Wärtsilä Oyj Abp — Earnings Release 2020

Jan 28, 2021

Wärtsilä’s Financial Statements Bulletin January–December 2020

Wärtsilä’s Financial Statements Bulletin January–December 2020

Wärtsilä Corporation, Financial Statements Bulletin January–December 2020, 28
January 2021 at 8:30 a.m. local time

Wärtsilä’s Financial Statements Bulletin January–December 2020

This release is a summary of Wärtsilä’s Financial Statements Bulletin
January–December 2020. The complete report is attached to this release as a pdf
file. It is also available on the company website at www.wartsila.com.

2020 – a year characterised by COVID-19 related uncertainty

Highlights of October–December 2020

· Order intake decreased by 28% to EUR 1,118 million (1,555)
· Net sales decreased by 28% to EUR 1,220 million (1,684)
· Book-to-bill amounted to 0.92 (0.92)
· Comparable operating result decreased by 49% to EUR 103 million (202), which
represents 8.4% of net sales (12.0)
· Earnings per share decreased to 0.10 euro (0.17)
· Cash flow from operating activities decreased to EUR 274 million (295)

Highlights of January–December 2020

· Order intake decreased by 18% to EUR 4,359 million (5,327)
· Order book at the end of the period decreased by 14% to EUR 5,057 million
(5,878)
· Net sales decreased by 11% to EUR 4,604 million (5,170)
· Book-to-bill amounted to 0.95 (1.03)
· Comparable operating result decreased by 40% to EUR 275 million (457), which
represents 6.0% of net sales (8.8)
· Earnings per share decreased to 0.23 euro (0.37)
· Cash flow from operating activities increased to EUR 681 million (232)
· Dividend proposal 0.20 euro per share (0.48)

Wärtsilä's prospects for 2021Wärtsilä expects the near-term demand environment
to be similar to that of the corresponding period in the previous year. However,
visibility remains limited, and the prevailing market conditions make the
outlook uncertain.

Jaakko Eskola, President & CEO

“2020 proved to be an unprecedented year, with Wärtsilä’s end markets heavily
affected by the coronavirus (COVID-19) outbreak and the measures taken globally
to contain the pandemic. Vessel contracting decreased to record low levels,
investments in new power plant capacity were postponed, and maintenance
activities were pushed out, as the utilisation of installations declined and
travel restrictions limited the mobility of service engineers. Although
Wärtsilä’s order intake declined as a result, I am pleased to note some areas of
resilience. Activity in the energy storage market held up well, driven by the
increasing need for short-term flexible capacity, while the marine markets’
digital transformation accelerated along with the adoption of new technologies
and digital applications in response to restrictions in physical travel and to
enhance competitive positioning.

Not surprisingly, the impact of the pandemic on our financial performance for
the year was significant. Net sales decreased because of lower service volumes
and disruptions to equipment deliveries. While fourth quarter profitability
improved sequentially, the seasonal pick-up in service activity was, as
anticipated, weaker than in previous years. The operating result and
profitability for the full year came in well below that of 2019, the main
reasons being a less favourable sales mix, under absorption of fixed costs, and
COVID-19 driven cost inflation. To mitigate the financial effects of COVID-19,
we have implemented temporary actions to create savings in the form of reduced
discretionary spending, worktime reductions, and temporary layoffs. We also
placed a significant focus on decreasing credit risk and improving working
capital, particularly in the areas of inventory management and receivables
collection. As a result, our operating cash flow reached record high levels.

Despite the disruptions to our operations, our commitment to R&D activities has
remained unchanged. Last year saw the launch of many solutions aimed at
delivering higher efficiency, greater reliability, and better environmental
sustainability to enhance the business of our customers. I am also pleased with
the progress we have made in future-proofing engine technology, in line with the
global trend towards the decarbonisation of the energy and marine markets.
During the year, we initiated full-scale testing of ammonia as a fuel in our 4
-stroke combustion engines and announced our intention to develop the gas engine
combustion process to enable them over time to burn 100% hydrogen fuel. In the
energy markets, we have stepped up our efforts to support our customers in
understanding and accelerating the energy transformation. An example of this is
the launch of the Energy Transition Lab, a platform that provides a better
understanding of the implications on electricity generation, demand, and pricing
resulting from the increased integration of energy from renewable sources, such
as wind and solar.

The demand environment is likely to remain challenging in the short term, with
near-term demand similar to the levels seen in early 2020. However, vaccine
developments have provided some relief to the markets. We expect to see this
having a positive effect on our business during the course of 2021, as country
level vaccination programmes are implemented on a global scale. Looking further
ahead, I remain confident that our strategy, and the organisational changes we
implemented last year, position us well to capture opportunities arising from
decarbonisation efforts in both the marine and energy markets.

This being the last results to be published before my retirement, I would like
to take the opportunity to thank all my colleagues throughout Wärtsilä for your
dedication and support. In particular, your help in navigating our way through
the past challenging year is highly appreciated. It has been a true pleasure to
work with you in developing Wärtsilä into the smart technology company it is
today.”

Key figures

MEUR 10–12/ 10–12/ Change 1–12/20 1–12/2019 Change
2020 2019 20
Order intake 1,118 1,555 -28% 4,359 5,327 -18%
of which services 626 726 -14% 2,267 2,683 -16%
Order book, end of 5,057 5,878 -14%
period
Net sales 1,220 1,684 -28% 4,604 5,170 -11%
of which services 654 741 -12% 2,255 2,505 -10%
Book-to-bill 0.92 0.92 0.95 1.03
Operating result 90 164 -45% 234 362 -35%
% of net sales 7.4 9.7 5.1 7.0
Comparable operating 103 202 -49% 275 457 -40%
result
% of net sales 8.4 12.0 6.0 8.8
Comparable adjusted 111 213 -48% 308 498 -38%
EBITA*
% of net sales 9.1 12.6 6.7 9.6
Profit before taxes 78 153 -49% 191 315 -39%
Earnings/share, EUR 0.10 0.17 0.23 0.37
Cash flow from 274 295 681 232
operating activities
Net interest-bearing 394 726
debt, end of period
Gross capital 117 122
expenditure
Gearing 0.18 0.30
Solvency, % 38.1 40.8
Personnel, end of 17,792 18,795 -5%
period
*Comparable adjusted
EBITA excludes items
affecting
comparability and
purchase price
allocation
amortisation.

Wärtsilä’s financial information for the first quarter of 2020 and for the full
year 2019 has been adjusted to reflect the group’s new reporting structure. As
of the second quarter of 2020, Marine Power, Marine Systems, Voyage, and Energy
constitute the reportable segments of the group, while Portfolio Business
continues to be reported as other business activities. This restatement has no
impact on the group’s total financial figures.

As published in the Interim report January-March 2020, order book figures for
2019 have been restated due to the stricter requirements for booking new orders,
and personnel comparison figures for 2019 have been adjusted to correctly
reflect the business line composition of the Portfolio Business and a change in
allocation principles. The tables in this report reflect both changes.

Wärtsilä presents certain alternative performance measures in accordance with
the guidance issued by the European Securities and Markets Authority (ESMA). The
definitions of these alternative performance measures are presented in the
Calculations of financial ratios section.

Board of Directors’ dividend proposal

The Board of Directors proposes that a dividend of EUR 0.20 per share be paid
for the financial year 2020. The parent company’s distributable funds total EUR
974,008,736.28, which includes EUR 264,838,387.72 in net profit for the year.
There are 591,723,390 shares with dividend rights. The dividend shall be paid in
two instalments.

The first instalment of EUR 0.10 per share shall be paid to the shareholders who
are registered in the list of shareholders maintained by Euroclear Finland Oy on
the dividend record date of 8 March 2021. The payment day proposed by the Board
for this instalment is 15 March 2021.

The second instalment of EUR 0.10 per share shall be paid in September 2021. The
second instalment of the dividend shall be paid to shareholders who are
registered in the list of shareholders maintained by Euroclear Finland Oy on the
dividend record day, which, together with the payment day, shall be decided by
the Board of Directors in its meeting scheduled for 9 September 2021. The
dividend record day for the second instalment as per the current rules of the
Finnish book-entry system would be 13 September 2021 and the dividend payment
day 20 September 2021.

ANALYST AND PRESS CONFERENCE

A virtual analyst and press conference will be held as a webinar today, Thursday
28 January 2021, at 10:00 a.m. Finnish time (8:00 a.m. UK time).

If you only wish to view the stream, please register
at: http://www.mediaserver.fi/live/wartsila.
If you plan to view the stream and ask questions in the Q&A session, please
register at: https://register.gotowebinar.com/register/1774883758723889675.
Please register using only one of the links above, not both. Once you have
registered, you will receive a confirmation email that includes specific joining
instructions.

***
Please note that there will be no separate audio (phone) line for the event. The
Q&A session will use the audio in the GoToWebinar tool itself. In case you are
joining via mobile, you may need to install the free GoToWebinar app from the
app store.
To enter into the questions and answers queue, please use the raise your hand
function in the webinar platform and unmute your microphone when the moderator
announces your name. Please remember to lower your hand once your question has
been answered.
For more information on joining and setting up your audio for Q&A, you may visit
the official GoToWebinar attendee joining guide
at: https://support.goto.com/webinar/how-to-join-attendees. Instructions on Q&A
related functionalities can be found
at: https://support.logmeininc.com/gotowebinar/help/raise-your-hand.

A recording of the webcast will be available on the company website as soon as
possible after the event.

For further information, please contact:

Arjen Berends
Executive Vice President & CFO
Tel. +358 10 709 5444
arjen.berends@wartsila.com

Natalia Valtasaari
Vice President, Investor Relations
Tel. +358 10 709 5637
natalia.valtasaari@wartsila.com

For press information, please contact:

Atte Palomäki
Executive Vice President, Communications, Branding & Marketing
Tel. +358 10 709 5599
atte.palomaki@wartsila.com

Wärtsilä in brief
Wärtsilä is a global leader in smart technologies and complete lifecycle
solutions for the marine and energy markets. By emphasising sustainable
innovation, total efficiency and data analytics, Wärtsilä maximises the
environmental and economic performance of the vessels and power plants of its
customers. In 2020, Wärtsilä’s net sales totalled EUR 4.6 billion with
approximately 18,000 employees. The company has operations in over 200 locations
in more than 70 countries around the world. Wärtsilä is listed on Nasdaq
Helsinki.
www.wartsila.com

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