Power solutions providers for the marine and energy markets, Wärtsilä, has released a summary of its Interim Financial Report January-June 2014, excerpted as follows:
Highlights of the Review Period January-June 2014
- Order intake decreased 5% to EUR 2,305 million (2,424)
- Net sales increased 5% to EUR 2,144 million (2,034)
Book-to-bill 1.07 (1.19)
- Operating result before non-recurring items EUR 212 million, or 9.9% of net sales (EUR 181 million or 8.9%)
- Earnings per share EUR 0.73 (0.76)
- Cash flow from operating activities EUR 172 million (122)
- Order book at the end of the period decreased 4% to EUR 4,554 million (4,763)
Events After the Reporting Period
- Wärtsilä and China State Shipbuilding Corporation announced the establishment of a joint venture, which will take over Wärtsilä's two-stroke engine business. Going forward, the two-stroke engine business will be reported as discontinued operations.
- Wärtsilä and China State Shipbuilding Corporation announced the establishment of a joint venture for manufacturing medium and large bore medium-speed diesel and dual-fuel engines.
Wärtsilä's Prospects for 2014 Revised Upwards
Wärtsilä estimates its profitability for 2014 (EBIT% before non-recurring items) to be around 11.5%, due to the two-stroke business transaction. Net sales are expected to grow by around 5%.
Previously Wärtsilä expected its net sales to grow by 0-10% and its operational profitability (EBIT% before non-recurring items) to be around 11%.
Björn Rosengren, President & CEO
"The first half of 2014 has developed well. I am pleased to note that the ongoing restructuring measures have already made a positive contribution to our operating result. The savings we have achieved through these measures, together with the improved Ship Power and Services performance, have compensated for the low volumes in the Power Plants business and resulted in profitability increasing to 9.9%.
Contracting in the marine markets was active and Ship Power's second quarter order intake developed favourably, especially in the offshore and gas carrier segments. The challenges in the overall power generation markets, however, continued to affect our Power Plants business. Orders remained fairly low, although improving from the weak levels seen in the first quarter. I am confident that activity will improve in the second half. The Services business had an active quarter in terms of signing long-term service contracts with marine customers. The interest for agreements continues to be strongest in the more specialised vessel segments.
In July, Wärtsilä and China State Shipbuilding Corporation announced the establishment of a joint venture company, which will assume total responsibility for Wärtsilä's two-stroke engine business. Our ownership in the joint venture will be 30%. The responsibility for servicing Wärtsilä's two-stroke engines will remain with our Services business. The partnership will enhance the position of Wärtsilä's two-stroke technology in the marine engine market, and will provide a strong base for future investments in leading two-stroke technology and customer support. The transaction will have a positive impact on our continuing operations and consequently our estimate for 2014 profitability has been increased to around 11.5%. We have also narrowed down our net sales guidance to around 5% growth."
The interim report in full is available at: http://bit.ly/1nRYXix