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Strong Q1 for ship power buoys Wärtsilä results

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July 2, 2014

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Staff Correspondent:

A strong performance in the marine market partially offset a slow start to the year for power generation at Wärtsilä.

Order intake for the ship power division rose 5% compared to the first quarter last year to EUR467m ($645m), while power plants recorded a 59% drop to EUR165m.

The steep drop in power generation was attributed to global macroeconomic volatility, currency fluctuations and geopolitical uncertainty such as the tension in Ukraine. For shipbuilding, an improvement in finance terms available to owners and a slight increase in owners’ earnings manifested in an 83% rise in contracting activity for newbuilds, with 523 contracts registered for new vessels.

For Wärtsilä that increase in activity the quarter saw a 5% increase in order intake to EUR467m, with a significant order for a dual fuel engine for an LNG carrier, six orders for exhaust gas cleaning systems and orders for ballast water management systems.

Net sales for ship power increased by 54% to EUR386m, offsetting power plants’ 6% decrease to produce a 15% rise across the group to EUR1bn.

The company’s restructuring programmer, which will see around 1,000 job cuts around the world by the end of this year to save EUR60m annually, recorded EUR6m in costs for the quarter. Job losses including natural attrition and retirement will see 200 jobs cut in the company’s home base of Finland.

“In line with our expectations, first quarter net sales developed well with profitability at 8.9%. Favorable development was also seen in the operating cash flow,” commented ceo Björn Rosengren.

“The power plant markets remain challenging with customers continuing to delay decision-making due to global economic uncertainty and emerging market currency fluctuations. However, activity in the marine market was at a healthy level and Ship Power performed well, which partly offset the current challenges within the power generation markets. Several orders were received for offshore support vessels and there was active ordering of dual-fuel solutions and gas handling systems for the merchant fleet. The demand for services was stable within both of our end markets.”

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