Wärtsilä Corporation INTERIM REPORT 22 October 2015 at 8.30 a.m. local time
NET SALES AND PROFITABILITY DEVELOPING ACCORDING TO PLAN
This release is a summary of Wärtsilä's Interim Report January-September 2015. The complete report is attached to this release as a pdf-file. It is also available at http://www.wartsilareports.com/en-US/2015/q3/frontpage/ and on the company website at www.wartsila.com.
THIRD QUARTER HIGHLIGHTS
- Order intake decreased 17% to EUR 1,086 million (1,309)
- Net sales increased 9% to EUR 1,222 million (1,117)
- Book-to-bill 0.89 (1.17)
- EBITA EUR 170 million, or 13.9% of net sales (EUR 149 million or 13.3%)
- Operating result before non-recurring items EUR 160 million, or 13.1% of net sales (EUR 142 million or 12.7%)
- Earnings per share 0.49 euro (0.43)
- Cash flow from operating activities EUR -5 million (68)
- Mr Jaakko Eskola appointed President and CEO of Wärtsilä Corporation as of 1 November 2015
HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-SEPTEMBER 2015
- Order intake was stable at EUR 3,529 million (3,562)
- Net sales increased 6% to EUR 3,439 million (3,230)
- Book-to-bill 1.03 (1.10)
- EBITA EUR 420 million, or 12.2% of net sales (EUR 392 million or 12.1%)
- Operating result before non-recurring items EUR 397 million, or 11.5% of net sales (EUR 373 million or 11.5%)
- Earnings per share 1.46 euro (1.16)
- Cash flow from operating activities EUR 78 million (240)
- Order book at the end of the period increased 9% to EUR 5,112 million (4,674)
WÄRTSILÄ'S PROSPECTS FOR 2015 UNCHANGED
Wärtsilä expects its net sales for 2015 to grow by 5-10% and its operational profitability (EBIT% before non-recurring items) to be 12.0-12.5%. This guidance includes the impact of the L-3 Marine Systems International (MSI) acquisition. MSI is expected to contribute approximately EUR 250 million to net sales and EUR 9 million to the operating result during 2015. Excluding purchase price allocation amortisation, MSI's operating result is estimated to reach EUR 16 million.
BJÖRN ROSENGREN, PRESIDENT AND CEO
"Net sales increased by 9% to EUR 1,222 million in the third quarter, supported by growth in aftermarket activities and by the contribution from L-3 Marine Systems International. Good development within Services contributed to profitability, which reached 13.1%. We are well on track to reach our guidance for sales and profitability development this year.
Competition in the power generation markets is increasing, and the current macroeconomic uncertainty continues to cause delays in customer decision-making. Nevertheless, the project pipeline is solid and we continue to see opportunities for improved activity in the upcoming quarter. The Marine Solutions markets remain challenging. Low vessel contracting volumes, together with weak sentiment in the offshore segment, is impacting our order intake. I am pleased to note that our Services business is compensating well for the lower demand in our equipment markets. Improved maintenance demand from marine customers and stability within power plant service indicates a positive outlook for the rest of this year.
Wärtsilä's mission is to shape the marine and energy markets with advanced technologies while focusing on lifecycle performance - our ambition level is high. We are well positioned to benefit from the ongoing fundamental changes in our end markets, and from the increasing demand for higher efficiency with fewer emissions. Furthermore, we have during the past few years initiated various measures to develop the efficiency and flexibility of our own operations. I am confident in Wärtsilä's long-term opportunities for growth and improved profitability, and believe that Jaakko Eskola, with his strong and proven track record, is well suited to lead the company towards continued success. I would like to take this opportunity to thank our shareholders and the entire Wärtsilä organisation for the inspiring past four years."
| MEUR || 7-9/2015 || 7-9/2014 || Change || 1-9/2015 || 1-9/2014 || Change || 2014 |
| Order intake || 1 086 || 1 309 || -17% || 3 529 || 3 562 || -1% || 5 084 |
| Order book at the end of the period || || || || 5 112 || 4 674 || 9% || 4 530 |
| Net sales || 1 222 || 1 117 || 9% || 3 439 || 3 230 || 6% || 4 779 |
| Operating result (EBITA)1 || 170 || 149 || 14% || 420 || 392 || 7% || 594 |
| % of net sales || 13.9 || 13.3 || || 12.2 || 12.1 || || 12.4 |
| Operating result (EBIT)2 || 160 || 142 || 13% || 397 || 373 || 7% || 569 |
| % of net sales || 13.1 || 12.7 || || 11.5 || 11.5 || || 11.9 |
| Profit before taxes || 132 || 129 || || 354 || 338 || || 494 |
| Earnings/share, EUR || 0.49 || 0.43 || || 1.46 || 1.16 || || 1.76 |
| Cash flow from operating activities || -5 || 68 || || 78 || 240 || || 452 |
| Net interest-bearing debt at the end of the period || || || || 513 || 277 || || 94 |
| Gross capital expenditure || || || || 314 || 69 || || 94 |
| Gearing || || || || 0.26 || 0.14 || || 0.05 |
| 1 EBITA is shown excluding non-recurring items related to restructuring measures of EUR 11 million (17) and purchase price allocation amortisation of EUR 23 million (19) during the review period January-September 2015. During the third quarter, non-recurring items related to restructuring measures amounted to EUR 11 million (1) and purchase price allocation amortisation to EUR 9 million (6). |
| 2 EBIT is shown excluding non-recurring items. |
The market for liquid and gas fuelled power generation is expected to remain challenging as economic uncertainty continues. Despite the slower economic growth in the emerging markets, growth in electricity demand will support power plant investments. In the OECD countries, low economic growth continues to limit demand for new power plants. Low gas prices are driving demand in the USA. The megatrend towards distributed, flexible gas-fired power generation is gaining further ground globally. The increasing deployment of intermittent renewable power, such as wind and solar, will require flexible solutions to balance the power systems. Electricity markets, all over the world, are being developed to accommodate the necessary flexibility.
The overall outlook for the shipping and shipbuilding markets remains challenging. Overcapacity continues to affect demand. Low oil prices are impacting investments in offshore exploration and development, resulting in weak contracting of offshore drilling units and support vessels. Gas carrier contracting is expected to remain on a normalised level. The outlook for the cruise segment remains positive thanks to an anticipated increase in Asian passenger traffic, while the outlook for ferries is supported by signs of economic recovery in the USA and Europe. The importance of fuel efficiency and environmental regulations are clearly visible. The regulatory environment is driving interest in gas as a marine fuel in the wider marine markets.
The overall service market outlook is positive with growth opportunities in selected regions and segments. An increase in the installed base of medium-speed engines and propulsion equipment is offsetting the slower service demand for older installations and the uncertainty regarding short-term demand in the merchant marine segment. The service demand for installations operating on oil based fuels is expected to grow as low oil prices have had a favourable impact on operating costs. Although the decline in oil prices has resulted in a challenging outlook for offshore services in specific regions, the growth during recent years in the offshore installed base partially compensates for a potential decline in service volumes. The service outlook for gas fuelled vessels remains favourable. Service demand in the power plant segment continues to be good with an especially positive outlook in the Middle East and Africa. Customers in both the marine and power plant markets continue to show healthy interest in long-term service agreements.
ANALYST AND PRESS CONFERENCE AT 10.00 A.M. LOCAL TIME
An analyst and press conference will be held today, Thursday 22 October 2015, 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: http://wcc.webeventservices.com/r.htm?e=1064308&s=1&k=3B398222C5AEF8CFB1BCE24CAB280782. To participate in the teleconference please register at the following address: http://emea.directeventreg.com/registration/56579541. 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 2014, Wärtsilä's net sales totalled EUR 4.8 billion with approximately 17,700 employees. The company has operations in more than 200 locations in nearly 70 countries around the world. Wärtsilä is listed on the Nasdaq Helsinki. www.wartsila.com
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Source: Wärtsilä Oyj Abp via Globenewswire