WÄRTSILÄ CORPORATION BANK OF AMERICA MERRILL LYNCH GLOBAL INDUSTRIALS CONFERENCE 2014 18 MARCH 2014 Björn Rosengren, President & CEO 1
Net sales by business 2013 Ship Power 28% Services 40% Power Plants 31% 2
Profitability developed well MEUR 6000 12.8% 14% 5000 4000 12.1% 11.0% 10.7% 11.5% 11.7% 11.1% 10.9% 11.9% 11.2% 12% 10% 8% 3000 6% 2000 4% 1000 2% 0 2009 2010 2011 2012 2013 Net sales EBIT % EBITA % before intangible asset amortisation related to acquisitions 0% Figures shown before nonrecurring restructuring items 3
Order intake reflects market situation MEUR 6000 5000 4000-4% 3000 2000 14% 1000-15% 0 2009 2010 2011 2012 2013 Power Plants Ship Power Services 4
Order book distribution MEUR 4000 3000 2000 1000 0 31.12.2012 31.12.2013 Delivery next year Delivery after next year 5
Vessel contracting remains active 250 Merchant Offshore Cruise and Ferry Special vessels 3 months moving average in CGT * 5 200 4 # of vessels 150 100 3 * 2 Million CGT 50 1 0 01.09 02.09 03.09 04.09 05.09 06.09 07.09 08.09 09.09 10.09 11.09 12.09 01.10 02.10 03.10 04.10 05.10 06.10 07.10 08.10 09.10 10.10 11.10 12.10 01.11 02.11 03.11 04.11 05.11 06.11 07.11 08.11 09.11 10.11 11.11 12.11 01.12 02.12 03.12 04.12 05.12 06.12 07.12 08.12 09.12 10.12 11.12 12.12 01.13 02.13 03.13 04.13 05.13 06.13 07.13 08.13 09.13 10.13 11.13 12.13 01.14 02.14 0 Source: Clarkson Research Services * CGT= gross tonnage compensated with workload 6
Growth in Ship Power order intake MEUR 2000 1800 1600 1400 1200 1000 800 600 400 6% 8% 7% 3% 34% 200 0 2009 2010 2011 2012 2013 42% Merchant Offshore Navy Cruise and ferry Special vessels Other 7
The most complete marine offering 8
Ship Power focus areas Efficiency Gas and dual-fuel solutions Offshore market Environmental solutions 9
Continued interest in gas engines and systems 10
Power generation markets challenging Electricity consumption growth vs. GDP growth 7,00 25 000 000 Growth % 6,00 5,00 4,00 3,00 2,00 1,00 20 000 000 15 000 000 10 000 000 Electricity consumption GWh 0,00 5 000 000-1,00-2,00 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 0 GDP yearly growth rate Electricity production growth rate Electricity domestic consumption 11
Power Plants order intake by customer segment MEUR 2000 Review period development Total EUR 1,292 million (1,515) 1800 1600 1400 46% 23% 31% Utilities Industrials IPP s* 1200 x% 1000 800 600 Review period order intake by fuel in MW 400 200 Oil 18% Gas 82% 0 2009 2010 2011 2012 2013 *IPP = Independent Power Producer 12
Power Plants installed base Europe: Output: 12.5 GW Asia: Output: 19.8 GW Americas: Output: 11.7 GW Total: 56.2 GW Countries: 169 Plants: 4,700 Africa & Middle East: Output: 12.5 GW Utilities IPP:s Industry Others * December 2013 13
Power Plants strategic focus Maintain market leader position in flexible baseload and industrial self-generation in the growing emerging markets Grow in the large utility gas power plant markets Energy Efficiency Smart Power Generation Actively influence the regulatory environment to enable capacity investments Fuel Flexibility Operational Flexibility 14
Developing medium-scale LNG infrastructure 15
Service markets remain stable MEUR 2000 1800 1600 23% 1400 1200 1000 800 52% 600 17% 400 200 0 2009 2010 2011 2012 2013 Field service 8% Contracts Spare parts Projects 16
Development of installed engine base MW 200000 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 2008 2009 2010 2011 2012 2013 Power Plants Ship Power 17
Wärtsilä s service agreements around the world North Europe 2,900 MW Americas 5,140 MW South Europe & Africa 4,930 MW Middle East & Asia 5,390 MW Marine Power 18
70 countries, 160 locations, 11,000 service professionals Installed base 182,000 MW Wärtsilä Services global network Widest range of offering and expertise 19
Positioned for growth even in challenging markets Smart Power Generation Gas as a fuel Environmental solutions 20
Solid financial standing 21
Strong development in cash flow from operating activities MEUR 700 600 500 400 300 200 100 0 2009 2010 2011 2012 2013 22
Working capital Good development in advances received MEUR 2000 25% 1800 1600 20% 1400 1200 15% 1000 800 9.2% 9.8% 10% 600 5.8% 486 6.8% 465 6.7% 400 200 267 118 3.7% 235 313 5% 0 2008 2009 2010 2011 2012 2013 0% Working capital Total inventories Advances received Working capital / Net sales 23
Financial position Solvency 50% 45% 40% 35% 30% 25% 20% 15% Gearing 0,50 0,40 0,30 0,20 0,10 10% 5% 0% 0,00 2009 2010 2011 2012 2013-0,10 2009 2010 2011 2012 2013 24
An organisation based on divisions with end-to-end responsibility R&D Production Sales & marketing Product delivery Customer TRANSPARENCY ACCOUNTABILITY SPEED 25
Group-wide efficiency programme initiated Aim to secure future profitability and competitiveness Planned reductions of approx. 1,000 jobs globally Expected annual savings of EUR 60 million Non-recurring costs EUR 50 million, of which EUR 11 million recognised in 2013 26
Market outlook NEW PIC Power Plants: Based on the forecasted GDP growth in 2014, the overall market for liquid and gas fuelled power generation is expected improve slightly. Ordering activity remains focused on emerging markets, which continue to invest in new power generation capacity. Ship Power: The main drivers supporting activity in shipping and offshore are in place. Overall contracting is expected to remain on improved levels, keeping in mind the prevailing overcapacity and the market s limited capacity to absorb new tonnage. Services: The overall service market outlook remains stable. 27
Prospects for 2014 Wärtsilä expects its net sales for 2014 to grow by 0-10% and its operational profitability (EBIT% before non-recurring items) to be around 11%. 28
WARTSILA.COM IR Contact: Natalia Valtasaari Director, Investor Relations Tel. +358 (0) 40 187 7809 E-mail: natalia.valtasaari@wartsila.com 29