Wärtsilä Oyj : Result presentation Q2 2020

17 JULY 2020

JAAKKO ESKOLA, PRESIDENT & CEO

KEY FIGURES

MEUR	4-6/2020	CHANGE	1-6/2020	CHANGE
Order intake	1,011	-27%	2,259	-19%
of which services	486	-22%	1,120	-12%
Order book			5,401	-12%
Net sales	1,220	0%	2,390	+1%
of which services	510	-17%	1,103	-7%
Book-to-bill	0.83	-0.30	0.95	-0.23
Comparable operating result	55	-51%	111	-48%
% of net sales	4.5%	-4.8 pp	4.7%	-4.4 pp
Earnings per share, EUR	0.04	-0.07	0.09	-0.12
Cash flow from operating activities	252	+289	293	+295

3	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

VESSEL ORDERS REMAINED AT A VERY LOW LEVEL

Total vessel contracting

Number of vessels	Million CGT
250			5.0
	Merchant	Offshore	4.5
	Cruise and Ferry	Special vessels
200	3 months moving average in CGT	4.0
			3.5
150			3.0
			2.5
100			2.0
			1.5
50			1.0
			0.5
0	01-1106-1111-1104-1209-1202-1307-1312-1305-1410-1403-1508-1501-1606-1611-1604-1709-17	02-1807-1812-1805-1910-1903-20	0.0

Specialised tonnage

Number of vessels

90
	Offshore		Special vessels		LPG carriers
80
	Cruise and Ferry		LNG carriers

70

60

50

40

30

20

10

0

01-1106-1111-1104-1209-1202-1307-1312-1305-1410-1403-1508-1501-1606-1611-1604-1709-1702-1807-1812-1805-1910-1903-20

Source:Clarksons Research, contracting as per 1 July, 2020 CGT= gross tonnage compensated with workload

4	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

ENERGY MARKETS AT A STABLE LEVEL

Market for gas and liquid fuel power plants <500 MW

MW, 12m rolling

25,000
20,000
15,000
10,000
5,000
17%	13%	14%	15%	14%	17%	9%	8%
0
Q317-Q218	Q417-Q318	Q118-Q418	Q218-Q119		Q318-Q219	Q418-Q319	Q119-Q419	Q219-Q120
						Wärtsilä		Others

The total market, including also power plants with prime movers above 500 MW, decreased by 2% to 46.2 GW during the twelve-month period ending in March 2020 (47.2 at the end of December).

The market data includes all Wärtsilä power plants and other manufacturers' gas and liquid fuelled gas turbine based power plants with prime movers below 500 MW, as well as the estimated output of steam turbines for combined cycles. The data is gathered from the McCoy Power Report. The main gas turbine competitors are GE, Siemens, Mitsubishi, and Ansaldo. Other combustion engines are not included.

5	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

ORDER INTAKE

MEUR, 12m rolling

7,000

6,000

5,000

4,000

3,000

2,000
		Q2
			-27%
1,000
1,377	1,011
0
Q318-Q219Q418-Q319Q119-Q419Q219-Q120Q319-Q220
		Second quarter 2020 and comparison 2019

Second quarter development

	5% (3)
			39%		Marine Power
				Marine Systems
	Order intake	(46)
		Voyage
39%	by business area
(32)					Energy
	5%	12% (14)			Portfolio Business
	(5)

	Order intake	48%		Services
		Equipment
52%	by business type
(45)
(55)

6	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

JANUARY-JUNE ORDER INTAKE BY CUSTOMER SEGMENT

Marine Businesses

Power	Equipment		6%	32%	7%		11%	24%	19%
Marine				(15)	(34)		(3)	(16)	(11)		(20)
	Services				16%	13%	16%		12%	15%			25%	3%
						(16)	(27)		(13)			(9)		(12)			(22)	(2)
Systems	Equipment
				(45)			(18) (0)	(1)	(0)				(30)			(5)
					42%		3%3% 5%1%				45%			1%
Marine		Services		5%	9%	6%			35%				7%			38%
				(5)		(9)	(5)			(34)				(9)			(38)
	Equipment
Voyage		1%		32%			6% 3%		18%	20%	21%
		(0)			(47)			(11) (4)		(3)		(19)	(17)
		Services	3%		35%			8%	3% 5%				45%			1%
				(1)			(50)			(5)	(1)	(7)				(36)			(0)
		Gas carriers		Cruise & ferry		Offshore		Navy		Special vessels		Merchant		Other

Energy

14%(10) 11%(19)

30% (35)

59% (19)

24% (23)

33%(32) 30%(62)

Services Equipment

Other

Industrials

Independent

Power

Producers

Utilities

7	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

ORDER BOOK

Order book by business area					Order book delivery schedule
MEUR								MEUR
7,000										1.60	3,000
6,000										1.40	2,500
							1.20
5,000
										2,000
							1.00
4,000
							0.80	1,500
3,000
							0.60	1,000
2,000
							0.40
1,000											500
							0.20
0										0.00	0
31.3.2018*	30.9.2018*	31.3.2019**	30.9.2019**	31.3.2020					Delivery	Delivery next		Delivery after
				Marine Businesses total		Marine Power			Marine Systems				current year	year		next year
				Voyage			Energy			Portfolio Business			30.6.2018		30.6.2019**		30.6.2020
				Book-to-bill, QTD

*2018 figures not restated to accommodate the establishment of Portfolio Business entity

**As published in the Interim report January-March 2020, order book figures for 2019 have been restated due to stricter requirements for booking new orders.

8	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

NET SALES

MEUR, 12m rolling

6,000

5,000

4,000

3,000

2,000

		Q2
1,000		0%
	1,220
1,217

0

Q318-Q219Q418-Q319Q119-Q419Q219-Q120Q319-Q220Second quarter 2020 and comparison 2019

Second quarter development

4% (5)

34% (37)

37%	Net sales
by business area
(33)

5%	20% (19)
(6)

Net sales	42%
(50)
by business type

58%

(50)

Marine Power

Marine Systems

Voyage

Energy

Portfolio Business

Services

Equipment

9	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

NET SALES BY BUSINESS TYPE

Second quarter development

23% (25)

MEUR							MEUR, 12m rolling
1,800											3,000
1,600
								2,500
1,400
1,200											2,000
1,000
								1,500
800
600											1,000
400
								500
200
0											0
1-3/2018	7-9/2018	1-3/2019	7-9/2019	1-3/2020
			Services				Equipment		Service sales, 12m rolling

56%

(48)

60%

(53)

Marine
Businesses
EUR 715 million
(756)	13% (16)
	4% (7)

4% (4)

	17% (19)
	5% (4)
Energy
EUR 457 million
(400)	14% (18)
	4% (5)

Spare parts

Field service

Service agreements

Service projects Equipment

10	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

NET SALES BRIDGE

MEUR

11	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

COMPARABLE OPERATING RESULT

MEUR, 12m rolling

700	11.1%		9.6%					12%
600			8.8%			10%
500						7.9%	6.8%	8%
400								6%
300								4%
200
							2%
100
0								0%
Q318-Q219	Q418-Q319	Q119-Q419	Q219-Q120	Q319-Q220
			Comparable operating result		Comparable operating result, %

Review period development

MEUR

250						10%
9.1%
200						8%
150						6%
		4.7%
100			4%
50						2%
0						0%
-50						-2%
1-6/2019	1-6/2020
			Marine Power			Marine Systems
			Voyage			Energy
			Portfolio Business			Total, % of sales

12	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

CASH FLOW FROM OPERATING ACTIVITIES

MEUR

700

600

500

400

300

200

100

0

2015

2016

2017

2018

2019

Review period development

MEUR
350
300
250
200
150
100
50
0
-50
1-6/2019	1-6/2020

13	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

WORKING CAPITAL

MEUR

4,000

3,000

2,000

1,000

0

-1,000

-2,000

-3,000

-4,000

			14.2%
	11.5%	11.2%
10.2%			9.5%
490	563	581	732	492

2016

2017

2018

2019

30.6.2020

16%

14%

12%

10%

8%

6%

4%

2%

0%

Other non-interest-bearing liabilities

Advances received

Trade payables

Other non-interest-bearing receivables

Trade receivables

Inventories Working capital

Working capital / net sales, 12m rolling

14	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

GEARING

							Review period development
0.50							0.50
0.40							0.40
0.30							0.30
0.20							0.20
0.10							0.10
0.00							0.00
2015	2016	2017	2018	2019		30.6.2019	30.6.2020

15	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

MARINE POWER

MARINE POWER

• Order intake decreased by 38% to EUR 391 million (632)
• • Ordering activity under pressure due to idling of fleet and customers adjusting their capital and operating expenditures
• Net sales decreased by 6% to EUR 420 million (447)
• Comparable operating result amounted to EUR 24 million (62) or 5.7% of net sales (13.8)
• • Profitability weakened primarily due to an unfavourable sales mix and weaker fixed cost absorption

MEUR				Order intake
700
600
500
400
300
200
100
0
Q1/19		Q2/19	Q3/19		Q4/19	Q1/20	Q2/20
MEUR		Net sales and profitability
700					20%
600											18%
									16%
500
										14%
400											12%
									10%
300
								8%
200											6%
100										4%
								2%
0											0%
			Q1/19	Q2/19	Q3/19	Q4/19	Q1/20	Q2/20
			Services			Equipment		Comparable operating result, %

17	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

MARINE POWER

NET SALES FROM INSTALLATIONS UNDER AGREEMENT

MEUR, 12m rolling

450

400

350

300

250

200

150

100

50

0

30.6.2017

30.6.2018

30.6.2019

30.6.2020

A new remote service to overcome travel restrictions

• Wärtsilä introduced its Assured Operations remote support service for Wärtsilä4-stroke and 2-stroke engine customers
• The service enables technical experts to assess and resolve operational issues via remote connection between the vessel and Wärtsilä's Expertise Centres

18	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

MARINE SYSTEMS

MARINE SYSTEMS

• Order intake decreased by 40% to EUR 119 million (198)
• • Reduced fuel spreads resulted in lower demand for scrubber investments
• Net sales increased by 1% to EUR 238 million (237)
• Comparable operating result amounted to EUR 27 million (23) or 11.2% of net sales (9.7)
• • Increased scrubber delivery volumes boosted both net sales and profitability

MEUR	Order intake

300

250
200
150
100
50
0
Q1/19	Q2/19	Q3/19	Q4/19	Q1/20	Q2/20

MEUR		Net sales and profitability
300					14%
250											12%
200											10%
									8%
150
								6%
100
								4%
50
								2%
0											0%
			Q1/19	Q2/19	Q3/19	Q4/19	Q1/20	Q2/20
			Services			Equipment		Comparable operating result, %

19	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

VOYAGE

VOYAGE

• Order intake decreased by 23% to EUR 56 million (72)
• Net sales decreased by 23% to EUR 56 million (73)
• • COVID-19caused project postponements and less transactional service business
• Comparable operating result amounted to EUR-12 million (-9) or -20.8% of net sales (-12.8)
• • Negative impacts from lower sales volumes, a less favourable service mix, and increased investments in digital competences

MEUR	Order intake

120

100
80
60
40
20
0
Q1/19	Q2/19	Q3/19	Q4/19	Q1/20	Q2/20

MEUR		Net sales and profitability
120					10%
100											5%
80											0%
									-5%
60
								-10%
40
								-15%
20
								-20%
0											-25%
			Q1/19	Q2/19	Q3/19	Q4/19	Q1/20	Q2/20
			Services			Equipment		Comparable operating result, %

20	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

VOYAGE

VESSELS CONNECTED TO VOYAGE DIGITAL SERVICES INCREASED 90% -RECORD HIGH NUMBER OF VESSELS IN ORDER BOOK

Number of connected vessels

+90%

Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20

Commissioned, Order Book cumulative

Voyage is committed to creating a Smart Marine Ecosystem, whereby every vessel can connect to digital services that make voyaging safer and greener

Connected vessels enable:

• Significant cost savings
• Faster and safer voyage planning
• On time arrival, less anchorage
• Transparentship-to-shore data

21	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

ENERGY

ENERGY

• Order intake decreased by 10% to EUR 390 million (435)
• • Received equipment orders included a 200 MW flexible baseload power plant to be delivered to South America
• Net sales increased by 14% to EUR 457 million (400), driven by equipment deliveries
• Comparable operating result amounted to EUR 19 million (38) or 4.0% of net sales (9.6)
• • Decline in profitability mainly due to an unfavourable sales mix andCOVID-19 impacts

MEUR				Order intake
700
600
500
400
300
200
100
0
Q1/19		Q2/19	Q3/19		Q4/19	Q1/20	Q2/20
MEUR		Net sales and profitability
700					14%
600											12%
									10%
500
								8%
400											6%
300											4%
200											2%
									0%
100
								-2%
0											-4%
			Q1/19	Q2/19	Q3/19	Q4/19	Q1/20	Q2/20
			Services			Equipment		Comparable operating result, %

22	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

ENERGY

ENERGY INSTALLED BASE COVERED BY LONG-TERM SERVICE AGREEMENTS

MW

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

2015	2016	2017	2018	2019	30.6.2020
			MW under agreement*		% of Energy installed base

*Includes agreements covering both installed assets and assets to be installed in the future

30%

25%

20%

15%

10%

5%

0%

23	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

ENERGY

ORDERS RECEIVED FOR ENERGY EQUIPMENT GLOBALLY

Americas

719(248)

Europe

22(24)

Asia 101(525)

Utilities
IPP's	Africa and
(Independent
Middle East
Power Producers)
70(291)
Industrials
Others

ORDER INTAKE 1-6/2020: 912 MW (1,058)

24	© Wärtsilä	17 July 2020	HALF YEAR REPORT JANUARY-JUNE 2020

The COVID-19 outbreak and the measures taken to contain the pandemic will materially impact the demand for Wärtsilä's solutions and services, as well as the company's financial performance in 2020. The full financial impact cannot be quantified at this time.

Consequently, Wärtsilä withdrew its market outlook for 2020 on 31 March 2020 pending an improvement in visibility.

THANK YOU

Further information:

NATALIA VALTASAARI

Vice President, Investor Relations

Tel: [phone]

E-mail:[e-mail]