2008-04-25 07:30:00 CEST
2008-04-25 07:33:15 CEST
REGULATED INFORMATION
Wärtsilä - Quarterly report
INTERIM REPORT JANUARY - MARCH 2008
Wärtsilä Corporation QUARTERLY REPORT 25 April 2008 at 8.30 local
time
STRONG DEMAND CONTINUED - PROFITABILITY DEVELOPING ACCORDING TO PLAN
FIRST-QUARTER HIGHLIGHTS
- Market activity continued high in both Ship Power and Power Plants
- Good growth continues, order intake grew 67% to EUR 1,936 million
(1,157)
- Net sales grew 12% to EUR 850 million (761)
- Operating income (EBIT) grew 28% to EUR 81 million, or 9.6% of net
sales (EUR 63 million and 8.3%)
- Strong cash flow from operating activities EUR 75 million (79)
- Earnings per share amounted to 0.49 (0.44)
OLE JOHANSSON, PRESIDENT AND CEO:"Demand continued strong in all businesses and new orders grew by
67%. Our order book reached a new milestone, exceeding EUR 7,000
million. Net sales grew by 12% and our profitability, in terms of
EBIT margin, was 9.6% and in line with our expectations. We expect
ordering activity to continue to be solid during the next quarter in
all our businesses. In Ship Power, some slower growth will be seen
during the third quarter. However, we expect activity in the Power
Plant market to continue to be very strong with no signs of a
slowdown. Our balanced business mix and global reach offset the
current market turbulence, and our environmentally compatible
portfolio gives us a competitive edge for the future. Based on the
strong order book and capacity investments, we will continue our
positive development and 2008 will be a year of strong growth and
further improved profitability".
WÄRTSILÄ'S PROSPECTS FOR 2008 REITERATED
Based on the strong order book, Wärtsilä's net sales are expected to
grow by about 25% in 2008. Wärtsilä's profitability varies
considerably from one quarter to another. The full-year operating
margin will exceed 11%.
ANALYST AND PRESS CONFERENCE
An analyst and press conference will be held on Friday 25 April 2008
starting at 10.45 a.m. Finnish time (8.45 a.m. UK time) at the
Wärtsilä headquarters in Helsinki, Finland. The conference will be
webcasted and can be viewed at the following address:
http://194.100.179.139:80/wip//directlink.do?newbrowser=1&pid=2211826.
An on-demand version of the webcast will be available on the company
website later the same day.
Note that the international teleconference will be held separately
the same day at 14.00 hrs Finnish time (12 p.m. UK time). To listen
to the teleconference, please call:
+44 (0)20 7162 0025 if you are calling from the UK and
+1 334 323 6201 if you are calling from the US
and enter the PIN-code 793206. If you want to ask questions during
the teleconference, press the number 1 on your phone to register for
a question and the hash or pound key to withdraw a question. The
event title for the call is: Wärtsilä Result Q1 2008, please be ready
to state your details and the name of the conference to the operator.
Wärtsilä Corporation
Raimo
Lind
Atte Palomäki
Executive Vice
President Group Vice
president, Communications
Wärtsilä in brief
Wärtsilä enhances the business of its customers by providing them
with complete lifecycle power solutions. When creating better and
environmentally compatible technologies, Wärtsilä focuses on the
marine and energy markets with products and solutions as well as
services. Through innovative products and services, Wärtsilä sets out
to be the most valued business partner of all its customers. This is
achieved by the dedication of 17,000 professionals manning 160
Wärtsilä locations in close to 70 countries around the world.
INTERIM REPORT JANUARY-MARCH 2008
The figures in this interim report are unaudited.
REVIEW PERIOD JANUARY - MARCH 2008 IN BRIEF
MEUR 1-3/2008 1-3/2007 Change 2007
Order intake 1 936 1 157 67% 5 633
Order book 31 March 7 219 4 860 49% 6 308
Net sales 850 761 12% 3 763
Operating result 81 63 28% 379
% of net sales 9.6% 8.3% 10.1%
Profit before taxes 74 60 372
Earnings/share, EUR 0.49 0.44 2.74
Cash flow from
operating activities 75 79 431
Interest-bearing net debt
at the end of the period -79 179 -27
Gross capital expenditure 38 42 231
MARKET DEVELOPMENT
SHIP POWER
In terms of new vessel orders, the start of 2008 has been clearly
below the exceptionally high ordering of recent years. Monthly orders
began to decline already at the end of last year, and ordering
activity during the first three months, relating to the number of
vessels, was at the same level as in 2003. This indicates a drop of
as much as 50% from the very high activity in 2007. The decline was
most visible in various merchant segment vessels. New orders for bulk
carriers remained good, but volumes have normalized from their peak
levels. In the offshore segment, the trend from smaller vessels to
bigger and more complex tonnage continued. Despite the recent dip,
freight rates are still at a high level, and new build prices have
not come down, which indicates that ship yards still believe in
continuing demand. To summarize the situation, there still seems to
be overall market demand, but various uncertainty factors have
postponed decision-making.
Korea has clearly regained the leading position in new vessel
ordering with 41% of the market, in terms of number of new vessels
ordered in the first quarter. China is a clear number two with 33%
but has suffered somewhat from the current uncertain market
conditions. During the review period, Europe received 11%, Japan 5%,
and other countries 10% of new orders.
Ship Power market shares
Wärtsilä's market share for medium speed main engines continued a
slight downward trend to 36% (38 at the end of the previous quarter).
This is explained by Wärtsilä's capacity constraints and the deferred
ordering of LNG vessels. Wärtsilä's market share for low speed
engines declined to 13% (16). In low speed engines, Wärtsilä's demand
has shifted from bigger engines to medium size bore, implying less
power and a smaller share of the total market. The market share for
auxiliary engines remained almost unchanged at 6% (5).
POWER PLANTS
Markets continued to be globally active during the review period. The
main growth drivers in the power plant market remain world economic
growth, as well as the need to increase efficiency and versatility in
power generation due to high fuel prices. Other drivers for the power
plant market demand are environmental concerns and fuel availability
issues. The market situation remained good and demand in the Power
plant market remained high in all segments relevant to Wärtsilä -
flexible baseload production, industrial self generation, grid
stability and peaking, as well as power solutions for the oil and gas
industry.
Power Plants market shares
According to the statistics compiled by Diesel and Gas Turbine
magazine the total global market for oil and gas power plants in
Wärtsilä's power range was 14,060 MW (14,750) between June 2006 and
May 2007. Wärtsilä's market share of heavy fuel oil plants was 38%
(34). In the market for light fuel oil, Wärtsilä's market share
increased slightly to 24% (23), mainly as a result of high demand for
Wärtsilä's power plants fuelled by liquid bio-fuels. The market for
gas power plants, including both reciprocating engines and gas
turbines, was roughly 10,900 MW (10,400), Wärtsilä's share in this
segment was 12% (8).
ORDER INTAKE AND ORDER BOOK
The order intake for the review period totalled EUR 1,936 million
(1,157), representing growth of 67%. Wärtsilä Ship Power continued to
enjoy extremely lively ordering and its order intake for the review
period totalled EUR 758 million (521), a growth of 45%. Merchant
vessel orders were clearly dominant with 52% of total Ship Power
orders. Most of the orders were for bulk carriers, and it seems that
marine equipment orders are still profiting from the bulk carrier
boom of last year. The remaining orders within the Merchant vessel
segment, were distributed quite equally between tankers, RoRo vessels
and cargo vessels, while containerships had a somewhat smaller share.
The Offshore segment accounted for 21% of Wärtsilä Ship Power's new
orders during the review period. The orders were still highly supply
and support vessel driven, but orders were also received for offshore
drilling appliances. The Cruise & ferry and special vessel segments
each had 13% share of the orders, the rest being for Naval vessels.
Order intake for the Power Plants business was very strong during the
first quarter, and 168% higher than during the corresponding period
last year, totalling EUR 566 million (211). The largest oil-fired
power plant orders were received from Brazil, Indonesia and Greece.
The two Brazilian projects, disclosed in March, are the first power
plants to materialize from the A-3 energy auction conducted in Brazil
in 2007. Wärtsilä sees further potential in the Brazilian market. The
largest gas power plants orders were received from the USA and
Algeria. The power plant order from South Texas Electric Cooperative
marks an entry into the Texas utility market and further improves
Wärtsilä's foothold in the US grid stability market.
The Services business received several substantial project orders
during the review period. These include a contract from Norwegian
ferry operator New Kystlink AS for an overhaul project of the "Pride
of Telemark" ferry, a major retrofit order from Laurin Maritime for
Wärtsilä Senitec oily water separators, and the gas conversion and
relocation of the EGESUR power plant in Peru. These orders confirm
the success of Wärtsilä's Services business and the suitability of
its offering to the needs of the market.
At the end of the review period the Ship Power order book stood at
EUR 4,810 million (3,285), a growth of 46%. The Power Plants order
book stood at EUR 1,822 million (1,140), which is 60% higher than the
corresponding period in 2007. In 2004, Wärtsilä received two orders
for power plant deliveries to Iraq. The first power plant of the
Iraqi order has almost been completed, and all corresponding payments
have been received. The second order has been excluded from the order
book during the review period due to the uncertainty of delivery. At
the end of the review period Wärtsilä's total order book stood at EUR
7,219 million (4,860), a growth of 49%.
Order intake by business
MEUR 1-3/2008 1-3/2007 Change 2007
Ship Power 758 521 45% 2 600
Services 611 423 44% 1 607
Power Plants 566 211 168% 1 421
Order intake, total 1 936 1 157 67% 5 633
Order intake Power Plants
MW 1-3/2008 1-3/2007 Change 2007
Oil 442 130 239% 1 358
Gas 543 122 344% 1 005
Renewable fuels 37 204 -82% 483
Order book by business
MEUR 31 Mar. 2008 31 Mar. 2007 Change 2007
Ship Power 4 810 3 285 46% 4 292
Services 588 433 36% 405
Power Plants 1 822 1 140 60% 1 608
Order book, total 7 219 4 860 49% 6 308
NET SALES
Wärtsilä's net sales for January-March 2008 totalled EUR 850 million
(761), a growth of 12%. Ship Power net sales fell by 5% due to the
timing of deliveries and totalled EUR 244 million (256). Net Sales
for Power Plants developed favourably during the review period and
totalled EUR 175 million (150), a growth of 17% compared to the
corresponding period last year. Net sales from the Services business
increased to EUR 428 million (352), a growth of 22%. Organic growth
represented 20% of Services' net sales growth. Ship Power net sales
accounted for 29%, Services net sales for 50%, and Power Plants for
21% of total net sales.
Net sales by business
MEUR 1-3/2008 1-3/2007 Change 2007
Ship Power 244 256 -5% 1 320
Services 428 352 22% 1 550
Power Plants 175 150 17% 882
Net sales, total 850 761 12% 3 763
FINANCIAL RESULTS
The operating result rose to EUR 81 million (63) for January-March
2008, which is 9.6% of net sales (8.3).
Financial items amounted to EUR -7 million (-4). Net interest
totalled EUR 0 million (-2). Profit before taxes amounted to EUR 74
million (60). Taxes in the reporting period amounted to EUR -25
million (-17).
Earnings per share were EUR 0.49 (0.44).
BALANCE SHEET, FINANCING AND CASH FLOW
Cash flow from operating activities for January-March 2008 was strong
and totalled EUR 75 million (79). Advance payments at the end of the
period totalled EUR 1,083 million (698). Liquid reserves at the end
of the period amounted to EUR 432 million (148). Net interest-bearing
loan capital totalled EUR -79 million (179). The solvency ratio was
32.0% (42.4) and gearing was -0.07 (0.19). Dividends based on the
decision taken by the AGM 2008, paid on 2 April 2008, affect the
solvency ratio.
HOLDINGS
Wärtsilä owns 7,270,350 B shares in Assa Abloy, or 2.0% of the total.
This holding has been booked in the balance sheet at its market value
at the end of the reporting period, EUR 83 million.
CAPITAL EXPENDITURE
Gross capital expenditure in the review period totalled EUR 38
million (42), which comprised EUR 5 million (12) in acquisitions and
investments in securities and EUR 33 million (30) in production and
information technology investments. Depreciation amounted to EUR 21
million (18).
Due to strong volume growth, the total capital expenditure for 2008
is expected to be approx. EUR 200 million.
STRATEGIC ACQUISITIONS, JOINT-VENTURES AND EXPANSION OF NETWORK
In March Wärtsilä acquired the Norwegian company Maritime Service AS,
which specializes in ship service, mechanical and reconditioning
services. Maritime Service has its operations in Ålesund, on the west
coast of Norway. The annual net sales of Maritime Service were 26
million NOK (EUR 3.2 million) in 2007.
During the review period Wärtsilä Services continued the expansion of
its network by opening offices and workshops in Namibia, Chile and
Brazil.
OTHER STRATEGIC ISSUES
The importance of Asia as a shipbuilding hub has notably increased
during recent years. In order to be closer to the fastest growing
shipbuilding markets, the senior management of Wärtsilä Ship Power
will relocate to Shanghai, China during 2008.
MANUFACTURING
During the review period, new investments to increase the capacity of
the Automation business in Norway and the Propulsion business in
Spain were initiated. This capacity will become available in 2009.
All other ongoing investment programs to increase capacity, including
joint ventures, are proceeding according to plan. Continuous progress
has been made in enlarging the supplier base in emerging markets.
In March, Wärtsilä and Jiangsu Rongsheng Heavy Industries Group Co
Ltd (RSHI) signed a licence agreement for the manufacture and sale of
Wärtsilä low speed marine diesel engines by RSHI in China.
Another license agreement was signed in April between Wärtsilä and
Zhenjiang CME Co Ltd (CME) for the manufacture and sale of Wärtsilä
RT-flex low speed marine diesel engines by CME in China.
RESEARCH & DEVELOPMENT
During the review period several R&D accomplishments were achieved.
The 20kW solid oxide fuel power plant prototype that was started in
Wärtsilä's Fuel Cell test centre in October, passed the 1,000 hours
milestone.
The first RTA 82 engine was successfully started and passed the
factory acceptance test witnessed by the customer and classification
society. The engine is an addition to Wärtsilä's low speed engine
portfolio and has been developed in collaboration with Hyundai Heavy
Industry.
PERSONNEL
Wärtsilä had 16,979 (14,754) employees at the end of March. The
largest personnel increases took place in the Services business where
the personnel increase was 15% compared to the corresponding period
2007. 10,095 (8,746) people were employed by the Services business.
During the review period Wärtsilä launched a Top Graduates
professional programme for R&D. During the programme, attendees will
drive R&D projects throughout Wärtsilä's international organization.
A similar program for finance graduates has been in action since
March 2007.
CHANGES IN MANAGEMENT
Atte Palomäki (42) M.Sc. (pol.) started as Group Vice President,
Corporate Communications and member of the Wärtsilä Board of
Management on 1 of March 2008.
SHARES AND SHAREHOLDERS
In March Wärtsilä's A and B-series shares were combined. After the
combination all shares carry one vote and equal rights. The
combination of the share series involved a free share issue directed
to the holders of Series A-shares so that holders of Series A-shares
received one share free of charge for each nine Series A-shares. In
the directed share issue 2,619,954 shares were given. Trading with
the new and combined shares started on 27 of March.
SHARES ON HELSINKI EXCHANGES
26 March 2008 Number of Number of
shares votes
A-share (WRTAV) 23 579 587 235 795 870
B-share (WRTBV) 72 389 974 72 389 974
31 March 2008 Number of Number of Number of shares
traded
shares votes 1-3/2008
WRT1V 98 589 515 98 589 515 47 876 412
1 Jan. -26 March 2008 High Low Average 1) Close
A-shares 53.00 33.05 46.51 42.79
1 Jan. -31 March 2008 High Low Average 1) Close
52.40 35.02 43.71 42.75
1) Trade-weighted average price.
31 Mar. 31 Mar. 2007
2008
Market capitalization, EUR 4 215 4 417
million
Foreign shareholders 49.6% 30.5%
CHANGES IN OWNERSHIP
In relation to the combination of the share series and the directed
free share issue, Wärtsilä was informed of the following changes in
ownership:
The Fiskars Group's share of Wärtsilä Corporation's votes decreased
to less than 1/5 (20%). Following the transaction Fiskars Corporation
holds 901,857 or 0.9% of Wärtsilä's share capital and votes, and the
Fiskars wholly owned subsidiary Avlis AB's holds 15,944,444 or 16.2%
of Wärtsilä's share capital and total votes. In total, Fiskars Group
holds 16,846,301 or 17.1% of Wärtsilä Corporation's share capital and
votes.
Varma Mutual Pension Insurance's share of Wärtsilä Corporation's
shares increased to more than 1/20 (5%) and the share of the votes
decreased to less than 1/10 (10%). Following the transaction Varma
holds 5,130,087 or 5.2% of Wärtsilä's share capital and total votes.
Svenska Litteratursällskapet i Finland r.f's share of Wärtsilä
Corporation's votes decreased to less than 1/20 (5%). Following the
transaction Svenska Litteratursällskapet holds 1,735,506 or 1.76% of
Wärtsilä's share capital and total votes.
The above-mentioned changes came into effect when the combined and
new shares were registered in the trade register on 26 March 2008.
OPTION SCHEMES
During the review period Wärtsilä had one option scheme. This 2002
option scheme ended on 31 March 2008 and all option rights were
exercised.
DECISIONS TAKEN BY THE ANNUAL GENERAL MEETING
Wärtsilä's Annual General Meeting on 19 March approved the financial
statements and discharged the company's President & CEO and the
members of the Board of Directors from liability for the financial
year 2007. The Meeting approved the Board of Directors' proposal to
pay a dividend of EUR 2.25 per share and an extra dividend of EUR
2.00 per share for a total dividend of EUR 4.25 per share.
The Annual General Meeting decided that the Board of Directors shall
have six members. The following were elected to the Board: Ms Maarit
Aarni-Sirviö, Mr Kaj-Gustaf Bergh, Mr Kari Kauniskangas, Mr Antti
Lagerroos, Mr Bertel Langenskiöld and Mr Matti Vuoria.
The firm of authorized public accountants KPMG Oy Ab were appointed
as the company's auditors.
The Annual General Meeting approved the proposal of the Board of
Directors to amend the Articles of Association.
The Annual General Meeting approved the proposal of the Board of
Directors to direct a free share issue to holders of A shares and to
combine the Series A and Series B shares and the changes to the
Articles of Association.
ORGANIZATION OF THE BOARD OF DIRECTORS
The Board of Directors of Wärtsilä Corporation elected Antti
Lagerroos as its chairman and Matti Vuoria as the deputy chairman.
The Board decided to establish an Audit Committee, a Nomination
Committee and a Compensation Committee. The Board appointed from
among its members the following members to the Committees:
Audit Committee:
Antti Lagerroos, chairman
Maarit Aarni-Sirviö
Matti Vuoria
Nomination Committee:
Antti Lagerroos, chairman
Matti Vuoria
Kaj-Gustaf Bergh
Compensation Committee:
Antti Lagerroos, chairman
Matti Vuoria
Bertel Langenskiöld
RISKS AND BUSINESS UNCERTAINTIES
No major changes in the risks and business uncertainties occurred
during the review period. The biggest risks remain related to
sub-suppliers capacity constraints. Sub-suppliers are running at
capacity and global demand in key components such as castings,
forgings and thruster gear-wheels exceeds supply. Wärtsilä's measures
to secure availability of key components continue in close
collaboration with the supply chain. The uncertainty within the
financial markets, as well as the US housing market, has so far not
had any impact on Wärtsilä.
MARKET OUTLOOK
Record long order books and high ship prices, in combination with
fluctuating charter rates and uncertainties in the financial markets,
impacted the shipping and ship building industry and led to a
decrease in new vessel orders. This has been long anticipated and
could, in fact, be seen as healthy for the industry because it has
reduced market speculation. At this stage it is too early to predict
what direction the market will take following these developments.
Wärtsilä Ship Power's ordering activity has continued at the same
high level as at the end of last year. Even though key components,
such as main engines and propulsion equipment, remain critical
factors for the entire vessel supply, there is a time lag between
vessel ordering and component ordering. For this reason Wärtsilä
foresees an active Ship Power market for at least the second quarter
of 2008. During the third quarter, it is expected that a slowdown
will be seen within the merchant segment ordering as a consequence of
a reduction in vessel orders.
In the Power Plant market the situation remains good. The main
drivers for continued growth, such as economic growth and the need to
increase efficiency and versatility in power generation, remain.
Other drivers for the power plant market demand are environmental
concerns and fuel availability issues. Flexible baseload, as well as
industrial self-generation applications, are forecasted to remain
active market segments throughout the Middle East, Africa and the
Americas. Continued growth potential is seen in the grid stability
services market in North America as well as in other developed
countries. Wärtsilä's power plant solutions are ideally suited for
today's markets, which require high efficiency and operational
flexibility plus environmental sustainability. For Wärtsilä Power
Plants, continued high ordering activity is expected in all segments
for at least the next two quarters.
Activity in the Services business will continue strong and it will
continue to constitute a considerable share of Wärtsilä's net sales.
The long order book and flexible manufacturing model, in combination
with the solid growth in Services, gives Wärtsilä ample time to react
to potential fluctuations in the market.
WÄRTSILÄ'S PROSPECTS FOR 2008 REITERATED
Based on the strong order book, Wärtsilä's net sales are expected to
grow by about 25% in 2008. Wärtsilä's profitability varies
considerably from one quarter to another. The full-year operating
margin will exceed 11%.
WÄRTSILÄ INTERIM REPORT JANUARY - MARCH 2008
This interim financial report is prepared in accordance with IAS 34
(Interim Financial Reporting) using the same accounting policies and
methods of computation as in the annual financial statements for
2007. All figures in the accounts have been rounded and consequently
the sum of individual figures can deviate from the presented sum
figure.
Use of estimates
The preparation of the financial statements in accordance with IFRS
requires management to make estimates and assumptions that affect the
valuation of the reported assets and liabilities and other
information, such as contingent liabilities and the recognition of
income and expenses in the income statement. Although the estimates
are based on the management's best knowledge of current
events and actions, actual results may differ from the estimates.
Amended and new International Financial Reporting Standards (IFRS) as
of 1 January 2008:
- IFRIC 11 IFRS 2 - Group Treasury Share Transaction
- IFRIC 12 Service Concession Agreements
- IFRIC 13 Customer Loyalty Programmes
- IFRIC 14 IAS 19 - The Limit on Defined Benefit Asset,
Minimum Funding Requirements and their Interaction
The adoption of the new and revised standards and interpretations
does not have any material effect on the interim financial report.
This interim report is unaudited.
CONDENSED INCOME STATEMENT
MEUR 1-3/2008 1-3/2007 2007
Net sales 850 761 3 763
Other income 5 4 21
Expenses -754 -683 -3 328
Depreciation and impairment -21 -18 -78
Operating result 81 63 379
Financial income and expenses -7 -4 -8
Share of profit of associates 1
Profit before taxes 74 60 372
Income taxes -25 -17 -106
Profit for the financial period 49 42 265
Attributable to:
Equity holders of the parent
company 47 42 262
Minority interest 2 3
Total 49 42 265
Earnings per share attributable to equity holders of the
parent company:
Earnings per share, EUR 0.49 0.44 2.74
Diluted earnings per share, EUR 0.49 0.44 2.73
CONDENSED BALANCE SHEET
MEUR 31 Dec.
31 Mar. 2008 31 Mar. 2007 2007
Non-current assets
Intangible assets 641 605 646
Property, plant and equipment 385 315 377
Equity in associates 15 11 16
Investments available for sale 138 192 155
Deferred tax receivables 68 82 70
Other receivables 18 43 19
1 266 1 248 1 283
Current assets
Equity in associates 1 6 1
Inventories 1 311 960 1 081
Other receivables 1 117 962 1 088
Cash and cash equivalents 432 148 296
2 861 2 076 2 466
Assets 4 127 3 324 3 749
Shareholders' equity
Share capital 336 335 336
Other shareholders' equity 628 768 979
Total equity attributable to equity
holders of the parent 964 1 103 1 315
Minority interest 11 11 10
Total shareholders' equity 975 1 115 1 325
Non-current liabilities
Interest-bearing debt 241 257 245
Deferred tax liabilities 80 77 81
Other liabilities* 559 437 466
881 771 792
Current liabilities
Interest-bearing debt 123 107 38
Other liabilities 2 148 1 332 1 594
2 271 1 439 1 632
Total liabilities 3 152 2 210 2 424
Shareholders' equity and
liabilities 4 127 3 324 3 749
*In Q1/2007, the total amount of Advances received was presented in
Current liabilities.
CONDENSED CASH FLOW STATEMENT
MEUR 1-3/2008 1-3/2007 2007
Cash flow from operating
activities:
Profit before taxes 74 60 372
Depreciation and impairment 21 18 78
Financial income and expenses 7 4 8
Selling profit and loss of fixed
assets and other adjustments -4 -1 -7
Share of profit of associates -1
Changes in working capital 5 28 135
Cash flow from operating activities
before financial items and taxes 103 108 585
Net financial items and income
taxes -27 -29 -154
Cash flow from operating activities 75 79 431
Cash flow from investing
activities:
Investments in shares and
acquisitions -5 -12 -65
Net investments in tangible and
intangible assets -31 -27 -166
Proceeds from sale of shares 7
Cash flow from other investing
activities 1 9
Cash flow from investing activities -35 -38 -214
Cash flow from financing
activities:
Issuance of share capital 3 4
New long-term loans 58 65
Amortization and other changes in
long-term loans -9 -16 -33
Changes in short term loans and
other financing activities 108 50 36
Dividends paid -167 -168
Cash flow from financing activities 100 -72 -95
Change in liquid funds, increase
(+) / decrease (-) 140 -31 122
Cash and cash equivalents at
beginning of period 296 179 179
Fair value adjustments, investments 1
Exchange rate changes -4 -1 -6
Cash and cash equivalents at end of
period 432 148 296
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
MEUR Total equity attributable to equity holders Minority Total
of the parent
interest equity
Fair
Share value
Share issue Translation and Retained
other
capital premium differences reserves earnings
Shareholders'
equity on 31
December 2007 336 61 3 127 788 10 1 325
Translation
differences -4 -1 -5
Available-for-sale
investments
gain / loss
from fair
valuation,
net of taxes -14 -14
Cash flow hedges
after taxes 27 27
Net income
recognized
directly in equity -4 14 -1 9
Profit for the
financial period 47 2 49
Total recognized
income an expense
for the period -4 14 47 1 58
Dividends -408 -408
Shareholders'
equity on 31 March
2008 336 61 -1 141 427 11 975
Shareholders'
equity on 31
December 2006 334 58 3 128 693 13 1 230
Other changes -2 -2
Available-for-sale
investments
gain/loss from
fair valuation,
net of taxes 7 7
Cash flow hedges
after taxes 1 1
Net income
recognized
directly in equity 8 -2 7
Profit for the
financial period 42 42
Total recognized income and
expense for the period 8 42 -2 49
Options exercised 1 3 3
Dividends paid -167 -167
Shareholders'
equity on 31 March
2007 335 61 3 136 568 11 1 115
Geographical segments Europe Asia Americas Other Group
MEUR
Net sales 1-3/2008 318 301 159 71 850
Net sales 1-3/2007 330 257 98 75 761
INTANGIBLE ASSETS AND PROPERTY, PLANT &
EQUIPMENT
MEUR 1-3/2008 1-3/2007 2007
Intangible assets
Book value at 1 January 646 602 602
Changes in exchange rates -6 -2 -6
Acquisitions 2 3 47
Additions 7 6 33
Depreciation and impairment -8 -7 -30
Disposals and intra-balance
sheet transfer 2
Book value at end of period 641 605 646
Property, plant and equipment
Book value at 1 January 377 315 315
Changes in exchange rates -1 3
Acquisitions 2 1
Additions 26 24 133
Companies sold -10 -17
Depreciation and impairment -13 -10 -48
Disposals and intra-balance
sheet transfer -6 -4 -9
Book value at end of period 385 315 377
GROSS CAPITAL EXPENDITURE
MEUR 1-3/2008 1-3/2007 2007
Investments in securities and
acquisitions 5 12 65
Intangible assets and property,
plant & equipment 33 30 166
Group 38 42 231
During the review period investment in the enlargement of propulsion
equipment manufacturing in the Netherlands and China amounted to EUR
2 million, and Wärtsilä had commitments related to the enlargements
amounting to EUR 8 million at the end of the review period. In
addition, Wärtsilä's part of the investments related to the
investment programme in the Korean joint venture Wärtsilä Hyundai
Engine Company Ltd. amounted to EUR 5 million and the part of the
commitments related to the investment programme were EUR 7 million at
the end of the review period.
IMPACT OF ACQUISITIONS ON THE CONSOLIDATED BALANCE SHEET
During the period Wärtsilä has acquired a Norwegian company Maritime
Service AS, specializing in ship service, mechanical and
reconditioning services.
MEUR 1-3/2008
Acquisition costs 3
Acquired assets to fair value 1
Goodwill 2
Specification of acquired assets:
Intangible assets 1
Property, plant and equipment 2
Cash and cash equivalents 1
Liabilities -2
Total 1
INTEREST-BEARING LOAN CAPITAL
31 Dec.
MEUR 31 Mar. 2008 31 Mar. 2007 2007
Long-term liabilities 241 257 245
Current liabilities 123 107 38
Loan receivables -12 -37 -14
Cash and bank balances -432 -148 -296
Net -79 179 -27
FINANCIAL RATIOS 1-3/2008 1-3/2007 2007
Earnings per share, EUR 0.49 0.44 2.74
Diluted earnings per share, EUR 0.49 0.44 2.73
Equity per share, EUR 9.78 11.53 13.70
Solvency ratio, % 32.0 42.4 45.9
Gearing -0.07 0.19 -0.01
PERSONNEL
1-3/2008 1-3/2007 2007
On average 16 813 14 583 15 337
At end of period 16 979 14 754 16 336
CONTINGENT LIABILITIES
31 Dec.
MEUR 31 Mar. 2008 31 Mar. 2007 2007
Mortgages 13 15 13
Chattel mortgages 8 21 8
Total 21 37 22
Guarantees and contingent
liabilities
on behalf of Group companies 441 359 479
Nominal amount of rents
according to leasing contracts 71 42 69
Total 512 401 548
NOMINAL VALUES OF DERIVATIVE INSTRUMENTS
MEUR Total amount of which closed
Interest rate swaps 140
Foreign exchange forward
contracts 1 456 278
Currency options, purchased 151 20
Currency options, written 20 20
CONDENSED INCOME STATEMENT,
QUARTERLY
MEUR 1-3/2008 10-12/2007 7-9/2007 4-6/2007 1-3/2007
Net sales 850 1 272 933 797 761
Other income 5 10 3 4 4
Expenses -754 -1 114 -821 -710 -683
Depreciation and -21 -22 -19 -18 -18
impairment
Operating result 81 146 96 73 63
Financial income and -7 -1 -2 -1 -4
expenses
Share of profit of 1
associates
Profit before taxes 74 145 95 72 60
Income taxes -25 -43 -26 -20 -17
Profit for the 49 103 68 52 42
financial period
Attributable to:
Equity holders of 47 101 68 52 42
the parent company
Minority interest 2 2 1 1
Total 49 103 68 52 42
Earnings per share attributable to equity
holders of the parent company:
Earnings per share, 0.49 1.05 0.71 0.54 0.44
EUR
Diluted earnings per 0.49 1.05 0.70 0.54 0.44
share, EUR
CALCULATION OF FINANCIAL RATIOS
Earnings per share (EPS)
Profit before taxes - income taxes - minority interests
Adjusted number of shares over the financial year
Equity per share
Shareholders' equity
Adjusted number of shares at the end of the period
Solvency ratio
Shareholders' equity + minority interests x 100
Balance sheet total - advances received
Gearing
Interest-bearing liabilities - cash and bank balances
Shareholders' equity + minority interests
24 April 2008
Wärtsilä Corporation
Board of Directors
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