Wärtsilä Q1 2014 presentation

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Information about Wärtsilä Q1 2014 presentation
Business

Published on April 25, 2014

Author: wartsilacorp

Source: slideshare.net

© Wärtsilä WÄRTSILÄ CORPORATION INTERIM REPORT JANUARY-MARCH 2014 24 APRIL 2014 Björn Rosengren, President & CEO

• Order intake EUR 1,142 million, -16% • Net sales EUR 1,012 million, +15% • Book-to-bill 1.13 • EBIT EUR 90 million, 8.9% of net sales (EUR 70 million or 8.0%) • EPS EUR 0.31 (0.37) • Cash flow from operating activities EUR 111 million (84) • Efficiency program proceeding according to plan EBIT is shown excluding non-recurring items. Highlights Q1/2014 NEW PIC

© Wärtsilä 0 200 400 600 800 1000 1200 1400 Q1/2013 Q1/2014 -16% -59% 5% 1% 1,352 MEUR First quarter development MEUR 3 Order intake affected by challenging power plant markets 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 5500 2010 2011 2012 2013 1-3/2014 1,142 Q1 Q2-Q4 Power Plants Ship Power Services

© Wärtsilä 0 200 400 600 800 1000 1200 Q1/2013 Q1/2014 Net sales in line with our expectations 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 2010 2011 2012 2013 1-3/2014 -7.6% 12% 15% 0% 54% -6% 882 MEUR First quarter development MEUR 1,012 4 Net sales increased by 15% Power Plants Ship Power Services Q1 Q2-Q4 -1%

© Wärtsilä Net sales by business 1-3/2012 Ship Power 38% (28) Power Plants 19% (23) Services 43% (49) 5 Net sales by business 1-3/2014

© Wärtsilä 0.88 1.07 1.05 1.05 1.13 0,0 0,2 0,4 0,6 0,8 1,0 1,2 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 5500 2010 2011 2012 2013 1-3/2014 Order intake Net sales Book-to-bill MEUR 6 Book-to-bill ratio remains above one

© Wärtsilä Order book distribution MEUR 7 Order book distribution 0 500 1000 1500 2000 2500 3000 3500 31.03.2013 31.03.2014 Delivery current year Delivery next year or later

© Wärtsilä 8.0% 8.9% 0% 2% 4% 6% 8% 10% 0 20 40 60 80 100 Q1/2013 Q1/2014 10.7% 11.1% 10.9% 11.2% 0% 2% 4% 6% 8% 10% 12% 14% 0 100 200 300 400 500 600 2010 2011 2012 2013 MEUR First quarter development MEUR 8 Profitability in line with expectations EBIT% before non-recurring items EBIT before non-recurring items

© Wärtsilä9 Continued uncertainty in the power generation markets

Power Plants quotation activity remains on a good level 10 © Wärtsilä The share of natural gas is consistently increasing. 0 2000 4000 6000 8000 10000 12000 14000 16000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 MW Quoted MW per Fuel Type Others Natural gas Heavy fuel oil

© Wärtsilä 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2010 2011 2012 2013 1-3/2014 MEUR Review period development Total EUR 165 million (406) IPP’s* Utilities Industrials Oil 41% Gas 59% Review period order intake by fuel in MW x% 11 Power Plants order intake by customer segment 25% 24% 51% Q1 Q2-Q4 *IPP = Independent Power Producer

© Wärtsilä Order intake 1-3/2014: 396 MW (760) Power Plants global order intake Africa and Middle East the most active region Europe 91 (72) Africa and Middle East 202 (314) Asia 37 (50) Americas 67 (324) 12

© Wärtsilä Siemens GE MHI Wärtsilä Alstom 13 19.8% 2013 48.2% 22.1% 2.9% Total market 73.2 GW (75.4) 3.3% 2.6% Other GTs Ansaldo 13 Market for gas and liquid based power plants Includes all Wärtsilä power plants and other manufacturers’ gas and liquid fuelled 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. 1.1%

© Wärtsilä14 Marine market activity on a healthy level

© Wärtsilä15 Good activity in vessel contracting Source: Clarkson Research Services * CGT= gross tonnage compensated with workload * * 0 1 2 3 4 5 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 11.12 01.13 03.13 05.13 07.13 09.13 11.13 01.14 03.14 MillionCGT #ofvessels Merchant Offshore Cruise and Ferry Special vessels 3 months moving average in CGT

© Wärtsilä 0 300 600 900 1200 1500 1800 2010 2011 2012 2013 1-3/2014 MEUR Review period development Total EUR 467 million (443) Offshore 33% Merchant 62% Special vessels 4% 16 Ship Power order intake by segment Others 2% Q1 Q2-Q4

© Wärtsilä • Order received for Wärtsilä’s 2-stroke, dual-fuel engine and gas valve unit • The vessel will be built in China for the Chinese ship owner and operator Zhejiang Huaxiang Shipping Co. Ltd. • Benefits of low-pressure, dual-fuel technology for two stroke engines include: – Reduced capital expenditure and gains in operating expenditure – Compliance with IMO Tier III emission regulations without exhaust gas cleaning systems when operating in gas mode 17 Wärtsilä’s 2-stroke, dual-fuel engine chosen to power a new LNG carrier NEW PIC

© Wärtsilä • Joint venture order intake totalled EUR 25 million (25) during January-March 2014 • Wärtsilä’s share of ownership in these companies is 50%, and the results are reported as a share of result of associates and joint ventures MEUR Ship Power order intake Joint venture order intake, includes figures from Wärtsilä Hyundai Engine Company Ltd. and Wärtsilä Qiyao Diesel Company Ltd. 18 Joint venture ordering activity 0 50 100 150 200 250 300 350 400 450 500 550 600 Q1/2010 Q2/2010 Q3/2010 Q4/2010 Q1/2011 Q2/2011 Q3/2011 Q4/2011 Q1/2012 Q2/2012 Q3/2012 Q4/2012 Q1/2013 Q2/2013 Q3/2013 Q4/2013 Q1/2014

© Wärtsilä 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 51%(52) Others 20%(19) MAN D&T 23%(25) Caterpillar 6%(4) MAN D&T 90%(88) Wärtsilä 9%(10) Mitsubishi 1%(2) Low-speed main engines Total market volume last 12 months: 31,017 MW (22,935) Total market volume last 12 months: 3,787 MW (4,137) Medium-speed main engines Wärtsilä 3%(4) Auxiliary engines Total market volume last 12 months: 6,895 MW (5,966) Others 97%(96) 19 Ship Power market Market position of Wärtsilä’s marine engines

© Wärtsilä20 Steady demand in marine and power plant service markets

© Wärtsilä 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2010 2011 2012 2013 1-3/2014 -3% 0 100 200 300 400 500 600 Q1/2013 Q1/2014 MEUR First quarter development MEUR 434 0% 435 0% 21 Services net sales development stable 5% Q1 Q2-Q4

© Wärtsilä Spare parts 53%(50) Field service 24%(27) Contracts 17%(16) Projects 6%(6) 22 Total EUR 435 million (434) Services net sales distribution 1-3/2014

© Wärtsilä • Order for the technical design and installation of a new fixed pitch propeller for an FPSO conversion project • The vessel is operated by Woodside Energy Ltd, an independent Australian oil and gas company • Fast-track project execution a key customer requirement • The major benefit of the new propeller is increased vessel speed 23 Australian FPSO optimises propeller design NEW PIC

© Wärtsilä O&M and maintenance agreements Power Plants deliveries % of delivered MWs MW 24 Development of Power Plants service agreements 57% 58% 57% 51% 49% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 0 500 1000 1500 2000 2500 3000 3500 4000 2010 2011 2012 2013 Q1/2014 12m rolling

© Wärtsilä Fleet utilisation * Source Bloomberg. Sample of more than 25 000 vessels (>299 GT) covered by IHS AIS Live. ** Source Bloomberg 25 Fleet utilisation Fleet Average Speed, knots** Anchored Vessels & Fleet Development* 20500 21000 21500 22000 22500 15% 20% 25% 30% 35% 09.11 12.11 03.12 06.12 09.12 12.12 03.13 06.13 09.13 12.13 03.14 NrofActiveVessels PercentAnchored Anchored Active Fleet 8,0 8,5 9,0 9,5 10,0 10,5 09.11 12.11 03.12 06.12 09.12 12.12 03.13 06.13 09.13 12.13 03.14

© Wärtsilä26 Strong financial position

© Wärtsilä27 MEUR Favourable development in operating cash flow 0 25 50 75 100 125 150 Q1/2013 Q1/2014 First quarter development MEUR 0 100 200 300 400 500 600 700 2010 2011 2012 2013

© Wärtsilä Working capital Total inventories Advances received Working capital / Net sales MEUR 28 Focus on working capital development 118 235 465 313 292 2.6% 5.6% 9.8% 6.7% 6.1% 0% 5% 10% 15% 20% 25% 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2010 2011 2012 2013 31.3.2014

© Wärtsilä Solvency Gearing 29 Financial position 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 2010 2011 2012 2013 31.3.2014 -0,10 0,00 0,10 0,20 0,30 0,40 0,50 2010 2011 2012 2013 31.3.2014

© Wärtsilä • Power Plants: 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. • Ship Power: The main drivers supporting activity in the shipping and offshore sectors are in place. 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. • Services: The overall service market outlook remains stable. 30 Market outlook NEW PIC

© Wärtsilä31 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%. Prospects for 2014 unchanged

IR Contact: Natalia Valtasaari Director, Investor Relations Tel. +358 (0) 40 187 7809 E-mail: natalia.valtasaari@wartsila.com

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