progressing towards profitable growth
TRANSCRIPT
© Wärtsilä
Progressing towards profitable growthJaakko EskolaPresident & CEO
29 September 2016 Jaakko Eskola1
© Wärtsilä 29 September 2016 Jaakko Eskola2
OUR STRATEGIC GROWTH AGENDA
Well-positioned to benefit
from market trends
affecting our customers
Focused on fostering a
high performance culture
committed to continuous
improvement, and on
leveraging our global
presenceCommitted to
achieving
profitable growth
Key growth areas defined
around global megatrends
© Wärtsilä 29 September 2016 Jaakko Eskola3
Future energy investments will favor renewable power production
0
100
200
300
400
500
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Traditional baseload Gas Wind Solar Other Batteries Other flexible capacity
MARKET TRENDS
Source: Bloomberg New Energy Finance
Traditional baseload = coal, oil, nuclear, hydro
Other = geothermal, biomass, waste to energy, other REs
Other flexible capacity = demand response and other potential sources
Global annual gross capacity additions(GW)
© Wärtsilä
Marine emission regulations are driving a shift towards gas-fuelled vessels
MARKET TRENDS
LNG capable fleet
Source: Clarksons Research
29 September 2016 Jaakko Eskola4
2069
2826
268
3603
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Fleet Order book LOW CASE SCENARIO BASE CASE SCENARIO HIGH CASE SCENARIO
Fleet growth based on
current order book
© Wärtsilä 29 September 2016 Jaakko Eskola5
MARKET TRENDS
Average OPEX breakdown of a utility power plant
Environmental and economic considerations are increasingthe focus on efficiency
Voyage cost breakdown of a container ship
Source: CMA CGM Annual report 2015, data for 2014
Bunker
fuel and
consumables
41%
Handling and
stevedoring
45%
Port and canal
14%
Source: EIA, https://www.eia.gov/electricity/annual/html/epa_08_04.html, data for 2014
Fuel 87%
Maintenance 7%
Operation 6%
© Wärtsilä 29 September 2016 Jaakko Eskola6
OUR STRATEGIC GROWTH AGENDA
Well-positioned to benefit
from market trends
affecting our customers
Key growth areas defined
around global megatrends
• Gas-based technology
• Energy efficient solutions
• Innovative solutions
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WE SUPPORT OUR CUSTOMERS THROUGHOUT THE GAS VALUE CHAIN
Exploration& Drilling
Production &Liquefaction
Transport &storage
Receiving terminals& Regasification
Distribution &transport to the users
Gas-based powergeneration
29 September 2016 Jaakko Eskola7
POWER PLANT
LNG PEAK
SHAVING PLANT
RELIQUEFACTION UNIT
BUNKERING
TERMINAL
LNG FUELLED
PASSENGER SHIP
SATELLITE TERMINAL
MINI LIQUEFACTION
PLANT
SMALL LIQUEFACTION
PLANT
OFFSHORE SERVICE
VESSEL (OSV)
PLATFORM SUPPLY
VESSEL (PSV)
OIL & GAS PLATFORM
LNG CARRIER
POWER BARGE
STORAGE AND
REGASIFICATION
BARGE
SATELLITE
TERMINAL
POWER PLANT
SMALL LNG
CARRIER
FLOATING STORAGE &
(REGESIFICATION) UNIT
(FSRU/FSU)
LARGE
TERMINALSMALL LNG
CARRIER
BUNKERING
VESSEL
JETTY
SMALL/MEDIUM
TERMINAL
LNG FUELLED
CARGO SHIP
BUNKERING
TERMINAL
LNG FILLING
STATION
LBG FILLING
STATION
BIOGAS
LIQUEFACTION
PLANTSATELLITE AND
BUNKERING TERMINAL
REGASIFICATION
UNIT
RELIQUEFACTION
UNIT
POWER PLANT
POWER PLANT
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GAS-BASED TECHNOLOGY
Market share in gas engine power plants
0
50
100
150
200
250
85 86 88 91 00 03 04 06 07 08 09 10 11 12 13 14 15 16
Wärtsilä's deliveries Others
We are a leader in the gas equipment markets…
Cumulative gas-fuelled vessel deliveries
Wärtsilä77%
Other internal
combustion engines
23%
29 September 2016 Jaakko Eskola8
© Wärtsilä 29 September 2016 Jaakko Eskola9
…which creates growth opportunities for our Services businessInstalled base according to fuel type in % of MW
53% 55% 57%
5%7%
9%
43% 39% 35%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016 YTD
4-Stroke - Oil 4-Stroke - Gas 2-Stroke - Oil
GAS-BASED TECHNOLOGY
© Wärtsilä
Improving efficiency is a key cornerstone in our product development
ENERGY EFFICIENT SOLUTIONS
WST14
29 September 2016 Jaakko Eskola10
WST-14 STEERABLE
THRUSTER
WÄRTSILÄ 31 NACOS PLATINUM SHIP DESIGN
© Wärtsilä
Our new innovations in hybrid solutions increase customer efficiency
INNOVATIVE SOLUTIONS
Benefits of hybrid solutions:
• Fuel savings and reduced emissions
• Optimised engine operation
• Thermal power generation
optimisation
29 September 2016 Jaakko Eskola11
250 MW
ENGINE UNIT
46 MW SOLAR
PV UNIT
INTERCONNECTING
CABLES
© Wärtsilä 29 September 2016 Jaakko Eskola12
INNOVATIVE SOLUTIONS
Moving from hardware to software – Our digital journey
Products
equipped with
sensors, enabling
condition-based
monitoring
Developing our
digital service
offering
Expanding
our portfolio with
software-based
products
Extending
data analysis
& modelling to
external
factors
Creating customer value
through optimised performance
© Wärtsilä
Digitalisation increases our overall productivity
29 September 201613 Jaakko Eskola
INNOVATIVE SOLUTIONS
Manufacturing models
(Robotics, Manufacturing
execution system, 3D printing)
Infrastructure enablers
(Simulation clusters,
connectivity, big data storage,
cyber security)
Productivity enablers
(Engine component
traceability, parameter
management)
Building blocks for
digitalisation
(Smart sensors,
simple user
interfaces)
Integrated
product solutions(Eniram, Genius,
UNIC)
Diverse research areas
(Engine simulation models,
performance, big data
analytics, IoT)
Product
platforms
Components
Research
Manufacturing
Infrastructure
Tools & way
of working
© Wärtsilä 29 September 2016 Jaakko Eskola14
OUR STRATEGIC GROWTH AGENDA
Well-positioned to benefit
from market trends
affecting our customers
Focused on fostering a
high performance culture
committed to continuous
improvement, and on
leveraging our global
presence
Key growth areas defined
around global megatrends
© Wärtsilä© Wärtsilä
REACHING OUR FINANCIAL TARGETS THROUGH CONTINUOUS IMPROVEMENT
Value for
customers
Demand
driven flow
First time
right
Make it
visual
29 September 2016 Jaakko Eskola15
© Wärtsilä© Wärtsilä
… AND STRENGTHENING OUR HIGH PERFORMANCE CULTURE
Leadership
Developing excellent leaders
with common goals
Continuous development
Ensuring competent and
motivated personnel
Diversity
Building an inclusive
company culture
29 September 2016 Jaakko Eskola16
Over 130
nationalities in
70 countries
Over 55,000
learning days
in 2015
© Wärtsilä© Wärtsilä
… AND STRENGTHENING OUR HIGH PERFORMANCE CULTURE
High ethical standards
Ensuring responsible actions
and integrity among our
people
Quality
Providing the most reliable
products and services in our
industry
Safety
Creating a hazard-free
working environment
29 September 2016 Jaakko Eskola17
11 12 13 14 15
LOST TIME INJURY
FREQUENCY
-10%6.3
2.8
2014 2015
QUALITY
COSTS
© Wärtsilä 29 September 2016 Jaakko Eskola18
…AS WELL AS OUR UNRIVALLED GLOBAL NETWORK
Asia:
• Increasing energy demand
• Target market for solar
applications
• Significant shipping market,
growing cruise industry
• Large installed base
• Local presence through
partnerships
North America:
• Changing energy mix
• Growing installed base
• Opportunities in
environmental solutions
South America:
• Increasing energy demand
• Target market for solar applications
• Large installed base
Europe:
• Changing energy mix
• LNG infrastructure development
• Significant shipping market
• Opportunities in environmental
solutions
Middle East & Africa:
• Increasing energy demand
• Target market for solar applications
• Growing installed base
© Wärtsilä 29 September 2016 Jaakko Eskola19
WE ARE COMMITTED TO ACHIEVING OUR LONG-TERM FINANCIAL TARGETS
GROW FASTER THAN
GLOBAL GDP
Focus on strengthening our
position in strategic growth
markets
REACH 14%
PROFITABILITY
Enhanced performance
through continuous
improvement DIVIDEND OF AT
LEAST 50% OF EPS
OVER THE CYCLE
Committed to
providing shareholder
returnsMAINTAIN GEARING
BELOW 50%
Unleveraged balance sheet
supports growth through
acquisitions