Wärtsilä Oyj : Result presentation Q3 2020

23 OCTOBER 2020

JAAKKO ESKOLA, PRESIDENT & CEO

KEY FIGURES

MEUR	7-9/2020	CHANGE	1-9/2020	CHANGE
Order intake	981	+0%	3,240	-14%
of which services	521	-23%	1,641	-16%
Order book			5,265	-12%
Net sales	995	-11%	3,385	-3%
of which services	499	-14%	1,602	-9%
Book-to-bill	0.99	+0.11	0.96	-0.12
Comparable operating result	61	+55%	172	-32%
% of net sales	6.1	+2.6 pp	5.1	-2.2 pp
Earnings per share, EUR	0.04	+0.05	0.13	-0.07
Cash flow from operating activities	114	+174	407	+469

3	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 2020

VESSEL ORDERS REMAIN DEPRESSED

Total vessel contracting

Number of vessels	Million CGT
250	Merchant	Offshore	5.0
	Cruise and ferry	Special vessels 4.5
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	01-1107-1101-1207-1201-1307-1301-1407-1401-1507-1501-1607-1601-1707-1701-18	07-1801-1907-1901-2007-20	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
01-1107-1101-1207-1201-1307-1301-14	07-1401-1507-1501-1607-16	01-1707-1701-1807-1801-1907-1901-2007-20

Source: Clarksons Research, contracting as per 5 October 2020 CGT= gross tonnage compensated with workload

4	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 2020

ENERGY MARKETS SAW SOME DECLINE

Market for gas and liquid fuel power plants <500 MW

MW, 12m rolling

25,000
20,000
15,000
10,000
5,000
	14%
13%	15%	14%	17%	9%	8%	9%
0
Q417-Q318	Q118-Q418	Q218-Q119	Q318-Q219		Q418-Q319	Q119-Q419	Q219-Q120	Q319-Q220
						Wärtsilä		Others

The total market, including also power plants with prime movers above 500 MW, decreased by 15% to 39.3 GW during the twelve-month period ending in June 2020 (46.2 at the end of March).

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	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 2020

ORDER INTAKE

MEUR, 12m rolling

Third quarter development

3% (5)

33%

(27)

42%

Marine Power Marine Systems

7,000

6,000

5,000

4,000

3,000

2,000

1,000

Q3

0%

Order intake

by business area

4%

(7)18%

(15)

47%	Order intake

1. by business type

(46)

53%

Voyage

Energy

Portfolio Business

Services

Equipment

979981

0

Q418-Q319Q119-Q419Q219-Q120Q319-Q220Q419-Q320

Third quarter 2020 and comparison 2019

(70)

6	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 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	30.9.2020				Delivery	Delivery next		Delivery after
				Marine Businesses total			Marine Power			Marine Systems				current year	year		next year
				Voyage				Energy				Portfolio Business			30.9.2018		30.9.2019**		30.9.2020
				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.

7	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 2020

NET SALES

MEUR, 12m rolling

6,000

5,000

4,000

3,000

2,000

		Q3
		-11%
1,000
1,118	995

0

Q418-Q319Q119-Q419Q219-Q120Q319-Q220Q419-Q320Third quarter 2020 and comparison 2019

Third quarter development

		4% (5)
		38%		Marine Power
		(38)		Marine Systems
35%		Net sales
		Voyage
(29)	by business area
				Energy
	5%	17%		Portfolio Business
	(5)	(22)

	Net sales			Services
50%			Equipment
by business type	50%
(48)
	(52)

8	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 2020

COMPARABLE OPERATING RESULT

MEUR, 12m rolling

600								12%
9.6%
500							10%
		8.8%
400				7.9%		7.4%	8%
					6.8%
300								6%
200								4%
100								2%
0								0%
Q418-Q319	Q119-Q419	Q219-Q120	Q319-Q220	Q419-Q320
			Comparable operating result		Comparable operating result, %

Review period development

MEUR

350		10%
300
8%
250	7.3%
6%
200
5.1%
150		4%
100
2%
50
0%
0
-50		-2%

1-9/2019	1-9/2020
Marine Power			Marine Systems
Voyage			Energy
Portfolio Business			Total, % of sales

9	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 2020

CASH FLOW FROM OPERATING ACTIVITIES

MEUR

700

600

500

400

300

200

100

0

Review period development

MEUR

500

400

300

200

100

0

					-100
2015	2016	2017	2018	2019	1-9/2019	1-9/2020

10	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 2020

MARINE POWER

MARINE POWER

• Order intake decreased by 9% to EUR 410 million (449), burdened by:
• • Idling of cruise vessels
  • Customers adjusting capital and operating expenditures to market conditions
• Net sales decreased by 11% to EUR 382 million (430)
• Comparable operating result amounted to EUR 32 million (49) or 8.3% of net sales (11.4), burdened by:
• • COVID-19related decline in services
  • Weaker absorption of fixed costs

MEUR	Order intake

700

600

500

400

300

200

100

0

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

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	Q3/20
			Services			Equipment			Comparable operating result, %

12	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 2020

MARINE POWER

NET SALES FROM INSTALLATIONS UNDER AGREEMENT

MEUR, 12m rolling

400

350

300

250

200

150

100

50

0

Wärtsilä to provide a 5-year

maintenance agreement to the world's largest NGO hospital ship

• When completed in 2021, Global Mercy will be powered by four Wärtsilä 32 engines
• The comprehensive agreement provides guaranteed operational reliability, covering spare parts, field service, asset monitoring, and full technical support to keep the hospital ship running at all times

13	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 2020

MARINE SYSTEMS

MARINE SYSTEMS

• Order intake increased by 16% to EUR 174 million (150)
• • Reduced fuel spreads lessening demand for scrubber investments
  • Good development in gas solutions
• Net sales decreased by 31% to
  EUR 169 million (244) mainly due to fewer scrubber deliveries
• Comparable operating result amounted to EUR 22 million (10) or 13.0% of net sales (4.2)
• • Result for comparison period weakened by cost overruns in certain gas solution projects

MEUR	Order intake

300

250

200

150

100

50

0

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

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	Q3/20
			Services			Equipment			Comparable operating result, %

14	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 2020

VOYAGE

VOYAGE

• Order intake decreased by 36% to EUR 44 million (69)
• • Pressurised by the COVID-19 impact on demand in the cruise segment
  • Growth in fleet optimisation orders
• Net sales decreased by 9% to EUR 54 million (60), mainly due to:
• • COVID-19related project postponements
  • Lower transactional service business
• Comparable operating result amounted to EUR -6 million (-12) or -11.9% of net sales (-19.4), positively affected by COVID-19 related cost savings

MEUR	Order intake

120

100

80

60

40

20

0

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

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	Q3/20
			Services			Equipment			Comparable operating result, %

15	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 2020

VOYAGE

NUMBER OF CONNECTED VESSELS ALMOST DOUBLED YEAR-ON-YEAR

• NUMBER OF VESSELS IN ORDER BOOK STEADILY INCREASING

Number of connected vessels		+94%

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

Commissioned, Order book cumulative

1. profit-sharingcontract with Brittany
   Ferries results in a reduction of exhaust emissions

• Within six months following the installation of energy management and optimisation technology, the first ferry's fuel consumption was 4% lower, equating to a reduction
  of ~2,600 tons of CO2 emissions
• The initial contract covered three vessels, but Wärtsilä Voyage recently received orders for three more ships

16	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 2020

ENERGY

ENERGY

• Order intake increased by 23% to EUR 319 million (260), still affected by:
• • Postponed decision making
  • Site access constraints
• Net sales increased by 6% to EUR 347 million (328)
• Comparable operating result amounted to EUR 14 million (-8) or 3.9% of net sales (-2.4)
• • Result for comparison period weakened by cost overruns in certain equipment projects

MEUR	Order intake

700

600

500

400

300

200

100

0

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

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	Q3/20
			Services			Equipment			Comparable operating result, %

17	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 2020

ENERGY

ENERGY INSTALLED BASE COVERED BY LONG-TERM SERVICE AGREEMENTS

MW

14,000							30%
12,000
					25%
10,000
					20%
8,000
					15%
6,000
					10%
4,000
					5%
2,000
0							0%
2015	2016	2017	2018	2019	30.9.2020

Optimised maintenance solution enhancing availability and reliability of a 200 MW Cambodian power plant

• Wärtsilä signed a 5-year tailored optimised maintenance agreement with SchneiTec, covering a power plant close to Phnom Penh
• Wärtsilä will supply high quality spare parts to the twelve Wärtsilä 50DF dual-fuel engines, while also providing maintenance planning, remote asset diagnostics, guidance, and troubleshooting services

MW under agreement*		% of Energy installed base

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

18	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 2020

Near-term demand is expected to improve from current levels. However, visibility remains limited, and the prevailing market conditions make the outlook uncertain.

Based on the current order book, net sales for 2020 is expected to decline by appr. 10% (EUR 5,170 million in 2019). Profitability is expected to continue to be burdened by the effects of COVID-19 and, while service demand is anticipated to improve, the seasonal pick-up is unlikely to be as strong as in previous years.

© Wärtsilä

© Wärtsilä

JANUARY-SEPTEMBER ORDER INTAKE BY CUSTOMER SEGMENT

Marine Businesses

Power	Equipment		5%			39%								5%	10%	26%	14%	1%
Marine				(18)			(33)									(4)		(13)	(10)	(23)	(0)
	Services				17%	12%	15%	12%	16%			26%	2%
						(15)	(25)	(14)		(10)	(12)			(22)	(2)
Systems
						(44)	(10)(2)(3)		(0)				(34)	(6)
	Equipment									4%
					24%	5%1% 1%				30%	36%
Marine		Services		2% 7%	4%				32%									13%	39%				2%
				(3) (8)	(4)				(46)									(10)	(30)				(0)
	Equipment
Voyage		1%		29%				7%	5%	17%	21%	20%
			(0)			(43)				(8)		(3)	(12)	(16)	(19)
		Services		3%		25%				8%		3% 6%				55%				0%
				(0)			(52)				(6)			(1)	(5)				(33)				(2)
		Gas carriers		Cruise & ferry		Offshore				Navy		Special vessels		Merchant			Other

Energy

12%	(16)	(18)		Other
	20%
28%	(28)			Industrials
				Independent
				Power
	56%	(27)		Producers
26%		Utilities
(25)

34% (30)

24% (56)

Services Equipment

21	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 2020

ORDERS RECEIVED FOR ENERGY EQUIPMENT GLOBALLY

Utilities

IPP's

(Independent Power Producers)

Industrials

Others

ORDER INTAKE 1-9/2020: 1,142 MW (1,189)

Europe

85 (24)

Americas

728 (325)

Africa and

Middle East

80 (345)

Asia

249 (525)

22	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 2020

NET SALES BY BUSINESS TYPE

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	10-12/2018	7-9/2019	4-6/2020
			Services			Equipment			Service sales, 12m rolling

Third quarter development

		27% (25)
	Marine
47%	Businesses		Spare parts
EUR 605 million
(50)		Field service
(734)
		14% (15)		Service agreements
		7% (6)		Service projects
	5%		Equipment
	(4)

22% (23)

	Energy	4% (8)
	EUR 347 million
53%
(328)
(43)
		18% (21)
	3% (6)

23	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 2020

NET SALES BRIDGE

MEUR

24	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 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%

			431
490	563	581	732
8.5%

2016

2017

2018

2019

30.9.2020

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

25	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 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		30.9.2019	30.9.2020

26	© Wärtsilä	23 October 2020	INTERIM REPORT JANUARY-SEPTEMBER 2020

THANK YOU

Further information:

NATALIA VALTASAARI

Vice President, Investor Relations

Tel: [phone]

E-mail: [e-mail]