Wärtsilä’s Financial Statements Bulletin January-December 2017

Accountancy, Company Profiles, Marine Equipment Products and Services — By on January 31, 2018 at 7:55 AM

WÄRTSILÄ’S FINANCIAL STATEMENTS BULLETIN JANUARY-DECEMBER 2017

2017 – A YEAR OF SOLID SALES AND STRONG ORDER INTAKE

This release is a summary of Wärtsilä’s financial statements bulletin 2017. The complete report is attached to this release as a pdf-file. It is also available athttp://www.wartsilareports.com/en-US/2017/q4/frontpage/ and on the company website at www.wartsila.com.

FOURTH QUARTER HIGHLIGHTS

– Order intake increased 14% to EUR 1,514 million (1,324)
– Net sales decreased 7% to EUR 1,445 million (1,559)
– Book-to-bill reached 1.05 (0.85)
– Comparable operating result decreased to EUR 244 million (253), which represents 16.9% of net sales (16.3)
– Earnings per share amounted to 0.86 euro (0.87)
– Cash flow from operating activities increased to EUR 276 million (235)

HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-DECEMBER 2017

– Order intake increased 15% to EUR 5,644 million (4,927)
– Net sales increased 3% to EUR 4,923 million (4,801)
– Book-to-bill reached 1.15 (1.03)
– Comparable operating result increased to EUR 590 million (583), which represents 12.0% of net sales (12.1)
– Earnings per share increased to 1.95 euro (1.79)
– Cash flow from operating activities decreased to EUR 430 million (613)
– Order book at the end of the period increased 8% to EUR 5,064 million (4,696)
– Dividend proposal EUR 1.38 per share (1.30). The dividend will be paid in two instalments.

WÄRTSILÄ’S PROSPECTS FOR 2018

The demand for Wärtsilä’s services and solutions in 2018 is expected to improve somewhat from the previous year. Demand by business area is anticipated to be as follows:

  • Good in Services thanks to growth opportunities in selected regions and segments.
  • Good in Energy Solutions. The global shift towards renewable energy sources and increasing electricity demand in the emerging markets support the need for distributed and flexible power capacity, including gas-fired generation, energy storage, and smart integration technology.
  • Solid in Marine Solutions. Despite improving sentiment, the marine market environment remains challenging due to overcapacity and lack of financing.

Wärtsilä’s current order book for 2018 deliveries is EUR 3,171 million (3,143), which mainly comprises equipment deliveries. Services’ business is largely transactional, with only around 30% of annual net sales coming from the order book.

JAAKKO ESKOLA, PRESIDENT AND CEO

“The year 2017 developed according to our expectations. Increased power plant deliveries supported some growth in net sales, while profitability was in line with the previous year, due in part to a positive business mix in the fourth quarter. The favourable order trends seen throughout the year continued in the fourth quarter, providing us with a solid basis from which we can develop our business.

Activity in the service markets improved in the second half, despite low volumes in the offshore and merchant segments. I am especially pleased with the healthy growth in Services’ orders received, which demonstrates that our customers are increasingly seeing the value of longer-term partnerships. Energy Solutions’ order intake was boosted by both increased investments in modernising power infrastructures in the emerging markets, and the growing need for flexible power capacity to support the transition into renewable energy sources. In the marine industry, the sentiment among merchant customers improved during the latter part of the year. This, together with a healthy demand in the cruise and gas carrier segments, supported the growth of Marine Solutions’ order intake.

During the year, we introduced our smart marine and smart energy visions, which emphasise Wärtsilä’s commitment to promoting a low emission economy and providing intelligent ways of producing and using energy. The launch of our marine hybrid module, the development of our capabilities for remote vessel operation, the introduction of new service concepts, and the expansion into energy storage and software solutions are all concrete examples of how we increase customer value with energy efficiency, lifecycle optimisation and innovative solutions.

Looking ahead, I believe that developing smart technology and integrating new business models into our offering will be at the core of our long-term value creation, both for our shareholders and society at large. In terms of 2018, our demand outlook has improved somewhat. We continue to see growth opportunities in our service business, based on our portfolio of long-term agreements and the increasing technological sophistication of our installed base. The demand for our energy solutions is anticipated to be at a good level, supported by a healthy project pipeline and favourable market trends. Market conditions are expected to improve in the marine industry, thus supporting a solid demand outlook.”

KEY FIGURES

10-12/ 10-12/
MEUR 2017 2016 Change 1-12/2017 1-12/2016 Change
Order intake 1 514 1 324 14% 5 644 4 927 15%
Order book at the end of the period 5 064 4 696 8%
Net sales 1 445 1 559 -7% 4 923 4 801 3%
Operating result¹ 225 231 -3% 552 532 4%
% of net sales 15.6 14.8 11.2 11.1
Comparable operating result 244 253 -4% 590 583 1%
% of net sales 16.9 16.3 12.0 12.1
Comparable adjusted EBITA 254 262 -3% 626 618 1%
% of net sales 17.5 16.8 12.7 12.9
Profit before taxes 215 226 -5% 506 479 6%
Earnings/share, EUR 0.86 0.87 1.95 1.79
Cash flow from operating activities 276 235 430 613
Net interest-bearing debt at the end of the period 234 150
Gross capital expenditure 255 146
Gearing 0.10 0.07
¹ Items affecting comparability amounted to EUR 19 million (22) during the fourth quarter, of which EUR 18 million (22) related to restructuring programmes, and EUR 1 million (0) to acquisitions and other costs. During the review period January-December 2017, items affecting comparability amounted to EUR 37 million (51), of which EUR 36 million (48) related to restructuring programmes and EUR 2 million (3) to acquisitions and other costs.

BOARD OF DIRECTORS’ DIVIDEND PROPOSAL
The Board of Directors proposes that a dividend of EUR 1.38 per share be paid for the financial year 2017. The parent company’s distributable funds total EUR 1,002,092,268.56, which includes EUR 161,085,555.55 in net profit for the year. There are 197,241,130 shares with dividend rights. The dividend will be paid in two instalments.

The first instalment of 0.69 euro per share will be paid to shareholders who are registered in the list of shareholders maintained by Euroclear Finland Ltd on the record date 12 March 2018. The payment date proposed by the Board for this instalment is 19 March 2018.

The second instalment of the dividend shall be paid in September 2018. The Board of Directors will propose to the Annual General Meeting a share issue without payment (share split). If the Board’s proposal is approved, the second instalment will be divided between one old and two new shares so that EUR 0.23 will be paid for each share. If the general meeting does not approve the share issue without payment proposed by the Board, the second instalment will be paid in the same manner as the first, i.e. EUR 0.69 per share.

The second dividend instalment will be paid to shareholders who are registered in the list of shareholders maintained by Euroclear Finland Ltd on the dividend record day, which, together with the payment day, shall be decided by the Board of Directors in its meeting scheduled for 18 September 2018. The dividend record day for the second instalment as per the current rules of the Finnish book-entry system would be 20 September 2018 and the dividend payment day 27 September 2018.

The Annual Report 2017, including the financial review and the review by the Board of Directors, will be available on the company websitewww.wartsila.com and at www.wartsilareports.com during week 7.

ANALYST AND PRESS CONFERENCE
An analyst and press conference will be held today, Wednesday 31 January 2018, 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=1579348&s=1&k=531810D4AA856961FA01ECDED656B926.

To participate in the teleconference please register at the following address: http://emea.directeventreg.com/registration/6598735. You will receive dial-in details by e-mail once you have registered. If problems occur, please press *0 for operator assistance. Please press *6 to mute your phone during the teleconference and to unmute.

An on-demand version of the webcast will be available on the company website later the same day.

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