Wärtsilä Corporation's Result presentation 2018

1. © Wärtsilä PUBLIC
WÄRTSILÄ CORPORATION
RESULT PRESENTATION 2018
30 January 2019
Jaakko Eskola, President & CEO
30 January 2019 Full year result presentation 20181

2. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 20182
GROWTH IN ORDER INTAKE AND NET SALES

3. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 20183
Key financials 2018
• Order intake EUR 6,307 million, +12%
• Order book at the end of the period EUR 6,166 million, +21%
• Net sales EUR 5,174 million, +5%
• Book-to-bill 1.22 (1.15)
• Comparable operating result EUR 577 million (576),
which represents 11.2% of net sales (11.7)
• Earnings per share EUR 0.65 (0.63)
• Cash flow from operating activities EUR 470 million (430)
• Dividend proposal EUR 0.48 per share (0.46)
Comparison figures have been restated due to the adoption of IFRS 15.
Share related figures have been calculated based on the new amount of shares.

4. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 20184
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
Q4/2017 Q4/2018
Fourth quarter development
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
5 500
6 000
6 500
2014 2015 2016 2017 2018
MEUR
MEUR
Q1-Q3 Q4
24%
18%
1,514
1,874
33%
24%
Energy
Solutions
Marine
Solutions
Services
Positive development in order intake
Comparison figures for 2017 have been restated due to the internal reorganisation of service activities.

5. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 20185
Net sales supported by increased newbuild deliveries
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
Q4/2017 Q4/2018
1,441
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
5 500
2014 2015 2016 2017 2018
6%
4%
19%
1%
Fourth quarter development
Energy
Solutions
Marine
Solutions
Services
MEUR
MEUR
1,532
Comparison figures for 2017 have been restated due to the internal reorganisation of service activities and the adoption of IFRS 15.
Q1-Q3 Q4

6. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 20186
Net sales by business 2018
Marine Solutions
24% (22)
Energy Solutions
29% (29)
Services
47% (49)
Comparison figures for 2017 have been restated due to the internal reorganisation of service activities and the adoption of IFRS 15.

7. © Wärtsilä PUBLIC
1.06
0.98
1.03
1.15
1.22
0,0
0,4
0,8
1,2
1,6
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
5 500
6 000
6 500
7 000
2014 2015 2016 2017 2018
30 January 2019 Full year result presentation 20187
Book-to-bill
MEUR
Order intake Net sales Book-to-bill
Comparison figures for 2017 have been restated due to the adoption of IFRS 15.

8. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 20188
Order book distribution
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
31.12.2017 31.12.2018
Delivery next year Delivery after next year
MEUR
Comparison figures for 2017 have been restated due to the adoption of IFRS 15.

9. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 20189
11.9%
12.2% 12.1%
11.7% 11.2%
0%
2%
4%
6%
8%
10%
12%
14%
0
100
200
300
400
500
600
700
2014 2015 2016 2017 2018
MEUR
Comparable operating result % of net sales
Profitability affected by group sales mix
Comparison figures for 2017 have been restated due to the adoption of IFRS 15.

10. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 201810
SERVICES

11. © Wärtsilä PUBLIC
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
2 200
2 400
2 600
2014 2015 2016 2017 2018
30 January 2019 Full year result presentation 201811
Solid development in Services’ net sales
SERVICES
MEUR
Comparison figures for 2017 have been restated due to the internal reorganisation of service activities and the adoption of IFRS 15.
Q1-Q3 Q4
0
100
200
300
400
500
600
700
800
900
Q4/2017 Q4/2018
MEUR
Fourth quarter development
4%710
737

12. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 201812
Net sales distribution 2018
SERVICES
Total EUR 2,426 million (2,407)
By product area By segment
Spare parts
47% (48)
Field service
23% (24)
Projects
10% (12)
Agreements
20% (17)
Merchant
23% (22)
Power plants
35% (37)
Cruise & ferry
17% (15)
Navy
7% (8)
Special vessels
8% (8)
Offshore
4% (5)
Oil & Gas
4% (4)
Others
2% (2)

13. © Wärtsilä PUBLIC
0%
5%
10%
15%
20%
25%
30%
0
5 000
10 000
15 000
20 000
25 000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
MW
30 January 2019 Full year result presentation 201813
Installed base covered by service agreements
SERVICES
MW under agreement – Energy Solutions MW under agreement – Marine Solutions
% of Marine Solutions’ installed base% of Energy Solutions’ installed base

14. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 201814
• The power plant operates on seven
Wärtsilä 50SG gas-fuelled engines.
• Plant predictability and reliability is
ensured through the efficiency and
flexibility of Wärtsilä’s engines, backed
by operations, maintenance, and
performance agreements.
Wärtsilä to operate and maintain a 130 MW
power plant in Mexico
Setti 1
Setti 1

15. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 201815
ENERGY SOLUTIONS

16. © Wärtsilä PUBLIC
0
10 000
20 000
30 000
40 000
50 000
60 000
Q1/2015
Q2/2015
Q3/2015
Q4/2015
Q1/2016
Q2/2016
Q3/2016
Q4/2016
Q1/2017
Q2/2017
Q3/2017
Q4/2017
Q1/2018
Q2/2018
Q3/2018
Q4/2018
30 January 2019 Full year result presentation 201816
Quotation activity by fuel type
ENERGY SOLUTIONS
Liquid fuel
Multi-fuel
Gas
Calculated on a 12 months rolling basis
MW

17. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 201817
Energy Solutions’ order intake affected by
slower customer decision-making
ENERGY SOLUTIONS
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2014 2015 2016 2017 2018
MEUR
Utilities
Industrials
Review period development
Total EUR 1,511 million (1,685)
Review period order intake
by fuel in MW
Gas
67%
Oil
30%
Independent
power producers
48%48%
Q1-Q3 Q4
4%
Renewables
3%

18. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 201818
ENERGY SOLUTIONS
392
70
Order intake 2018: 2,905 MW (3,775)
871
IPP’s
(Independent
Power Producers)
Utilities
Industrials
Ordering activity highest in Asia
221 519
Africa and Middle East 289 (402)
Asia 1,426 (2,380)
Americas 818 (796)
Europe 327 (198)
106
417
88
132
36
10

19. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 201819
• The 90 MW combined heat and power
plant features eight highly efficient and
flexible Wärtsilä 31SG engines
operating on natural gas.
• The plant will be delivered by Wärtsilä
on an EPC basis to DREWAG,
Dresden’s local utility company.
• Wärtsilä will maintain the plant under
a guaranteed asset performance
solution for ten years.
Wärtsilä to supply electricity and district
heating for Dresden, Germany
Setti 1
Setti 1

20. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 201820
Market for gas and liquid fuel power plants, <500 MW
ENERGY SOLUTIONS
Market shares are calculated on a 12 months rolling basis, numbers in brackets are from the end of the previous period.
Market data includes all Wärtsilä power plants and other manufacturers’ gas and liquid fuelled gas turbine based power plants with prime movers above 5 MW,
as well as estimated output of steam turbines for combined cycles. The data is gathered from the McCoy Power Report.
Other combustion engines not included. In engine technology Wärtsilä has a leading position.
<500 MW market volume: 20.8 GW (20.7)
Total market volume: 40.7 GW (44.2)
GE
23% (24)
Siemens
22% (28)
Wärtsilä
13% (17)
MHI
33% (22)
Other GT’s
1% (2)Ansaldo
8% (7)

21. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 201821
MARINE SOLUTIONS

22. © Wärtsilä PUBLIC
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
5,0
0
50
100
150
200
250
1/2009
4/2009
7/2009
10/2009
1/2010
4/2010
7/2010
10/2010
1/2011
4/2011
7/2011
10/2011
1/2012
4/2012
7/2012
10/2012
1/2013
4/2013
7/2013
10/2013
1/2014
4/2014
7/2014
10/2014
1/2015
4/2015
7/2015
10/2015
1/2016
4/2016
7/2016
10/2016
1/2017
4/2017
7/2017
10/2017
1/2018
4/2018
7/2018
10/2018
MillionCGT
Numberofvessels
Merchant Offshore Cruise and Ferry Special vessels 3 months moving average in CGT
30 January 2019 Full year result presentation 201822
Gradual recovery in vessel contracting
MARINE SOLUTIONS
Source: Clarkson Research Services, figures exclude late contracting
* CGT= gross tonnage compensated with workload
*
*
12/2018

23. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 201823
Marine Solutions’ order intake boosted by scrubbers
and favourable contracting mix
MARINE SOLUTIONS
0
300
600
900
1 200
1 500
1 800
2014 2015 2016 2017 2018
Review period development
Total EUR 1,710 million (1,288)
Offshore
7% (3)
Traditional
merchant
28% (22)
Gas carriers
14% (26)
Navy
8% (6)
MEUR
Cruise
25% (26)
Special vessels
8% (7)
Ferry
4% (4)
Comparison figures for 2017 have been restated due to the internal reorganisation of service activities.
Q1-Q3 Q4
Other
5% (5)

24. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 201824
Marine Solutions’ order book 31 December 2018
MARINE SOLUTIONS
Offshore
6%
Cruise
32%
Navy
13%
Special vessels
7%
Non-vessel 2%
Gas carriers
14%
Tankers 11%
Bulk carriers 5%
Containers 3%
Cargo 1%
RoRo 2%
Ferry
5%

25. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 201825
FINANCIALS

26. © Wärtsilä PUBLIC
0
100
200
300
400
500
600
700
2014 2015 2016 2017 2018
30 January 2019 Full year result presentation 201826
Cash flow from operating activities
FINANCIALS
MEUR

27. © Wärtsilä PUBLIC
251
543
490
563 581
5.2%
10.8%
10.2%
11.5% 11.2%
0%
5%
10%
15%
20%
25%
0
200
400
600
800
1 000
1 200
1 400
1 600
2014 2015 2016 2017 2018
30 January 2019 Full year result presentation 201827
Working capital
FINANCIALS
MEUR
Working capital Total inventories Advances received Working capital / Net sales
Comparison figures for 2017 have been restated due to the adoption of IFRS 15.

28. © Wärtsilä PUBLIC
0,00
0,10
0,20
0,30
0,40
0,50
2014 2015 2016 2017 2018
30 January 2019 Full year result presentation 201828
Gearing
FINANCIALS

29. © Wärtsilä PUBLIC
0,0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
0,9
1,0
2014 2015 2016 2017 2018*
30 January 2019 Full year result presentation 201829
EPS and dividend per share
FINANCIALS
* Dividend 2018 - Proposal of the Board
Figures have been restated to reflect the new amount of shares.
EUR
EPS Dividend
0.65
0.48

30. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 201830
• The Group-wide programme emphasises
sustainable savings and actions that
increase customer value, including:
• Increased focus on targeted sales activities
• Developing the agreements-based and
“as-a-service” business
• Reviewing the cost structure
• Optimising the business portfolio and
organisation
• The program is expected to lead to a
reduction of approximately 1,200
employees globally
• With these actions Wärtsilä seeks
annual savings of EUR 100 million
Wärtsilä to enhance competitiveness
aby aligning operations globally
Setti 1
Setti 1

31. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 201831
The demand for Wärtsilä’s services and
solutions in 2019 is expected to be in line
with the previous year.
Demand by business area is anticipated
to be as follows:
• Solid in Energy Business
• Solid in Marine Business
Prospects for 2019
Setti 1
Setti 1

32. © Wärtsilä PUBLIC 30 January 2019 Full year result presentation 201832
THANK YOU
Further information:
Natalia Valtasaari
Director, Investor Relations
Tel. +358 (0) 10 709 5637
E-mail: natalia.valtasaari@wartsila.com