RESILIENT PROFITABILITY AND STRONG CASH FLOW IN CHALLENGING MARKETS
This release is a summary of Wärtsilä’s financial statements bulletin 2013. The complete report is attached to this release as a pdf-file. It is also available at http://www.wartsilareports.
FOURTH QUARTER HIGHLIGHTS
– Order intake remained stable at EUR 1, 351 million (1, 357)
– Net sales decreased 8% to EUR 1, 411 million (1, 533)
– Book-to-bill 0.96 (0.89)
– Operating result before non-recurring items EUR 201 million, or 14.2% of net sales (EUR 188 million or 12.3%)
– EBITA EUR 208 million, or 14.8% of net sales (EUR 198 million or 12.9%)
– Earnings per share EUR 0.74 (0.62)
– Cash flow from operating activities EUR 317 million (187)
HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-DECEMBER 2013
– Order intake decreased 1% to EUR 4, 872 million (4, 940)
– Net sales decreased 1% to EUR 4, 654 million (4, 725)
– Book-to-bill 1.05 (1.05)
– Order book at the end of the period decreased 1% to EUR 4, 426 million (4, 492)
– Operating result before non-recurring items EUR 520 million, or 11.2% of net sales (EUR 517 million or 10.9%)
– EBITA EUR 552 million, or 11.9% of net sales (EUR 552 million or 11.7%)
– Earnings per share EUR 1.98 (1.72)
– Cash flow from operating activities EUR 578 million (153)
– Dividend proposal 1.05 euro per share
EVENTS AFTER THE REPORTING PERIOD
– A Group-wide efficiency programme was announced on 29 January 2014
BJÖRN ROSENGREN, PRESIDENT AND CEO
“Wärtsilä’s performance in 2013 was impacted by the continued uncertainty in the global economy. Due to unfavorable exchange rates and some delayed deliveries, the net sales development was slightly weaker than expected. However, profitability remained resilient despite the lower level of sales. Supported by a strong fourth quarter and a focus on cost control, our full year operational profitability reached 11.2%. Cash flow from operating activities developed well, increasing to EUR 578 million during the year. There was significant improvement in the marine markets during 2013, and ordering was active in all major vessel segments. In the power plant markets delays in customer decision-making continued. This impacted our Group order intake levels, which decreased by 1% compared to the previous year. The service markets remained stable. Long-term agreements continue to be a strategic focus area for the Services business, and I am pleased that several such contracts were signed during the year.
Our market outlook for 2014 remains cautious, although a slight improvement may be seen in certain areas. Based on our current order book and project pipeline we expect some growth in net sales during 2014 and profitability to remain at a similar level to that of 2013.”
WÄRTSILÄ’S PROSPECTS FOR 2014
Wärtsilä expects its net sales for 2014 to grow by 0-10% and its operational profitability (EBIT% before non-recurring items) to be around 11%.
|Order intake||1 351||1 357||0%||4 872||4 940||-1%|
|Order book at the end of the period||4 426||4 492||-1%|
|Net sales||1 411||1 533||-8%||4 654||4 725||-1%|
|Operating result (EBITA)1||208||198||5%||552||552||0%|
|% of net sales||14.8||12.9||11.9||11.7|
|Operating result (EBIT)2||201||188||7%||520||517||1%|
|% of net sales||14.2||12.3||11.2||10.9|
|Profit before taxes||181||162||507||453|
|Cash flow from operating activities||317||187||578||153|
|Net interest-bearing debt at the end of the period||276||567|
|Gross capital expenditure||134||513|
1 EBITA is shown excluding non-recurring items of EUR 20 million (34) and intangible asset amortisation related to acquisitions of
EUR 32 million (35) during the review period January-December 2013. During the fourth quarter, non-recurring items amounted to
EUR 9 million (17) and intangible asset amortisation related to acquisitions to EUR 8 million (10).
2 EBIT is shown excluding non-recurring items.
3 Figures have been restated due to changes in pension accounting (IAS 19 Employee benefits).
EVENTS AFTER THE REPORTING PERIOD
On 29 January 2014, Wärtsilä announced plans to realign its organisation to secure future profitability and competitiveness. The Group-wide efficiency programme is expected to lead to a reduction of approximately 1, 000 employees globally, of which about 200 are planned to be in Finland. The reductions will impact all businesses and support functions. With these actions Wärtsilä seeks annual savings of EUR 60 million. The effect of these savings is expected to materialise fully by the end of 2014. The non-recurring costs related to the restructuring measures will be EUR 50 million. Of these costs EUR 11 million was recognised in 2013, as certain measures were initiated at the end of the year.
Power generation markets closely follow global macro-economic development. Uncertainty in the macro economy, combined with slow global growth projections, has impacted the power generation markets, leading to two consecutive years of decline. Based on the forecasted GDP growth in 2014, the overall market for liquid and gas fuelled power generation is expected to improve slightly. Ordering activity remains focused on emerging markets, which continue to invest in new power generation capacity. In the OECD countries, there is still pent-up power sector demand, mainly driven by CO2 neutral generation and the ramp down of older, mainly coal-based generation.
The main drivers supporting activity in the shipping and offshore sectors are in place. World seaborne trade and the world economy are showing signs of improvement, which benefits the merchant shipping market. Furthermore, the current oil price level supports activity in the offshore industry, including operations in harsh and deep water areas. The importance of fuel efficiency and the regulatory environment are clearly visible, and the interest in gas as a fuel is increasing. Overall contracting is expected to remain at improved levels, keeping in mind the prevailing overcapacity and the market’s limited capacity to absorb new tonnage. Due to the relatively high level of contracting in the traditional merchant segment during 2013, a small downturn in merchant ordering activity may be seen in 2014.
The overall service market outlook remains stable. An increase in the installed base partly balances the slower service demand for older installations and the continued focus of merchant marine customers on reducing operating expenses. The outlook for services to offshore and gas fuelled vessels remains positive. Demand for services in the power plant segment continues to be good. From a regional perspective, the outlook for the Middle East and Asia is slightly more positive, supported by interest in power plant related services. The outlook is also good in the Americas and Africa.
BOARD OF DIRECTORS’ DIVIDEND PROPOSAL
The Board of Directors proposes that a dividend of 1.05 euro per share be paid for the financial year 2013. The parent company’s distributable funds total 1, 027, 025, 847.20 euro, which includes 174, 475, 007.05 euro in net profit for the year. There are 197, 241, 130 shares with dividend rights. The dividend will be paid to shareholders who are registered in the list of shareholders maintained by Euroclear Finland Ltd on the record date, which is 11 March 2014. The dividend payment date proposed by the Board is 18 March 2014. The Annual Report 2013, including the financial review and the review by the Board of Directors, will be available on the company website www.wartsila.com and at www.wartsilareports.com during week 7.
ANALYST AND PRESS CONFERENCE
An analyst and press conference will be held on Wednesday 29 January 2014, at 10.00 a.m. Finnish time (8.00 a.m. UK time), at the Wärtsilä headquarters in Helsinki, Finland. The combined web- and teleconference will be held in English and can be viewed on the internet at the following address: http://wcc.webeventservices.
To participate in the teleconference please register at the following address; http://emea.directeventreg.
An on-demand version of the webcast will be available on the company website later the same day.
Wärtsilä in brief
Wärtsilä is a global leader in complete lifecycle power solutions for the marine and energy markets. By emphasising technological innovation and total efficiency, Wärtsilä maximizes the environmental and economic performance of the vessels and power plants of its customers. In 2013, Wärtsilä’s net sales totalled EUR 4.7 billion with approximately 18, 700 employees. The company has operations in more than 200 locations in nearly 70 countries around the world. Wärtsilä is listed on the NASDAQ OMX Helsinki, Finland. www.wartsila.com