Wärtsilä Corporation Interim Report January-June 2003 Ole Johansson President & CEO 31 July 2003
Group structure Power Divisions Engine division Marine Power Plants Service Holding Assa Abloy 7.6% 2
Group structure Power Divisions Engine division Marine Service Power Plants Holding Assa Abloy 7.6% 3
Revision of the corporate strategy Focus on ship power systems and service shipbuilding concentrates to Asia, price competition more stringent acquisitions production in China Power Plants business structure re-examined no significant recovery on the power plant market Capacity utilisation insufficient Operating margin of 7-8% further actions needed in pending market demands 4
Shipyard orderbook 150 Korea Japan China Others 125 Volume [ million dwt ] 100 75 50 25 0 12-96 06-97 12-97 06-98 12-98 06-99 12-99 06-00 12-00 06-01 12-01 06-02 12-02 Source: Based on data from Clarkson Research Studies Note: Cargo vessels > 5,000 dwt, Other vessels > 2000 grt 5
Shipyard orders and deliveries July 2002 - June 2003 Vessel deliveries Others 10% Vessel orders Others Europe 1% 5% Asia 94% Europe 38% Asia 52% Total deliveries: 75 million dwt Total orders: 76 million dwt Data Source: Clarkson Research Studies Lloyds-Register Fairplay Note: vessels > 100 gt 6
Expanding the scope of supply System management Device controls Services Support systems Power out alternator propulsion Connected systems 7
Wärtsilä group MEUR Q2/2003 Q2/2002 Net sales 538.5 701.4 Operational EBIT 16.2 33.6 EBIT 16.2 144.7 EPS, EUR 0.22 1.60 MEUR 1-6/2003 1-6/2002 2002 Net sales 1,026.6 1,282.3 2,519.0 Operational EBIT 21.1 37.7 77.8 EBIT 21.1 148.8 188.9 Profit before taxes 15.6 147.3 170.4 EPS, EUR 0.13 1.58 2.05 8
Cashflow MEUR 1-6/2003 1-6/2002 2002 Cashflow from operating activities 3.9 28.3 55.4 Cashflow from investing activities -9.3-212.9-286.5 Cashflow from financing activities -44.0 212.6 232.3 Liquid funds at the end of period 136.5 212.5 185.8 9
Solvency and gearing 50 Solvency 1,2 Gearing 45 40 1 35 30 25 0,8 0,6 20 15 0,4 10 5 0 98 99 00 01 02 1-6/03 0,2 0-0,2 98 99 00 01 02 1-6/03 Solvency 1 Solvency 2 Gearing 1 Gearing 2 10
Power Divisions profitability Operating profit and EBIT-% by quarter 2000-2003 MEUR % 60 8 40 6 4 20 2 0-20 -40 1-3/00 4-6/00 7-9/00 10-12/00 1-3/01 4-6/01 7-9/01 10-12/01 1-3/02 4-6/02 7-9/02 10-12/02 1-3/03 4-6/03 0-2 -4-6 -60-8 -10-80 Operating profit Operating result incl. restructuring provisions EBIT % -12 11
Power Divisions key figures MEUR Net sales Order intake Order book 649.5 +4.8% 483.2 342.3 511.9 1.206,6 1.372,8 1.392,8 +7,7% +25,3% +11.2% -62.6% -16.9% Q2/02 Q2/03 +209.7% +25.6% Q2/02 Q2/03-16,7% 30.12.02 30.6.02 30.6.03 Marine Power Plants Service 12
Power Divisions MEUR Q2/2003 Q2/2002 Change Net sales 483.2 649.5-25.6% EBIT 14.0 30.7-54.4% % of net sales 2.9% 4.7% Order intake 511.9 342.3 49.5% MEUR 1-6/2003 1-6/2002 Change 2002 Net sales 916.3 1,176.5-22.1% 2,319.9 EBIT 22.3 32.1-30.5% 74.6 % of net sales 2.4% 2.7% 3.2% Order intake 1,102.3 855.0 28.9% 1,882.8 Order book, end of period 1,392.8 1,372.8 1.5% 1,206.6 presentaatio 13
Delivered engine megawatts from Wärtsilä factories MW 5 000 4 000 3 000 2 000 1 000 0 1998 1999 2000 2001 2002 1-6/2003 Power Plants Marine Note! Does not include Biopower and licensing. 14
Marine MEUR Q2/2003 Q2/2002 Change 2002 Net sales 176.3 212.1-16.9% 763.4 Order intake 130.2 103.7 25.6% 506.7 Order book, end of period 616.4 739.9-16.7% 617.7 Power Divisions net sales Q2/2003 MEUR 483.2 Marine 36% 15
Vessel orders Volume [ million dwt ] 10 9 8 7 6 5 4 3 2 1 0 Tankers Bulk carriers Containers Others 3 months moving average 12-99 03-00 06-00 09-00 12-00 03-01 06-01 09-01 12-01 03-02 06-02 09-02 12-02 03-03 06-03 Source: Based on data from Clarkson Research Studies Note: Cargo vessels > 5,000 dwt 16
Vessel orderbook 150 Tankers Bulk carriers Containers Others 125 Volume [ million dwt ] 100 75 50 25 0 12-96 06-97 12-97 06-98 12-98 06-99 12-99 06-00 12-00 06-01 12-01 06-02 12-02 06-03 Source: Based on data from Clarkson Research Studies Note: Cargo vessels > 5,000 dwt 17
Net sales of Marine division by vessel type MEUR 800 600 400 200 0 1998PF 1999 2000 2001 2002 1-6/2003 Note! 1998 incl. Grandi Motori Trieste Wärtsilä Propulsion others container ships bulk carriers tankers 18
Power Plants MEUR Q2/2003 Q2/2002 Change 2002 Net sales 81.5 217.9-62.6% 666.0 Order intake 137.8 44.5 209.7% 427.9 Order intake (MW), diesel 238 75 217.3% 539 gas 50 32 56.3% 293 Biopower, MW th 46 28 64,3% 107 Order book, end of period 391.0 312.1 25.3% 255.2 Power Divisions net sales Q2/2003 EUR 483.2 million. Power Plants 17% 19
Power plant order intake 1-6/2003: 616 MW (475) America 39 (220) Europe 115 (107) 74 41 (57) (50) in addition Biopower 128 (107) Asia 110 (70) 80 30 (60) (10) 30 9 (201) (19) Africa and other regions 352 (77) Gas Oil 350 (61) 2 (16) 20
Service Q2/2003 Q2/2002 Change 2002 Net sales, MEUR 217.6 207.6 4.8% 843.4 Personnel, end of period 5,839 5,314 9.9% 5,644 Long-term service agreements, MW 9,867 9,321 5.9% 9,756 O&M (operation and maintenance) agreements, MW 2,182 1,824 19.6% 2,056 Power Divisions net sales Q2/2003 EUR 483.2 million. Service 45% 21
Long-term service and O&M contracts O&M contacts rapid growth continues Long-term service and O&M contracts cover 12,049 MW Active engine base 128,000 MW MW 2,500 MW 10,000 2,000 O&M contracts 1,500 1,000 500 9,500 9,000 8,500 8,000 7,500 Long-term service agreements 0 2000 2001 2002 1-6/2003 7,000 22
Imatra Steel Key figures, MEUR Q2/2003 Q2/2002 Change 2002 Net sales 55.5 52.6 5.5% 200.4 Operating profit 2.2 2.9 3.2 % of net sales 4.0% 5.5% 1.6% Imatra Steel s net sales by market segment 2002 sale of Billnäs Spring Works impact on profits neutral after write-down of fixed assets Trucks 52% Engineering industries 34% Cars 14% will concentrate on manufacturing long special engineering steels and forged components for the truck industry 23 A WÄRTSILÄ COMPANY
Outlook for year 2003 Power Divisions sales and operational profitability on last year s level streamlining measures will continue restructuring provision will burden the 2003 result Imatra Steel increased sales operational result will improve 24