Finland: Wartsila Order Intake Up 7 Pct in 1H

Wärtsilä Corporation announced its interim report for the first half of 2012.

Second quarter highlights

• Order intake increased 2% to EUR 1,198 million (1,170)
• Net sales increased 6% to EUR 1,099 million (1,036)
• Operating result EUR 113 million or 10.3% of net sales (EUR 117 million and 11.3%)
• Earnings per share amounted to EUR 0.38 (0.35)
• Book-to-bill 1.09 (1.13)

Highlights of the review period January-June 2012

• Order intake increased 7% to EUR 2,308 million (2,149)
• Net sales decreased 1% to EUR 2,104 million (2,119)
• Operating result EUR 215 million, or 10.2% of net sales (EUR 230 million and 10.9%)
• At the end of the period the order book totalled EUR 4,515 million (3,779), +19%
• Earnings per share amounted to 0.72 euro (0.73)
• Cash flow from operating activities EUR -154 million (84)

Björn Rosengren, president and CEO:

“The second quarter marked steady progress for Wärtsilä. Our net sales grew by 6% and our profitability was 10.3%. We continue to work towards reaching our growth and profitability targets this year. I am pleased with the good development within Ship Power’s specialised vessel segments, which compensated for Power Plants’ slightly weaker second quarter order intake. Ship Power also received interesting pump, gas and environmental system orders. Services development remained rather steady, despite the tough market conditions in the merchant vessel markets.

To further strengthen our competitiveness and to serve our customers more effectively, we have decided to change the organisational set up within Ship Power and Wärtsilä Industrial Operations (WIO). The main change will be that the product development related to 2-stroke, and the manufacturing and product development related to Propulsion and Electrical & Automation will be transferred from WIO to Ship Power. WIO will be renamed PowerTech and it will continue to serve both market areas of Ship Power and Power Plants. There are no job reductions planned based on this change.”

Market outlook

The power generation market is expected to remain active in 2012. The growing emerging markets will continue to invest in new power generation capacity, which will drive demand – especially in the flexible baseload segment. In the OECD countries, there is still pent-up power sector demand, mainly driven by CO2 neutral generation and the ramp down of older, mainly coal-based, generation.

The outlook for overall vessel contracting activity during 2012 is slightly negative, with full year contracting expected to be somewhat lower than contracting during 2011. The decrease is largely driven by the low contracting levels in traditional merchant segments. Robust contracting activity, in line with activity levels seen during 2011 and so far in 2012, is expected for the offshore, gas carrier, and other specialised vessel markets. Interesting opportunities are seen in the following areas: efficiency improvement, gas as a fuel, and environmental solutions. These are now central issues in many newbuilding discussions and are expected to grow in importance going forward.

Despite the slightly improved market situation in the review period, some uncertainties remain in the service market. The merchant marine segments are still expected to be under pressure, as overcapacity in the market continues to impact the potential for services in this area. Development in the active installed base is also expected to be moderate, with continued scrapping, layups, slow steaming, and low utilisation of vessels in the merchant segments. The power plant service market is expected to develop steadily.

Wärtsilä’s prospects for 2012 reiterated

Wärtsilä expects its net sales for 2012 to grow by 5-10% and its operational profitability (EBIT% before non-recurring items) to be 10-11%.

[mappress]
LNG World News Staff, July 18, 2012