SMART STRATEGIES DRIVING PROFITABLE GROWTH Jaakko Eskola, President & CEO 1
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
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
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
Marine market sentiment is cautiously optimistic Vessel contracting 3 000 2 500 2 384 2 000 1 579 1 490 1 500 1 166 1 236 1 311 1 021 953 920 933 1 000 855 500 509 536 580 483 334 271 327 342 384 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 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
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
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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As energy markets transition to renewables and flexible capacity Cumulative installed capacity in OECD countries (GW) 10 000 Cumulative installed capacity in non-oecd countries (GW) 10 000 8 000 8 000 6 000 6 000 4 000 4 000 2 000 2 000 0 2017 2020 2025 2030 2035 2040 0 2017 2020 2025 2030 2035 2040 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
we continue to strengthen our position in addressable markets WÄRTSILÄ 9% WÄRTSILÄ 13% WÄRTSILÄ 19% 2015 26.2 GW 2016 26.1 GW 2017 20.1 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
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
Customers interest in our new service models is increasing 200 000 180 000 160 000 140 000 120 000 100 000 80 000 60 000 40 000 20 000 MW 40% 35% 30% 25% 20% 15% 10% 5% 0 2010 2011 2012 2013 2014 2015 2016 2017 Total installed base MW Installed base under agreement 0% 12
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 2 000 1 500 1 000 500 MEUR 2 000 MEUR 2 500 MEUR 1 500 2 000 1 500 1 000 1 000 500 500 0 2013 2014 2015 2016 2017 0 2013 2014 2015 2016 2017 0 2013 2014 2015 2016 2017 13
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 2017 14
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