In the marine markets, contracting activity fell to an exceptionally low level, Jaakko Eskola, President & CEO, Wärtsilä said in the annual report 2016.
The majority of the volume decline was seen in the shipping industry, where overcapacity and low earnings remain the key challenges. Low oil prices
and reduced capital expenditures from oil companies continued to limit demand also in the offshore industry.
For some years already, Wärtsilä has focused on developing an extensive offering and a wide market exposure. This positioning served us well in 2016, enabling us to capture opportunities in niche markets, such as cruise and ferry, where the demand for new vessels was unaffected by the general market weakness.
Nevertheless, a certain pressure on order intake was unavoidable, and this meant that we had to react to the early signs of weakening markets by announcing in April additional efficiency improvement measures. Such measures, while unfortunate, are necessary for safeguarding our competitive position. "Going forward, we will continue to pursue more cost-efficient and flexible ways of operating," he said.
Marine environmental regulations took a step forward in 2016, with ratification of the ballast water convention in September. This was soon followed by the decision to implement the global sulphur cap in 2020, reducing the sulphur content of marine fuel to 0.5%.
The investments we have made in developing our environmental portfolio will help us to support our customers as they evaluate means of complying with the upcoming regulations.
"2016 was a satisfactory year, considering the continued challenges in our end markets. Thanks to a good fourth quarter highlighted by successful delivery execution, growth in Services’ revenues, and an improved project mix, we were able to meet our revised net sales and profitability targets for the year," Jaakko said.
"Looking into 2017, we expect our business environment to remain largely unchanged. We continue to be well positioned to benefit from the trends of increasing demand for efficiency and changing energy needs
. This, together with our efforts to optimise internal operations as described above, will support us in reaching our long-term target for profitable growth," he added.