WÄRTSILÄ'S FINANCIAL STATEMENT BULLETIN JANUARY - DECEMBER 2010
(Thomson Reuters ONE) -
Wärtsilä Corporation FINANCIAL STATEMENTS RELEASE 28 January 2011 at 8.30 local
time
WÄRTSILÄ 2010 - SOLID PERFORMANCE AT ALL LEVELS
FOURTH QUARTER HIGHLIGHTS
- Order intake EUR 1,003 million (823), +22%
- Net sales EUR 1,462 million (1,519), -4%
- Operating result EUR 159 million (219), 10.9% of net sales (14.4)
- Earnings per share 0.99 euro (1.48)
- Cash flow from operating activities EUR 171 million (207)
HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-DECEMBER 2010
- Order intake EUR 4,005 million (3,291), +22%
- At the end of the period the order book totalled EUR 3,795 million (4,491),
-16%
- Net sales EUR 4,553 million (5,260), -13%
- Operating result EUR 487 million (638), 10.7% of net sales (12.1)
- Earnings per share 3.35 euro (4.30)
- All time high cash flow from operating activities EUR 663 million (349)
- Dividend proposal 1.75 euro/share and extra dividend 1.00 euro/share, total
2.75 euro/share
All numbers above are shown excluding nonrecurring items and selling profits
from assets available for sale. Wärtsilä recognised EUR 16 million (40) of
nonrecurring items related to restructuring measures during the fourth quarter
and a selling profit of EUR 117 million from the divestment of its Assa Abloy
holding. Wärtsilä recognised EUR 75 million (46) of nonrecurring restructuring
items and selling profits of EUR 149 million from the divestment shares during
the review period January-December 2010.
OLE JOHANSSON, PRESIDENT AND CEO:
"The year 2010 was a year of restructuring and recovery. The ordering of new
ships started to pick up earlier than expected, and the orders for Wärtsilä Ship
Power more than doubled compared to 2009. The activity in our Power Plants and
Services divisions has remained high. As a consequence, our order intake grew
22%. Net sales developed as expected and fell by 13 percent to EUR 4,553
million, while profitability remained at a good 10.7% level. In 2011 we should
again see some growth in sales, and profitability is expected to improve
slightly. For the longer term, we believe that the new leaner organisation, our
solid position in the markets and our efficient services organisation should
enable operating margins of up to 14 percent."
WÄRTSILÄ'S PROSPECTS FOR 2011
Wärtsilä expects its net sales for 2011 to grow 3-5% and operational
profitability (EBIT% before nonrecurring items) to be around 11%.
ANALYST AND PRESS CONFERENCE AT 10.45 A.M. LOCAL TIME
An analyst and press conference will be held on Friday 28 January 2011, at
10.45 a.m. Finnish time (8.45 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 on the internet at the following address:
http://storm.zoomvisionmamato.com/player/wartsila/objects/a6jsy25p
To participate in the teleconference please register at the following address:
http://www.yourconferencecentre.com/r.aspx?p=1&a=DCmLWHsIZIGjHD
You will receive dial-in details once you have registered. If you want to ask
questions during the teleconference, press the *-button followed by the 1-button
on your phone to register for a question and the # -key to withdraw a question.
The event name is: Annual Result 2010. Please be ready to state your details and
the name of the conference to the operator. If problems occur, please press the
*-button followed by the 0-button.
An on-demand version of the webcast will be available on the company website
later the same day.
For further information, please contact:
Raimo Lind
Executive Vice President & CFO
Tel: +358 10 709 5640
raimo.lind(at)wartsila.com
Joséphine Mickwitz
Director, Investor Relations
Tel: +358 400 784 889
josephine.mickwitz(at)wartsila.com
For press information, please contact:
Atte Palomäki
Group Vice President, Communications & Branding
Tel: +358 40 547 6390
atte.palomaki(at)wartsila.com
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 maximises the environmental and economic performance of the
vessels and power plants of its customers. In 2010, Wärtsilä's net sales
totalled EUR 4.6 billion with approximately 17,500 employees. The company has
operations in 160 locations in 70 countries around the world. Wärtsilä is listed
on the NASDAQ OMX Helsinki, Finland.
FINANCIAL STATEMENTS BULLETIN JANUARY-DECEMBER 2010
The annual figures in this financial statements bulletin are audited.
FOURTH QUARTER 10-12/2010 IN BRIEF
MEUR 10-12/2010 10-12/2009 Change
Order intake 1 003 823 22%
Net sales 1 462 1 519 -4%
Operating result (EBIT) 159 219 -27%
% of net sales 10.9% 14.4%
Profit before taxes 251 170
Earnings/share, EUR 0.99 1.48
Cash flow from operating activities 171 207
REVIEW PERIOD JANUARY-DECEMBER 2010 IN BRIEF
MEUR 1-12/2010 1-12/2009 Change
Order intake 4 005 3 291 22%
Order book at the end of the period 3 795 4 491 -16%
Net sales 4 553 5 260 -13%
Operating result (EBIT) 487 638 -24%
% of net sales 10.7% 12.1%
Profit before taxes 548 558
Earnings/share, EUR 3.35 4.30
Cash flow from operating activities 663 349
Interest-bearing net debt
at the end of the period -165 414
Gross capital expenditure 98 152
All numbers above are shown excluding nonrecurring items and selling profits
from assets available for sale. Wärtsilä recognised EUR 16 million (40) of
nonrecurring items related to restructuring measures during the fourth quarter
and a selling profit of EUR 117 million from the divestment of its Assa Abloy
holding. Wärtsilä recognised EUR 75 million (46) of nonrecurring restructuring
items and selling profits of EUR 149 million from the divestment shares during
the review period January-December 2010.
OPERATING ENVIRONMENT AND MARKET DEVELOPMENT
SHIP POWER
2010 contracting activity stronger than expected
The number of vessels contracted in 2010 represented an increase of 75% compared
to the previous year. This was a much faster and more significant recovery than
expected. The improvement was backed by a recovery in trade and ship owner
earnings, as well as by attractive new building prices. A more positive outlook
for ship financing, together with low interest rates, also contributed to the
development. While the first half of the year was characterised by high
contracting activity for bulk carriers, the second half saw a similar increase
in contracting activity for container vessels and more specialised vessel types.
The offshore segment continued strong throughout the year and demand was good
especially for floating production units. In the fourth quarter demand for more
specialised vessels was good.
Ship Power geographical markets - China the biggest market
As expected, the Asian shipbuilding market, and especially China, emerged
stronger than earlier after the downturn. In 2010, China secured the majority of
global new building orders, followed by Korea. Both Japan and Europe lost
market share in 2010. Growing shipbuilding nations, such as Brazil, were active
throughout the year and secured a good share of orders.
In 2010, Chinese ship owners were the most active, ordering more than 20% of all
vessels ordered. German owners, traditionally strong in shipping, were slow in
ordering whereas Greek owners continued to be active.
Ship Power market shares
Wärtsilä's market share in medium speed main engines increased from 32% at the
end of the previous quarter to 42%. The company's market share in low speed main
engines increased slightly to 13% (12). In auxiliary engines the market shares
increased slightly to 4% (3).
POWER PLANTS
Power Plants markets remain solid
The Power Plants market activity continued at a good level during the fourth
quarter of 2010. The orders were predominantly for small and medium size
projects. Industrial output is increasing in most emerging markets which, in
combination with population growth and enhanced standard of living, is driving
the need for more power generation. The installed base of wind power generation
has also increased, which is creating a need for flexible power generation. The
financial crisis led to the postponement of investments for power generation in
2009, and this is now creating demand in several markets.
Power generation market overview
As energy consumption grows, the need for both new power generation equipment
increases, as does demand for replacement equipment for older capacity. Today,
the global installed power generation capacity totals approximately 4,700 GW,
out of which over half is in OECD-countries. Going forward, growth is expected
to be stronger in non-OECD countries, due to increasing industrialization and
higher living standards. The majority of Wärtsilä's Power Plants business
derives from these emerging markets. Heavy fuel oil (HFO) has traditionally been
the dominant fuel for power generation in emerging markets but demand for gas
driven plants increases along with the introduction of gas networks. OECD-
countries have focused on the development of wind power and increasing the share
of natural gas power generation with the target to ramp down old coal based
installations. In the USA, the introduction of shale gas has been rapid, and has
made the natural gas prices very competitive. Wärtsilä is the only player in the
market with such a broad gas engine portfolio within its power range.
Power Plants market position
The size of Wärtsilä's target markets is approximately 15,000 MW and Wärtsilä's
yearly delivery volumes are 2,500-3,000 MW. The development of the heavy fuel
oil driven power plants market, where Wärtsilä has a market share of over 50%,
is rather stable whereas the market for gas driven power plants is growing.
Wärtsilä has a market share of over 60% in the gas engine driven power plants.
Wärtsilä is continuously strengthening its position in the gas market, by
capturing market share from other technologies and currently has 14% of the
market including both gas engines and gas turbines.
SERVICES
Marine service market focused on cost savings throughout the year
During 2010, the global economic downturn had its effect on the marine service
market which focused strongly on cost savings. Marine customers, especially in
the merchant segment continued to limit their maintenance and modernisation
investments. A large number of ships were slow steaming which reduces
maintenance and repair expenditures. At the end of the year, the amount of idled
vessels had decreased to 6% from its peak of 10% at the beginning of 2010. The
power plants service business was less affected by the downturn.
Wärtsilä's installed engine base in the Ship Power and Power Plants markets
totals close to 180,000 MW and consists of thousands of installations
distributed throughout the world. Both end markets consist of several customer
segments for Services, and Wärtsilä's portfolio is the broadest in the market.
These factors limit the impacts of fluctuations in any individual market or
customer segment.
ORDER INTAKE INCREASED
The Group order intake for the fourth quarter totalled EUR 1,003 million (823),
22% higher than the corresponding period last year. The book-to-bill ratio for
the fourth quarter was 0.69 (0.54).
The fourth quarter order intake for Ship Power totalled EUR 178 million (54),
227% above the corresponding period last year. During the quarter, Wärtsilä
received an important order for LNG Platform Supply Vessels (PSVs) from the
Norwegian operator Eidesvik Offshore. This and other orders in the Offshore
segment highlight the success of Wärtsilä's strategy to be a system integrator,
ship designer, and solutions provider. During the last quarter Wärtsilä was also
successful in the big cruise vessel market, endorsing its traditionally strong
position in this area. The Offshore segment represented 34% of total orders,
Merchant 20%, Special vessels 19%, Cruise&Ferry 21% and Navy and Ship design 2%
and 4% respectively. Compared to the previous quarter, order intake increased by
1% (EUR 176 million in the third quarter of 2010).
The order intake for Power Plants in the fourth quarter totalled EUR 317 million
(300), which was 5% higher than for the corresponding period last year. During
the fourth quarter, the largest power plant orders were received from Timor
Leste, Turkey and Bangladesh. Compared to the previous quarter, the Power Plants
business order intake decreased 19% (EUR 393 million in the third quarter of
2010). In the Power Plants business, big projects lead to swings between the
quarters.
The order intake for Services in the fourth quarter totalled EUR 510 million
(470), which was 8% higher than for the corresponding period last year. Compared
to the previous quarter, order intake increased by 18% (EUR 433 million in the
third quarter of 2010). During the quarter, Wärtsilä signed and renewed a number
of O&M and maintenance contracts in several countries, including India and
Turkey. Wärtsilä Services has more than 400 installations and over 13,000 MW
under O&M and Maintenance agreements in approximately 50 countries.
Wärtsilä's order intake for the review period January-December 2010 totalled EUR
4,005 million (3,291), an increase of 22%. The book-to-bill ratio for the review
period was 0.88 (0.63). Wärtsilä Ship Power's order intake for the review period
was EUR 657 million (317), an increase of 107% over the corresponding period
last year. The market started to show small signs of recovery in the first
quarter of 2010, leading to increased ordering activity for Wärtsilä Ship Power
from the second quarter of 2010. Wärtsilä noted increased activity in the
Offshore segment throughout the year and secured several offshore orders during
the period. Wärtsilä signed a major contract with the Brazilian industrial group
QUIP to supply a totally integrated power solution for a new FPSO (Floating
Production Supply and Offloading) vessel. The vessel is unique in that it will
be the first FPSO vessel ever to operate on more than 100 MWe of installed
power, produced by gas engines.
For the review period January-December 2010, the Power Plants order intake
totalled EUR 1,413 million (1,048), a 35% increase compared to last year. The
clearly increased order intake was attributable to the improved financing
situation in general, as well as recovery in many emerging economies. During the
year Wärtsilä received several significant orders. Wärtsilä was contracted to
supply Africa's largest gas engine power plant. The contract value is EUR 120
million and it is to be installed in Cameroon. In the second quarter, Wärtsilä
was awarded a contract from Brazil to build the largest power plant ever built
by Wärtsilä anywhere in the world. This turnkey contract is valued at close to
EUR 200 million and the plant will have an electrical output of 380 MW. In
addition, Wärtsilä received more than 900 MW of orders from Bangladesh, and
almost 700 MW of orders from Turkey.
For the review period January-December 2010, the Services order intake totalled
EUR 1,931 million (1,917). Customers showed an increasing interest throughout
the year in cost savings and in reducing their environmental footprint and
Wärtsilä received several orders for environmental upgrades and conversions.
Fourth quarter order intake by business
MEUR 10-12/2010 10-12/2009 Change
Ship Power 178 54 227%
Power Plants 317 300 5%
Services 510 470 8%
Order intake, total 1 003 823 22%
Order intake Power Plants
MW 10-12/2010 10-12/2009 Change
Oil 223 293 -24%
Gas 611 332 84%
Order intake for the review period by business
MEUR 1-12/2010 1-12/2009 Change
Ship Power 657 317 107%
Power Plants 1 413 1 048 35%
Services 1 931 1 917 1%
Order intake, total 4 005 3 291 22%
Order intake Power Plants
MW 1-12/2010 1-12/2009 Change
Oil 1 797 1 172 53%
Gas 1 377 800 72%
Renewable fuels 1 35 -97%
ORDER BOOK
At the end of the review period Wärtsilä's total order book stood at EUR 3,795
million (4,491), a decrease of 16%.
The Ship Power order book stood at EUR 1,825 million (2,553), -29%. At the end
of the review period the Power Plants order book amounted to EUR 1,299 million
(1,362), which is 5% lower than at the same date last year. The Services order
book totalled EUR 671 million (576) at the end of the review period, an increase
of 16%.
Order book by business
MEUR 31 Dec. 2010 31 Dec. 2009 Change
Ship Power 1 825 2 553 -29%
Power Plants 1 299 1 362 -5%
Services 671 576 16%
Order book, total 3 795 4 491 -16%
SALES DEVELOPED AS EXPECTED
Wärtsilä's net sales for the fourth quarter decreased by 4% to EUR 1,462 million
(1,519) compared to the corresponding period last year. Net sales for Ship Power
totalled EUR 371 million (538), a decrease of 31%. Power Plants' net sales for
the fourth quarter totalled 577 million (476), which is 21% higher than in the
corresponding quarter last year. The fourth quarter again marked an all time
high for Services net sales, which amounted to EUR 516 million (504), an
increase of 2%.
Wärtsilä's net sales for January-December 2010 totalled EUR 4,553 million
(5,260), -13%. This was well in line with Wärtsilä's estimate of a decrease of
approximately 15%. Ship Power's net sales decreased by 32% and totalled EUR
1,201 million (1,767). Net sales for Power Plants totalled EUR 1,525 million
(1,645), a decrease of 7%. Net sales from the Services business remained at last
year's level and amounted to EUR 1,823 million (1,830). Ship Power accounted for
26%, Power Plants for 34% and Services for 40% of the total net sales.
Of Wärtsilä's net sales for January-December 2010, approximately 70% was EUR
denominated, 12% USD denominated, with the remainder being split between several
currencies.
Fourth quarter net sales by business
MEUR 10-12/2010 10-12/2009 Change
Ship Power 371 538 -31%
Power Plants 577 476 21%
Services 516 504 2%
Net sales, total 1 462 1 519 -4%
Net sales for the review period by business
MEUR 1-12/2010 1-12/2009 Change
Ship Power 1 201 1 767 -32%
Power Plants 1 525 1 645 -7%
Services 1 823 1 830 0%
Net sales, total 4 553 5 260 -13%
SOLID PROFITABILITY
The fourth quarter operating result before nonrecurring expenses was EUR 159
million (219), or 10.9% of net sales (14.4). For the review period January-
December 2010, the operating result before nonrecurring expenses was EUR 487
million (638). The operating margin (EBIT) was 10.7% of net sales (12.1), well
in line with Wärtsilä's estimate for 2010. Including nonrecurring expenses, the
operating result was EUR 412 million or 9.1% of net sales. Wärtsilä recognised
EUR 75 million of nonrecurring expenses related to the restructuring measures
during the review period January-December 2010.
Based on the new, leaner structure, its good position in the markets and its
efficient services organisation, Wärtsilä has redefined its long-term EBIT
margin target to be 14% at the peak of the cycle. At the trough of the cycle
Wärtsilä's target is to keep the operating profit margin above 10%. This
replaces the previous target of 8-10% +/-2% over the cycle.
Financial items amounted to EUR -13 million (-34). Net interest totalled EUR -12
million (-17). Dividends received totalled EUR 7 million (6). The deviation in
financial items is mainly due to exchange rate differences, which were negative
during the corresponding period of 2009 as well as lower net interest expenses.
Profit before taxes amounted to EUR 548 million (558). Taxes in the reporting
period amounted to EUR 151 million (161). The profit for the financial period
amounted to EUR 397 million (396). Earnings per share were 3.91 euro (3.94) and
equity per share was 16.61 euro (15.17). Return on investment (ROI) was 26.0%
(29.9). Return on equity was 25.0% (29.2)
BALANCE SHEET, FINANCING AND CASH FLOW
Wärtsilä's fourth quarter cash flow from operating activities amounted to EUR
171 million (207). For January-December 2010 the cash flow from operating
activities was at an all time high level, 663 million (349). Net working capital
at the end of the period totalled EUR 170 million (482). Advances received at
the end of the period totalled EUR 616 million (879). Liquid reserves at the end
of the period amounted to EUR 776 million (244).
Wärtsilä had interest bearing loans totalling EUR 628 million at the end of
December 2010. The existing funding programmes include long-term loans of EUR
572 million, unutilised Committed Revolving Credit Facilities totalling EUR 560
million, and Finnish Commercial Paper programmes totalling EUR 700 million. The
total amount of short-term debt maturing within the next 12 months is EUR 56
million.
The solvency ratio was 40.8% (40.0) and gearing was -0.09 (0.28).
HOLDINGS DIVESTED
During the third quarter Wärtsilä sold its holding in Sampo Group for EUR 35
million. The realised selling profit amounted to EUR 32 million. During the
fourth quarter Wärtsilä sold its holding of 7,270,350 B shares in Assa Abloy for
EUR 135 million and booked a selling profit of EUR 117 million.
CAPITAL EXPENDITURE WAS CLEARLY BELOW DEPRECIATION
Gross capital expenditure in the review period totalled EUR 98 million (152),
which comprised EUR 92 million (136) in production, logistics and information
technology investments, and EUR 6 million (16) in acquisitions and investments
in securities. Depreciation and amortisations for the review period amounted to
EUR 116 million (165).
Maintenance capital expenditure for 2011 will be in line with or slightly above
depreciation. Possible acquisition opportunities may affect capital expenditure
for the year.
STRATEGY
Wärtsilä's strategic aim is to strengthen its leading position in its markets
and to ensure continued growth by offering customers reliability and the best
lifecycle efficiency available. This is made possible by an integrated equipment
and solutions portfolio combined with a broad service offering that matches
customers' needs worldwide. The foundation of Wärtsilä's competitive edge lies
in its continuous focus on innovation and R&D and its aim is to be the
technology leader in its industries. Wärtsilä's ability to focus on long-term
business drivers, its strong financial base, and agility in adapting to changing
market conditions puts the company in a strong position to pursue its strategy.
STRATEGIC ACQUISITIONS, JOINT VENTURES AND EXPANSION OF THE NETWORK IN 2010
In May, Wärtsilä signed a joint venture agreement with the Russian company
Transmashholding (TMH) to manufacture modern multipurpose diesel engines in
Russia. The engines, including a new and technically advanced version of the
Wärtsilä 20-engine, will be used in shunter locomotives and for various marine
and power applications. The two companies will jointly engineer the railway
application. Wärtsilä and TMH will also evaluate broadening the activities of
the joint venture to include the development and manufacturing of other diesel
engine models in the future. The value of Wärtsilä's investment in the joint
venture is approximately EUR 30 million and production of the engines is planned
to start in 2012.
During the review period, Wärtsilä continued to expand its service network with
the inauguration of a new office and workshop facility in Panama.
LONG-TERM FINANCIAL TARGETS
Wärtsilä has redefined its long-term financial targets. Our target is to grow
faster than global GDP. Our operating profit margin (EBIT%) target is 14% at the
peak of the cycle. Even at the trough of the cycle, our target is to keep the
operating profit margin above 10%. Our target is to maintain gearing below 50%.
Our target is to pay a dividend equivalent to 50% of earnings.
RESTRUCTURING MEASURES
Following the global financial crisis, Wärtsilä began adjusting its capacity and
cost structure in May 2009 to reflect lower demand. These efforts were
intensified in January 2010.
The first steps taken were to reduce the number of jobs in Ship Power, the
business that had been the most severely hit by the market downturn.
In January 2010, measures continued by starting the adaptation of manufacturing
capacity to both the structural changes in the market and to a lower demand
environment. Some of the manufacturing capacity has been moved to China and two
factories in the Netherlands are in the process of being closed. New and more
efficient ways to operate have been introduced, thus enabling the closure of
smaller units and the consolidation of operations to larger entities in various
countries, as well as the consolidation of manufacturing close to growing
markets. Temporary lay-offs have mainly been used in Finland and Norway. Lower
capacity utilisation has also triggered an adaptation of all Wärtsilä's global
staff functions with the aim of streamlining processes, decreasing overlaps, and
improving the cost efficiency. Wärtsilä initiated processes to reduce
approximately 400 jobs globally in its support functions during the fourth
quarter.
Through all of these measures initiated in different phases, Wärtsilä is
reducing the number of personnel by approximately 1,800 employees.
When fully implemented, it is estimated that the reductions will decrease costs
by approximately EUR 130 million, which is slightly higher than previously
anticipated. Of these cost savings, about EUR 60 million have materialised by
the end of 2010. The remainder of the savings will gradually materialise during
2011. Wärtsilä anticipates that the majority of these cost savings will be
permanent.
The total nonrecurring costs related to the restructuring will be approximately
EUR 150 million, somewhat higher than previously estimated. From the costs, EUR
40 million non-cash write-offs were recognised in 2009. In January-December
2010, Wärtsilä recorded EUR 75 million nonrecurring items related to
restructuring measures. The remainder of the costs will be recognised during the
first half of 2011.
MANUFACTURING
The year 2010 was characterised by restructuring and reorganisation of
Wärtsilä's manufacturing footprint and measures continued throughout the year.
The set up for manufacturing controllable pitch (CP) propellers at the joint
venture, Wärtsilä CME Zhenjiang Propeller Co. Ltd. in Zhenjiang, China, is
proceeding according to plan. The majority of the equipment needed will be
relocated from the Wärtsilä factory in Drunen, The inauguration of the new
factory and the first deliveries are planned for the second quarter of 2011.
The activities in Wärtsilä's joint venture with Transmashholding in Russia
relating to the manufacturing of modern and multipurpose diesel engines,
including a new and technically advanced version of the Wärtsilä 20 engine which
will be used in shunter locomotives and for various marine and power
applications, is proceeding according to plan. The first test locomotive was
started at the end of the year.
RESEARCH AND DEVELOPMENT
The foundation of Wärtsilä's competitive edge lies in its continuous focus on
innovation and R&D and in its aim is to be the technology leader in its
industries. This is done by offering a streamlined portfolio of products and by
integrating products into larger solutions Environmental solutions are an
integrated part of Wärtsilä's product portfolio. Wärtsilä's R&D activities
focus on products and solutions that are fuel-efficient, reliable and safe,
cost-efficient to operate, and that produce minimal environmental impacts
throughout their lifecycles. Wärtsilä is in the process of renewing its 4-stroke
and 2-stroke engine portfolio to meet the needs brought by the tightened
environmental legislation.
In 2010, Wärtsilä's research and development expenses totalled EUR 141 million
(141), or 3.1% of net sales.
NEW PRODUCT LAUNCHES
During the first quarter of 2010, Wärtsilä launched a new product, the Wärtsilä
NOR, which is a NOx reducer based on Selective Catalytic Reduction technology.
This is a proven means for the effective reduction of NOx emissions.
In the third quarter, Wärtsilä launched its new Communication and Control
Centre, the first system to integrate an entire ship control system into a
single solution.
In September, Wärtsilä launched the latest addition to its gas engine portfolio,
the Wärtsilä 18V50SG engine. The engine has an electrical output of 18,321 kW,
making it the largest gas powered generating set in the world.
Wärtsilä also launched the Wärtsilä Ballast Water Treatment solution which
provides customers with a reliable means for responding to the requirements set
by the International Maritime Organization, and to additional requirements
stipulated by maritime authorities.
The new Propulsion Condition Monitoring Service, adapted from the remote
monitoring architecture Wärtsilä developed for its engine monitoring service, is
the first of its kind in the marine propulsion market
In the fourth quarter, Wärtsilä introduced a more powerful version of its
popular Wärtsilä 32 engine for marine applications.
PERSONNEL
Wärtsilä had 17,528 (18,541) employees at the end of December 2010. On average,
the number of personnel for January-December 2010 totalled 18,000 (18,830). Ship
Power employed 969 (1,140) people. Power Plants employed 835 (835) people,
Services 11,150 (11,219) and manufacturing and R&D (Wärtsilä Industrial
Operations) 4,210 (4,911) people.
Of Wärtsilä's total number of employees, 19% (19) were located in Finland, 6%
(8) in the Netherlands and 31% (31) in the rest of Europe. Personnel employed in
Asia represented 31% (30), out of which 7% (7) were in China, in India 6% (6),
in Singapore 5% (5), and in the rest of the Asia 14% (12)
SUSTAINABLE DEVELOPMENT
The global quest for sustainable and environmentally sound development is an
important demand driver for Wärtsilä. Increased environmental concerns and more
stringent regulations, both globally and locally, are creating pressure on the
marine industry to constantly investigate new ways of reducing the environmental
impact of ships. Wärtsilä is well positioned to reduce sea transport emissions
and greenhouse gas emissions, thanks to its various technologies and specialised
services. The need to reduce greenhouse gas emissions also continues to drive
change in the energy sector.
During the second quarter, Wärtsilä in co-operation with the Baltic Sea Action
Group (BSAG), arranged an environmental conference to seek shipping solutions
that can benefit the seriously polluted Baltic Sea.
Wärtsilä joined the World Bank-led Global Gas Flaring Reduction organisation,
which strives to reduce the flaring or burning of natural gas associated with
oil production, thereby reducing greenhouse gas emissions.
In December, Wärtsilä joined the Sustainable Shipping Initiative (SSI), a
programme initiated by Forum for the Future. The initiative brings together the
industry's leading organisations to show what can and must be done for shipping
to contribute to, and benefit from, a sustainable future.
In 2010, Wärtsilä's share was included in two new sustainability indexes: The
ECPI Global Carbon Equity Index, and the OMX GES Sustainability Nordic index.
Wärtsilä was also rated a PRIME company by Oekom Research.
Wärtsilä is committed to support the UN Global Compact and its principles with
respect to human rights, labour, environment and anti-corruption.
Wärtsilä's Sustainability Report, which is part of the annual report, is
prepared in accordance with the GRI G3 guidelines. It represents a balanced and
reasonable view of Wärtsilä's economic, environmental and social performance.
The sustainability report is assured.
SHARES AND SHAREHOLDERS
SHARES ON HELSINKI EXCHANGES
31 Dec. 2010 Number of Number of Number of shares
Shares votes traded 1-12/2010
-----------------------------------------------------------------------------
WRT1V 98 620 565 98 620 565 98 075 775
-----------------------------------------------------------------------------
1 Jan. - 31 Dec. 2010 High Low Average 1) Close
-----------------------------------------------------------------------------
Share price 59.25 28.19 39.86 57.10
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1) Trade-weighted average price
31 Dec. 2010 31 Dec. 2009
------------------------------------------------------------------------
Market capitalisation, EUR million 5 631 2 768
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Foreign shareholders 51.0% 45.4%
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FLAGGING NOTIFICATIONS
During the review period, Wärtsilä was informed of the following changes in
ownership:
On 17 December 2010 BlackRock Inc. increased its holding in Wärtsilä
Corporation. Following the transaction BlackRock Inc. owned 4,941,759 shares or
5.01% of Wärtsilä's share capital and total votes.
On 20 December 2010 BlackRock Inc. decreased its holding in Wärtsilä
Corporation. Following the transaction BlackRock Inc. owned 4,898,350 shares or
4.97% of Wärtsilä's share capital and total votes.
DECISIONS TAKEN BY THE ANNUAL GENERAL MEETING
Wärtsilä's Annual General Meeting held on 4 March 2010 approved the financial
statements and discharged the members of the Board of Directors and the
company's President & CEO from liability for the financial year 2009. The
Meeting approved the Board of Directors' proposal to pay a dividend of 1.75 euro
per share. The dividend was paid on 16 March 2010.
The Annual General Meeting decided to change the eighth article of the Articles
of Association so that the publication of the notice for the general meeting
will be no later than three weeks, but at least nine (9) days before the record
date of the general meeting. The change is due to a change in the Finnish
Limited Liability Companies Act.
The Annual General Meeting decided to change the fourth article of the Articles
of Association so that the maximum number of members of the Board of Directors
was increased to ten, and that the Board of Directors consists of 5-10 members.
The Annual General Meeting decided that the Board of Directors shall have nine
members. The following were elected to the Board: Ms Maarit Aarni-Sirviö, Mr
Kaj-Gustaf Bergh, Mr Alexander Ehrnrooth, Mr Paul Ehrnrooth, Mr Ole Johansson,
Mr Antti Lagerroos, Mr Bertel Langenskiöld, Mr Mikael Lilius and Mr Matti
Vuoria.
The firm of public auditors KPMG Oy Ab was appointed as the company's auditors.
The Annual General Meeting authorised the Board to resolve on donations of EUR
1,500,000 at the maximum to be made to universities during 2010. The primary
recipient of the donations is Aalto University.
Organisation of the Board of Directors
The Board of Directors of Wärtsilä Corporation elected Antti Lagerroos as its
chairman and Matti Vuoria as the deputy chairman. The Board decided to establish
an Audit Committee, a Nomination Committee and a Compensation Committee. The
Board appointed from among its members the following members to the Committees:
Audit Committee:
Chairman Antti Lagerroos, Maarit Aarni-Sirviö, Alexander Ehrnrooth, Bertel
Langenskiöld
Nomination Committee:
Chairman Antti Lagerroos, Kaj-Gustaf Bergh, Paul Ehrnrooth, Matti Vuoria
Compensation Committee:
Chairman Antti Lagerroos, Bertel Langenskiöld, Mikael Lilius, Matti Vuoria
BOARD OF DIRECTOR'S DIVIDEND PROPOSAL
The Board of Directors proposes that a dividend of 1.75 euro per share and an
extra dividend of 1.00 euro per share, totalling 2.75 euro per share, be paid
for the financial year 2010. Wärtsilä's distributable funds at the end of the
period totalled EUR 901,099,082.48. The dividend will be paid to shareholders
who are registered in the list of shareholders maintained by the Finnish Central
Securities Depository Ltd on the record date, which is 8 March 2011. The
dividend payment date proposed by the Board is 15 March 2011. The Annual Report
2010, including the financial review and the review by the Board of Directors,
will be available the company website www.wartsila.com during week 6.
RISKS AND BUSINESS UNCERTAINTIES
No major changes occurred in Wärtsilä's business environment in the fourth
quarter and Wärtsilä expects that its business environment will continue to
improve.
Although the risks have decreased substantially, the main risks within Ship
Power remain the slippage of shipyard delivery schedules, as well as the risk of
cancellation of existing orders. Due to high contracting activity in 2010, there
is a risk of a slowdown in certain vessel segments.
In the Power Plant business, the consequences from the financial crisis can
still be seen in the timing of bigger projects.
In Services, the biggest risk continues to be the uncertainty in the marine
markets.
The annual report for 2010 contains a thorough description of Wärtsilä's risks
and risk management.
MARKET OUTLOOK
Although the recovery of the shipbuilding markets has been much stronger than
anticipated, the market fundamentals in some vessel segments remain unchanged.
There is overcapacity, especially in the merchant segment, as order books are
still being delivered and ordering activity has been strong in this segment in
2010. Wärtsilä's view on the developments in the merchant segment is cautious
for 2011. The strengthening of the offshore segment as well as other more
specialised vessel segments important for Wärtsilä, is expected to continue in
2011. Interest in the use of natural gas as fuel in the shipping industry is
expected to continue, providing good potential for Wärtsilä within this field.
In 2011, the prevailing conditions will continue to affect competition and price
pressure among shipbuilding suppliers. Wärtsilä expects that its Ship Power
order intake in 2011 will be moderately better than in 2010.
Recovery in the power generation market is expected to continue in 2011. The
growing emerging markets will continue to invest in power generation, and the
OECD countries are expected to gradually address the need for changes in their
power generation systems. The investments in renewable power may still take some
time to recover, but the operational base of renewable energy, mainly wind
power, has increased substantially in the past years. This creates a need for
flexible power generation to manage the power variations.
At the same time the economics of natural gas generation are good. Natural gas
prices have remained stable, and in the USA the prices of natural gas and oil
have decoupled as a result of the quick ramp up of shale gas supply and moderate
demand. There is also expectation that the ramp down of older coal based
generation, due to environmental reasons, will create demand for clean, gas
based generation. Wärtsilä Power Plants estimates its order intake to remain at
a good level in 2011.
Wärtsilä expects that a sustainable recovery in the marine service market will
begin during 2011. Power plant installations will continue to be run at high
operating levels.The focus on operational improvement and competiveness will
remain high on customers' agendas. Wärtsilä is well positioned to offer service
solutions that ensure the reliability and availability of installations whilst
reducing the overall maintenance spend. Increasingly stringent environmental
regulations pose a challenge for our customers. Wärtsilä's extensive product
portfolio offers competitive options for our customers for meeting the new
requirements. The size and scope of Wärtsilä Services creates stability in a
changing market environment, and provides a platform for future growth.
WÄRTSILÄ'S PROSPECTS FOR 2011
Wärtsilä expects its net sales for 2011 to grow 3-5% and operational
profitability (EBIT% before nonrecurring items) to be around 11%.
WÄRTSILÄ FINANCIAL STATEMENTS BULLETIN 2010
This financial statement bulletin is prepared in accordance with IAS 34 (Interim
Financial Reporting) using the same accounting policies and methods of
computation as in the annual financial statements for 2009. All figures in the
accounts have been rounded and consequently the sum of individual figures can
deviate from the presented sum figure.
Use of estimates
The preparation of the financial statements in accordance with IFRS requires
management to make estimates and assumptions that affect the valuation of the
reported assets and liabilities and other information, such as contingent
liabilities and the recognition of income and expenses in the income statement.
Although the estimates are based on the management's best knowledge of current
events and actions, actual results may differ from the estimates.
IFRS amendments
Of the amended International Financial Reporting Standards (IFRS) and
interpretations mandatory as of 1 January 2010 the following are applicable on
the Group reporting:
* Revised IFRS 3 Business Combinations
* Amendment to IAS 27 Consolidated and Separate Financial Statements
* Amendment to IAS 39 Financial Instruments: Recognition and Measurement:
Eligible Hedged Items
* IFRIC 18 Transfers of Assets from Customers
- Amendments to IFRIC 9 Reassessment of Embedded Derivatives and IAS 39
Financial Instruments: Recognition and Measurement - Embedded Derivatives
The adaption of the revised standards and interpretations does not have any
material effect on the interim report.
The annual figures in this financial statements bulletin are audited.
CONSOLIDATED STATEMENT OF INCOME
MEUR 2010 2009
--------------------------------------------------------------------------------
Net sales 4 553 5 260
Change in inventories of finished goods & work in
progress -164 98
Work performed by the Group and capitalised 2 1
Other operating income 52 50
Material and services -2 372 -3 183
Employee benefit expenses -948 -910
Depreciation, amortisation and impairment -116 -165
Other operating expenses -601 -564
Share of result of associates and joint
ventures 5 6
Operating result 412 592
Dividend income 7 6
Interest income 6 4
Other financial income 12 12
Interest expenses -18 -21
Other financial expenses -20 -35
Net income from financial assets available
for sale 149
Profit before taxes 548 558
Income taxes -151 -161
--------------------------------------------------------------------------------
Profit for the financial period 397 396
--------------------------------------------------------------------------------
Attributable to:
Equity holders of the parent company 386 389
Non-controlling interests 11 8
--------------------------------------------------------------------------------
397 396
Earnings per share attributable to equity holders of the parent
company:
Earnings per share (basic and diluted), EUR 3.91 3.94
Statement of Comprehensive Income
Profit for the financial period 397 396
Other comprehensive income after tax:
Exchange rate differences on translating foreign operations 17 18
Financial assets available for sale
fair valuation 30 34
transferred to statement of income -110
Cash flow hedges -9 20
Share of other comprehensive income of associates and joint ventures 1
Other income/expenses 1
------------------------------------------------------------------------------
Other comprehensive income -71 73
------------------------------------------------------------------------------
Total comprehensive income for the period 326 469
------------------------------------------------------------------------------
Total comprehensive income attributable to:
Equity holders of the parent company 313 460
Non-controlling interests 13 9
------------------------------------------------------------------------------
326 469
CONSOLIDATED STATEMENT OF FINANCIAL POSITION, ASSETS
MEUR 31.12.2010 31.12.2009
---------------------------------------------------------------------------
Non-current assets
Goodwill 574 558
Intangible assets 205 222
Property, plant and equipment 455 449
Investment properties 11 9
Investments in associates and joint ventures 65 56
Financial assets available for sale 18 151
Interest-bearing investments 16 2
Deferred tax receivables 122 88
Trade receivables 2
Other receivables 16 12
---------------------------------------------------------------------------
1 483 1 548
Current assets
Inventories 1 244 1 577
Interest-bearing receivables 1 4
Trade receivables 860 1 028
Income tax receivables 26 10
Other receivables 305 244
Cash and cash equivalents 776 244
---------------------------------------------------------------------------
3 213 3 108
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Total assets 4 696 4 655
---------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION, EQUITY AND LIABILITIES
MEUR 31.12.2010 31.12.2009
--------------------------------------------------------------------------------
Equity
Share capital 336 336
Share issue premium 61 61
Translation differences 8 -6
Fair value reserve 12 99
Retained earnings 1 221 1 006
--------------------------------------------------------------------------------
Total equity attributable to equity holders of the
parent 1 638 1 496
Non-controlling interests 26 16
--------------------------------------------------------------------------------
Total equity 1 664 1 512
Liabilities
Non-current liabilities
Interest-bearing debt 572 591
Deferred tax liabilities 70 93
Pension obligations 40 46
Provisions 45 24
Advances received 104 187
Other liabilities 1
--------------------------------------------------------------------------------
831 941
Current liabilities
Interest-bearing debt 56 73
Provisions 233 181
Advances received 511 691
Trade payables 366 299
Income tax liabilities 105 75
Other liabilities 929 883
--------------------------------------------------------------------------------
2 201 2 202
Total liabilities 3 032 3 143
--------------------------------------------------------------------------------
Total equity and liabilities 4 696 4 655
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
MEUR 2010 2009
--------------------------------------------------------------------------------
Cash flow from operating activities:
Profit before taxes 548 558
Adjustments:
Depreciation, amortisation and impairment 116 165
Financial income and expenses 13 34
Selling profit and loss of fixed assets and other changes -147 -7
Share of result of associates and joint
ventures -5 -6
--------------------------------------------------------------------------------
Cash flow before changes in working capital 526 743
Changes in working capital:
Assets, non-interest-bearing, increase (-) / decrease (+) 132 114
Inventories, increase (-) / decrease (+) 379 66
Liabilities, non-interest-bearing, increase (+) / decrease
(-) -141 -358
--------------------------------------------------------------------------------
Changes in working capital 370 -179
Cash flow from operating activities before financial items and taxes 896 564
Financial items and taxes:
Interest and other financial income 11 15
Interest and other financial expenses -72 -72
Income taxes -173 -158
--------------------------------------------------------------------------------
Financial items and taxes -233 -215
--------------------------------------------------------------------------------
Cash flow from operating activities 663 349
--------------------------------------------------------------------------------
Cash flow from investing activities:
Investments in shares and acquisitions -6 -16
Investments in property, plant and equipment and intangible assets -92 -136
Proceeds from sale of property, plant and equipment and intangible
assets 9 3
Proceeds from sale of financial assets available for sale 173 -21
Loan receivables, increase (-) / decrease (+) and other
changes -13 -1
Dividends received 8 8
--------------------------------------------------------------------------------
Cash flow from investing activities 79 -163
--------------------------------------------------------------------------------
Cash flow after investing activities 742 187
Cash flow from financing activities:
Proceeds from non-current borrowings 37 263
Repayments and other changes in non-current
loans -78 -109
Loan receivables, increase (-) / decrease (+) 2 3
Current loans, increase (+) / decrease (-) -2 -141
Dividends paid -175 -156
--------------------------------------------------------------------------------
Cash flow from financing activities -216 -140
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Change in cash and cash equivalents,
increase (+) / decrease (-) 525 47
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash and cash equivalents at beginning of
period 244 197
Exchange rate changes 7
Cash and cash equivalents at end of period 776 244
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Total equity attributable to equity holders of the
MEUR parent Non-
controlling
Interests
--------------------------------------------------------------------------------
Trans-
Share lation Fair
Share issue differ- value Retained
capital premium ence reserve earnings Total
--------------------------------------------------------------------------------
Equity on 1
January 2009 336 61 -27 50 764 1 184 15
Translation
differences 21 21
Other changes 1 1
Financial assets
available for
sale
gain / loss
arising from fair
valuation, net of
taxes 34 34
Cash flow hedges
gain / loss
arising from fair
valuation, net of
taxes 3 3
transfer
Unternehmensinformation / Kurzprofil:
Datum: 28.01.2011 - 07:31 Uhr
Sprache: Deutsch
News-ID 50811
Anzahl Zeichen: 65593
contact information:
Town:
Helsinki
Kategorie:
Business News
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"WÄRTSILÄ'S FINANCIAL STATEMENT BULLETIN JANUARY - DECEMBER 2010"
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