Wärtsilä Corporation has revealed that profit before tax fell by EUR 15 million, or 15.6 percent, during the first quarter of 2014 to EUR 81 million, down from EUR 96 million during the corresponding period in 2013.
Net sales increased year-on-year by EUR 130 mllion, or 14.7 percent, to EUR 1012 million, up from EUR 882 million in the first quarter of 2013.
Earnings before interest and taxes (EBIT) during the first quarter of 2014 were EUR 20 million, or 28.6 percent, higher than the previous year at EUR 90 million. The figure is 8.9 percent of net sales, compared to 8.0 percent during the first three months of 2013.
Cash flow from operating activities was EUR 111 million, representing a rise of EUR 27 million, or 32 percent, on the EUR 84 million recorded last year.
The order book at the end of the three-month period decreased by 10 percent to EUR 4,505 million, down from last year's figure of EUR 4,998 million.
Commenting on the results,
Björn Rosengren, President and CEO of Wärtsilä, said: "In line with our expectations, first quarter net sales developed well with profitability at 8.9%. Favourable development was also seen in the operating cash flow. The power plant markets remain challenging with customers continuing to delay decision-making due to global economic uncertainty and emerging market currency fluctuations. However, activity in the marine market was at a healthy level and Ship Power performed well, which partly offset the current challenges within the power generation markets. Several orders were received for offshore support vessels and there was active ordering of dual-fuel solutions and gas handling systems for the merchant fleet. The demand for services was stable within both of our end markets.
"While the market situation continues to be volatile, we remain focused on improving efficiency and our competitive position. The restructuring measures announced in January have proceeded according to plan and are contributing to the efficiency improvement. Based on these measures, the current order book and a stable service market our prospects for 2014 remain unchanged."
In its market outlook, Wärtsilä said: "Power generation markets closely follow global macro-economic development. Uncertainty in the macro economy, combined with slow global growth projections, has lead to two consecutive years of decline in the power generation markets. Although customers are still delaying their decision-making, the forecasted GDP growth in 2014 is expected to result in a slightly improved overall market for liquid and gas fuelled power generation. Ordering activity remains focused on the emerging markets, which continue to invest in new power generation capacity. In the OECD countries, there is still pent-up power sector demand, mainly driven by CO2 neutral generation and the ramp down of older, mainly coal-based generation.
"The main drivers supporting activity in the shipping and offshore sectors are in place. World seaborne trade and the world economy are showing signs of improvement, which benefits the merchant shipping market. In the offshore segment, the current oil price level is supportive of investments. Furthermore, the strong drilling rig order book supports the ordering of offshore support vessels and there is continued demand for production units. The importance of fuel efficiency and the regulatory environment are clearly visible, and the interest in gas as a fuel is increasing. Financing has eased with more options and better terms available. Overall contracting is expected to be in line with that seen in 2013, keeping in mind the prevailing overcapacity and the market’s limited capacity to absorb new tonnage. Offshore activity is anticipated to be stable and the shipping markets to remain healthy, although a slight decline in traditional merchant vessel orders may be seen. The gas carrier market is expected to continue to be active, particularly in the LPG vessel segment.
"The overall service market outlook remains stable. An increase in the installed base partly balances the slower service demand for older installations and the continued focus of merchant marine customers on reducing operating expenses. The outlook for services to offshore and gas fuelled vessels remains positive. Demand for services in the power plant segment continues to be good. From a regional perspective, the outlook for the Middle East and Asia is slightly more positive, supported by interest in power plant related services. The outlook is also good in the Americas and Africa.
