2012-01-27 07:30:00 CET
2012-01-27 07:31:17 CET
REGULATED INFORMATION
Wärtsilä - Financial Statement Release
WÄRTSILÄ'S FINANCIAL STATEMENTS BULLETIN JANUARY-DECEMBER 2011
Wärtsilä Corporation FINANCIAL STATEMENTS RELEASE 27 January 2012 at 8.30 local
time
WÄRTSILÄ 2011 - GROWTH IN ORDER INTAKE AND RESILIENCE IN PROFITABILITY
FOURTH QUARTER HIGHLIGHTS
- Order intake increased 25% to EUR 1,250 million (1,003)
- Order intake in joint venture companies grew significantly, EUR 178 million
(4)
- Book-to-bill 1.01 (0.69)
- Net sales decreased 15% to EUR 1,238 million (1,462)
- Operating result EUR 145 million, or 11.7% of net sales (EUR 159 million and
10.9%)
- Earnings per share amounted to 0.48 euro (0.50)
- Cash flow from operating activities EUR -71 million (171)
HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-DECEMBER 2011
- Order intake increased 13% to EUR 4,516 million (4,005)
- Order intake in joint venture companies grew significantly, EUR 394 million
(77)
- Book-to-bill 1.07 (0.88)
- At the end of the period the order book totalled EUR 4,007 million (3,795),
+6%
- Net sales decreased 7.6% to EUR 4,209 million (4,553)
- Operating result EUR 469 million, or 11.1% of net sales (EUR 487 million and
10.7%)
- Earnings per share 1.52 euro (1.68)
- Cash flow from operating activities EUR 232 million (663)
- Dividend proposal 0.90 euro/share
HIGHLIGHTS AFTER THE REVIEW PERIOD
- Wärtsilä's recommended offer received the strong support of Hamworthy's
shareholders and the acquisition is expected to become effective on 31 January
2012.
The operating result and earnings per share are shown excluding non-recurring
items. Wärtsilä recognised EUR 7 million (16) of non-recurring items related to
restructuring measures during the fourth quarter and EUR 24 million (75) of non-
recurring items during the review period January-December 2011. Earnings per
share after non-recurring items was 1.44 (1.96).
BJÖRN ROSENGREN, PRESIDENT AND CEO:"The year 2011 was a year of changes. It started quite well, but towards the
summer the financial problems within the EU and US markets started to escalate,
eventually affecting GDP development globally. Despite these tough market
conditions we have performed well. I am especially pleased with the continued
strength of our order intake and also with the resilience shown in reaching our
profitability targets with lower sales. This is a result of the good order mix,
successful execution and keeping our costs under control. After a very strong
fourth quarter, we managed to fulfill our order intake target and reached 11.1%
profitability. Due mainly to delayed power plant deliveries, our net sales
decreased slightly more than expected.
Looking ahead, the pipeline of potential orders for Power Plants is promising.
We anticipate growing interest for gas as a fuel and on a slightly longer term
we foresee strong potential in the marine markets for environmental
technologies. The acquisition of Hamworthy will enhance our capabilities in the
offshore, marine gas applications, and environmental solutions markets and it
will provide important synergies. The acquisition is expected to become
effective on 31 January 2012 and it will increase our earnings as soon as it is
finalised. However, it will have a slightly negative impact on our profitability
in 2012."
WÄRTSILÄ'S PROSPECTS FOR 2012
Wärtsilä expects its net sales for 2012 to grow by 5-10% and its operational
profitability (EBIT% before non-recurring items) to be 10-11%. These estimates
take into account the impact of the Hamworthy acquisition, which is expected to
become effective on 31 January 2012.
ANALYST AND PRESS CONFERENCE AT 10.00 A.M. LOCAL TIME
An analyst and press conference will be held on Friday 27 January 2012, 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://storm.zoomvisionmamato.com/player/wartsila/objects/15apsnc7.
To participate in the teleconference please register at the following address:
http://www.yourconferencecentre.com/r.aspx?p=1&a=DMLCWxZyXzsmIg.
You will receive dial-in details by email once you have registered. If you want
to ask questions during the teleconference, press the *-button followed by the
1-button on your phone to register for a question and the # -key to withdraw a
question. The event name is: Wärtsilä Financial Statements Bulletin 2011. Please
be ready to state your details and the name of the conference to the operator.
If problems occur, please press the *-button followed by the 0-button.
An on-demand version of the webcast will be available on the company website
later the same day.
For further information, please contact:
Raimo Lind
Executive Vice President & CFO
Tel: +358 10 709 5640
raimo.lind@wartsila.com
Pauliina Tennilä
Director, Investor Relations
Tel: +358 40 570 5530
pauliina.tennila@wartsila.com
For press information, please contact:
Atte Palomäki
Group Vice President, Communications & Branding
Tel: +358 40 547 6390
atte.palomaki@wartsila.com
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 maximises the environmental and economic performance of the
vessels and power plants of its customers. In 2011, Wärtsilä's net sales
totalled EUR 4.2 billion with approximately 18,000 employees. The company has
operations in nearly 170 locations in 70 countries around the world. Wärtsilä is
listed on the NASDAQ OMX Helsinki, Finland.
FINANCIAL STATEMENTS BULLETIN JANUARY-DECEMBER 2011
The annual figures in this financial statements bulletin are audited.
FOURTH QUARTER 10-12/2011 IN BRIEF
MEUR 10-12/2011 10-12/2010 Change
Order intake 1 250 1 003 25%
Net sales 1 238 1 462 -15%
Operating result (EBIT) 145 159 -9%
% of net sales 11.7% 10.9%
Profit before taxes 131 251
Earnings/share, EUR 0.48 0.50
Cash flow from operating activities -71 171
REVIEW PERIOD JANUARY-DECEMBER 2011 IN BRIEF
MEUR 1-12/2011 1-12/2010 Change
Order intake 4 516 4 005 13%
Order book at the end of the period 4 007 3 795 6%
Net sales 4 209 4 553 -7.6%
Operating result (EBIT) 469 487 -4%
% of net sales 11.1% 10.7%
Profit before taxes 429 548
Earnings/share, EUR 1.52 1.68
Cash flow from operating activities 232 663
Interest-bearing net debt
at the end of the period 58 -165
Gross capital expenditure 187 98
The operating result and earnings per share are shown excluding non-recurring
items. Wärtsilä recognised EUR 7 million (16) of non-recurring items related to
restructuring measures during the fourth quarter and EUR 24 million (75) of non-
recurring items during the review period January-December 2011. Earnings per
share after non-recurring items was 1.44 (1.96).
MARKET DEVELOPMENT
POWER PLANTS
Power plant markets remain solid
Power plant market activity was at a good level in the fourth quarter of 2011,
showing a clear rebound in quoted MW levels after the third quarter. Quotations
for gas power plants remained on a high level. During the review period, the
growing emerging markets continued to invest in new power generation capacity.
This created a good level of demand that was evenly spread across the globe.
Market activity was strongest in the flexible baseload and industrial self-
generation segments.
Power generation market overview
As energy consumption grows, the need for new power generation equipment
increases, as does the demand for replacement equipment for older capacity.
Today, the global installed power generation capacity totals approximately
5,400 GW, out of which approximately half is in OECD countries. Going forward,
growth is expected to be stronger in the emerging markets, due to increasing
industrialisation and rising living standards. The majority of Wärtsilä's Power
Plants orders derive from the non-OECD countries. Heavy fuel oil (HFO) has
traditionally been the dominant fuel for power generation in emerging markets,
but demand for gas driven plants is increasing along with the introduction of a
natural gas infrastructure. The industrialised countries have focused on the
development of wind power and on increasing the share of natural gas power
generation, the target being to ramp down old coal-based installations. In the
US, the introduction of shale gas has been rapid, and has made natural gas
prices very competitive.
Power Plants market position
During the period July 2010 - June 2011, the overall market for gas and liquid
fuel based power plants grew to approximately 70.1 GW (51.1). This includes all
prime mover units of over 5 MW. Wärtsilä's share represents 4.5% of the market
(4.8).
SHIP POWER
Vessel contracting for specialised tonnage continues to be strong
Vessel contracting activity during the fourth quarter 2011 was approximately at
the same level as in the third quarter. A total of 1,192 vessels were contracted
in 2011, which represents a decrease of 49% compared to the previous year.
However, the investment level in newbuilding of ships is comparable to that of
2010, highlighting a shift towards the contracting of specialised vessels.
During 2011, dry and wet cargo trades grew, but the fleet of bulk carriers and
tankers grew twice as much as the growth in cargo. This evidences an imbalance
between supply and demand that resulted in the slowing down of contracting for
traditional merchant ships in 2011.
Contracting activity was robust for specialised vessel types throughout the
year. By year-end, 50 contracts for LNG carriers were registered and the dual-
fuel solution has proven to be the preferred technology for propulsion in this
segment. Vessels used for offshore exploration also experienced very robust
contracting activity, with notably 36 contracts for drillships being placed in
2011. In the fourth quarter of 2011, several offshore service vessels (OSV's)
were contracted.
China accounts for 44% of contracting in 2011 in terms of number of vessels and
36% in terms of Gross Tonnage compensated with workload (CGT). South Korea
accounts for 27% and 45% respectively. Thereby, China continues to be the
leading shipbuilding country in terms of number of vessels, while South Korea
regained its position as the number one shipbuilder in terms of workload for
their shipyards. Notably, Brazilian yards booked a number of orders for offshore
vessels, positioning the country in the top five shipbuilders for 2011.
Ship Power market shares
Wärtsilä's share of the medium-speed main engine market was steady at 46% (at
the end of the previous quarter 46%). Its market share in low-speed engines
increased to 22% (18). In the auxiliary engine market Wärtsilä's share was 4%
(3).
SERVICES
Varying development in service markets
In the beginning of the year, service markets appeared to pick up. However,
during the summer uncertainty in the global economy began to have an impact on
this market development, especially in Europe. By contrast, the Middle East,
Asia and the Americas continued to be active. Development was strongest in the
power plant and offshore service markets. This is in line with developments in
the market conditions and installed base. Development was weaker in the merchant
shipping market. At the end of 2011, the installed base of Wärtsilä engines was
approximately 180.000 MW's.
ORDER INTAKE INCREASED
Wärtsilä's order intake for the fourth quarter increased 25% to EUR 1,250
million (1,003). In relation to the previous quarter, Wärtsilä's order intake
increased by 12% (EUR 1,118 million in the third quarter of 2011). The book-to-
bill ratio for the fourth quarter was 1.01 (0.69).
The order intake for Power Plants in the fourth quarter totalled EUR 464 million
(317), which was 47% higher than for the corresponding period last year and
stable compared to the previous quarter (EUR 466 million in the third quarter of
2011). During the fourth quarter, Wärtsilä received a 215 MW turnkey project
order from the Dominican Republic, and several midsize projects from Bangladesh
and Saudi Arabia. All these plants rely on the benefits of Wärtsilä's Smart
Power Generation concept.
The fourth quarter order intake for Ship Power totalled EUR 324 million (178),
an increase of 83% over the corresponding period last year. Compared to the
previous quarter order intake increased by 65% (EUR 196 million in the third
quarter of 2011). During the quarter, order activity was again dominated by
Offshore and Special vessels. In the Offshore segment, orders were received for
a large range of vessels, including platform supply vessels, seismic vessels and
pipe-layers. In October Wärtsilä was awarded a contract to supply a complete LNG
propulsion system package for two offshore supply vessels, being the first ever
U.S. flagged PSVs fuelled with LNG. In Special vessels the most active sub-
segments were Cruise and Fishing. The Offshore segment represented 43% of the
fourth quarter order intake, while the Merchant segment share was 26% and
Special Vessels 19%. The Cruise & Ferry segment's share of order intake was 7%,
Ship Design accounted for 4%, and Navy 1%.
The order intake for Services in the fourth quarter totalled EUR 459 million
(510), which was 10% lower than for the corresponding period last year. Compared
to the previous quarter, order intake remained stable (EUR 455 million in the
third quarter of 2011).
Wärtsilä's order intake for the review period January-December 2011 totalled EUR
4,516 million (4,005), an increase of 13%. The book-to-bill ratio for the review
period was 1.07 (0.88).
For the review period January-December 2011, the Power Plants order intake
totalled EUR 1,602 million (1,413), a 13% increase compared to the previous
year. After a rather slow start, ordering activity picked up towards the year's
end. Around 50% of the orders received in terms of MW's were from gas based
markets. During 2011, Wärtsilä received two large turnkey project orders from
the Dominican Republic, as well as a 250 MW turnkey project order from Estonia
and a 180 MW order from South Africa. Several midsize orders were received from
Bangladesh and Turkey.
Wärtsilä Ship Power's order intake for January-December 2011 was EUR 1,000
million (657), a significant increase of 52% over the corresponding period last
year. Throughout 2011, Offshore and Special Vessels segment orders continued to
be active. In line with the Ship Power strategy, Wärtsilä received several
significant orders for the delivery of total solutions, including ship design,
propulsion machinery, automation and other equipment. Wärtsilä received many
orders for dual-fuel engines, thus underlining the company's frontrunner
position in gas applications. Dual-fuel orders included several offshore
vessels, as well as a significant order for a passenger ferry from the Finnish
ship owner Viking Line. The vessel will be the largest passenger vessel ever to
operate on LNG. The Offshore segment represented 40% of the total order intake,
while the Merchant segment share was 25% and Special Vessels 15%. The Cruise &
Ferry segment's share was 10%, Navy represented 7% of the order intake, and Ship
Design accounted for 3%.
For the review period January-December 2011, the Services order intake totalled
EUR 1,909 million (1,931). During 2011, Wärtsilä was awarded a five-year
technical management contract, based on Dynamic Maintenance Planning, covering a
total of 24 Wärtsilä 50DF dual-fuel engines installed in six LNG carriers. The
contract was placed by the operator of the vessels, Ceres LNG Services Ltd, a
Greek ship management company and a major marine services provider in LNG
shipping. Wärtsilä also signed its largest ever long-term marine maintenance
support agreement. The contract with Royal Caribbean Cruises Ltd covers a wide
range of services and 29 vessels with an aggregated output of approximately
1,400 MW.
Order intake in joint ventures
The joint venture company in South Korea, Wärtsilä Hyundai Engine Company Ltd
(WHEC), received orders for dual-fuel engines for 34 LNG carriers in 2011. Total
order intake in WHEC and in the Wärtsilä Qiyao Diesel Company Ltd joint venture
company in China, producing auxiliary engines, totalled EUR 178 million (4) in
the fourth quarter. Order intake for the review period January-December 2011
grew significantly to EUR 394 million (77). Wärtsilä's share of ownership in
these companies is 50%, and the profits will be reported as a share of the
result of associates and joint ventures.
Fourth quarter order intake by business
MEUR 10-12/2011 10-12/2010 Change
Power Plants 464 317 47%
Ship Power 324 178 83%
Services 459 510 -10%
Order intake, total 1 250 1 003 25%
Order intake Power Plants
MW 10-12/2011 10-12/2010 Change
Oil 720 223 224%
Gas 213 611 -65%
Order intake for the review period by business
MEUR 1-12/2011 1-12/2010 Change
Power Plants 1 602 1 413 13%
Ship Power 1 000 657 52%
Services 1 909 1 931 -1%
Order intake, total 4 516 4 005 13%
Order intake Power Plants
MW 1-12/2011 1-12/2010 Change
Oil 1 647 1 797 -8%
Gas 1 693 1 377 23%
Renewable fuels 0 1 -100%
ORDER BOOK
At the end of the review period, Wärtsilä's total order book stood at EUR 4,007
million (3,795), an increase of 6%. In relation to the previous quarter,
Wärtsilä's order book remained stable (EUR 4,042 million at the end of the third
quarter of 2011). At the end of the review period the Power Plants order book
amounted to EUR 1,536 million (1,299), which is 18% higher than on the same date
last year. The Ship Power order book stood at EUR 1,684 million (1,825), a
decrease of 8%. The Services order book totalled EUR 786 million (671) at the
end of the review period, an increase of 17%.
Order book by business
MEUR 31.12.2011 31.12.2010 Change
Power Plants 1 536 1 299 18%
Ship Power 1 684 1 825 -8%
Services 786 671 17%
Order book, total 4 007 3 795 6%
SALES DECREASED
Wärtsilä's net sales for the fourth quarter decreased by 15% to EUR 1,238
million (1,462). Power Plants' net sales for the fourth quarter totalled 413
million (577), which is 28% lower than in the corresponding quarter last year.
Net sales for Ship Power totalled EUR 309 million (371), a decrease of 17%. The
fourth quarter Services net sales amounted to EUR 513 million (516), a decrease
of 1%.
Wärtsilä's net sales for January-December 2011 decreased by 7.6% to EUR 4,209
million (4,553). This was slightly more than the estimated decrease of 0-5%. The
main reason was delayed power plant project deliveries. Power Plants accounted
for 32%, Ship Power for 24% and Services for 43% of the total net sales. Net
sales for Power Plants totalled EUR 1,365 million (1,525), a decrease of 10%.
Ship Power's net sales decreased by 15% and totalled EUR 1,022 million (1,201).
Net sales from the Services business amounted to EUR 1,816 million (1,823). Net
sales development was good especially in the strategic focus areas of
environmental services, electric & automation and propulsion services. However,
over 75% of revenues are still derived from engine related services. The
merchant market in particular was rather weak. Net sales increased also in
Contracts and Projects. Revenues from projects can vary significantly from
quarter to quarter.
Of Wärtsilä's net sales for January-December 2011, approximately 68% was EUR
denominated, 13% USD denominated, with the remainder being split between several
currencies.
Fourth quarter net sales by business
MEUR 10-12/2011 10-12/2010 Change
Power Plants 413 577 -28%
Ship Power 309 371 -17%
Services 513 516 -1%
Net sales, total 1 238 1 462 -15%
Net sales for the review period by business
MEUR 1-12/2011 1-12/2010 Change
Power Plants 1 365 1 525 -10%
Ship Power 1 022 1 201 -15%
Services 1 816 1 823 0%
Net sales, total 4 209 4 553 -7.6%
OPERATING RESULT AND PROFITABILITY
The fourth quarter operating result before non-recurring items was EUR 145
million (159), or 11.7% of net sales (10.9). For the review period January-
December 2011, the operating result before non-recurring items was EUR 469
million (487). Profitability (EBIT%) was 11.1% of net sales (10.7), well in line
with Wärtsilä's estimate for 2011. Including non-recurring items, the operating
result was EUR 445 million or 10.6% of net sales. Wärtsilä recognised EUR 24
million of non-recurring items related to the restructuring measures during the
review period January-December 2011.
Financial items amounted to EUR -16 million (-13). Net interest totalled EUR -5
million (-12). Dividends received totalled EUR 3 million (7). Profit before
taxes amounted to EUR 429 million (548). Taxes in the reporting period amounted
to EUR 136 million (151). The profit for the financial period amounted to EUR
293 million (397). Earnings per share were 1.44 euro (1.96) and equity per share
was 8.30 euro (8.30). Return on investment (ROI) was 20.4% (26.0). Return on
equity (ROE) was 17.5% (25.0).
BALANCE SHEET, FINANCING AND CASH FLOW
Wärtsilä's fourth quarter cash flow from operating activities amounted to EUR
-71 million (171). For January-December 2011, the cash flow from operating
activities was EUR 232 million (663). Net working capital at the end of the
period totalled EUR 285 million (170). Advances received at the end of the
period totalled EUR 563 million (616). The increase in net working capital is
mainly due to timing of deliveries and advances received and results from normal
variation in operations. Cash and cash equivalents at the end of the period
amounted to EUR 592 million (776).
Wärtsilä had interest-bearing debt totalling EUR 652 million at the end of
December 2011. The total amount of short-term debt maturing within the next 12
months was EUR 167 million, including EUR 70 million of Finnish Commercial
Papers. Net interest-bearing loan capital totalled EUR 58 million (-165).
The funding programmes at the end of December 2011 included long-term loans of
EUR 485 million, undrawn long-term loans totalling EUR 150 million and
unutilised Committed Revolving Credit Facilities totalling EUR 494 million. The
funding programs also included Finnish Commercial Paper programmes totalling EUR
700 million.
The solvency ratio was 41.3% (40.8) and gearing was 0.04 (-0.09).
CAPITAL EXPENDITURE
Gross capital expenditure in the review period totalled EUR 187 million (98),
which comprised of EUR 97 million (6) in acquisitions and investments in
securities, and EUR 90 million (92) in intangible assets and property, plant and
equipment. Depreciation, amortisations and impairment for the review period
amounted to EUR 113 million (116).
Maintenance capital expenditure for 2012 will be in line with or slightly above
depreciation.
STRATEGY
Wärtsilä aims to be the leader in complete lifecycle power solutions for the
global marine markets and selected energy markets worldwide. We see growth
opportunities in gas power plants as part of our Smart Power Generation concept,
as well as in gas-fuelled engines and related systems for the marine market. We
also seek growth in environmental solutions, including scrubbers and ballast
water treatment systems. Our strengths are our technological leadership, an
integrated product and service offering, our close and long-standing customer
relationships, and our unparalleled global presence. Our production and supply
chain management serves both our end markets, and we constantly seek ways to
maintain cost efficiency and high quality - often in co-operation with leading
industrial partners in our key growth markets. Our R&D provides another source
of synergies, allowing us to stay at the forefront of technology and innovation
in our industry.
We are determined to capture growth opportunities within our end markets, while
maintaining a solid profitability.
STRATEGIC PROJECTS, ACQUISITIONS, JOINT VENTURES AND EXPANSION OF THE NETWORK IN
2011
In November 2011, Wärtsilä inaugurated its new spare parts distribution centre
in Kampen, the Netherlands. The Central Distribution Centre integrates eight
previously localised spare parts warehouses into one global supply chain
operation. It covers the entire material flow, from order confirmation until the
point of delivery at the customer's doorstep. The new centre will shorten
transportation distances, reduce spare parts traffic between warehouses, and
improve management of the entire supply chain. Wärtsilä's total investment in
the new distribution centre has been approximately EUR 70 million. Wärtsilä is
currently optimising the operations of the distribution centre.
In June, Wärtsilä and Jiangsu CuiXing Marine Offshore Engineering Co. Ltd.
agreed to establish a joint venture for the manufacturing of Wärtsilä 26 and
Wärtsilä 32 medium-speed marine engines in China. The set up of the joint
venture is proceeding according to plan.
In July, Wärtsilä acquired Cedervall, one of the leading manufacturers of shaft
seal and bearing systems for the marine industry. This acquisition strengthens
Wärtsilä's leading position in the global service market, in line with its
strategy. The combination of Wärtsilä's and Cedervall's businesses will create
market leadership in oil and water lubricated seals and bearings and sterntubes.
The total preliminary consideration of the transaction is EUR 81 million.
During the review period, Wärtsilä continued to expand its Services network. A
new workshop was inaugurated in Gdansk, Poland during the second quarter. During
the third quarter, a new workshop facility was opened in Helsinki, Finland.
In November 2011, Wärtsilä announced that it had reached agreement with the
Board of Hamworthy in regards to a recommended cash offer for the acquisition of
Hamworthy, a global provider of specialist equipment and services to the marine,
oil & gas and industrial sectors. Under the terms of the acquisition Hamworthy
shareholders will receive 825 pence in cash for each Hamworthy share. Hamworthy
is listed on the London Stock Exchange's Alternative Investment Market. The
acquisition will be effected by means of a Scheme of Arrangement under English
law. On 9 January 2012, all the resolutions proposed received the strong support
of Scheme Shareholders at both the Court Meeting and General Meeting of
Hamworthy plc. The Court sanctioned the Scheme on 26 January 2012. Subject to
the Court hearing confirming the associated Reduction of Capital on 30 January
2012, the Scheme is expected to become effective and the control transferred to
Wärtsilä on 31 January 2012.
RESTRUCTURING MEASURES
In 2009, Wärtsilä began the process of adapting its activities to lower demand
through various restructuring measures with the aim of reducing approximately
1,800 persons. This target has nearly been reached and the remainder of the
reductions will materialise in 2012. It is estimated that the reductions will
decrease costs by approximately EUR 130 million. Of these cost savings, about
EUR 60 million had materialised by the end of 2010 and about EUR 60 million
materialised during 2011. The remainder of the cost savings will materialise in
2012. Wärtsilä anticipates that the majority of these cost savings will be
permanent. The total non-recurring costs related to the restructuring will be
approximately EUR 150 million, out of which EUR 115 million has been recognised
by the end of 2010. In the review period January-December 2011, Wärtsilä
recognised EUR 24 million (75) of non-recurring items related to the
restructuring measures. The remainder of the restructuring costs will be
recognised in 2012.
PERSONNEL
Wärtsilä had 17,913 (17,528) employees at the end of December 2011. On average,
the number of personnel for January-December 2011 totalled 17,708 (18,000).
Power Plants employed 855 (835) people. Ship Power employed 999 (969) people,
Services 11,168 (11,150) and manufacturing and R&D (Wärtsilä Industrial
Operations) 4,091 (4,210) people.
Of Wärtsilä's total number of employees, 20% (19) were located in Finland and
35% (37) elsewhere in Europe. Personnel employed in Asia represented 33% (31).
MANUFACTURING
During 2011, the focus on moving manufacturing closer to customers in Asia
continued.
In June, Wärtsilä CME Zhenjiang Propeller Co. Ltd., the joint venture company of
Wärtsilä and Zhenjiang CME Ltd., inaugurated its new manufacturing facilities
for Controllable Pitch Propellers (CPP) in Zhenjiang, China. The majority of the
new factory's manufacturing equipment was transferred from the Wärtsilä factory
in Drunen, the Netherlands, where production was closed in 2010. The first CPP
manufactured by Wärtsilä CME Zhenjiang Propeller Co. Ltd. was approved by the
classification society and the customer on 4 November 2011.
In July, CSSC Guangzhou Marine Diesel Co. Ltd., a member of the state-owned
China State Shipbuilding Corporation, and Wärtsilä jointly signed a license
agreement for the manufacturing and sale of Wärtsilä low-speed engines in China.
It covers the entire engine portfolio with a power range from 4,300 to 80,000 kW
per engine. With the shipbuilding industry being increasingly concentrated in
Asia, the local manufacture of Wärtsilä's marine engines is a key element in the
company's growth strategy.
In November 2011, Wärtsilä and Doosan Engine Co. Ltd., a member of the South
Korean Doosan Group, signed a ten year extension to the licensing agreement for
building Wärtsilä low-speed engines. The agreement renewal covers the period
from 2012 to 2021.
Activities in Wärtsilä's joint venture with Transmashholding in Russia are
proceeding according to plan. The joint venture is preparing to manufacture
modern and multipurpose diesel engines, including a new and technically advanced
version of the Wärtsilä 20 engine, to be used in shunter locomotives and for
various marine and power applications.
RESEARCH AND DEVELOPMENT, PRODUCT LAUNCHES
In 2011, Wärtsilä's research and development expenses totalled EUR 162 million
(141), or 3.8% of net sales and the following major accomplishments were
achieved:
During the third quarter, Wärtsilä's dual-fuel engines exceeded three million
running hours in both land-based and marine applications. This milestone
represents a dual-fuel track record that cannot be matched by any other engine
manufacturer. Today, the total number of Wärtsilä dual-fuel engines delivered to
both marine and land-based applications is 470. The fuel flexibility of these
engines offers numerous tangible benefits, both economic and environmental.
Wärtsilä has successfully tested its new low-speed gas engine technology in
trials conducted at the company's facilities in Trieste, Italy. The tests have
demonstrated that the engine performance fully complies with the upcoming IMO
Tier III nitrogen oxide limits, thereby setting a new benchmark for low-speed
engines running on gas. The new test engine is part of Wärtsilä's 2-stroke dual-
fuel gas engine technology development programme.
Wärtsilä has strengthened its offering in the mid-size, low-speed engine sector
by adding new X62 and X72 engines to its portfolio. The first X62 engine will be
available for delivery in September 2013 and the first X72 engine will be
available approximately one year later. Wärtsilä successfully started up its new
6-cylinder RT-flex48T engine as well as the first of the new electronically
controlled Wärtsilä X35 low-speed engines.
Wärtsilä and Aker Solutions have signed an agreement to jointly develop a new
and environmentally sound concept for offshore wind farm installation vessels.
Wärtsilä will provide the ship design, electrical power generation, propulsion
machinery and high-end automation, whilst Aker Solutions will supply the jacking
system. Wärtsilä, together with Aker Solutions, will also offer a 24/7 global
support service for maintenance, repairs, and component supply to the vessels.
The Wärtsilä engines to be used will be dual-fuel engines capable of operating
on liquefied natural gas (LNG).
At the end of 2011, Wärtsilä, together with six partners in Maritime Clean Tech
West, a Norwegian industrial network, were awarded approximately EUR 2.4 million
from Innovation Norway for a pioneering project where the goal is to test
new solutions for energy storage and electrical operation of propulsion systems.
SUSTAINABLE DEVELOPMENT
Wärtsilä is well positioned to reduce emissions and the use of natural
resources, thanks to its various technologies and specialised services.
Wärtsilä's R&D efforts continue to focus on the development of advanced
environmental technologies and solutions. The company is committed to supporting
the UN Global Compact and its principles with respect to human rights, labour,
the environment and anti-corruption. Wärtsilä's share is included in several
sustainability indices.
CHANGES IN MANAGEMENT
Mr Björn Rosengren (52) M.Sc. (Tech.), started as the new President and CEO of
Wärtsilä Corporation on 1 September 2011. Mr Rosengren succeeded Mr Ole
Johansson, who retired at that time.
The following appointments were made within Wärtsilä Corporation's Board of
Management, with effect from 1 January 2012:
Mr Kari Hietanen (48) LLM was appointed Group Vice President, Corporate
Relations and Legal. Ms Päivi Castrén (53) MSc (Soc.Sc.), was appointed Group
Vice President Human Resources and a member of the Board of Management.
SHARES AND SHAREHOLDERS
The figures in the table below have been adjusted to reflect the increased
number of shares resulting from the free share issue approved by Wärtsilä
Corporation's Annual General Meeting on 3 March 2011.
SHARES ON HELSINKI EXCHANGES
31.12.2011 Number of Number of Number of shares
Shares votes traded 1-12/2011
---------------------------------------------------------------------------
WRT1V 197 241 130 197 241 130 197 186 087
---------------------------------------------------------------------------
1.1. - 31.12.2011 High Low Average 1) Close
---------------------------------------------------------------------------
Share price 29.55 15.50 26.93 22.32
---------------------------------------------------------------------------
1) Trade-weighted average price
31.12.2011 31.12.2010
----------------------------------------------------------------------
Market capitalisation, EUR million 4 402 5 631
----------------------------------------------------------------------
Foreign shareholders 47.0% 51.0%
----------------------------------------------------------------------
FLAGGING NOTIFICATIONS
During the review period January-December 2011, Wärtsilä was informed of the
following changes in ownership:
On 5 January 2011, BlackRock, Inc. increased its holding in Wärtsilä
Corporation. Following the transaction, BlackRock, Inc. owned 4,941,593 shares
(the number of shares before the free share issue) or 5.01% of Wärtsilä's share
capital and total votes.
On 9 August 2011, BlackRock, Inc. decreased its holding in Wärtsilä Corporation.
Following the transaction, BlackRock, Inc. owned 9,838,853 shares or 4.99% of
Wärtsilä's share capital and total votes.
DECISIONS TAKEN BY THE ANNUAL GENERAL MEETING
Wärtsilä's Annual General Meeting held on 3 March 2011 approved the financial
statements and discharged the members of the Board of Directors and the
company's President & CEO from liability for the financial year 2010. The
Meeting approved the Board of Directors' proposal to pay a dividend of EUR 1.75
per share and an extra dividend of EUR 1.00 per share, totalling EUR 2.75 per
share. The dividend was paid on 15 March 2011. Adjusted to reflect the increased
number of shares resulting from the free share issue, the dividend amounted to
EUR 0.88 per share and the extra dividend to EUR 0.50 per share, totalling EUR
1.38 per share.
The Annual General Meeting decided that the Board of Directors shall have nine
members. The following were elected to the Board: Ms Maarit Aarni-Sirviö, Mr
Kaj-Gustaf Bergh, Mr Alexander Ehrnrooth, Mr Paul Ehrnrooth, Mr Lars Josefsson,
Mr Bertel Langenskiöld, Mr Mikael Lilius, Mr Markus Rauramo and Mr Matti Vuoria.
Authorized public accountants KPMG Oy Ab were appointed as the company's
auditors for the year 2011.
Free share issue
The Annual General Meeting decided to approve the free share issue in accordance
with the proposal of the Board of Directors. The free share issue was
implemented by applying the pre-emptive right of the shareholders so that for
each old share one new share was issued. Thereby a total of 98,620,565 new
shares were issued. The new shares were registered in the trade register on 8
March 2011.
Organisation of the Board of Directors
The Board of Directors of Wärtsilä Corporation elected Mikael Lilius as its
chairman and Matti Vuoria as the deputy chairman. The Board decided to establish
an Audit Committee, a Nomination Committee and a Remuneration Committee. The
Board appointed from among its members the following members to the Committees:
Audit Committee:
Chairman Markus Rauramo, Maarit Aarni-Sirviö, Alexander Ehrnrooth, Bertel
Langenskiöld
Nomination Committee:
Chairman Mikael Lilius, Kaj-Gustaf Bergh, Lars Josefsson, Matti Vuoria
Remuneration Committee:
Chairman Mikael Lilius, Paul Ehrnrooth, Matti Vuoria
BOARD OF DIRECTORS' DIVIDEND PROPOSAL
The Board of Directors proposes that a dividend of 0.90 euro per share be paid
for the financial year 2011. Wärtsilä's distributable funds at the end of the
period totalled EUR 974,384,311.79. 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 13 March 2012. The dividend payment date
proposed by the Board is 20 March 2012. The Annual Report 2011, including the
financial review and the review by the Board of Directors, will be available on
the company website www.wartsila.com during week 7.
RISKS AND BUSINESS UNCERTAINTIES
Towards the end of the year 2011, the uncertainty concerning the global economy
and the financial markets increased certain risks for Wärtsilä's businesses.
In the Power Plants business, uncertainty in the financial markets may impact
the timing of bigger projects.
Uncertainty regarding the global economic situation continues to threaten the
outlook for shipping and shipbuilding. Overcapacity is exerting pressure on
freight rates, especially in the traditional merchant segments such as bulk
carriers and tankers. The main risk for Ship Power is still delays in yard
delivery schedules, while difficulties in the financial markets have increased
the risk of cancellations.
Increasing risks in the financial markets may have a negative impact on
Services' order intake. The tough conditions in the marine merchant markets are
also seen as a potential risk, and they could have a negative impact on net
sales in 2012.
The annual report for 2011 contains a thorough description of Wärtsilä's risks
and risk management.
MARKET OUTLOOK
The power generation market is expected to remain on a good level in 2012, but
due to macroeconomic issues, significant growth is not foreseen. The growing
emerging markets will continue to invest in new power generation capacity, which
will drive demand - especially in the flexible baseload segment. In the OECD
countries, there is still pent-up power sector demand, mainly driven by CO(2)
neutral generation and the ramp down of older, mainly coal-based generation.
The outlook for vessel contracting activity during 2012 is cautious, with
overall levels of contracting expected to be about the same or slightly lower
than during 2011. The contracting mix is expected to be in line with that seen
in 2011, favouring contracting for specialised vessel segments. The contracting
outlook is gloomy for certain ship types, including bulk carriers and tankers,
due to overcapacity. The segments with a positive outlook are in line with
Wärtsilä's Ship Power strength areas. Contracting for LNG carriers is expected
to remain strong compared to historical levels, albeit lower than the level of
contracting seen in 2011. The offshore segment continues to present good future
contracting opportunities, especially for drilling and floating production
units.
There are no major changes in the market outlook for 2012. Overall economic
uncertainty still prevails. The best prospects continue to be in the BRIC
countries, while conditions are expected to continue to be weakest in Europe. In
the short term, development of the active installed base is also expected to be
moderate, with the scrapping, layups, slow steaming, and lower utilisation rates
of vessels likely to continue. The power plant service market is expected to
develop steadily.
WÄRTSILÄ'S PROSPECTS FOR 2012
Wärtsilä expects its net sales for 2012 to grow by 5-10% and its operational
profitability (EBIT% before non-recurring items) to be 10-11%. These estimates
take into account the impact of the Hamworthy acquisition, which is expected to
become effective on 31 January 2012.
WÄRTSILÄ FINANCIAL STATEMENTS BULLETIN 2011
This financial statements bulletin 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 2011. 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.
IFRS amendments
Of the amended International Financial Reporting Standards (IFRS) and
interpretations mandatory as of 1 January 2011 the following are applicable to
the Group reporting:
- Amendment to IAS 32 Financial Instruments: Presentation - Classification of
Rights Issues
- Revised IAS 24 Related Party Disclosures
The adaption of the revised standards and interpretations does not have any
material effect on this financial statements bulletin.
The annual figures in this financial statements bulletin are audited.
CONSOLIDATED STATEMENT OF INCOME
MEUR 2011 2010
--------------------------------------------------------------------------------
Net sales 4 209 4 553
Change in inventories of finished goods & work in progress 39 -164
Work performed by the Group and capitalised 1 2
Other operating income 47 52
Material and services -2 285 -2 372
Employee benefit expenses -956 -948
Depreciation, amortisation and impairment -113 -116
Other operating expenses -506 -601
Share of result of associates and joint ventures 8 5
Operating result 445 412
Dividend income 3 7
Interest income 13 6
Other financial income 10 12
Interest expenses -18 -18
Other financial expenses -23 -20
Net income from financial assets available-for-sale 149
Profit before taxes 429 548
Income taxes -136 -151
--------------------------------------------------------------------------------
Profit for the financial period 293 397
--------------------------------------------------------------------------------
Attributable to:
Equity holders of the parent company 283 386
Non-controlling interests 10 11
--------------------------------------------------------------------------------
293 397
Earnings per share attributable to equity holders of the parent company:
Earnings per share (basic and diluted), EUR 1,44 1,96
Statement of Comprehensive Income
Profit for the financial period 293 397
Other comprehensive income after tax:
Exchange rate differences on translating foreign operations -4 17
Financial assets available-for-sale
fair valuation 16 30
transferred to statement of income -110
Cash flow hedges -23 -9
Other income/expenses 1
--------------------------------------------------------------------------------
Other comprehensive income -12 -71
--------------------------------------------------------------------------------
Total comprehensive income for the period 281 326
--------------------------------------------------------------------------------
Total comprehensive income attributable to:
Equity holders of the parent company 270 313
Non-controlling interests 11 13
--------------------------------------------------------------------------------
281 326
CONSOLIDATED STATEMENT OF FINANCIAL POSITION, ASSETS
MEUR 31.12.2011 31.12.2010
---------------------------------------------------------------------------
Non-current assets
Goodwill 616 574
Intangible assets 209 205
Property, plant and equipment 463 455
Investment properties 9 11
Investments in associates and joint ventures 87 65
Financial assets available-for-sale 39 18
Interest-bearing investments 1 16
Deferred tax assets 119 122
Other receivables 33 16
---------------------------------------------------------------------------
1 577 1 483
Current assets
Inventories 1 222 1 244
Interest-bearing receivables 1 1
Trade receivables 877 860
Income tax receivables 38 26
Other receivables 294 305
Cash and cash equivalents 592 776
---------------------------------------------------------------------------
3 023 3 213
---------------------------------------------------------------------------
Total assets 4 600 4 696
---------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION, EQUITY AND LIABILITIES
MEUR 31.12.2011 31.12.2010
--------------------------------------------------------------------------------
Equity
Share capital 336 336
Share premium 61 61
Translation differences 2 8
Fair value reserve 5 12
Retained earnings 1 233 1 221
--------------------------------------------------------------------------------
Total equity attributable to equity holders of the parent 1 636 1 638
Non-controlling interests 30 26
--------------------------------------------------------------------------------
Total equity 1 666 1 664
Liabilities
Non-current liabilities
Interest-bearing debt 485 572
Deferred tax liabilities 69 70
Pension obligations 39 40
Provisions 52 45
Advances received 120 104
--------------------------------------------------------------------------------
765 831
Current liabilities
Interest-bearing debt 167 56
Provisions 215 233
Advances received 443 511
Trade payables 348 366
Income tax liabilities 55 105
Other liabilities 941 929
--------------------------------------------------------------------------------
2 169 2 201
Total liabilities 2 934 3 032
--------------------------------------------------------------------------------
Total equity and liabilities 4 600 4 696
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
MEUR 2011 2010
--------------------------------------------------------------------------------
Cash flow from operating activities:
Profit for the financial period 293 397
Adjustments:
Depreciation, amortisation and impairment 113 116
Financial income and expenses 16 13
Selling profit and loss of fixed assets and other changes -6 -147
Share of result of associates and joint ventures -8 -5
Income taxes 136 151
--------------------------------------------------------------------------------
Cash flow before changes in working capital 544 526
Changes in working capital:
Assets, non-interest-bearing, increase (-) / decrease (+) 3 132
Inventories, increase (-) / decrease (+) 33 379
Liabilities, non-interest-bearing, increase (+) / decrease (-) -125 -141
--------------------------------------------------------------------------------
Changes in working capital -88 370
Cash flow from operating activities before financial items and taxes 456 896
Financial items and taxes:
Interest and other financial
income 25 11
Interest and other financial expenses -49 -72
Income taxes paid -199 -173
--------------------------------------------------------------------------------
Financial items and paid taxes -224 -233
--------------------------------------------------------------------------------
Cash flow from operating activities 232 663
--------------------------------------------------------------------------------
Cash flow from investing activities:
Investments in shares and acquisitions -91 -6
Investments in property, plant and equipment and intangible assets -90 -92
Proceeds from sale of property, plant and equipment and intangible
assets 9 9
Proceeds from sale of financial assets available-for-sale 3 173
Loan receivables, increase (-) / decrease (+) and other changes -13
Dividends received 3 8
--------------------------------------------------------------------------------
Cash flow from investing activities -166 79
--------------------------------------------------------------------------------
Cash flow after investing activities 66 742
Cash flow from financing activities:
Proceeds from non-current borrowings 37
Repayments and other changes in non-current
loans -50 -78
Loan receivables, increase (-) / decrease (+) 2 2
Current loans, increase (+) / decrease (-) 79 -2
Dividends paid -279 -175
--------------------------------------------------------------------------------
Cash flow from financing activities -247 -216
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Change in cash and cash equivalents,
increase (+) / decrease (-) -181 525
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period 776 244
Exchange rate changes -3 7
Cash and cash equivalents at end of period 592 776
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
Non-
controlling Total
Total equity attributable to equity holders
MEUR of the parent interests equity
--------------------------------------------------------------------------------
Trans-
lation Fair
Share Share differ- value Retained
capital premium ence reserve earnings
--------------------------------------------------------------------------------
Equity on 1
January 2010 336 61 -6 99 1 006 16 1 512
Translation
differences 14 1 15
Other changes 2 -1 1
Financial assets
available-for-
sale
net change in
fair value, net
of taxes 30 30
transferred to
statement of
income, net of
taxes -110 -110
Cash flow hedges
net change in
fair value, net
of taxes 6 6
transferred to
statement of
income, net of
taxes -13 -12
--------------------------------------------------------------------------------
Comprehensive
income 14 -87 2 1 -71
Profit for the
financial period 386 11 397
--------------------------------------------------------------------------------
Total
comprehensive
income for the
period 14 -87 387 12 326
Dividends paid -173 -2 -175
--------------------------------------------------------------------------------
Equity on 31
December 2010 336 61 8 12 1 221 26 1 664
--------------------------------------------------------------------------------
Translation
differences -6 2 -4
Financial assets
available-for-
sale
net change in
fair value, net
of taxes 16 16
Cash flow hedges
net change in
fair value, net
of taxes -12 -12
transferred to
statement of
income, net of
taxes -11 -11
--------------------------------------------------------------------------------
Comprehensive
income -6 -7 1 -12
Profit for the
financial period 283 10 293
--------------------------------------------------------------------------------
Total
comprehensive
income for the
period -6 -7 283 11 281
Dividends paid -271 -8 -279
--------------------------------------------------------------------------------
Equity on 31
December 2011 336 61 2 5 1 233 30 1 666
--------------------------------------------------------------------------------
GEOGRAPHICAL AREAS Europe Asia Americas Other Total
MEUR
----------------------------------------------------
Net sales 2011 1 249 1 594 845 520 4 209
Net sales 2010 1 266 1 754 1 034 499 4 553
----------------------------------------------------
INTANGIBLE ASSETS AND PROPERTY, PLANT & EQUIPMENT
MEUR 2011 2010
--------------------------------------------------
Intangible assets
Carrying amount at 1 January 780 779
Changes in exchange rates 5 20
Acquisitions 64
Additions 21 17
Amortisation and impairment -44 -42
Disposals and reclassifications -1 6
--------------------------------------------------
Carrying amount at end of period 826 780
--------------------------------------------------
Property, plant and equipment
Carrying amount at 1 January 466 457
Changes in exchange rates 4 14
Acquisitions 15
Additions 69 75
Depreciation and impairment -69 -73
Disposals and reclassifications -10 -6
--------------------------------------------------
Carrying amount at end of period 472 466
--------------------------------------------------
GROSS CAPITAL EXPENDITURE
MEUR 2011 2010
-------------------------------------------------------------
Investments in securities and acquisitions 97 6
Intangible assets and property, plant and equipment 90 92
-------------------------------------------------------------
Total 187 98
-------------------------------------------------------------
ACQUISITIONS IN 2011
On August 31, 2011 Wärtsilä obtained control of Cedervall, one of the leading
manufacturers of shaft seal and bearing systems for the marine industry, by
acquiring 100% of shares and voting interests in the company.
Taking control of Cedervall will enable Wärtsilä to strengthen its leading
position in the global marine services market, in-line with Wärtsilä strategy.
The combination of Wärtsilä's and Cedervall's businesses will create the market
leader for oil and water lubricated seals and bearings, as well as for stern
tubes.
The acquisition cost is calculated on the basis of the Cedervall's preliminary
balance sheet as per 31 August, 2011 which is prepared, essentially, in
accordance with IFRSs and Wärtsilä Group's accounting principles.
The total preliminary consideration of the transaction is EUR 81 million and the
amount will be revised after the final closing of the accounts. The acquisition
does not include any additional consideration.
The preliminary goodwill of EUR 40 million reflects the value of know-how and
expertise in marine seal and bearing systems as well as widened propulsion line
product portfolio offering Wärtsilä to strengthen its total propulsion
solutions. The goodwill recognised for Cedervall is not tax deductible.
The following tables summarise the consideration paid for Cedervall and the
amounts of the assets acquired and liabilities assumed recognised at the
acquisition date. The below mentioned acquisition consideration and the fair
values at August 31, 2011 are preliminary as the finalisation of the final
closing of the accounts is still ongoing.
Total consideration MEUR
--------------------------------------------------------------------------------
Cash 81
--------------------------------------------------------------------------------
Total consideration transferred 81
Cash flow from the acquisition MEUR
--------------------------------------------------------------------------------
Consideration paid in cash 81
Cash and cash equivalents of the acquired
companies -6
--------------------------------------------------------------------------------
Total cash flow from the acquisition 75
The assets and liabilities arising from the
acquisition are as follows: MEUR
Intangible assets 23
Property, plant and equipment 15
Inventories 7
Trade and other receivables 6
Cash and cash equivalents 6
--------------------------------------------------------------------------------
Total assets 56
--------------------------------------------------------------------------------
Provisions 1
Interest-bearing liabilities 1
Trade and other liabilities 6
Deferred tax liabilities 8
--------------------------------------------------------------------------------
Total 16
--------------------------------------------------------------------------------
According to the preliminary valuation of the fair value of the net assets
(including technology, customer relations, trademarks and valuation of order
book) amounted to EUR 41 million.
The fair value of current trade receivables and other receivables is EUR 6
million and includes trade receivables with a fair value of EUR 5 million. The
fair value of trade receivables does not include any significant risk.
The Group incurred during 2011 acquisition-related costs of EUR 1 million
related to external legal fees and due diligence costs. The total acquisition-
related costs are estimated to be approximately EUR 1 million. The costs have
been included in the other operating expenses in the consolidated statement of
income.
The net sales included in the condensed income statement since August 31, 2011
contributed by Cedervall companies was EUR 9 million and operating profit EUR 2
million.
Had Cedervall been consolidated form January 1, 2011, the condensed income
statement would show net sales of EUR 4,231 million and operating profit EUR
448 million.
INTEREST-BEARING LOAN CAPITAL
MEUR 2011 2010
-----------------------------------
Non-current liabilities 485 572
Current liabilities 167 56
Loan receivables -2 -17
Cash and cash equivalents -592 -776
-----------------------------------
Net 58 -165
-----------------------------------
FINANCIAL RATIOS 2011 2010
--------------------------------------------------------------------
Total equity attributable to equity holders of the parent 1,44 1,96
Equity per share, EUR 8,30 8,30
Solvency ratio, % 41,3 40,8
Gearing 0,04 -0,09
--------------------------------------------------------------------
PERSONNEL 2011 2010
------------------------------
On average 17 708 18 000
At end of period 17 913 17 528
------------------------------
CONTINGENT LIABILITIES
MEUR 2011 2010
--------------------------------------------
Mortgages 57 59
Chattel mortgages 41 18
--------------------------------------------
Total 98 77
--------------------------------------------
Guarantees and contingent liabilities
on behalf of Group companies 903 623
on behalf of associated companies 10 9
Nominal amount of rents according
to leasing contracts 64 74
--------------------------------------------
Total 976 706
--------------------------------------------
NOMINAL VALUES OF DERIVATIVE INSTRUMENTS
MEUR Total amount of which closed
---------------------------------------------------------------
Interest rate swaps 20
Foreign exchange forward contracts 1 306 291
Currency options, purchased 108 18
Currency options, written 96 18
---------------------------------------------------------------
CONDENSED STATEMENT OF INCOME, QUARTERLY
MEUR 10-12/2011 7-9/2011 4-6/2011 1-3/2011 10-12/2010 7-9/2010
--------------------------------------------------------------------------------
Net sales 1 238 851 1 036 1 083 1 462 1 039
Other operating
income 13 20 4 10 21 13
Expenses -1 086 -758 -906 -956 -1 313 -910
Depreciation,
amortisation and
impairment -29 -27 -28 -29 -29 -29
Share of result of
associates and
joint ventures 2 2 1 3 2 2
Operating result 138 88 108 111 143 114
Financial income
and expenses -6 -5 -4 -10 -6
Net income from financial
assets available for sale 0 0 117 32
Profit before
taxes 131 83 108 107 251 140
Income taxes -39 -30 -35 -31 -71 -35
--------------------------------------------------------------------------------
Profit for the
financial period 92 53 73 76 179 104
--------------------------------------------------------------------------------
Attributable to:
Owners of the
parent 89 51 70 74 176 101
Non-controlling
interests 3 3 2 2 4 3
--------------------------------------------------------------------------------
Total 92 53 73 76 179 104
--------------------------------------------------------------------------------
Earnings per share attributable to equity
holders of the parent company:
--------------------------------------------------------------------------------
Earnings per
share, EUR 0,45 0,26 0,35 0,38 0,89 0,51
--------------------------------------------------------------------------------
SUBSEQUENT EVENTS
On 22 November 2011, Wärtsilä announced that it had reached agreement with the
Board of Hamworthy in regards to a recommended cash offer for the acquisition of
Hamworthy. Further information on the Hamworthy acquisition can be found in the
section Strategic projects, acquisitions, joint-ventures and expansion of the
network in 2011.
CALCULATION OF FINANCIAL RATIOS
Earnings per share (EPS)
Profit for the financial period attributable to equity holders of the
parent company
-----------------------------------------------------------------------
Adjusted number of shares over the financial period
Equity per share
Equity attributable to equity holders of the parent company
-----------------------------------------------------------------------
Adjusted number of shares at the end of the financial period
Solvency ratio
Equity
-----------------------------------------------------------------------x 100
Total equity and liabilities - advances received
Gearing
Interest-bearing liabilities - cash and cash equivalents
-----------------------------------------------------------------------
Equity
Return on investment (ROI)
Profit before taxes + interest and other financial expenses
-----------------------------------------------------------------------x 100
Total equity and liabilities - non-interest-bearing liabilities -
provisions, average over the year
Return on equity (ROE)
Profit for the financial period
-----------------------------------------------------------------------x 100
Equity, average over the year
26 January 2012
Wärtsilä Corporation
Board of Directors
Wärtsilä Corporation ENCLOSURE TO THE FINANCIAL STATEMENTS BULLETIN 27.1.2012
Board of Directors' dividend proposal
The parent company's distributable funds total 974,384,311.79 euro, which
includes 344,851,783.06 euro in net profit for the year. There are 197,241,130
shares with dividend rights.
The Board of Directors proposes to the Annual General Meeting that the company's
distributable earnings be disposed of in the following way:
+---------------------------------------------------------+--------------------+
|EUR | |
+---------------------------------------------------------+--------------------+
|A dividend of 0.90 euro per share be paid, making a total| |
|of | 177,517,017.00 euro|
+---------------------------------------------------------+--------------------+
|That the following sum be retained in shareholders' | |
|equity | 796,867,294.79 euro|
+---------------------------------------------------------+--------------------+
|Totalling | 974,384,311.79 euro|
+---------------------------------------------------------+--------------------+
No significant changes have taken place in the company's financial position
since the end of the financial year. The company's liquidity is good and in the
opinion of the Board of Directors the proposed dividend will not put the
company's solvency at risk.
[HUG#1580617]
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