Wärtsilä - Half Year financial report

WÄRTSILÄ INTERIM REPORT JANUARY-JUNE 2016

Wärtsilä Corporation HALF YEAR FINANCIAL REPORT 20 July 2016 at 8.30 a.m. local
time

WÄRTSILÄ INTERIM REPORT JANUARY-JUNE 2016

STABLE VOLUME DEVELOPMENT IN A CHALLENGING MARKET

This release is a summary of Wärtsilä's Interim Report January-June 2016. The
complete report is attached to this release as a pdf-file. It is also available
at http://www.wartsilareports.com/en-US/2016/q2/frontpage/ and on the company
website at www.wartsila.com.

SECOND QUARTER HIGHLIGHTS
- Order intake increased 3% to EUR 1,194 million (1,159)
- Net sales decreased 3% to EUR 1,196 million (1,230)
- Book-to-bill 1.00 (0.94)
- Comparable operating result EUR 122 million, or 10.2% of net sales (EUR 137
million or 11.1%)
- Earnings per share 0.19 euro (0.54)
- Cash flow from operating activities EUR 202 million (47)

HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-JUNE 2016
- Order intake increased 1% to EUR 2,465 million (2,443)
- Net sales decreased 2% to EUR 2,163 million (2,218)
- Book-to-bill 1.14 (1.10)
- Comparable operating result EUR 206 million, or 9.5% of net sales (EUR 237
million or 10.7%)
- Earnings per share 0.49 euro (0.97)
- Cash flow from operating activities EUR 189 million (84)
- Order book at the end of the period decreased 5% to EUR 5,083 million (5,325)

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

JAAKKO ESKOLA, PRESIDENT AND CEO
"The development of the first half of 2016 was satisfactory, given the
prevailing challenges in our operating environment. Net sales remained broadly
in line with the previous year, while the lower level of power plant deliveries
and tight competition in the energy markets burdened our operating result. Going
forward, we expect equipment deliveries to be concentrated towards the end of
the year. Order intake development was solid, largely thanks to the somewhat
improved sentiment in the power generation industry, which supported growth in
Energy Solutions' ordering activity. Marine Solutions' orders have also held up
fairly well considering the low level of vessel contracting, benefitting from
announced fleet renewal activity in the cruise and ferry markets. Services' net
sales have grown at a slower pace; however, we expect improved activity levels
to support a pick-up in volumes in the coming quarters. Based on the current
trends in our end markets and the increased uncertainty in the global economy,
our outlook for demand development remains cautious.

Pursuing growth through innovative solutions is one of the key cornerstones of
Wärtsilä's strategy, which is why I am pleased to highlight the acquisition of
Eniram, a company specialised in energy management and data analytics solutions.
Eniram complements our existing digital offering and enhances our expertise in
data analytics, modelling, and performance optimisation. It is an important
investment for our digital future. During the second quarter, we also announced
the acquisition of American Hydro. This investment is aimed at strengthening our
presence and competences in the industrial and hydro power service markets."


KEY FIGURES
 MEUR                4-6/2016 4-6/2015 Change 1-6/2016 1-6/2015 Change     2015
-------------------------------------------------------------------------------
 Order intake           1 194    1 159     3%    2 465    2 443     1%    4 932

 Order book at the
 end of the period                               5 083    5 325    -5%    4 882

 Net sales              1 196    1 230    -3%    2 163    2 218    -2%    5 029

 Operating result(1)       96      137   -30%      179      237   -24%      587

 % of net sales           8.0     11.1             8.3     10.7            11.7

 Comparable               122      137   -11%
 operating result                                  206      237   -13%      612

 % of net sales          10.2     11.1             9.5     10.7            12.2

 Comparable adjusted      131      144    -9%
 EBITA                                             224      250   -11%      643

 % of net sales          10.9     11.7            10.3     11.3            12.8

 Profit before             58      140   -59%
 taxes(2)                                          138      222   -38%      553

 Earnings/share,         0.19     0.54
 EUR(2)                                           0.49     0.97            2.25

 Cash flow from           202       47
 operating
 activities                                        189       84             255

 Net interest-
 bearing debt at the
 end of the period                                 517      495             372

 Gross capital
 expenditure                                        71      297             346

 Gearing                                          0.25     0.25            0.17
-------------------------------------------------------------------------------
 (1)Items affecting comparability included restructuring costs of EUR 26
 million in the second quarter of 2016, of which EUR 17 million were non-cash
 write-downs. During the review period January-June 2016 restructuring costs
 amounted to EUR 27 million.

 (2)Write-downs of approx. EUR 42 million related to the divestment of the
 Winterthur Gas & Diesel joint venture, realised exchange rate losses from
 Brazilian projects, and other receivables were recognised in the results for
 the second quarter of 2016.


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

The outlook for the shipping and shipbuilding markets remains challenging.
Overcapacity continues to limit demand for new vessels in the merchant segment,
while low oil prices impact investments in offshore exploration and development.
In the gas carrier markets, the demand for both LNG and LPG carriers is under
pressure due to low oil and gas prices and supply-demand imbalances. The outlook
for the cruise and ferry segment remains positive. The demand for cruise vessels
is supported by increasing passenger volumes, particularly in Asia, while the
contracting of ferries is supported by fleet renewals in Europe, the potential
implementation of new emission regulations, and favourable newbuilding prices.

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

ANALYST AND PRESS CONFERENCE
An analyst and press conference will be held today 20 July 2016, at 10.00 a.m.
Finnish time (8.00 a.m. UK time), at the Wärtsilä headquarters in Helsinki,
Finland. The combined web- and teleconference will be held in English and can be
viewed at the following address:
http://wcc.webeventservices.com/r.htm?e=1214185&s=1&k=58BDF371EA04A78F20587BB492
2A9510. To participate in the teleconference please register at the following
address: http://emea.directeventreg.com/registration/37473381. You will receive
dial-in details by e-mail once you have registered. If problems occur, please
press *0 for operator assistance. Please use *6 to mute your phone during the
teleconference and the same code to unmute.

An on-demand version of the webcast will be available on the company website
later the same day.

For further information, please contact:

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


Natalia Valtasaari
Director, Investor & Media Relations
Tel: +358 10 709 5637
natalia.valtasaari@wartsila.com


For press information, please contact:

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


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

[HUG#2029372]

Liitteet:

Interim report Q2 2016.pdf