SMART STRATEGIES DRIVING PROFITABLE GROWTH

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1 SMART STRATEGIES DRIVING PROFITABLE GROWTH Jaakko Eskola, President & CEO 1

2 The marine and energy industries are transforming CLEAN ENVIRONMENT ENERGY INTELLIGENCE MARKET SHAPING & INNOVATION A future without emissions or pollution An optimised way of producing and using energy A union of new technology and business models 2

3 Smart solutions are the foundation for our long-term value creation OPERATIONAL EFFICIENCY NEW OFFERINGS SMART SOLUTIONS, NEW BUSINESS MODELS AND KNOWLEDGE SHARING SUSTAINABLE SOCIETIES GROWTH 3

4 We are accelerating our digital transformation ENABLE AND TRANSFORM Culture & competencies Operating model & technology Data capability DEVELOP THE CORE Product development Supply chain & logistics Sales & marketing Customer experience PROFITABLE GROWTH GROW THE NEW New business model acquisition Corporate venturing approach New disruptive business model 4

5 Marine market sentiment is cautiously optimistic Vessel contracting Historical Forecast Improving economic outlook Increasing demand for LNG Regulatory developments Emerging technologies New business models Traditional merchant Gas Carriers, Cruise & Ferry, Offshore Source: Clarksons Platou, Wärtsilä Internal Analysis 5

6 OUR SMART MARINE VISION S M A RT R O U T I N G A N D V O YA G E P L A N N I N G R E M O T E E M I S S I O N S & P E R F O R M A N C E M O N I TO R I N G C O L L I S I O N AV O I D A N C E A N D A U TO - D O C K I N G H YBRID S H I P R E A L - T I M E V I S I B I L I T Y O F S H I P E TA A N D E T D 6

7 Building on our smart marine competences MARINE SYSTEMS INTERNATIONAL ENIRAM GUIDANCE MARINE TRANSAS Automation, navigation and electrical systems Voyage optimisation Situational awareness Navigation, simulation and traffic control 7

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9 As energy markets transition to renewables and flexible capacity Cumulative installed capacity in OECD countries (GW) Cumulative installed capacity in non-oecd countries (GW) Other Gas Wind Solar Flexible Other Gas Wind Solar Flexible Source: Bloomberg New Energy Outlook 2017 Other includes: coal, oil, nuclear, other renewables; Flexible includes: batteries, demand response and other flexible capacity 9

10 we continue to strengthen our position in addressable markets WÄRTSILÄ 9% WÄRTSILÄ 13% WÄRTSILÄ 19% GW GW GW Source: McCoy Power Report. Includes GT-based gas and liquid-fuelled, <500 MW power plants with prime movers above 5 MW. Includes estimated output of steam turbines for combined cycles (factor 0.5 for industrial turbines, 0.25 for aeros). Oil & Gas projects not included. Other combustion engines not included data not available. 10

11 OUR SMART ENERGY VISION TIPPING POINT Existing thermal capacity replaced with flexible generation RENEWABLE BASELOAD Energy storage becomes affordable, enabling increase in renewable energy 100% RENEWABLE ENERGY Flexible thermal capacity provides seasonal back-up, daily energy variations managed with storage 11

12 Customers interest in our new service models is increasing MW 40% 35% 30% 25% 20% 15% 10% 5% Total installed base MW Installed base under agreement 0% 12

13 Our short-term market outlook is improving ENERGY SOLUTIONS MARINE SOLUTIONS SERVICES Good demand outlook due to renewables growth and increasing electricity demand in emerging markets. Energy Solutions, orders Gradual market recovery, despite challenges related to overcapacity and lack of financing. Solid demand outlook. Marine Solutions, orders Growth opportunities from long-term agreements and the increasing sophistication of our installed base. Services, sales MEUR MEUR MEUR

14 and we remain committed to our long-term financial targets <50% 50% GROW FASTER THAN GLOBAL GDP Focus on strengthening position in strategic growth markets REACH 14% PROFITABILITY Enhanced performance through continuous improvement MAINTAIN GEARING BELOW 50% Unleveraged balance sheet supports growth through acquisitions DELIVER DIVIDEND OF 50% OF EPS OVER THE CYCLE Committed to providing shareholder returns 3% growth 12.0% profitability Gearing 10% Dividend per earnings 70.8% DEVELOPMENT IN

15 THANK YOU