result presentation q1 2016

© 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’.


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


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


Energy

Solutions

Marine

Solutions

Services

MEUR

Q1 Q2-Q4

MEUR


Net sales by business 1-3/2016

Marine Solutions

35% (32)

Energy Solutions

14% (18)

Services

52% (49)


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


Book-to-bill ratio

MEUR

Order intake Net sales Book-to-bill


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


10.1%

8.7%

0%

2%

4%

6%

8%

10%

12%

14%

0

20

40

60

80

100

120

140

Q1/2015 Q1/2016


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


MEUR


ENERGY SOLUTIONS


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


Quotation activity on a satisfactory level

ENERGY SOLUTIONS

Liquid fuel

Gas

Multi-fuel


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


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.


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%


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


MARINE SOLUTIONS


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

*

*


Limited demand for new vessels

MARINE SOLUTIONS

Source: Clarkson Research Services, figures exclude late contracting

* CGT= gross tonnage compensated with workload


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%


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 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


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)


SERVICES


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


Steady progression in Services net sales

SERVICES

0

100

200

300

400

500

600

Q1/2015 Q1/2016

MEUR

MEUR

485

3%

500


Q1 Q2-Q4


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)


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


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 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


FINANCIALS


-20

-10

0

10

20

30

40

50

Q1/2015 Q1/2016


Cash flow from operating activities

FINANCIALS

0

100

200

300

400

500

600

700

2012 2013 2014 2015

MEUR

Review period development

MEUR


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


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


MEUR

* Working capital / 12 months rolling net sales


0,00

0,10

0,20

0,30

0,40

0,50

31.3.2015 31.3.2016


Gearing

FINANCIALS

0,00

0,10

0,20

0,30

0,40

0,50

2012 2013 2014 2015



Market outlook


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.


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 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


THANK YOU

IR Contact:

Natalia Valtasaari

Director, Investor & Media Relations

Tel. +358 (0) 40 187 7809

E-mail: [email protected]

result presentation q1 2016

Presentations & Public Speaking