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    WRT1V   FI0009003727

WÄRTSILÄ OYJ

(WRT1V)
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Wärtsilä Oyj : Result presentation Q3 2020

10/23/2020 | 08:20am EDT

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: +358 (0) 10 709 5637

E-mail: natalia.valtasaari@wartsila.com

Disclaimer

Wärtsilä Oyj published this content on 23 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 October 2020 12:19:08 UTC


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Financials
Sales 2021 4 506 M 5 406 M 5 406 M
Net income 2021 215 M 258 M 258 M
Net Debt 2021 334 M 401 M 401 M
P/E ratio 2021 34,1x
Yield 2021 2,10%
Capitalization 7 411 M 8 980 M 8 890 M
EV / Sales 2021 1,72x
EV / Sales 2022 1,58x
Nbr of Employees 17 742
Free-Float 76,4%
Chart WÄRTSILÄ OYJ
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Technical analysis trends WÄRTSILÄ OYJ
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
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Mean consensus HOLD
Number of Analysts 17
Average target price 10,41 €
Last Close Price 12,56 €
Spread / Highest target 19,4%
Spread / Average Target -17,1%
Spread / Lowest Target -57,0%
EPS Revisions
Managers and Directors
NameTitle
Håkan Agnevall President & Chief Executive Officer
Arjen Berends Chief Financial Officer & Executive VP
Thomas Johnstone Chairman
Sari Kolu Compliance Director
Outi Maarit Aarni-Sirviö Independent Director
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