Result presentation Q3 2016

© Wärtsilä PUBLIC

WÄRTSILÄ CORPORATION

INTERIM REPORT JANUARY-SEPTEMBER 2016

25 October 2016

Jaakko Eskola, President & CEO

25 October 2016 Q3 result presentation1

© Wärtsilä PUBLIC 25 October 2016 Q3 result presentation2

Highlights Q3/2016

• Order intake EUR 1,139 million, +5%

• Net sales EUR 1,079 million, -12%

• Book-to-bill 1.06 (0.89)

• Comparable operating result EUR 123 million,

11.4% of net sales (EUR 160 million or 13.1%)

• Earnings per share EUR 0.43 (0.49)

• Cash flow from operating activities EUR 189 million (-5)

• Order book at the end of the period EUR 5,024 million, -2%


Positive development in order intake

0

200

400

600

800

1 000

1 200

1 400

1 600

Q3/2015 Q3/2016

Third 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-Q3 Q4

5%

97%

1,086 1,139

-29%

2%

Energy

Solutions

Marine

Solutions

Services


Net sales affected by delivery schedules

0

200

400

600

800

1 000

1 200

1 400

Q3/2015 Q3/2016

1,222

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

-12%

-4%

-13%

-27%


Energy

Solutions

Marine

Solutions

Services

MEUR

Q1-Q3 Q4

MEUR

1,079


Net sales by business 1-9/2016

Marine Solutions

36% (33)

Energy Solutions

16% (22)

Services

48% (45)


1.05 1.05 1.06 0.981.11

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 1-9/2016


Book-to-bill ratio

MEUR

Order intake Net sales Book-to-bill

© Wärtsilä PUBLIC 20 July 2016 Q2 Result presentation7

Order book distribution

0

500

1 000

1 500

2 000

2 500

3 000

30.9.2015 30.9.2016

Delivery current year Delivery next year

MEUR

Delivery later than next year


0%

2%

4%

6%

8%

10%

12%

14%

0

50

100

150

200

250

300

350

400

450

1-9/2015 1-9/2016


Operating result impacted by lower delivery volumes

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 29 million (11) for the review period January-September 2016, of which EUR 17 million were non-cash write-downs.

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

Comparable operating result % of net sales

Review period development

MEUR

11.5%

10.2%


ENERGY SOLUTIONS


Strong ordering activity in Energy Solutions

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 947 million (642)

Review period order intake

by fuel in MW

Gas

41%

Oil

59%

Q1-Q3 Q4

Independent

power producers

20%

58%

21%


ENERGY SOLUTIONS

412278

228

919

Order intake 1-9/2016: 2,555 MW (1,687)

298

IPP’s

(Independent

Power Producers)

Utilities

Industrials

Order intake globally

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

36

18

215

87

9

55

Africa and Middle East 498 (230)

Asia 395 (174)

Americas 726 (246)

Europe* 936 (1,037)


• The plant will provide balancing power to the community, which is moving towards a green, low emissions power system

• The value of the engineering and equipment (EEQ) order is approx. EUR 100 million

• Quick start and stop capability, high efficiency, and fast delivery were key in the contract award

Wärtsilä to supply a 225 MW Smart Power Generation power plant to the City of Denton, Texas, USA


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

ENERGY SOLUTIONS

1-6/2015 1-6/2016

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: 11.8 GW (12.6), -6%

Total market volume: 37.2 GW (27.9), +32%

GE

35.0%

Siemens

27.9%

Wärtsilä

9.7%

MHI

19.5%

Other GT’s

0.4%

GE

36.8%

Siemens

27.8%

Wärtsilä

16.0%

MHI

17.7%

Other GT’s

1.9%Ansaldo

7.4%


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

07

.16

09

.16

Mill

ion C

GT

Num

ber

of

vessels

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


Contracting volumes reflect weak marine market environment

MARINE SOLUTIONS

Source: Clarkson Research Services, figures exclude late contracting

* CGT= gross tonnage compensated with workload

*

*


Cruise & ferry supported Marine Solutions’ order intake

MARINE SOLUTIONS

0

300

600

900

1 200

1 500

1 800

2012 2013 2014 2015 2016

Review period developmentTotal EUR 1,028 million (1,134)

Offshore

4%

Traditional

merchant

19%

Others

5%

Gas carriers

13%

Navy

8%

MEUR

Q1-Q3 Q4

Cruise &

ferry

41%

Special vessels

10%


• The conversion is planned to be carried

out on a modern LNG vessel

• Conversion enables Höegh LNG to

quickly capture new business

opportunities

• Wärtsilä’s system features

regasification technology using water

glycol, providing a more compact

solution than the traditional propane

based system

Wärtsilä to supply regasification system for Höegh LNG’s FSRU conversion project

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

50% (58)

Others

11% (14)

MAN D&T

24% (22)

Caterpillar

15% (6)

Total market volume last 12 months:

2,358 MW (2,090)

Wärtsilä

16% (13)

Total market volume last 12 months:

3,617 MW (4,498)

Others

84% (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’ year-to-date net sales stable

SERVICES

0

100

200

300

400

500

600

700

Q3/2015 Q3/2016

MEUR

MEUR

531-4%

512


Q1-Q3 Q4


Net sales distribution 1-9/2016

SERVICES

Spare parts

50% (51)

Field service

23% (24)

Projects

11% (8)

Agreements

15% (17)

Total EUR 1,554 million (1,565)


0%

5%

10%

15%

20%

25%

30%

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

2009 2010 2011 2012 2013 2014 2015 1-9/2016

MW


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


• SkyLight combines data about the ship’s

movements with noon report and

meteorological data, to model the vessel’s

speed and fuel performance

• Vessel performance records are stored in

the cloud-based software, enabling more

prompt reporting, planning and cost

optimisation

SkyLight – a next generation fleet performance monitoring service


FINANCIALS


0

50

100

150

200

250

300

350

400

1-9/2015 1-9/2016


Cash flow development

FINANCIALS

0

100

200

300

400

500

600

700

2012 2013 2014 2015

MEUR


MEUR


522 540

10.5%* 11.2%*

0%

5%

10%

15%

20%

25%

0

200

400

600

800

1 000

1 200

1 400

1 600

30.9.2015 30.9.2016


Working capital development

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

30.9.2015 30.9.2016


Gearing

FINANCIALS

0,00

0,10

0,20

0,30

0,40

0,50

2012 2013 2014 2015



Market outlook


Energy Solutions

Growth in electricity demand and the availability of international funding for infrastructure projects will continue to support power plant investments in the emerging markets. In the industrialised countries, the slow economic growth continues to limit demand for new power plants, except in North America. The megatrend towards renewable energy sources is evident.

Marine Solutions

The outlook for the shipping and shipbuilding markets remains challenging. Overcapacity and weak earnings continue to limit the demand for new vessels in the merchant segment, while low oil prices are impacting investments in offshore exploration and development and gas carrier market remains under pressure. The outlook for the cruise and ferry segment remains positive.

Services

The service market outlook remains solid with growth opportunities in selected regions and segments. Customers in both the marine and power plant markets continue to show interest in long-term service agreements.


Wärtsilä expects its net sales to decline by around 5% and its profitability (comparable operating result as a percent of net sales) to be around 12%.

Prospects for 2016 revised


THANK YOU

Further information:

Natalia Valtasaari

Director, Investor & Media Relations

Tel. +358 (0) 10 709 5637

E-mail: [email protected]

Engineering

Result presentation Q3 2016