result presentation q2 2016

© Wärtsilä PUBLIC

WÄRTSILÄ CORPORATION

INTERIM REPORT JANUARY-JUNE 2016

20 July 2016

Jaakko Eskola, President & CEO

20 July 2016 Q2 Result presentation1

© Wärtsilä PUBLIC 20 July 2016 Q2 Result presentation2

Highlights Q2/2016

• Order intake EUR 1,194 million, +3%

• Net sales EUR 1,196 million, -3%

• Book-to-bill 1.00 (0.94)

• Comparable operating result EUR 122 million, 10.2%

of net sales (EUR 137 million or 11.1%)

• Earnings per share EUR 0.19 (0.54)*

• Cash flow from operating activities EUR 202 million (47)

• Order book at the end of the period EUR 5,083 million, -5%

*Write-downs of approx. EUR 42 million related to the divestment of the Winterthur Gas &

Diesel joint venture, realised exchange rate losses from Brazilian projects, and other

receivables were recognised in the results for the second quarter of 2016.


Solid development in order intake

0

200

400

600

800

1 000

1 200

1 400

1 600

Q2/2015 Q2/2016

Second 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 Q3-Q4

3%

62%

1,159 1,194

-8%

-9%

Energy

Solutions

Marine

Solutions

Services


Net sales on a stable level

0

200

400

600

800

1 000

1 200

1 400

Q2/2015 Q2/2016

1,230

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

-3%

-1%

23%

-33%


Energy

Solutions

Marine

Solutions

Services

MEUR

Q1-Q2 Q3-Q4

MEUR

1,196


Net sales by business 1-6/2016

Marine Solutions

36% (30)

Energy Solutions

16% (23)

Services

48% (47)


1.05 1.05 1.06 0.98

1.14

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 1-6/2016


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

3 500

30.6.2015 30.6.2016

Delivery current year Delivery next year or later

MEUR


0%

2%

4%

6%

8%

10%

12%

14%

0

40

80

120

160

200

240

1-6/2015 1-6/2016


Operating result affected by fewer power plant deliveries and tight competition

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 27 million for the review period January-June 2016.

Figures for 2012-2013 include both discontinued and continuing operations.

Comparable operating result % of net sales

Review period development

MEUR

10.7%

9.5%


ENERGY SOLUTIONS


Quotation activity on a good level

ENERGY SOLUTIONS

Liquid fuel

Gas

Multi-fuel

MW

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

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

Q2/2

016


Power plant orders developed well

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

Review period developmentTotal EUR 616 million (475)

Review period order intake

by fuel in MW

Gas

31%

Oil

69%

Q1-Q2 Q3-Q4

Independent

power producers

14%

57%

28%


ENERGY SOLUTIONS

Americas 299 (239)

Asia 368 (111)

Africa and Middle East 299 (175)

Europe* 920 (698)

21547

199

903

Order intake 1-6/2016: 1,886 MW (1,222)

298

IPP’s

(Independent

Power Producers)

Utilities

Industrials

Order intake globally

*Turkish owners contributed to the high level of activity in Europe.

36

18

100

609


Market for gas and liquid fuel power plants, <500 MW

ENERGY SOLUTIONS

1-3/2015 1-3/2016

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: 4.3 GW (4.7), -9%

Total market volume: 17.7 GW (9.7), +82%

GE

52.4%

Siemens

21.5%

Wärtsilä

15.0%

MHI

10.2%

Other GT’s

0.9%

MHI

34.6%

GE

33.3%

Siemens

10.9%

Wärtsilä

20.4%

Other GT’s

0.8%


• EEQ contracts for three power plants, with a combined output of 192 MW, signed with Industrias J.F.Secco S.A.

• Two additional projects are expected to be included in Wärtsilä’s Q3 order book

• The plants will support the development of Argentina’s national grid

• Dual-fuel technology helps customers cope with the varying supply of natural gas

Wärtsilä awarded five major power plant projects in Argentina


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

05

.16

Mill

ion C

GT

Num

ber

of

vessels

Merchant Offshore Cruise and Ferry Special vessels 3 months moving average in CGT


Limited contracting of new vessels

MARINE SOLUTIONS

Source: Clarkson Research Services, figures exclude late contracting

* CGT= gross tonnage compensated with workload

*

*

06.1

6


Continued healthy demand in the cruise & ferry segment

MARINE SOLUTIONS

0

300

600

900

1 200

1 500

1 800

2012 2013 2014 2015 2016

Review period developmentTotal EUR 741 million (728)

Offshore

4%

Traditional

merchant

19%

Others

6%

Gas carriers

11%

Navy

8%

MEUR

Q1-Q2 Q3-Q4

Cruise &

ferry

43%

Special vessels

8%


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

Q2/2

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


Order received to supply turnkey electrical solutions for four new RoRoferries.

The integrated systems include all products and services available from Wärtsilä SAM Electronics, a leading supplier of complete electrical and automation system packages.

Sound demand for electrical and automation solutions

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

58% (60)

Others

14% (15)

MAN D&T

22% (20)

Caterpillar

6% (5)

Total market volume last 12 months:

2,090 MW (2,307)

Wärtsilä

13% (13)

Total market volume last 12 months:

4,498 MW (5,273)

Others

87% (87)


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


Services net sales on a good level

SERVICES

0

100

200

300

400

500

600

700

Q2/2015 Q2/2016

MEUR

MEUR

548-1%

542


Q1-Q2 Q3-Q4


Net sales distribution 1-6/2016

SERVICES

Spare parts

51% (51)

Field service

24% (24)

Projects

9% (7)

Agreements

15% (17)

Total EUR 1,042 million (1,034)


0%

5%

10%

15%

20%

25%

30%

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

2009 2010 2011 2012 2013 2014 2015 1-6/2016

MW


Development of installed base covered by service agreements

SERVICES

MW under agreement – Energy Solutions MW under agreement – Marine Solutions

% of Marine Solutions’ installed base% of Energy Solutions’ installed base


The acquisition of Eniram is a key step in our digital development, enabling us to strengthen our competences in data analytics, modelling and performance optimization.

American Hydro supports our expansion in renewables, by enhancing our existing hydro and industrial service offering.

Acquisitions support Services’ growth strategy


FINANCIALS


0

20

40

60

80

100

120

140

160

180

200

1-6/2015 1-6/2016


Cash flow improved in the second quarter

FINANCIALS

0

100

200

300

400

500

600

700

2012 2013 2014 2015

MEUR


MEUR


404

6028.3%*

12.1%*

0%

5%

10%

15%

20%

25%

0

200

400

600

800

1 000

1 200

1 400

1 600

30.6.2015 30.6.2016


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

30.6.2015 30.6.2016


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 and gas carrier market is under pressure. The outlook for cruise and ferry segment 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 contracts, as evidenced by the growth in the installed engine base covered by agreements.


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

Further information:

Natalia Valtasaari

Director, Investor & Media Relations

Tel. +358 (0) 10 709 5637

E-mail: [email protected]

result presentation q2 2016

Presentations & Public Speaking