Wärtsilä, Hyundai form Joint Venture

Tuesday, January 23, 2007
Wärtsilä and Hyundai Heavy Industries Co. Ltd (HHI) signed an agreement to set up a 50/50-owned joint venture in Korea to manufacture dual-fuel engines for LNG (Liquefied Natural Gas) carriers.

The total investment in the company will be EUR 58 million, Wärtsilä's share being EUR 29 million. The name of the company will be Wärtsilä Hyundai Engine Company Ltd and the intended location is in South Korea.

The technology shift towards dual-fuel machinery in LNG carriers has significantly increased demand for Wärtsilä's dual-fuel engines. The main market is Korea. Demand in the market is forecast to continue growing in pace with the increasing demand for natural gas. To date Wärtsilä has received orders for 206 Wärtsilä 50DF dual-fuel engines for 52 LNG carriers, most of which will be built in Korea. The global market share of Korea in the LNG shipbuilding market currently exceeds 70%.

"This joint venture will accentuate the strengths of two companies that are already partners; the vast know-how of the world's biggest shipbuilder with the expertise and experience of a global leader in engine design and ship machinery. The joint venture marks a major step in Wärtsilä's strategy to accelerate growth in the continuously expanding Asian market", says Ole Johansson, President and CEO of Wärtsilä when signing the contract today in Korea with Ph.D. Min, Keh-Sik, Vice Chairman and CEO of HHI.

The joint venture will manufacture Wärtsilä 50DF dual-fuel engines for the Korean, Japanese, Chinese and Taiwanese shipbuilding markets. Focusing on assembly and testing of the engines, the joint venture is scheduled to deliver its first engine in the second half of 2008. The total capacity of the factory will be in the magnitude of 100 engines a year. Wärtsilä's sales organization will continue to serve the Japanese, Chinese and Taiwanese markets whereas the Korean market will be served by the joint venture company directly.

The joint venture will utilize the established global service networks of Wärtsilä and HHI to take complete care of customers' ship machinery needs at every stage in about 70 countries.

The Trieste factory in Italy will continue to manufacture Wärtsilä 50DF dual-fuel engines for the marine markets outside East Asia and the growing worldwide power plant market.

Wärtsilä and Hyundai Heavy Industries have a long history of close co-operation. Wärtsilä and HHI have a licence agreement to produce low-speed engines..

The deal is subject to the approvals of the relevant regulatory authorities.

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