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MarketScreener Homepage  >  Equities  >  NASDAQ OMX HELSINKI LTD.  >  Wärtsilä    WRT1V   FI0009003727

WÄRTSILÄ

(WRT1V)
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Wärtsilä : Wartsila sees quarterly profits fall, warns of weaker demand

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07/18/2019 | 05:25am EDT
FILE PHOTO: An employee walks at a engine factory of CSSC Wartsila Engine (Shanghai) Co. Ltd  in Shanghai

HELSINKI (Reuters) - Finland's Wartsila Oyj missed second-quarter forecasts on Thursday and warned that it expected demand to weaken for both its marine and energy businesses, sending shares in the engineering firm to a three-year low.

Comparable operating profit in April-June fell to 113 million euros (101.75 million pounds) from 123 million euros a year earlier and missed the 132 million euro forecast by analysts in a poll.

Sales fell to 1.22 billion euros from 1.25 billion euros and missed the 1.37 billion euros forecast by analysts.

It shares were 10% lower at 11.23 euros by 0845 GMT, down almost 20% in the past year to their lowest since June 2016.

Citi analysts said sales at the energy business unit were "the standout disappointment in the quarter" and said they expected double-digit cuts to consensus estimates to reflect the downgrade to the outlook and the second quarter earnings miss.

Second quarter sales at the energy unit, which makes power plants, dropped 26% from a year ago to 416 million euros.

Wartsila cut its demand outlook for its energy business to "soft" from "solid" as economic uncertainties stemming from risks of trade wars, sanctions and climate debates hold back customer investment.

"The decision-making is slower," Wartsila Chief Executive Jaakko Eskola told Reuters. "The uncertainties have increased."

Wartsila also downgraded its outlook for its marine business to "soft" from "solid", due to lower vessel contracting volumes and a decline in demand for scrubber solutions from last year's exceptionally high level.

Demand for so-called scrubbers which strip out sulphur from marine fuel has boosted Wartsila and its Swedish rival Alfa Laval in the past few years as shipowners prepared for stricter sulphur emissions regulations from next year.

But Alfa Laval reported a fall in quarterly orders this week, hit by weaker-than-expected demand for ship exhaust cleaners and pumping systems.

Wartsila cut demand outlook, but said a large number of deliveries, including for scrubbers, was scheduled for the end of the year, giving management confidence in strong short-term outlook.

"The rest of the year, and especially the fourth quarter will be record-high," Eskola said.

(Reporting by Tarmo Virki; editing by Jason Neely)

By Tarmo Virki

Stocks mentioned in the article
ChangeLast1st jan.
ALFA LAVAL 2.50% 172.4 Delayed Quote.-9.10%
WÄRTSILÄ 2.22% 10.8 Delayed Quote.-22.27%
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Financials (EUR)
Sales 2019 5 553 M
EBIT 2019 646 M
Net income 2019 423 M
Debt 2019 294 M
Yield 2019 4,67%
P/E ratio 2019 15,1x
P/E ratio 2020 13,6x
EV / Sales2019 1,20x
EV / Sales2020 1,14x
Capitalization 6 391 M
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Mean consensus HOLD
Number of Analysts 16
Average target price 12,59  €
Last Close Price 10,80  €
Spread / Highest target 52,8%
Spread / Average Target 16,6%
Spread / Lowest Target -7,41%
EPS Revisions
Managers
NameTitle
Jaakko-Veikko Eskola President & Chief Executive Officer
Percy Henrik Mikael Lilius Chairman
Marco Wirén Chief Financial Officer & Executive Vice President
Jukka Kumpulainen Chief Information Officer & Vice President
Outi Maarit Aarni-Sirviö Independent Director
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