FOURTH QUARTER HIGHLIGHTS
- Order intake declined 6% to EUR 1 324 million (1 403)
- Net sales declined 2% to EUR 1 559 million (1 590)
- Book-to-bill 0.85 (0.88)
- Comparable operating result improved to EUR 253 million, or 16.3% of net sales (EUR 215 million or 13.5%)
- Earnings per share increased to 0.87 euro (0.79)
- Cash flow from operating activities increased to EUR 235 million (176)
HIGHLIGHTS OF THE REVIEW PERIOD JANUARY-DECEMBER 2016
- Order intake was stable at EUR 4 927 million (4 932)
- Net sales declined 5% to EUR 4 801 million (5 029)
- Book-to-bill 1.03 (0.98)
- Comparable operating result declined to EUR 583 million, or 12.1% of net sales (EUR 612 million or 12.2%)
- Earnings per share declined to 1.79 euro (2.25)
- Cash flow from operating activities increased to EUR 613 million (255)
- Order book at the end of the period decreased 4% to EUR 4 696 million (4 882)
- The dividend is proposed to increase by 8% to 1.30 (1.20) euro per share. In line with growing practice, the dividend will be paid in two equal instalments in March and September.
WARTSILA'S PROSPECTS FOR 2017
As of 2017, Wartsila has changed its guidance policy to be consistent with general industry practice. Wartsila has discontinued providing numerical financial guidance on net sales and operating result developments. Instead, Wartsila's prospects statement is based on expectations regarding demand development in its markets. Wartsila will continue to provide certain financial information, including the order book for current year deliveries, as well as information on key matters that may affect profitability.
The overall demand for Wartsila's services and solutions in 2017 is expected to be relatively unchanged from the previous year. Demand by business area is anticipated to develop as follows:
* Solid in Services with growth opportunities in selected regions and segments.
* Solid in Energy Solutions, thanks to growth in electricity demand in the emerging markets and the global shift towards renewable energy sources, which will support the need for distributed, flexible, gas fired power generation.
* Soft in Marine Solutions. Although the outlook for the cruise and ferry segment is positive, the merchant, gas carrier, and offshore segments continue to suffer from overcapacity, slow trade growth and customers' financial constraints.
Wartsila's current order book for 2017 deliveries is EUR 3 143 million (3 097), which mainly comprises Marine Solutions and Energy Solutions' deliveries. Wartsila will continue to focus on improving efficiency, which is expected to partially offset lower volumes in the marine markets. The pricing environment in Energy Solutions' markets has stabilised, but the order book is still impacted by the competitive pressure seen in previous years. The good performance in Services is expected to continue.
JAAKKO ESKOLA, PRESIDENT AND CEO
"Thanks to solid delivery execution, growth in Services' revenues, and an improved project mix in the fourth quarter, we were able to meet our revised net sales and profitability targets for the year 2016. I am pleased with our cash flow development, which improved primarily due to our focus on working capital management.
The weak growth in seaborne trade, low oil and gas prices, as well as customers' financial constraints burdened the marine industry throughout the year, which resulted in exceptionally low contracting activity. Considering these headwinds, Wartsila's order intake developed well. This was largely due to the improved sentiment in the energy markets, where growth in electricity demand and energy policy changes supported the demand for Wartsila's power generation solutions in both the emerging markets and the industrialised world. The development of our Services business was solid, despite challenges related primarily to the offshore service market.
Wartsila is in the midst of a major digital transformation. I am excited about this journey, which will enhance our customer offering as well as our own operations. During the year, we strengthened our digital foundation with the appointment of a Chief Digital Officer to the Board of Management, as well as with the acquisition of Eniram. Going forward we expect to shape our markets with efficient use of data.
Looking into 2017, we expect our business environment to remain largely unchanged. We continue to be well positioned to benefit from the trends of increasing demand for efficiency and changing energy needs, and will continue to work towards reaching our long-term target for profitable growth."
KEY FIGURES
MEUR 10-12/2016 10-12/2015 Change 1-12/2016 1 -12/2015 Change
Order intake 1 324 1 403 -6% 4 927 4 932 0%
Order book at the end of the period 4 696 4 882 -4%
Net sales 1 559 1 590 -2% 4 801 5 029 -5%
Operating result1 231 202 15% 532 587 -9%
% of net sales 14.8 12.7 11.1 11.7
Comparable operating result 253 215 18% 583 612 -5%
% of net sales 16.3 13.5 12.1 12.2
Comparable adjusted EBITA 262 224 17% 618 643 -4%
% of net sales 16.8 14.1 12.9 12.8
Profit before taxes 226 199 14% 479 553 -13%
Earnings/share, EUR 0.87 0.79 1.79 2.25
Cash flow from operating activities 235 176 613 255
Net interest-bearing debt at the end of the period 150 372
Gross capital expenditure 146 346
Gearing 0.07 0.17
BOARD OF DIRECTORS' DIVIDEND PROPOSAL
The Board of Directors proposes that a dividend of 1.30 euro per share be paid for the financial year 2016. The parent company's distributable funds total 1 097 420 182.01 euro, which includes 281 705 697.79 euro in net profit for the year. There are 197 241 130 shares with dividend rights. The dividend will be paid in two instalments. The first instalment of 0.65 euro per share will be paid to shareholders who are registered in the list of shareholders maintained by Euroclear Finland Ltd on the record date 6 March 2017. The dividend payment date proposed by the Board for this instalment is 13 March 2017. The second instalment of 0.65 euro per share will be paid in September 2017. The second instalment will be paid to shareholders who are registered in the list of shareholders maintained by Euroclear Finland Ltd on the dividend record date, which, together with the payment date, shall be decided by the Board of Directors in its meeting scheduled for 12 September 2017 in accordance with the rules of the Finnish book-entry system. The dividend record date for the second instalment as per the current rules of the Finnish book-entry system would be 14 September 2017 and the dividend payment date 21 September 2017, unless the renewal of the securities processing infrastructure by Euroclear Finland Ltd brings the dividend payment date a few days earlier.
