net sales) to be 12.5-13.0%
Prospects for 2016 unchanged
© Wärtsilä PUBLIC 21 April 2016 Q1 Result presentation33
THANK YOU
IR Contact:
Natalia Valtasaari
Director, Investor & Media Relations
Tel. +358 (0) 40 187 7809
E-mail: [email protected]