Wärtsilä - Interim report (Q1 and Q3)

WÄRTSILÄ INTERIM REPORT JANUARY-MARCH 2016

Wärtsilä Corporation INTERIM REPORT 21 April 2016 at 8.30 a.m. local time

WÄRTSILÄ INTERIM REPORT JANUARY-MARCH 2016

STABLE ORDERS AND SALES IN CHALLENGING MARKETS

This release is a summary of Wärtsilä's Interim Report January-March 2016. The
complete report is attached to this release as a pdf-file. It is also available
at http://www.wartsilareports.com/en-US/2016/q1/frontpage/ and on the company
website at www.wartsila.com.

HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-MARCH 2016
- Order intake decreased 1% to EUR 1,271 million (1,285)
- Net sales decreased 2% to EUR 967 million (988)
- Book-to-bill 1.31 (1.30)
- Comparable operating result EUR 84 million, or 8.7% of net sales (EUR 100
million or 10.1%)
- Earnings per share 0.30 euro (0.43)
- Cash flow from operating activities EUR -13 million (37)
- Order book at the end of the period increased 3% to EUR 5,103 million (4,931)

EVENTS AFTER THE REPORTING PERIOD
- Plans to realign the Marine Solutions and Energy Solutions businesses
announced on 21 April 2016

Wärtsilä has revised the terminology used for alternative performance measures
due to new guidelines by the European Securities and Market Authority.
'Operating result before non-recurring items' has been replaced with 'comparable
operating result', and 'operating result before non-recurring items and purchase
price allocation amortisation' has been replaced with 'comparable adjusted
EBITA'. Definitions of these performance measures and of items affecting
comparability can be found in the tables of the interim report on page 22.
Wärtsilä presents alternative performance measures to show the underlying
business performance and to enhance comparability between reporting periods.

WÄRTSILÄ'S PROSPECTS FOR 2016 UNCHANGED
Wärtsilä expects its net sales for 2016 to grow by 0-5% and its profitability
(comparable operating result as a percent of net sales) to be 12.5-13.0%.

JAAKKO ESKOLA, PRESIDENT AND CEO
"In terms of Wärtsilä's operations, 2016 has started in line with our
expectations. We continued to advance steadily in our maintenance markets, as
reflected by an increase of 3% in Services' net sales during the first quarter.
I am satisfied with this development given the strong volumes in the
corresponding period last year. Order intake was on a good level in Marine
Solutions, largely due to healthy demand for electrical & automation systems and
positive activity in the cruise and ferry segment. Ordering activity was solid
also in the Energy Solutions business, but the reduction in power plant
deliveries and price pressure in the power generation markets affected
Wärtsilä's overall financial performance. Group net sales declined slightly to
EUR 967 million in the first quarter and profitability ended up at 8.7%.
Nevertheless, we remain committed to our guidance of modest growth in sales
based upon our broad customer offering, our current order book and the demand
outlook in the Services business. Furthermore, we expect our continuous focus on
cost control and increased efficiency to support an improvement in profitability
this year.

We have seen market conditions weakening in our equipment businesses. Despite
the somewhat improved sentiment in the power generation markets, the competitive
environment remains tough. Furthermore, the combined effect of overcapacity of
merchant ships, and a continued lack of demand in the offshore segment, caused
vessel contracting to decline in the first quarter. We continue to strive for
success despite the prevailing market challenges. Consequently, we have today
announced plans to realign our Marine Solutions and Energy Solutions businesses.
These adjustments, although unfortunate, are necessary for securing our future
competitiveness and performance. In addition, we plan to concentrate more of the
engine related R&D activities to Finland with the aim of reducing development
cycles."

KEY FIGURES
 MEUR                            1-3/2016 1-3/2015 Change                  2015
-------------------------------------------------------------------------------
 Order intake                       1 271    1 285    -1%                 4 932

 Order book at the end of the
 period                             5 103    4 931     3%                 4 882

 Net sales                            967      988    -2%                 5 029

 Operating result                      83      100   -17%                   587

 % of net sales                       8.6     10.1                         11.7

 Comparable operating result(1)        84      100   -16%                   612

 % of net sales                       8.7     10.1                         12.2

 Comparable adjusted EBITA(1)          93      106   -12%                   643

 % of net sales                       9.6     10.7                         12.8

 Profit before taxes                   80       82                          553

 Earnings/share, EUR                 0.30     0.43                         2.25

 Cash flow from operating
 activities                           -13       37                          255

 Net interest-bearing debt at
 the end of the period                639      251                          372

 Gross capital expenditure             11       18                          346

 Gearing                             0.32     0.14                         0.17
-------------------------------------------------------------------------------
 (1)Items affecting comparability in the first quarter of 2016 included costs
 of EUR 1 million related to the ongoing restructuring measures in the Marine
 Solutions business.



MARKET OUTLOOK
The market for liquid and gas fuelled power generation is expected to remain
challenging as economic uncertainty continues. Despite slower economic growth in
the emerging markets, growth in electricity demand and the availability of
international funding for infrastructure projects will continue to support power
plant investments. In the industrialised countries, the low economic growth
continues to limit demand for new power plants, except for in North America
where the market situation is more positive for gas-fired power plants. The
megatrend towards renewables is evident, with investments expected to favour
utility scale solar PV installations. Furthermore, distributed, flexible, gas-
fired power generation continues to gain ground globally. Electricity markets
are being developed to reward the necessary flexibility, thereby enabling new
profitable investments. Wärtsilä's systematic market development work in these
markets will continue to bring forward the benefits of Smart Power Generation.

The outlook for the shipping and shipbuilding markets remains challenging.
Overcapacity continues to limit demand for new vessels in the merchant segment,
while low oil prices are impacting investments in offshore exploration and
development. In the gas carrier markets, the demand for LNG carriers is under
pressure due to supply-demand imbalances and low gas prices. The high number of
scheduled deliveries is also creating pressure for LPG carrier contracting,
despite the strong growth in LPG demand in Asia. Fleet renewal, potential
implementation of new emission regulations, and favourable newbuilding prices
are expected to support contracting for passenger ferries. The outlook for
cruise vessels remains positive due to an anticipated increase in Asian
passenger traffic. The importance of fuel efficiency and environmental
regulations are clearly visible, driving interest in environmental solutions,
gas as a marine fuel, as well as electric/hybrid solutions.

The service market outlook is positive with growth opportunities in selected
regions and segments. An increase in the installed base of medium-speed engines
and propulsion equipment, as well as the shift to gas based technology, offsets
the slower service demand for older installations and the uncertainty regarding
short-term demand development in the merchant marine segment. In the offshore
segment, the growth in the installed base during recent years is expected to
partially compensate for the challenging outlook in certain regions. The service
outlook for gas fuelled vessels remains favourable. Service demand in the power
plant segment continues to be good with an especially positive outlook in the
Middle East and Africa. Customers in both the marine and power plant markets
continue to show healthy interest in long-term service agreements.

EVENTS AFTER THE REPORTING PERIOD
On 21 April 2016, Wärtsilä announced plans to adjust its Marine Solutions and
Energy Solutions businesses to the weakened newbuild market situation and the
tough competitive environment. In addition, Wärtsilä plans to concentrate more
of the engine related R&D activities to Finland with the aim of reducing
development cycles. The realignment will mean the reduction of approximately
550 jobs, of which some 270 will be in Finland. In taking these measures,
Wärtsilä seeks annual savings in the region of EUR 50 million. The effect of the
savings will materialise gradually beginning from the second quarter of 2016,
and will take full effect by the end of 2017. The costs related to the
restructuring measures will be approximately EUR 50 million.

ANALYST AND PRESS CONFERENCE AT 10.00 A.M. LOCAL TIME
An analyst and press conference will be held today, Thursday 21 April 2016, 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 at the following address:
http://wcc.webeventservices.com/r.htm?e=1163080&s=1&k=5FC92DDC5B26941DAC1FC8AD5E
3E0B89. To participate in the teleconference please register at the following
address: http://emea.directeventreg.com/registration/79260235. You will receive
dial-in details by e-mail once you have registered. If problems occur, please
press *0 for operator assistance. Please use *6 to mute your phone during the
teleconference and the same code to unmute.
An on-demand version of the webcast will be available on the company website
later the same day.

For further information, please contact:

Marco Wirén
Executive Vice President & CFO
Tel: +358 10 709 5640
marco.wiren@wartsila.com

Natalia Valtasaari
Director, Investor & Media Relations
Tel: +358 40 187 7809
natalia.valtasaari@wartsila.com

For press information, please contact:

Atte Palomäki
Executive Vice President, Communications & Branding
Tel: +358 10 709 5599
atte.palomaki@wartsila.com

Wärtsilä in brief
Wärtsilä is a global leader in advanced technologies and complete lifecycle
solutions for the marine and energy markets. By emphasising sustainable
innovation and total efficiency, Wärtsilä maximises the environmental and
economic performance of the vessels and power plants of its customers.
In 2015, Wärtsilä's net sales totalled EUR 5 billion with approximately 18,800
employees. The company has operations in over 200 locations in more than 70
countries around the world. Wärtsilä is listed on Nasdaq Helsinki.
www.wartsila.com


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Attachments:

Interim report Q1 2016.pdf